AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

Agreement and Plan of Merger

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LOUDEYE CORP | PRIVATEER ACQUISITION CORP. | OVERPEER, INC. | SK ENERGY & CHEMICAL, INC.

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Title: AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
Governing Law: Washington Date: 3/5/2004
Industry: Software and Programming Law Firm: Procopio, Cory, Hargreaves & Savitch LLP Sector: Technology

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, Parties: loudeye corp , privateer acquisition corp. , overpeer inc. , sk energy & chemical inc.

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EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

BY AND AMONG

LOUDEYE CORP.,

PRIVATEER ACQUISITION CORP.,

OVERPEER, INC.,

SK ENERGY & CHEMICAL, INC.,

(ON BEHALF OF ITSELF AND IN ITS CAPACITY AS THE STOCKHOLDER

REPRESENTATIVE)

AND

(SOLELY FOR PURPOSES OF SECTION 5.11, SECTION 5.12 AND ARTICLE VII)

MARC MORGENSTERN, ERIC BINGHAM, VALERIAN THOMAS,

CHEOL WOONG LEE AND CHANG YOUNG LEE

MARCH 1, 2004

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TABLE OF CONTENTS

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ARTICLE I THE MERGER........................................................................ 2

1.1 The Merger. .............................................................. 2

1.2 Effective Time. .......................................................... 3

1.3 Effect of the Merger. .................................................... 3

1.4 Certificate of Incorporation and Bylaws................................... 3

1.5 Directors and Officers. .................................................. 3

1.6 Conversion of Shares...................................................... 3

1.7 Company Stock Subject to Vesting. ........................................ 5

1.8 Dissenting Shares......................................................... 6

1.9 Surrender of Certificates................................................. 6

1.10 Treatment of Company Options. ............................................ 7

1.11 Escrow of Parent Common Stock. ........................................... 7

1.12 No Further Ownership Rights in Company Capital Stock. .................... 8

1.13 Lost, Stolen or Destroyed Certificates. .................................. 8

1.14 Tax Consequences. ........................................................ 8

1.15 Accounting Treatment. .................................................... 8

1.16 Taking of Necessary Action; Further Action. .............................. 8

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND SK............................. 9

2.1 Organization of the Company. ............................................. 9

2.2 Subsidiaries. ............................................................ 9

2.3 Capital Structure......................................................... 9

2.4 Authority. ............................................................... 10

2.5 No Conflict. ............................................................. 10

2.6 Consents. ................................................................ 11

2.7 Company Financial Statements. ............................................ 11

2.8 No Undisclosed Liabilities. .............................................. 11

2.9 No Changes. .............................................................. 11

2.10 Tax Matters............................................................... 14

2.11 Restrictions on Business Activities. ..................................... 16

2.12 Title of Properties; Absence of Liens and Encumbrances; Condition of

Equipment................................................................. 16

2.13 Intellectual Property..................................................... 17

2.14 Agreements, Contracts and Commitments..................................... 22

2.15 Interested Party Transactions. ........................................... 24

2.16 Governmental Authorization. .............................................. 24

2.17 Litigation. .............................................................. 24

2.18 Accounts Receivable....................................................... 24

2.19 Minute Books. ............................................................ 25

2.20 Environmental Matters..................................................... 25

2.21 Brokers' and Finders' Fees. .............................................. 26

2.22 Employee Benefit Plans and Compensation................................... 26

2.23 Insurance. ............................................................... 29

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2.24 Compliance with Laws; Relations with Governmental Entities. .............. 30

2.25 Warranties ............................................................... 30

2.26 Complete Copies of Materials. ............................................ 30

2.27 Ownership of Capital Stock. .............................................. 30

2.28 Customer Relations. ...................................................... 31

2.29 Parent Stock Ownership. .................................................. 31

2.30 Representations Complete. ................................................ 31

2.31 Due and Diligent Inquiry. ................................................ 31

ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB................................ 31

3.1 Organization, Standing and Power. ........................................ 32

3.2 Authority. ............................................................... 32

3.3 No Conflict. ............................................................. 32

3.4 Capitalization. .......................................................... 32

3.5 SEC Filings; Financial Statements......................................... 32

3.6 Valid Issuance. .......................................................... 33

ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.............................................. 33

