AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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TUMBLEWEED COMMUNICATIONS CORP

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Title: AGREEMENT AND PLAN OF MERGER
Governing Law: Delaware Date: 6/6/2008
Industry: Software and Programming Law Firm: Skadden Arps;Heller Ehrman Sector: Technology

AGREEMENT AND PLAN OF MERGER, Parties: tumbleweed communications corp

EXHIBIT 2.1

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

dated as of

June 5, 2008

among

TUMBLEWEED COMMUNICATIONS CORP.

AXWAY INC.

and

TORNADO ACQUISITION CORP.

TABLE OF CONTENTS

Page

ARTICLE I DEFINITIONS
Section 1.1	Definitions	1
Section 1.2	Other Definitional and Interpretative Provisions	9
ARTICLE II THE MERGER
Section 2.1	The Closing	10
Section 2.2	The Merger	10
Section 2.3	Conversion of Shares	10
Section 2.4	Surrender and Payment	11
Section 2.5	Dissenting Shares	12
Section 2.6	Company Stock Options; Company Restricted Shares	12
Section 2.7	Withholding Rights	13
Section 2.8	Lost Certificates	13
ARTICLE III THE SURVIVING CORPORATION
Section 3.1	Certificate of Incorporation	13
Section 3.2	Bylaws	14
Section 3.3	Directors and Officers	14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1	Corporate Existence and Power	14
Section 4.2	Corporate Authorization	14
Section 4.3	Governmental Authorization	15
Section 4.4	Non-contravention	15
Section 4.5	Capitalization	15
Section 4.6	Subsidiaries	17
Section 4.7	SEC Filings and the Sarbanes-Oxley Act	18
Section 4.8	Financial Statements; Internal Controls	19
Section 4.9	Proxy Statement	20
Section 4.10	Absence of Certain Changes	20
Section 4.11	No Undisclosed Material Liabilities	20

- i -

Section 4.12	Litigation	20
Section 4.13	Compliance with Applicable Law and Orders	21
Section 4.14	Material Contracts	21
Section 4.15	Taxes	24
Section 4.16	Employee Benefit Plans	25
Section 4.17	Labor and Employment Matters	27
Section 4.18	Insurance Policies	29
Section 4.19	Environmental Matters	29
Section 4.20	Intellectual Property	29
Section 4.21	Properties	32
Section 4.22	Interested Party Transactions	33
Section 4.23	Certain Business Practices	33
Section 4.24	Finders’ Fees	33
Section 4.25	Opinion of Financial Advisor	33
Section 4.26	Export Control Laws	33
Section 4.27	Government Contracts	34
Section 4.28	State Takeover Statutes	35
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Section 5.1	Corporate Existence and Power	35
Section 5.2	Corporate Authorization	35
Section 5.3	Governmental Authorization	36
Section 5.4	Non-contravention	36
Section 5.5	Information Provided	36
Section 5.6	Company Securities	36
Section 5.7	Litigation	37
Section 5.8	Financing	37
ARTICLE VI COVENANTS OF THE COMPANY
Section 6.1	Conduct of the Company	37
Section 6.2	Proxy Statement	41
Section 6.3	Stockholders Meeting	42
Section 6.4	No Solicitation	42
Section 6.5	Access to Information	44
Section 6.6	Notice of Certain Events	45
Section 6.7	Termination of 401(k) Plan	45
Section 6.8	FIRPTA Certificate	46
Section 6.9	Director Resignations	46

- ii -

ARTICLE VII COVENANTS OF PARENT
Section 7.1	Director and Officer Liability	46
Section 7.2	Employee Matters	47
ARTICLE VIII COVENANTS OF PARENT AND THE COMPANY
Section 8.1	Reasonable Best Efforts	48
Section 8.2	Public Announcements	50
Section 8.3	Further Assurances	50
ARTICLE IX CONDITIONS TO THE MERGER
Section 9.1	Conditions to the Obligations of Each Party	50
Section 9.2	Additional Conditions to the Obligations of the Company	51
Section 9.3	Additional Conditions to the Obligations of the Parent and Merger Sub	51
ARTICLE X TERMINATION
Section 10.1	Termination	52
Section 10.2	Effect of Termination	53
ARTICLE XI MISCELLANEOUS
Section 11.1	Notices	54
Section 11.2	Survival of Representations and Warranties	55
Section 11.3	Amendments and Waivers	55
Section 11.4	Expenses	55
Section 11.5	Disclosure Schedule References	56
Section 11.6	Binding Effect; Benefit; Assignment	56
Section 11.7	Governing Law	57
Section 11.8	Jurisdiction	57
Section 11.9	Waiver of Jury Trial	57
Section 11.10	Counterparts; Effectiveness	57
Section 11.11	Entire Agreement	57
Section 11.12	Severability	57
Section 11.13	Specific Performance	58

- iii -

Exhibit A Agreement of Guarantee of Sopra Group SA

- iv -

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) dated as of June 5, 2008 among Tumbleweed Communications Corp., a Delaware corporation (the “ Company ”), Axway Inc., a Delaware corporation (“ Parent ”), and Tornado Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”).

WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company deem it advisable and in the best interests of each corporation and their respective stockholders that Parent acquire the Company on the terms and conditions set forth in this Agreement;

WHEREAS, the acquisition of the Company shall be effected through a merger (the “ Merger ”) of Merger Sub with and into the Company in accordance with the terms of this Agreement and the Delaware General Corporation Law (the “ Delaware Law ”), as a result of which the Company shall become a wholly-owned subsidiary of Parent;

WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s willingness to enter into this Agreement, all current executive officers and members of the Board of Directors of the Company (the “ Company Board ”) are entering into Voting Agreements and irrevocable proxies (the “ Voting Agreements ”); and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the Merger and to prescribe certain conditions to the consummation of the Merger.

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

ARTICLE I

DEFINITIONS

Section 1.1 Definitions .

(a) As used herein, the following terms have the following meanings:

“ Acquisition Proposal ” means, other than the transactions contemplated by this Agreement, any Contract offer, proposal, inquiry or indication of interest relating to any transaction or series of related transactions involving (i) the purchase from the Company or any of its Subsidiaries by any Third Party of more than a fifteen percent (15%) interest in the total outstanding voting securities of the Company and its Subsidiaries on a consolidated basis, or any tender offer or exchange offer that, if consummated, would result in any Third Party beneficially

owning fifteen percent (15%) or more of the total outstanding voting securities of the Company and its Subsidiaries on a consolidated basis, (ii) any merger, amalgamation, consolidation, share exchange, business combination or other similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or more of the consolidated assets of the Company pursuant to which the shareholders of the Company immediately preceding such transaction hold, directly or indirectly, less than eighty-five percent (85%) of the equity interests in the surviving or resulting entity of such transaction, (iii) other than in the ordinary course of business, any sale, transfer or disposition of fifteen percent (15%) or more of the consolidated assets of the Company and its Subsidiaries on a consolidated basis (measured by the greater of book or fair market value thereof) or (iv) any liquidation, recapitalization, extraordinary dividend or other significant corporate reorganization of the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute fifteen percent (15%) or more of the consolidated assets of the Company; provided , however , that each reference to fifteen percent (15%) and eighty-five percent (85%) in clauses (i) and (ii) shall be changed to twenty percent (20%) and eighty percent (80%), respectively, with respect to any Third Party that, as of the date hereof, beneficially owns greater than ten percent (10%) of the total outstanding voting securities of the Company.

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with such Person. As used in this definition, the term “control” (including the terms “controlling”, “controlled by” and “under common control with”) means possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

“ Applicable Law ” means, with respect to any Person, any international, national, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule or regulation enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon such Person.

“ Bid ” means any quotation, bid or proposal by the Company or any of its Affiliates which, if accepted or awarded, would lead to a Government Contract for the design, manufacture or sale of products or the provision of services by the Company or any of its Subsidiaries.