4.1 Conduct of Business of the Company. ...................................... 33

4.2 No Solicitation. ......................................................... 35

ARTICLE V ADDITIONAL AGREEMENTS............................................................. 36

5.1 Issuance of Parent Common Stock........................................... 36

5.2 Access to Information..................................................... 37

5.3 Confidentiality. ......................................................... 38

5.4 Public Disclosure. ....................................................... 38

5.5 Consents. ................................................................ 38

5.6 FIRPTA Compliance. ....................................................... 38

5.7 Reasonable Efforts. ...................................................... 38

5.8 Notification of Certain Matters........................................... 39

5.9 Additional Documents and Further Assurances. ............................. 39

5.10 Federal and State Securities Exemptions. Stockholder Representation

Statements ............................................................... 39

5.11 Non-Competition and Non-Solicitation...................................... 39

5.12 Agreement to Vote Shares. ................................................ 41

5.13 Closing Balance Sheet..................................................... 41

ARTICLE VI CONDITIONS TO THE MERGER......................................................... 41

6.1 Conditions to Obligations of Each Party to Effect the Merger. ............ 41

6.2 Conditions to the Obligations of Parent and Merger Sub. .................. 41

6.3 Conditions to Obligations of the Company and SK. ......................... 43

ARTICLE VII SURVIVAL OF REPRESENTATIONS AND WARRANTIES;

INDEMNIFICATION.................................................................... 44

7.1 Survival of Representations, Warranties and Covenants..................... 44

7.2 Indemnification by SK and the Company Stockholders; Escrow Fund........... 45

7.3 Limitation on Indemnification............................................. 46

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7.4 Indemnification Procedures. .............................................. 46

7.5 Stockholder Representative................................................ 47

7.6 No Contribution. ......................................................... 48

7.7 Fraud; Willful Misrepresentation. ........................................ 48

7.8 Additional Right Against Escrow........................................... 48

ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER.............................................. 49

8.1 Termination. ............................................................. 49

8.2 Effect of Termination. ................................................... 50

8.3 Expenses. ................................................................ 50

8.4 Amendment. ............................................................... 50

8.5 Extension; Waiver. ....................................................... 50

ARTICLE IX GENERAL PROVISIONS............................................................... 50

9.1 Notices. ................................................................. 50

9.2 Interpretation. .......................................................... 51

9.3 Counterparts. ............................................................ 52

9.4 Entire Agreement; Assignment. ............................................ 52

9.5 No Third Party Beneficiaries. ............................................ 52

9.6 Severability. ............................................................ 52

9.7 Other Remedies. .......................................................... 52

9.8 Governing Law; Venue...................................................... 52

9.9 Rules of Construction. ................................................... 52

9.10 Attorneys' Fees. ......................................................... 53

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INDEX OF EXHIBITS

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EXHIBIT DESCRIPTION

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Exhibit A Certificate of Merger

Exhibit B Escrow Agreement

Exhibit C Stockholder Representation Statement

Exhibit D Purchaser Representative Questionnaire

Exhibit E Form of Release

Exhibit F Affiliate Agreement

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AGREEMENT AND PLAN

MERGER AND REORGANIZATION

This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the "Agreement") is made

and entered into as of March 1, 2004, by and among Loudeye Corp., a Delaware

corporation ("Parent"); Privateer Acquisition Corp., a Delaware corporation and

a wholly-owned subsidiary of Parent ("Merger Sub"); Overpeer, Inc., a Delaware

corporation (the "Company"); SK Energy & Chemical, Inc., a Delaware corporation

("SK", and in its capacity as such, the "Stockholder Representative"); and,

solely for purposes of Section 5.11, Section 5.12 and Article VII herein, Marc

Morgenstern, Eric Bingham, Valerian Thomas, Cheol Woong Lee and Chang Young Lee

(collectively, the "Employee Stockholders").

BACKGROUND

A. The Board of Directors of each of Parent, Merger Sub, and the Company

believe it is in the best interests of their respective companies and their

respective stockholders that Parent acquire the Company through the statutory

merger of Merger Sub with and into the Company (the "Merger") and, in

furtherance thereof, have approved the Merger.

B. Pursuant to the Merger, among other things, all of the issued and

outstanding capital stock of the Company shall be acquired and converted into

the right to receive the consideration upon the terms and conditions set forth

herein.

C. The Company and SK, on the one hand, and Parent and Merger Sub, on the

other hand, desire to make certain representations, warranties, covenants and

other agreements in connection with the Merger.