“ Business Day ” means a day, other than Saturday, Sunday or other day on which commercial banks in New York, New York or in Paris, France are authorized or required by Applicable Law to close.

“ Closing Date ” means the date of Closing.

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

“ Company Balance Sheet ” means the unaudited consolidated balance sheet of the Company and its Subsidiaries as of March 31, 2008 and the footnotes thereto set forth in the Company’s quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2008.

“ Company Balance Sheet Date ” means March 31, 2008.

“ Company Bylaws ” means the bylaws of the Company.

“ Company Certificate of Incorporation ” means the certificate of incorporation of the Company.

“ Company Common Stock ” means the common stock, par value $0.001 per share, of the Company.

“ Company Disclosure Schedule ” means the disclosure schedule dated the date hereof regarding this Agreement that has been provided by the Company to Parent and Merger Sub.

“ Company IP ” means all Intellectual Property Rights owned by the Company and / or any of its Subsidiaries.

“ Company Material Adverse Effect ” means any change, event, circumstance or development (each, an “ Effect ”) that individually or in the aggregate and regardless of whether or not such Effect constitutes a breach of the representations, warranties, covenants or agreements made by the Company in this Agreement, is or would reasonably be expected to be materially adverse to the business, assets (including intangible assets), financial condition or results of operations of the Company and its Subsidiaries, taken as a whole, excluding any such Effect resulting from or arising out of (i) any adverse Effect (including any loss of or adverse change in the relationship of the Company and its Subsidiaries with their respective employees, customers, distributors, licensors, partners, suppliers or similar relationship) arising out of or related to the announcement, pendency or consummation of the Merger or the performance of any other obligation under this Agreement, (ii) changes in general economic, market or political conditions (including acts of terrorism or war or other force majeure events) that do not disproportionately affect the Company and its Subsidiaries, taken as a whole, as compared with other participants in the industry in which the Company and its Subsidiaries operate, (iii) general conditions in the industry in which the Company and its Subsidiaries operate that do not disproportionately affect the Company and its Subsidiaries, taken as a whole, (iv) any changes (after the date hereof) in GAAP or Applicable Law, (v) any failure of the Company or any of its Subsidiaries to take any action as a result of Parent’s unreasonable refusal to grant its consent to such action pursuant to Section 6.1 hereof, (vi) any failure of the Company to meet internal or analysts’ expectations or projections as to revenue or earnings or otherwise (provided that such

exclusion shall not apply to any underlying Effect that may have caused such failure), or (vii) a decline in the price of the Company Common Stock or the Nasdaq generally (provided that such exclusion shall not apply to any underling Effect that may have caused such decline).

“ Company Products ” means all software and hardware products owned by the Company or any of its Subsidiaries. The term “ Company Products ” shall not include Third Party software.

“ Company Restricted Share ” means a restricted share of Company Common Stock issued (or issuable under an outstanding deferred stock agreement) pursuant to any of the Company Stock Plans that remains unvested.

“ Company Shares ” shall mean the outstanding shares (each a “ Company Share ”) of Company Common Stock.

“ Contract ” means any contract, agreement, note, bond, indenture, mortgage, guarantee, option, lease, license, sales or purchase order, warranty, commitment or other instrument, obligation or binding arrangement or understanding of any kind.

“ Environmental Law ” means any Applicable Law governing (i) pollution or the protection, investigation or restoration of the environment, human health and safety, or natural resources, (ii) the manufacture, processing, distribution, handling, use, storage, treatment, transport, disposal, release or threatened release of any Hazardous Substance or (iii) wetland protection.

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

“ ERISA Affiliate ” of any entity means any other entity that, together with such entity, would be treated as a single employer under Section 414 of the Code.

“ Executory Government Contract ” means a Government Contract that has not been closed by the U.S. Government, such prime contractor or such higher tier subcontractor, as appropriate.

“ GAAP ” means generally accepted accounting principles in the United States.

“ Governmental Authority ” means (i) any government or any state, department, local authority or other political subdivision thereof or (ii) any governmental body, agency,

authority (including any central bank, Taxing Authority or transgovernmental or supranational entity or authority), minister or instrumentality (including any court or tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

“ Governmental Authorizations ” means, with respect to any Person, all material licenses, permits (including construction permits), certificates, waivers, consents, franchises, exemptions, variances, expirations and terminations of any waiting period requirements and other authorizations and approvals issued to such Person by or obtained by such Person from any Governmental Authority, or of which such Person has the benefit under any Applicable Law.

“ Government Contract ” means any prime contract or subcontract between the Company or any of its Subsidiaries and (i) the U.S. Government, (ii) any prime contractor to the U.S. Government or (iii) any higher tier subcontractor with respect to any contract described in clause (i) or (ii).

“ Hazardous Substance ” means (i) any substance that is regulated as a “hazardous substance”, “hazardous waste”, “hazardous material”, “solid waste”, “pollutant”, “contaminant”, “toxic waste” or any other term of similar import under any Environmental Law, or (ii) any petroleum product or by-product, chemical, asbestos-containing material, polychlorinated biphenyls, radioactive materials, lead or lead-based paints or materials, toxic fungus or mold, mycotoxins or radon.

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

“ Indebtedness ” means, collectively, any (i) indebtedness for borrowed money, (ii) indebtedness evidenced by any bond, debenture, note, letter of credit, mortgage, indenture or other debt instrument or debt security, (iii) amounts owing as deferred purchase price for the purchase of any property (other than trade payables and other current liabilities), (iv) amounts owing under any capitalized or synthetic leases or (v) guarantees with respect to any indebtedness or obligation of a type described in clauses (i) through (iv) above of any other Person; provided , however , that Indebtedness shall not include any inter-company indebtedness between the Company and any of its Subsidiaries or between any of the Company’s Subsidiaries.

“ Intellectual Property Rights ” means all worldwide rights in (i) patents and patent applications, (ii) trademarks, service marks, trade dress, logos, Internet domain names and trade names, whether or not registered, and all goodwill associated therewith, (iii) copyrights and rights in databases, whether or not registered, (iv) computer software, databases and documentation related to the foregoing, (v) trade secrets and (vi) all rights to any of the foregoing provided by bilateral or international treaties or conventions.

“ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance, claim, infringement, interference, right of first refusal, preemptive right, community property right or other adverse claim of any kind in respect of such property or asset (but excluding (i) licenses and other agreements related to Intellectual Property Rights which are not intended to secure an obligation, (ii) any obligation to accept returns of inventory and (iii) any obligation arising by reason of restrictions on transfer under federal, state and foreign securities laws). For purposes of this Agreement, a Person shall be deemed to own subject to a Lien, any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

“ made available ” means such documents or information shall have been (i) publicly filed with the SEC, (ii) posted in the electronic data room maintained by the Company and hosted by RR Donnelley Venue in connection with this Agreement and the transactions contemplated hereby, or (iii) provided separately to Parent or its Representatives, in either instance, no later than 5:00 p.m. Pacific time on the day immediately preceding the date hereof.

“ Nasdaq ” means The NASDAQ Global Market.

“ 1933 Act ” means the Securities Act of 1933.

“ 1934 Act ” means the Securities Exchange Act of 1934.

“ Order ” means, with respect to any Person, any order, injunction, judgment, decree or ruling enacted, adopted, promulgated or applied by a Governmental Authority or arbitrator that is binding upon or applicable to such Person or its property.

“ Permitted Liens ” means (i) Liens disclosed on the Company Balance Sheet, (ii) Liens for Taxes not yet due or being contested in good faith by any appropriate Proceedings or for which accruals or reserves have been established on the Company Balance Sheet and (iii) Liens (other than those securing Indebtedness) incurred in the ordinary course of business which do not materially interfere with any continued use of the property or assets to which such Lien relates.

“ Person ” means any individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including any Governmental Authority.

“ Proceeding ” means any suit, claim, action, litigation, arbitration, proceeding (including any civil, criminal, administrative, investigative or appellate proceeding), hearing,

audit, examination or investigation commenced, brought, conducted or heard by or before, any court or other Governmental Authority or any arbitrator or arbitration panel (but excluding ordinary course prosecution proceedings before the U.S. Patent and Trademark Office, U.S. Copyright Office and other IP registries).

“ Registered IP ” means all U.S., international and foreign (i) patents and patent applications, (ii) registered trademarks, service marks, applications to register trademarks, applications to register service marks, including intent-to-use applications, (iii) registered copyrights and applications for copyright registration, (iv) domain name registrations and Internet number assignments and (v) other Intellectual Property Rights that are the subject of an application or registration issued or filed with, any Governmental Authority, in the case of each of clauses (i)-(v) above, owned by or filed in the name of, the Company or any of its Subsidiaries.

“ Representatives ” means, with respect to any Person, the directors, officers, employees, financial advisors, attorneys, accountants, consultants, agents and other authorized representatives of such Person, acting in such capacity.

“ Sarbanes-Oxley Act ” means the Sarbanes-Oxley Act of 2002.

“ SEC ” means the Securities and Exchange Commission.

“ Subsidiary ” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person.

“ Superior Proposal ” means any bona fide written offer which did not arise from a breach of Section 6.4 hereof and which is an Acquisition Proposal made by a Third Party and which, if consummated, would result in such Third Party (or in the case of a direct merger between such Third Party or any Subsidiary of such Third Party and the Company, the stockholders of such Third Party) owning, directly or indirectly, at least a majority of the outstanding voting securities of the Company or at least a majority of the consolidated assets of the Company and its Subsidiaries, in each case for consideration consisting exclusively of cash and / or publicly traded equity securities, and which Acquisition Proposal the Company Board determines by a majority vote, after considering the advice of its outside legal counsel and of a financial advisor of nationally recognized reputation and taking into account all of the terms and conditions of such Acquisition Proposal, including any breakup fees, expense reimbursement provisions and financing or other conditions to consummation, would be, if consummated, more favorable, from a financial point of view, to the Company’s stockholders (other than Parent and its Affiliates) than as provided hereunder (after giving effect to any adjustments to the terms of this Agreement definitively proposed by Parent in response to such written offer) and is reasonably likely to be consummated on the terms proposed.

“ Third Party ” means any Person or “group” as defined in Section 13(d) of the 1934 Act, other than the Company and Parent or any of its Affiliates or Representatives.

“ U.S. Government ” means any United States Governmental Authority, including United States Government corporations and non-appropriate fund activities.

(b) Each of the following terms is defined in the Section set forth opposite such term:

Term	Section
Adverse Recommendation Change	6.4(a)
Agreement	Preamble
Antitrust Laws	8.1(d)
Board Recommendation	6.3(b)
Breakup Fee	11.4(b)
Certificates	2.4(a)
CFIUS	8.1(e)
CFIUS Approval	8.1(e)
Closing	2.1
Company	Preamble
Company Board	Recitals
Company Charter Documents	4.1
Company Employee Plan	4.16(a)
Company SEC Documents	4.7(a)
Company Securities	4.5(c)
Company Stock Option	2.6(a)
Company Stock Plans	2.6(a)
Company Subsidiary Securities	4.6(c)
Confidentiality Agreement	6.4(b)
Continuing Employees	7.2(a)
Delaware Law	Recitals
Dissenting Shares	2.5
Effective Time	2.2(a)
End Date	10.1(b)
Exchange Agent	2.4(a)
Exon-Florio	4.3
Export Approvals	4.26(a)
Foreign Competition Laws	4.3
Grant Date	4.5(d)
Indemnification Agreements	7.1(a)
Indemnified Person	7.1(a)
Insurance Policies	4.18
Joint Filing	8.1(e)
Leased Real Property	4.21(a)
Leases	4.21(a)
Material Contract	4.14(b)

Term	Section
Merger	Recitals
Merger Certificate	2.2(a)
Merger Consideration	2.3(a)
Merger Sub	Preamble
Necessary IP Rights	4.20(a)
Open Source Materials	4.20(h)
Parent	Preamble
Proxy Statement	4.9
Standard Outbound Contracts	4.20(e)
Stockholder Approval	4.2(a)
Stockholder Meeting	6.3(a)
Subsidiary Charter Documents	4.6(a)
Surviving Corporation	2.2(b)
Tax	4.15(h)
Taxing Authority	4.15(h)
Tax Return	4.15(h)
Triggering Event	10.1(f)
Uncertificated Shares	2.4(a)
Voting Agreements	Recitals

Section 1.2 Other Definitional and Interpretative Provisions . The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”, whether or not they are in fact followed by those words or words of like import. “Writing”, “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. References to any Person include the successors and permitted assigns of that Person. References to any statute are to that statute, as amended from time to time, and to the rules and regulations promulgated thereunder. References to “$” and “dollars” are to the currency of the United States. References from or through any date mean, unless otherwise specified, from and including or through and including, respectively. References to a party’s “knowledge” are references to the actual knowledge (without independent inquiry or investigation) of the executive officers of that party; for the avoidance of doubt, these executive officers of the Company are: James P. Scullion, Timothy G. Conley, Taher Elgamal, Nicholas Hulse, Bernard J. Cassidy, Jorge Rodriguez and Joseph Fisher.

ARTICLE II

THE MERGER

Section 2.1 The Closing . Upon the terms and subject to the conditions set forth herein, the closing of the Merger (the “ Closing ”) will take place at 10:00 a.m., Pacific time, as soon as practicable (and, in any event, within one (1) Business Day) after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger set forth in Article IX (excluding conditions that, by their terms, are satisfied at the Closing, but subject to the satisfaction or waiver (to the extent permitted hereunder) of such conditions), unless this Agreement has been terminated pursuant to its terms or unless another time or date is agreed to in writing by the parties hereto. The Closing shall be held at the offices of Heller, Ehrman LLP, 275 Middlefield Road, Menlo Park, California 94025, unless another place is agreed to by the parties hereto.

Section 2.2 The Merger .

(a) As soon as practicable after satisfaction or, to the extent permitted hereunder, waiver of all conditions to the Merger, the Company and Merger Sub shall file a certificate of merger (the “ Merger Certificate ”) with the Delaware Secretary of State and make all other filings or recordings required by Delaware Law in connection with the Merger. The Merger shall become effective at such time (the “ Effective Time ”) as the Merger Certificate is duly filed with the Delaware Secretary of State or at such later time as is specified in the Merger Certificate.

(b) At the Effective Time, Merger Sub shall be merged with and into the Company in accordance with Delaware Law, whereupon the separate existence of Merger Sub shall cease, and the Company shall be the surviving corporation (the “ Surviving Corporation ”). From and after the Effective Time, the Surviving Corporation shall possess all the rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Sub, all as provided under Delaware Law.

Section 2.3 Conversion of Shares . At the Effective Time, by virtue of the Merger and without any action on the part of the holders thereof:

(a) except as otherwise provided in Sectio ns 2 .3(b) , 2 .3(c) or 2 .5 , each Company Share or Company Restricted Share outstanding immediately prior to the Effective Time shall be converted into the right to receive $2.70 in cash, without interest (the “ Merger Consideration ”);

(b) each Company Share or Company Restricted Share held by the Company as treasury stock or owned by Parent or Merger Sub immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto;

(c) each Company Share held by any Subsidiary of either the Company or Parent (other than Merger Sub) immediately prior to the Effective Time shall be converted into such number of shares of common stock, par value $0.001 per share, of the

Surviving Corporation such that each such Subsidiary owns the same percentage of Surviving Corporation immediately following the Effective Time as such Subsidiary owned in the Company immediately prior to the Effective Time; and

(d) each share of common stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into and become one share of common stock, par value $0.001 per share, of the Surviving Corporation with the same rights, powers and privileges as the shares so converted and (in addition to shares referred to in Section 2 .3(c) ) shall constitute the only outstanding shares of capital stock of the Surviving Corporation.