D. It is intended that the Merger qualify as a tax-free reorganization

within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as

amended (the "Code"). For accounting purposes, it is intended that the Merger be

treated as a "purchase." NOW, THEREFORE, in consideration of the covenants,

promises and representations set forth in this Agreement, the parties agree as

follows:

THE MERGER

The Merger. At the Effective Time (as defined in Section 1.2 below) and

subject to and upon the terms and conditions of this Agreement and the

applicable provisions of the Delaware General Corporation Law (the "DGCL"), the

Merger Sub shall be merged with and into the Company, the separate corporate

existence of the Merger Sub shall cease, and the Company shall

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continue as the surviving corporation and as a wholly-owned subsidiary of

Parent. The Surviving Corporation after the Merger is sometimes referred to as

the "Surviving Corporation."

Effective Time. Unless this Agreement is terminated earlier pursuant to

Section 8.1, the closing of the Merger (the "Closing") will take place as

promptly as practicable after the execution and delivery hereof by the parties

hereto, but no later than five (5) business days following satisfaction or

waiver of the conditions set forth in Article VI hereof, at the offices of

Procopio, Cory, Hargreaves & Savitch LLP, 530 B Street, Suite 2100, San Diego,

California, at 10 a.m. San Diego time, unless another time and/or place is

mutually agreed upon in writing by Parent and the Company. The date upon which

the Closing actually occurs shall be referred to as the "Closing Date." On the

Closing Date, the parties shall cause the Merger to be consummated by filing the

Certificate of Merger (or like instrument), in substantially the form attached

hereto as EXHIBIT A, with the Secretary of State of the State of Delaware (the

"Certificate of Merger"), in accordance with the applicable provisions of the

DGCL (the time of acceptance by the Secretary of State of the State of Delaware

of such filing shall be referred to as the "Effective Time").

Effect of the Merger. At the Effective Time, the effect of the Merger

shall be as provided in the applicable provisions of the DGCL. Without limiting

the generality of the foregoing, and subject thereto, at the Effective Time,

except as otherwise agreed to pursuant to the terms of this Agreement, all the

property, rights, privileges, powers and franchises of the Company and Merger

Sub shall vest in the Surviving Corporation, and all debts, liabilities and

duties of the Company and Merger Sub shall become the debts, liabilities and

duties of the Surviving Corporation.

Certificate of Incorporation and Bylaws.

The Certificate of Merger shall provide that, at the Effective

Time, the certificate of incorporation of the Surviving Corporation as in effect

immediately prior to the Effective Time shall be amended as of the Effective

Time so as to contain the provisions, and only the provisions, contained

immediately prior to the Effective Time in the certificate of incorporation of

Merger Sub, except for Article I thereof, which shall continue to read "The name

of the corporation is Overpeer, Inc."

The Bylaws of Merger Sub, as in effect immediately prior to

the Effective Time, shall be the initial Bylaws of the Surviving Corporation.

Directors and Officers. Unless otherwise determined by Parent prior to

the Effective Time, the directors of Merger Sub immediately prior to the

Effective Time shall be the directors of the Surviving Corporation immediately

after the Effective Time, to serve as directors of the Surviving Corporation in

accordance with the provisions of the DGCL and the Certificate of Incorporation

and Bylaws of the Surviving Corporation until their successors are duly elected

and qualified. Unless otherwise determined by Parent prior to the Effective

Time, the officers of Merger Sub immediately prior to the Effective Time shall

be the officers of the Surviving Corporation immediately after the Effective

Time, to hold office in accordance with the provisions of the Bylaws of the

Surviving Corporation.

Conversion of Shares.

Definitions. For all purposes of this Agreement, the following

terms shall have the following respective meanings:

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"Applicable Fraction" shall be the fraction: (A)

having a numerator equal to the total number of Merger Shares, and (B) having a

denominator equal to the Fully Diluted Company Share Amount. If, between the

date that the Merger Share Price is determined and the Effective Time, the

outstanding shares of Parent Common Stock shall have been changed into a

different number of shares or a different class by reason of any

reclassification, stock split, reverse stock split, stock dividend,

recapitalization or other similar transaction, then the Applicable Fraction

shall be correspondingly adjusted.

"Company Common Stock" shall mean shares the

Company's common stock, $0.01 par value per share.

"Escrow Agent" shall mean LaSalle Bank National

Association.

"Escrow Agreement" shall mean the agreement between

the Parent, the Company, the Escrow Agent and the Stockholder Representative in

the form attached as EXHIBIT B.