Section 2.4 Surrender and Payment .

(a) Prior to the Effective Time, Parent shall appoint an exchange agent reasonably acceptable to the Company (the “ Exch ange Agent ”) for the purpose of exchanging for the Merger Consideration (i) certificates representing Company Shares (the “ Certificates ”) and (ii) uncertificated Company Shares (the “ Uncertificated Shares ”). Immediately prior to the Effective Time, Parent shall pay to the Exchange Agent, the Merger Consideration to be paid in respect of the Certificates and the Uncertificated Shares. Promptly after the Effective Time (but in no event later than two (2) Business Days after the Effective Time), Parent shall send, or shall cause the Exchange Agent to send, to each record holder of Company Shares or Company Restricted Shares at the Effective Time a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the Uncertificated Shares to the Exchange Agent) for use in such exchange.

(b) Each holder of Company Shares or Company Restricted Shares that have been converted into the right to receive the Merger Consideration shall be entitled to receive the Merger Consideration in respect of the Company Common Stock represented by a Certificate or Uncertificated Share, upon (i) surrender to the Exchange Agent of a Certificate, together with a properly completed letter of transmittal, or (ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares. Until so surrendered or transferred, as the case may be, each such Certificate or Uncertificated Share shall represent after the Effective Time for all purposes only the right to receive such Merger Consideration.

(c) If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate or the transferred Uncertificated Share is registered, it shall be a condition to such payment that (i) either such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Uncertificated Share shall be properly transferred and (ii) the Person requesting such payment shall pay to the Exchange Agent any transfer or other Tax required as a result of such payment to a Person other than the registered holder of such Certificate or Uncertificated Share or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.

(d) After the Effective Time, there shall be no further registration of transfers of Company Shares or Company Restricted Shares. If, after the Effective Time, Certificates or Uncertificated Shares are presented to the Surviving Corporation, they shall be canceled and exchanged for the Merger Consideration provided for, and in accordance with the procedures set forth, in this Article II .

(e) Any portion of the Merger Consideration paid to the Exchange Agent pursuant to Section 2 .4(a) (and any interest or other income earned thereon) that remains unclaimed by holders of Company Shares or Company Restricted Shares six (6) months after the Effective Time shall be returned to Parent, upon demand, and any such holder who has not exchanged such Company Shares or Company Restricted Shares for the Merger Consideration in accordance with this Section 2 .4 prior to that time shall thereafter look only to Parent for payment of the Merger Consideration in respect of such Company Shares or Company Restricted Shares without any interest thereon. Notwithstanding the foregoing, Parent shall not be liable to any holder of Company Shares or Company Restricted Shares for any amounts paid to a public official pursuant to applicable abandoned property, escheat or similar laws.

(f) Any portion of the Merger Consideration paid to the Exchange Agent pursuant to Section 2.4(a) in respect of any Dissenting Shares shall be returned to Parent, upon demand.

Section 2.5 Dissenting Shares . Notwithstanding Section 2.3 , any Company Shares outstanding immediately prior to the Effective Time (collectively, the “ Dissenting Shares ”) held by a holder who has not voted in favor of adoption of this Agreement or the Merger or consented thereto in writing and who has demanded appraisal for such Company Shares in accordance with Delaware Law shall not be converted into a right to receive the Merger Consideration, unless such holder fails to perfect, withdraws or otherwise loses the right to appraisal. If, after the Effective Time, such holder fails to perfect, withdraws or loses the right to appraisal, such Company Shares shall be treated as if they had been converted as of the Effective Time into a right to receive the Merger Consideration. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of Company Shares, and Parent shall have the right to participate in all negotiations and proceedings with respect to such demands. Except with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall not make any payment with respect to, or offer to settle or settle, any such demands.

Section 2.6 Company Stock Options; Company Restricted Share s .

(a) As of the Effective Time, by virtue of the Merger and without any action or payment being required on the part of the holders thereof, each option to purchase shares of Company Common Stock (each, a “ Company Stock Option ”) issued under any stock option stock or equity compensation plan or agreement (the “ Company Stock Plans ”) that is outstanding immediately prior to the Effective Time, whether or not then vested or exercisable, shall be deemed to be one hundred percent (100%) vested and exercisable immediately prior to the Effective Time, cancelled and, in consideration of such cancellation, Parent shall, or shall cause Surviving Corporation to, promptly following the Effective Time, pay to such holders of Company Stock Options an amount in respect thereof equal to the product of (i) the excess, if

any, of the Merger Consideration over the exercise price of each such Company Stock Option and (ii) the number of unexercised Company Shares subject thereto (such payment, if any, to be net of applicable Taxes withheld pursuant to Section 2.7 ). In the case of any issued Company Stock Option for which the per share exercise price is greater than or equal to the Merger Consideration, the amount to which the holder of such Company Stock Option shall be entitled at the Effective Time shall be $0.00 and, for the avoidance of doubt, such Company Stock Option shall be terminated for no consideration. As of the Effective Time, the Company Stock Plans shall terminate and all rights under any provision of any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of the Company or any of its Subsidiaries shall be cancelled. The Company shall use all reasonable efforts to effectuate the foregoing, including, but not limited to, sending out the requisite notices and obtaining all consents necessary to cash out and cancel all Company Stock Options necessary to ensure that, after the Effective Time, no person shall have any right under the Company Stock Plans, except as set forth herein.

(b) As of the Effective Time, by virtue of the Merger and without any action or payment being required on the part of the holders thereof, each Company Restricted Share outstanding immediately prior to the Effective Time shall be, whether or not then vested, deemed to be one hundred percent (100%) vested immediately prior to the Effective Time and converted into the right to receive Merger Consideration in accordance with Section 2.4 .

Section 2.7 Withholding Rights . Each of the Company, Merger Sub, the Surviving Corporation and Parent shall be entitled to deduct and withhold in respect of any payments made hereunder as may be required by applicable Tax law. If the Company, Merger Sub, the Surviving Corporation or Parent, as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person in respect of which the Company, Merger Sub, the Surviving Corporation or Parent, as the case may be, made such deduction and withholding.

Section 2.8 Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent, the posting by such Person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall pay, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the Company Shares formerly represented by such Certificate, as contemplated under this Article II .

ARTICLE III

THE SURVIVING CORPORATION

Section 3.1 Certificate of Incorporation . The certificate of incorporation of the Surviving Corporation immediately following the Effective Time shall be amended and restated in its entirety so that such certificate of incorporation is identical to the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time, except that (i)

the name of the corporation set forth therein shall be changed to the name of the Company and (ii) the identity of the sole incorporator shall be deleted.

Section 3.2 Bylaws . The bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with Applicable Law.

Section 3.3 Directors and Officers . From and after the Effective Time, except as otherwise duly elected or appointed and qualified in accordance with Applicable Law, (i) the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation and (ii) the officers of Merger Sub immediately prior to the Effective Time shall be the officers of the Surviving Corporation.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to Section 11.5 , except as set forth in the Company Disclosure Schedule, the Company represents and warrants to Parent and Merger Sub that:

Section 4.1 Corporate Existence and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has all corporate powers required to carry on its business as now conducted. The Company is duly qualified to do business and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified would not reasonably be expected to have a Company Material Adverse Effect. The Company has heretofore made available to Parent true, complete and correct, in all material respects, copies of the minutes that have been finalized containing the records of all proceedings, consents, actions and meetings of the Company Board and committees thereof and, if applicable, of the stockholders of the Company, since January 1, 2006 (excluding such minutes related to the potential sale of the Company), the charters of all committees of the Company Board, all codes of conduct, whistleblower policies or similar policies adopted by the Company Board. The Company has made available to Parent a true and correct copy of the Company Certificate of Incorporation and Company Bylaws, each as amended to date (collectively, the “ Company Charter Documents ”). Each such instrument is in full force and effect. The Company is not in violation of any of the provisions of the Company Charter Documents.