"Fully Diluted Company Share Amount" shall be the sum

of (A) the aggregate number of shares of Company Common Stock outstanding

immediately prior to the Effective Time (including any shares of Company Common

Stock that are subject to a repurchase option or risk of forfeiture under any

restricted stock purchase agreement or other agreement) and (B) the aggregate

number of shares of Company Common Stock issuable pursuant to warrants, options,

convertible securities and any other rights to acquire shares of Company Common

Stock outstanding immediately prior to the Effective Time.

"GAAP" shall mean U.S. generally accepted accounting

principles, consistently applied.

"Knowledge" shall mean (i) with respect to the

Company, the actual knowledge of any of the Company's officers or directors or

any of SK's officers or directors and the knowledge that such person would have

obtained of the matter represented after due and diligent inquiry thereof under

the circumstances; and (ii) with respect to the Parent, the actual knowledge of

the Parent's officers and directors and the knowledge that such person would

have obtained of the matter represented after due and diligent inquiry thereof

under the circumstances.

"Material Adverse Effect" shall mean any change,

event or effect that is materially adverse to the business, assets, liabilities,

condition (financial or otherwise), results of operations, prospects or

capitalization of the Company.

"Merger Consideration" shall mean the consideration

receivable by the holders of capital stock of the Company (the "Company

Stockholders") that shall consist of (A) the shares of Parent Common Stock

issuable to such holders in accordance with this Agreement upon the surrender of

the certificate or certificates representing capital stock of the Company held

by such holders and (B) the right of such holders to receive cash in lieu of

fractional shares of Parent Common Stock in accordance with Section 1.9(b).

"Merger Share Price" shall mean the average of the

closing sales price of one share of Parent Common Stock as quoted on the Nasdaq

on each of the thirty (30) consecutive trading days immediately preceding the

Closing; weighted on the basis of trading volume on each such day; provided,

however, that if such average is $1.50 or less, than the Merger Share Price

shall

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be equal to $1.50, and if such average is $2.29 or more, than the Merger Share

Price shall be equal to $2.29.

"Merger Shares" shall mean shall be the number of

shares of Parent Common Stock determined by dividing $4,000,000 by the Merger

Share Price. The Merger Shares shall be appropriately adjusted to fully reflect

the effect of any stock split, reverse stock split, stock dividend,

reorganization, recapitalization or like change with respect to Parent Common

Stock occurring after the date hereof and prior to the Effective Time.

"Parent Common Stock" shall mean shares of the common

stock, $0.001 par value, of Parent.

"SEC" shall mean the U.S. Securities and Exchange

Commission.

Effect on Capital Stock. At the Effective Time, by virtue of

the Merger and without any action on the part of Merger Sub, the Company or any

Company Stockholder, each outstanding share of Company Common Stock issued and

outstanding immediately prior to the Effective Time (other than any Dissenting

Shares, as defined in Section 1.8) will be canceled and extinguished and

converted automatically into the right to receive, upon surrender of the

certificate(s) representing such stock and upon the terms and subject to the

conditions set forth in this Section 1.6 and throughout this Agreement

(including but not limited to the deposit of the Escrow Shares into the Escrow

Fund), that fraction of a share of Parent Common Stock equal to the Applicable

Fraction, it being understood that certain of the shares of Parent Common Stock

issuable pursuant to this Section 1.6(b) shall be held in escrow in accordance

with Section 1.11.

Withholding Taxes. Each of the Exchange Agent (as defined

below), Parent and the Surviving Corporation shall be entitled to deduct and

withhold from any consideration payable or otherwise deliverable pursuant to

this Agreement to any holder or former holder of Company Common Stock such

amounts as may be required to be deducted or withheld therefrom under the Code

or any provision of state, local or foreign tax law or under any other

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.

Capital Stock of Merger Sub. Each share of common stock of

Merger Sub issued and outstanding immediately prior to the Effective Time shall

be converted into and exchanged for one validly issued, fully paid and

nonassessable share of common stock of the Surviving Corporation.

Company Stock Subject to Vesting. If any Company Common Stock issued

and outstanding immediately prior to the Effective Time are unvested or are

subject to a repurchase option by the Company, risk of forfeiture or other

condition under any applicable stock restriction agreement or other agreement

with the Company, then the shares of Parent Common Stock issued in exchange for

such Company Common Stock shall also be unvested and subject to the same

repurchase option, risk of forfeiture or other condition (including any

requirement that any unvested shares be held in escrow), and the certificates

representing such shares of Parent Common Stock may accordingly be marked with

appropriate legends in the discretion of Parent.