Section 4.2 Corporate Authorization .

(a) The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby are within the Company’s corporate powers and, except for obtaining the Stockholder Approval have been duly authorized by all necessary corporate action on the part of the Company. The affirmative vote of the holders of a majority of the outstanding shares of Company Common Stock in favor of the approval and adoption of this Agreement and the Merger (the “ Stockholder Approval ”) is the only vote of the holders of any of the Company’s capital stock necessary in connection with the consummation of the Merger and the other transactions contemplated by this

Agreement. This Agreement constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar Applicable Law affecting creditors’ rights generally and by general principles of equity.

(b) At a meeting duly called and held, prior to the execution of this Agreement, the Company’s Board of Directors duly adopted resolutions by a unanimous vote of those directors in attendance (i) declaring that this Agreement and the transactions contemplated hereby are fair to and in the best interests of the Company’s stockholders, (ii) approving and declaring advisable this Agreement, the Merger and the other transactions contemplated hereby, (iii) directing that the adoption of this Agreement and the Merger be submitted to the Stockholder Meeting and (iv) making the Board Recommendation.

Section 4.3 Governmental Authorization . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority, other than (i) the filing of the Merger Certificate with the Delaware Secretary of State and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with any applicable requirements of the HSR Act and any Applicable Law analogous to the HSR Act or otherwise regulating antitrust, competition or merger control matters and in each case existing in foreign jurisdictions (“ Forei gn Competition Laws ”), (iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act and any other applicable U.S. state or federal securities laws, (iv) compliance with the Exon-Florio Amendment of the Defense Production Act of 1950, as amended (“ Exon-Florio ”) and any similar or analogous Applicable Law including the making of a Joint Filing (as that term is defined in Section 8.1(e) hereof), (v) the contractual consents set forth on Section 4.3 of the Company Disclosure Schedule and (vi) any actions or filings the absence of which would not reasonably be expected to have a Company Material Adverse Effect.

Section 4.4 Non-contravention . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the Merger and the other transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the Company Charter Documents, (ii) assuming compliance with the matters referred to in Section 4.3 , contravene, conflict with, or result in a violation or breach of any provision of any Applicable Law or Order, (iii) require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit under, any provision of any Material Contract binding upon the Company or any of its Subsidiaries, or any Governmental Authorization affecting, or relating in any way to, the assets or business of the Company or any of its Subsidiaries, or (iv) result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, with such exceptions, in the case of each of clauses (ii) through (iv), as would not reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect.

Section 4.5 Capitaliza tion .

(a) The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock and 10,000,000 shares of preferred stock, par value $0.001 per share, of the Company. As of the close of business on June 3, 2008, (i) 53,099,926 Company Shares were issued and outstanding (of which an aggregate of 1,900,436 were Company Restricted Shares), (ii) no shares of preferred stock of the Company were issued and outstanding, (iii) Company Stock Options to purchase an aggregate of 13,687,132 Company Shares were issued and outstanding (of which Company Stock Options to purchase an aggregate of 9,365,110 Company Shares were exercisable) and (iv) an aggregate of 7,713,499 Company Shares were reserved for settlement of authorized but unissued Company Stock Options. All outstanding shares of capital stock of the Company have been, and all shares that may be issued pursuant to any Company Stock Plan will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued and are (or, in the case of shares that have not yet been issued, will be) fully paid, non-assessable and free of preemptive rights.

(b) Section 4.5(b) of the Company Disclosure Schedule sets forth, as of the close of business on June 3, 2008, a complete and correct list of (i) all outstanding Company Stock Options, including with respect to each such option, the number of shares subject to such option, the title and position of the holder, the grant date, the exercise price per share, the vesting schedule and expiration date of each such option, whether the option is intended to qualify as an “incentive stock option” under Section 422 of the Code or a non-qualified stock option and (ii) all outstanding Company Restricted Shares, including with respect to each such award, the title, position of the holder, the grant date and vesting schedule and whether a Section 83(b) election was taken under the Code (if available) with respect to such Company Restricted Share. The Company Stock Plans listed on Sec tion 4 .5(b) of the Company Disclosure Schedule are the only plans or programs the Company or any of its Subsidiaries maintains under which stock options, restricted shares or other compensatory equity-based awards have been granted and remain outstanding or may be granted. All Company Stock Options and Company Restricted Shares may, by their terms, be treated in accordance with Section 2.6 .

(c) Except for changes since June 3, 2008 resulting from the exercise of Company Stock Options outstanding on such date and disclosed on Section 4.5(b) of the Company Disclosure Schedule or for issuances of shares of Company Common Stock and grants of Company Stock Options permitted under Section 6.1(c) , there are no outstanding (i) shares of capital stock or voting securities of the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (iii) options, warrants or other rights or arrangements or other Contracts to acquire from the Company, or other obligations or commitments or other Contracts of the Company to issue, any capital stock or other voting securities or ownership interests in, or any securities convertible into or exchangeable for capital stock or other voting securities or ownership interests in, the Company, (iv) restricted shares, restricted share units, stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other voting securities or ownership interests in, the Company (the items in clauses (i)-(iv) being referred to collectively as the “ Company Securities ”), (v) voting trusts, proxies or other similar agreements or understandings or other Contracts to which Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound with respect

to the voting of any shares of capital stock of Company or any of its Subsidiaries, (vi) except as may be required by applicable securities laws and regulations, obligations or commitments or other Contracts of any character restricting the transfer of, or requiring the registration for sale of, any shares of capital stock of Company or any of its Subsidiaries, or (vii) obligations or commitments or other Contracts of any character of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities. No Company Securities are owned by any Subsidiary of the Company.

(d) With respect to the Company Stock Options, (i) each Company Stock Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies, (ii) each grant of a Company Stock Option was duly authorized no later than the date on which the grant of such Company Stock Option was by its terms to be effective (the “ Grant Date ”) by all necessary corporate action, including, as applicable, approval by the Company Board (or a duly constituted and authorized committee thereof), or a duly authorized delegate thereof, and any required stockholder approval by the necessary number of votes or written consents, (iii) each such grant was made in all material respects in accordance with the terms of the applicable Company Stock Plan and Applicable Law and (iv) the per share exercise price of each Company Stock Option was not less than the fair market value of a share of Company Common Stock on the applicable Grant Date.

Section 4.6 Sub sidiaries .

(a) Section 4 .6(a) of the Company Disclosure Schedule sets forth a complete and correct list of each Subsidiary of the Company, its place and form of organization. The Company has delivered or made available to Parent the certificate of incorporation and bylaws, or like organizational documents (collectively the “ Subsidiary Charter Documents ”), of each of its Subsidiaries. Each such instrument is in full force and effect. No Subsidiary is in violation of any of the provisions of its respective Subsidiary Charter Documents.

(b) Each Subsidiary of the Company is a corporation or other business entity duly incorporated or organized (as applicable), validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and has all corporate or other organizational powers required to carry on its business as now conducted. Each such Subsidiary is duly qualified to do business and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified, when taken together with all other such failures to be so qualified or in good standing, would not reasonably be expected to have a Company Material Adverse Effect.

(c) All of the outstanding capital stock of, or other voting securities or ownership interests in, each Subsidiary of the Company, is owned by the Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other voting securities or ownership interests). There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any Subsidiary of the Company, (ii) options, warrants or other rights or arrangements or other Contracts to acquire from the Company or any of its Subsidiaries, or other obligations or commitments or other Contracts of the Company or any of

its Subsidiaries to issue, any capital stock of or other voting securities or ownership interests in, or any securities convertible into or exchangeable for any capital stock of or other voting securities or other Contracts or ownership interests in, any Subsidiary of the Company, or (iii) restricted shares, stock appreciation rights, performance shares, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other voting securities or ownership interests in, any Subsidiary of the Company (the items in clauses (i)-(iii), in addition to all shares of capital stock or voting securities of the Company’s Subsidiaries, being referred to collectively as the “ Company Subsidiary Securities ”). There are no outstanding obligations or other Contracts of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities.

(d) Neither the Company nor any of its Subsidiaries directly or indirectly owns any equity, ownership, profit, voting or similar interest in or any interest convertible, exchangeable or exercisable for, any equity, profit, voting or similar interest in, any Person (other than a Subsidiary of the Company).

Section 4.7 SEC Filings and the Sarbanes-Oxley Act .

(a) The Company has made available to Parent all of its reports, statements, schedules, registration statements and other documents required to be filed or furnished by the Company or any of its Subsidiaries with the SEC since December 31, 2005 (the documents referred to in this Section 4.7(a) , together with all information incorporated by reference therein in accordance with applicable SEC regulations, are collectively referred to in this Agreement as the “ Company SEC Documents ”).

(b) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each Company SEC Document complied as to form in all material respects with the applicable requirements of the 1933 Act and the 1934 Act, as the case may be.

(c) As of its filing date (or, if amended or superseded by a filing prior to the date hereof, on the date of such filing), each Company SEC Document filed pursuant to the 1934 Act did not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(d) The Company has made available to Parent true, correct and complete copies of all comment letters received by the Company and any of its Subsidiaries from the SEC since December 31, 2004 relating to the Company SEC Documents, together with all written responses of the Company and any of its Subsidiaries thereto. As of the date hereof, (i) there are no outstanding or unresolved comments in any such comment letters received by the Company from the SEC and (ii) to the Company’s knowledge, none of the Company SEC documents is the subject of ongoing SEC review.

(e) Each required form, report and document containing financial statements that has been filed with or submitted to the SEC by the Company since July 31, 2002

was accompanied by the certifications required to be filed or submitted by the Company’s chief executive officer and / or chief financial officer, as required, pursuant to the Sarbanes-Oxley Act and, at the time of filing or submission of each such certification, such certification was true and accurate and complied with the Sarbanes-Oxley Act.

Section 4.8 Financial Statements; Internal Controls .

(a) The audited consolidated financial statements and unaudited consolidated interim financial statements of the Company included in the Company SEC Documents were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present, in all material respects, the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and their consolidated results of operations and cash flows for the periods then ended in accordance with GAAP (subject to normal year end adjustments, condensation or omission of certain information and footnote disclosure in the case of any unaudited interim financial statements). As of the date hereof, the Company has no current intention to restate the financial statements included in, or incorporated by reference into, the Company SEC Documents.

(b) The Company’s system of internal controls over financial reporting is sufficient in all material respects to provide reasonable assurance (i) regarding the reliability of financial reporting and the preparation of the Company’s consolidated financial statements for external purposes in accordance with GAAP, (ii) that transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP, (iii) that receipts and expenditures are executed in accordance with the authorization of management and (iv) regarding prevention or timely detection of the unauthorized acquisition, use or disposition of the Company’s assets that would materially affect the Company’s financial statements. No significant deficiency or material weakness was identified in management’s assessment of internal controls as of December 31, 2007.

(c) The Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the 1934 Act) are reasonably designed to ensure that (i) all information (both financial and non-financial) required to be disclosed by the Company in the reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported to the individuals responsible for preparing such reports within the time periods specified in the rules and forms of the SEC and (ii) all such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications of the principal executive officer and principal financial officer of the Company required under the 1934 Act with respect to such reports.

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

(e) The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K, for senior financial officers, applicable to its principal financial officer, comptroller or principal accounting officer, or persons performing similar functions. The Company has promptly disclosed any change in or waiver of the Company’s code of ethics with

respect to any such persons, as required by Section 406(b) of the Sarbanes-Oxley Act. To the knowledge of the Company, there have been no violations of provisions of the Company’s code of ethics by any such persons.

Section 4.9 Proxy Statement . The information to be supplied by or on behalf of the Company for inclusion in the proxy statement to be sent to the stockholders of the Company (the “Proxy Statement”) in connection with the Stockholder Meeting shall not, on the date the Proxy Statement is first mailed to stockholders of the Company or at the time of the Stockholder Meeting, contain any statement which, at such time and in light of the circumstances under which it shall be made, is false or misleading with respect to any material fact, or omit to state any material fact necessary in order to make the statements made in the Proxy Statement not false or misleading in light of the circumstances under which they were or shall be made; or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Stockholder Meeting which has become false or misleading.

Section 4.10 Absence of Certain Changes . Since December 31, 2007, (i) the business of the Company and each of its Subsidiaries has been conducted in the ordinary course consistent with past practice, (ii) there has not been any event, change, development or set of circumstances that has had or would reasonably be expected to have a Company Material Adverse Effect and (iii) there has not been any action or event, nor any authorization, commitment or agreement by the Company or any of its Subsidiaries with respect to any action or event, that if taken or if it occurred after the date hereof would be prohibited by Section 6.1.

Section 4.11 No Undisclosed Material Liabilities . Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC). There are no liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined or determinable, and there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a liability or obligation, other than:

(a) liabilities or obligations disclosed and provided for in the Company Balance Sheet or disclosed in the notes thereto;

(b) liabilities or obligations incurred under this Agreement or in connection with the transactions contemplated hereby; and

(c) liabilities or obligations incurred in the ordinary course of business consistent with past practice in amounts that would not reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect.

Section 4.12 Litigation .

(a) As of the date hereof, there is no Proceeding pending against or, to the knowledge of the Company, threatened in writing against the Company or any of its Subsidiaries or any of their respective businesses or assets or any of the directors or employees of the Company or any of its Subsidiaries or, to the knowledge of the Company, any of its

stockholders or Representatives (in each case insofar as any such matters relate to their activities with the Company or any of its Subsidiaries) that would reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect.

(b) As of the date hereof, neither the Company nor any of its Subsidiaries is subject to any Order against the Company or any of its Subsidiaries or naming the Company or any of its Subsidiaries as a party that would reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect.

Section 4.13 Compliance with Applicable Law and Orders .

(a) The Company and each of its Subsidiaries is and, since December 31, 2005 has been, in compliance with all Applicable Laws and Orders, and the Company has not received a written notice of a material violation of, or a material liability or default under, any Applicable Law or Order, except such non-compliance, violations, liabilities or defaults that have not had and would not reasonably be expected to have a Company Material Adverse Effect. As of the date hereof, neither the Company nor any of its Subsidiaries has received any written notice since December 31, 2006 until the date hereof (i) of any administrative or civil, or criminal investigation or audit (other than Tax audits) by any Governmental Authority relating to the Company or any of its Subsidiaries, or (ii) from any Governmental Authority alleging that the Company or any of its Subsidiaries are not in compliance in any material respect with any Applicable Law or Order.

(b) Each of the Company and its Subsidiaries has in effect all Governmental Authorizations necessary for it to own, lease or otherwise hold and to operate its properties and assets and to carry on its businesses and operations as now conducted, except where the failure to have such Governmental Authorizations has not had and would not reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect. There have occurred no defaults (with or without notice or lapse of time or both) under, violations of, or events giving rise to any right of termination, amendment or cancellation of any such Governmental Authorizations, except where such defaults, violations or events have not had and would not reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect.

Section 4.14 Material Contracts .

(a) Section 4 .14 (a) of the Company Disclosure Schedule contains a complete and correct list of each of the following Contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is legally bound as of the date hereof:

(i) (x) each of the twenty (20) largest Contracts between the Company or any of its Subsidiaries and an end-user customer for the license of Company Products (determined on the basis of aggregate license revenues received by the Company and its Subsidiaries, taken as a whole, over the four consecutive fiscal quarter period ended March 31, 2008), (y) each of the twenty (20) largest Contracts between the Company or any of its Subsidiaries and a non-end user customer, including any customer

that embeds one or more Company Product into one or more product of such customer for the license of Company Products (determined on the basis of aggregate license revenues received by the Company and its Subsidiaries, taken as a whole, over the four consecutive fiscal quarter period ended March 31, 2008) and (z) each of the ten (10) largest Contracts between the Company or any of its Subsidiaries and a customer for the provision of services, including professional or consulting services, other than maintenance and support services provided solely in connection with licenses of Company Products (determined on the basis of aggregate revenues received by the Company and its Subsidiaries, taken as a whole, over the four consecutive fiscal quarter period ended March 31, 2008);

(ii) except for the Contracts disclosed in clause (i) above, each Contract that involves (x) license of Company Products, or (y) performance of services (including maintenance and support services) by the Company or any of its Subsidiaries, or (z) the marketing, resale, OEM, distribution or other similar arrangement of the Company Products, in each instance providing for annual payments to the Company or any of its Subsidiaries of $250,000 or more (determined on the basis of aggregate payments to the Company or any of its Subsidiaries over the four consecutive fiscal quarter period ended March 31, 2008);

(iii) (x) each of the Contracts between the Company or any of its Subsidiaries and any licensor of Intellectual Property Rights that is material to the conduct of the Company and its Subsidiaries’ business, other than non-exclusive in-licenses for non-customized commercial off the shelf software that is generally available on standard terms, and (y) each of the ten (10) largest Contracts between the Company or any of its Subsidiaries and any supplier (other than a licensor), including any supplier of outsourcing or development services, to the Company or any of its Subsidiaries, taken as a whole (determined on the basis of aggregate payments made by the including supplier of outsourcing services over the four consecutive fiscal quarter period ended March 31, 2008);

(iv) each Contract that contains any exclusivity or non-competition provisions (x) restricting the Company, any of its Subsidiaries or the Surviving Corporation from competing in any line of business or with any Person or in any area or engaging in any activity or business (including with respect to the development, manufacture, marketing or distribution of their respective products or services), or pursuant to which any benefit or right is required to be given or lost as a result of so competing or engaging, or (y) which would have any such effect on Parent or any of its Affiliates after the consummation of the Merger or the Closing Date;

(v) each Contract that (x) grants any exclusive license, exclusive supply or exclusive distribution agreement or other material exclusive rights, (y) grants any “most favored nation” rights, rights of first refusal or other similar terms with respect to any product, service or material Intellectual Property Rights, or

(z) contains any provision that requires the purchase of all or a given portion of the Company’s or any of its Subsidiaries’ requirements from a given Third Party, or any other similar material provision;

(vi) each lease or sublease of real property and each lease or sublease of personal property providing for annual payments of $250,000 or more to which the Company or any of its Subsidiaries is party as either lessor or lessee;

(vii) each Contract relating to Indebtedness, except any such Contract with an aggregate outstanding principal amount not exceeding $250,000;

(viii) each Contract creating or granting a material Lien (including Liens upon properties acquired under conditional sales, capital leases or other title retention or security devices), other than Permitted Liens;

(ix) each partnership, joint venture or other similar Contract or arrangement currently in effect (but excluding non-exclusive outbound or inbound partnering agreements (such as marketing, reselling, consulting, OEM and distributor agreements) entered into by the Company or any of its Subsidiaries in the ordinary course of business and Standard Outbound Contracts);

(x) each employee collective bargaining agreement or other Contract with any labor union, and each employment Contract (other than offer letters for employment at-will or similar arrangements) that is not terminable by the Company without notice and without cost to the Company;

(xi) each Contract pursuant to which the Company or its Subsidiaries has acquired or sold a business or entity, or assets of a business or entity, whether by way of merger, consolidation, purchase or sale of stock, purchase or sale of assets, exclusive license or otherwise since December 31, 2004, or any Contract pursuant to which it has any material ownership interest in any other Person (other than its Subsidiaries); or

(xii) except for the Contracts disclosed above, each Contract currently in effect and required to be filed by the Company pursuant to Item 601(b)(10) of Regulation S-K under the 1933 Act.

(b) Except as would not reasonably be expected to have a Company Material Adverse Effect, (i) each Contract disclosed in Section 4 .14 (a) of the Company Disclosure Schedule (each, a “ Material Contract ”) is in full force and effect and is a valid and binding agreement of the Company or any of its Subsidiaries, as the case may be, and, to the

knowledge of the Company, of each other party thereto, enforceable against the Company or such Subsidiary, as the case may be, and, to the knowledge of the Company, against the other party or parties thereto, in each case, in accordance with its terms except as such enforceability may be limited by bankruptcy, insolvency, moratorium and other similar Applicable Law affecting creditors’ rights generally and by general principles of equity and (ii) none of the Company, any of its Subsidiaries or, to the knowledge of the Company, any other party thereto is or alleged to be in default or breach under the terms of any Material Contract in any respect which would permit the Company or any of its Subsidiaries, on the one hand, or any other party thereto, on the other hand, to terminate such Material Contract, including with notice or lapse of time or both.

Section 4.15 Taxes .

(a) All material Tax Returns required by Applicable Law to be filed with any Taxing Authority by, or on behalf of, the Company or any of its Subsidiaries have been filed and all such Tax Returns are, or shall be at the time of filing, true and complete in all material respects.

(b) The Company and each of its Subsidiaries has paid (or has had paid on its behalf) or has withheld and remitted to the appropriate Taxing Authority all material Taxes due and payable, or, has otherwise established (or has had established on its behalf and for its sole benefit and recourse) in accordance with GAAP an adequate accrual for all material Taxes through the Company Balance Sheet Date. All liabilities for Taxes that arose since the Company Balance Sheet Date arose in the ordinary course of business.

(c) As of the date hereof, (i) there is no Proceeding now pending with respect to the Company or any of its Subsidiaries in respect of any material Tax, or, to the knowledge of the Company, threatened in a writing received from a Governmental Authority and (ii) neither the Company nor any of its Subsidiaries has been informed in writing by any Governmental Authority that the Governmental Authority believes that the Company or any of its Subsidiaries was required to pay any material Tax that was not paid or file a material Tax Return that was not filed.

(d) Neither the Company nor any of its Subsidiaries has granted any extension or waiver of the statute of limitations period applicable to any material Tax Return, which period (after giving effect to such extension or waiver) has not yet expired.

(e) Neither the Company nor any of its Subsidiaries (i) is or has ever been a member of a group of corporations with which it has filed (or been required to file) consolidated, combined or unitary Tax Returns, other than a group of which only the Company and its Subsidiaries are or were members or (ii) has any liability for Taxes of any Person (other than the Company or such Subsidiaries) pursuant to any Tax allocation or sharing agreement, under Treasury Regulations Section 1.1502-6 (or any similar provision of state, local or foreign law), or as a transferee or successor, by contract or otherwise.

(f) Neither the Company nor any of its Subsidiaries has been either a “distributing corporation” or a “controlled corporation” in a distribution to which Section 355 of the Code is applicable.

(g) Neither the Company nor any of its Subsidiaries have consummated or participated in, nor are currently participating in, any transaction which was or is a “tax shelter” transaction as defined in Sections 6662, 6011, or 6111 of the Code.

(h) “ Tax ” means (i) any tax, governmental fee or other like assessment or charge of any kind whatsoever (including withholding on amounts paid to or by any Person), together with any interest, penalty, addition to tax or additional amount imposed by any Governmental Authority (a “ Taxing Authority ”) responsible for the imposition of any such tax, (ii) any liability for the payment of any amounts of the type described in clause (i) of this sentence as a result of being a member of an affiliated, consolidated, combined or unitary group for a taxable period, and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this sentence as a result of being a transferee of or successor to any Person or entity. “ Tax Return ” means any report, return, document, declaration or other information or filing required to be filed with any Taxing Authority with respect to Taxes, including information returns.

Section 4.16 Employee Benefit Plans .

(a) Section 4 .16 of the Company Disclosure Schedule contains a correct and complete list identifying each “employee benefit plan” (as defined in Section 3(3) of ERISA) as of the date hereof, each employment, severance, change-in-control or similar contract, plan, practice or policy providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentive or deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits, loans, employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits, severance benefits and post-employment or retirement benefits, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise) whether formal or informal, oral or written (including compensation, pension, health, medical or life insurance benefits) which is maintained, administered or contributed to by the Company or any ERISA Affiliate of the Company and covers any current or former employee of the Company or any of its Subsidiaries, and with respect to which the Company or any of its Subsidiaries has any liability (each, a “ Company Employee Plan ”).

(b) With respect to each Company Employee Plan, the Company has provided or made available to Parent a complete and accurate copy of each Company Employee Plan and, to the extent applicable or in existence (i) the most recent IRS determination letter, (ii) any summary plan description, (iii) a summary of any proposed amendments or changes anticipated to be made to the Company Employee Plans at any time within the twelve months immediately following the date hereof and which have been communicated to employees, (iv) the three most recent annual reports (Form 5500) filed with the IRS, and all schedules attached thereto for each Company Employee Plan that is subject to ERISA and Code reporting requirements, and all material communications with participants, the IRS, the U.S. Department

of Labor, or any other Governmental Authority, administrator, trustee, beneficiary and alternate payee relating to any Company Employee Plan; and (v) each trust agreement, group annuity contract or other funding instrument, if any, relating to such Company Employee Plan.

(c) Neither the Company nor any ERISA Affiliate of the Company nor any predecessor thereof sponsors, maintains or contributes to, or has in the past sponsored, maintained or contributed to, any Company Employee Plan subject to Section 412 of the Code or Title IV of ERISA, any non-U.S. defined benefit plan, or any multiple employer plan within the meaning of Section 4063 or 4064 of ERISA. Neither the Company nor any ERISA Affiliate of the Company nor any predecessor thereof contributes to any multiemployer plan, as defined in Section 3(37) of ERISA. No Company Employee Plan is a split-dollar life insurance program or otherwise provides for loans (except for routine advances for business expenses and other items in the ordinary course) to executive officers (within the meaning of the Sarbanes-Oxley Act).

(d) Each Company Employee Plan which is intended to be qualified under Section 401(a) of the Code has received a favorable determination letter, or has pending or has time remaining in which to file, an application for such determination from the Internal Revenue Service, and the Company is not aware of any reason why any such determination letter should be revoked or not be reissued.

(e) Except as would not reasonably be expected to have a Company Material Adverse Effect, each Company Employee Plan has been maintained in substantial compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations including, but not limited to, ERISA and the Code, which are applicable to such Employee Plan.

(f) There has been no amendment to, written interpretation of or announcement by the Company relating to, or change in employee participation or coverage under, any Company Employee Plan that would increase materially the expense of maintaining such Company Employee Plan above the level of the expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof.

(g) There is no Proceeding pending, or, to the knowledge of the Company, threatened, against or involving any Company Employee Plan before any arbitrator or any Governmental Authority. No event has occurred and, to the knowledge of the Company, no condition exists that would subject the Company or its Subsidiaries, either directly or by reason of their affiliation with any ERISA Affiliate, to any Tax, fine, lien, penalty or other liability imposed by ERISA or the Code that would reasonably be expected individually or in the aggregate to have a Company Material Adverse Effect.

(h) All contributions due from the Company or a Subsidiary with respect to any of the Company Employee Plans have been made or have been accrued on a timely basis on the Company’s or on a Subsidiary’s financial statements, in all material respects, and no further contributions shall be due or shall have accrued thereunder as of the Closing Date (other than contributions accrued in the ordinary course of business, consistent with past practice, after the Company Balance Sheet Date as a result of the operations of the Company and its Subsidiaries after the Company Balance Sheet Date). No Company Employee Plan shall be

subject to any surrender fees or services fees upon termination other than the normal and reasonable administrative fees associated with the termination of benefit plans.

(i) Neither the Company nor any of its Subsidiaries is a party to any written (i) agreement with any stockholder, or any present or former director, executive officer or other key employee of the Company or any of its Subsidiaries (A) the benefits of which are contingent, or the terms of which are materially altered, upon the occurrence of a transaction involving the Company or any of its Subsidiaries of the nature of any of the transactions contemplated by this Agreement, (B) providing any term of employment or compensation guarantee or (C) providing severance benefits or other benefits after the termination of employment of such director, executive officer or key employee regardless of the reason for such termination of employment other than as required by COBRA (or similar state laws), Applicable Law, vacation pay cash-outs or other arrangements governed by ERISA or (ii) except as contemplated in Section 2 .6 of this Agreement, Company Employee Plan, any of the benefits of which will be increased, or the vesting of the benefits of which shall be accelerated or resulting in any payment to or funding of any trust, by the occurrence of any of the transactions contemplated by this Agreement 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.

(j) The Company has not established any compensation or benefit plan that is maintained or is required to be maintained or contributed to by the law, applicable custom or rule of the relevant jurisdiction outside the United States.

(k) As of the date hereof, neither the Company nor any of its Subsidiaries has made any payments or is obligated to make any payments or is a party to any agreement that could obligate it to make any payments that will be treated as an “excess parachute payment” under Section 280G of the Code or will give rise to an excise Tax pursuant to Section 4999 of the Code pursuant to the Merger or the transactions contemplated by this Agreement.

Section 4.17 Labor and Employment Matters .

(a) Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement with a labor union or organization. None of the employees of the Company or any of its Subsidiaries is represented by any union with respect to his or her employment by the Company or such Subsidiary. Except as would not reasonably be expected to have a Company Material Adverse Effect, there are no actions, claims, grievances, labor disputes or labor arbitration proceeding pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries relating to their businesses, including charges of unfair labor practices. There is no activity or proceeding by a labor union or representative thereof to the knowledge of the Company to organize any employees of the Company or any of its Subsidiaries. No lockout, strike, slowdown, work stoppage against the Company or any of its Subsidiaries is pending or, to the knowledge of the Company, threatened, nor has there been any such occurrence for the past three years.

(b) The Company has delivered or made available to Parent a true, correct and complete list of the names, positions and rates of compensation of all officers,

directors, consultants, independent contractors and employees of the Company and its Subsidiaries, showing each such person’s name, date of hire, position, work location, annual remuneration, status as exempt/non-exempt (for U.S. employees), country of citizenship (for non-U.S. employees) bonus and fringe benefits for the current fiscal year.

(c) The Company and its Subsidiaries are in compliance in all material respects with all Applicable Law and contracts relating to employment, including without limitation legal requirements relating to employment practices, anti-discrimination, immigration, wages, hours, overtime pay, meal and rest periods and occupational health and safety laws and regulations. The Company has correctly classified employees as exempt employees and nonexempt employees under the Fair Labor Standards Act and applicable state or local laws. All Persons providing services to the Company have been properly classified as employees or independent contractors, as applicable, for purposes of federal and applicable state tax laws, laws applicable to employee benefits and other Applicable Law.

(d) To the Company’s knowledge, no employee or consultant of the Company is in material violation of (i) any term of any employment or consulting Contract or (ii) any term of any other Contract or any restrictive covenant relating to the right of any such employee or consultant to be employed by the Company or to use trade secrets or proprietary information of others. To the Company’s knowledge, the employment of any employee or consultant by the Company does not subject it to any liability to any Third Party.

(e) &

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