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Dissenting Shares.

Notwithstanding any other provisions of this Agreement to the

contrary, any shares of Company Common Stock held by a Stockholder who has

exercised and perfected appraisal rights for such Company Common Stock in

accordance with Section 262 of the DGCL and who has not effectively withdrawn or

lost such appraisal rights ("Dissenting Shares"), shall not be converted into or

represent a right to receive the consideration set forth in Section 1.6 hereof,

but the holder shall only be entitled to such rights as are provided by the

DGCL.

Notwithstanding the provisions of Section 1.8(a) hereof, if

any holder of Dissenting Shares shall effectively withdraw or lose (through

failure to perfect or otherwise) such holder's appraisal rights under the DGCL,

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 set forth in Section 1.6 hereof, without

interest thereon, upon surrender of the certificate(s) representing such shares.

The Company shall give Parent (i) prompt notice of any written

demand for appraisal received by the Company pursuant to the applicable

provisions of the DGCL; and (ii) the opportunity to participate in all

negotiations and proceedings with respect to such demands. The Company shall

not, except with the prior written consent of Parent, make any payment with

respect to any such demands or offer to settle or settle any such demands. To

the extent that Parent or the Company makes any payment or payments to any

Dissenting Shares, Parent shall be entitled to recover under the terms of

Article VII hereof the aggregate amount by which such payment or payments exceed

the aggregate consideration that otherwise would have been payable in respect of

the stock of any Dissenting Shares.

Surrender of Certificates.

Exchange Agent. The Chief Financial Officer of Parent shall

serve as the exchange agent (the "Exchange Agent") for the Merger.

Exchange Procedures. As promptly as practicable after the

Effective Time, Parent shall cause the Exchange Agent to mail to each holder of

record of a certificate(s) which, immediately prior to the Effective Time,

represented outstanding Company Common Stock (the "Certificates"), whose Company

Common Stock was converted into the right to receive shares of Parent Common

Stock pursuant to Section 1.6: a letter of transmittal in customary form and

containing such provisions as the Exchange Agent may reasonably specify and

instructions for use in effecting the surrender of Certificates in exchange for

the Merger Consideration. Upon surrender of a Certificate to the Exchange Agent

for exchange, together with a duly executed letter of transmittal and such other

documents as may be reasonably required by the Exchange Agent, Exchange Agent

shall (i) deliver to the holder of such Certificate a certificate representing

85% of the number of shares of Parent Common Stock that such holder has the

right to receive pursuant to Section 1.6, and (ii) deliver to the Escrow Agent

under the Escrow Agreement on behalf of such holder a certificate in the name of

the Escrow Agent representing 15% of the number of shares of Parent Common Stock

that such holder has the right to receive pursuant to Section 1.6, provided that

the certificates representing Parent Common Stock to be delivered to the holder

of a Certificate under clause (i) above and to the Escrow Agent under clause

(ii) above shall, in each case, represent only whole shares of Parent Common

Stock and in lieu of any fractional shares to which such

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holder would otherwise be entitled, after combining any fractional interests of

such holder into as many whole shares as is possible, the holder of such

Certificate shall be paid in cash an amount equal to the sum of (1) the dollar

amount (rounded to the nearest whole cent) determined by multiplying the Merger

Share Price (as defined below) by the fraction of a share of Parent Common Stock

that would otherwise be deliverable to such holder under clause (i) above and

(2) the dollar amount (rounded to the nearest whole cent) determined by

multiplying the Merger Share Price by the fraction of a share of Parent Common

Stock that would otherwise be deliverable to the Escrow Agent under clause (ii)

above.

Distributions With Respect to Unexchanged Shares. No dividends

or other distributions declared or made after the Effective Time with respect to

Parent Common Stock with a record date after the Effective Time will be paid to

the holder of any unsurrendered Certificate with respect to the Parent Common

Stock represented thereby until the holder of record of such Certificates shall

surrender such Certificates. Subject to applicable law, following surrender of

any such Certificates, the Exchange Agent shall deliver to the record holder

thereof, without interest, certificate(s) representing whole shares of Parent

Common Stock and the cash consideration issued in exchange therefor.

Transfers of Ownership. If any certificate for shares of

Parent Common Stock is to be issued in a name other than that in which the

Certificates surrendered in exchange therefor is registered, it will be a

condition of the issuance thereof that the Certificates so surrendered will be

properly endorsed and otherwise in proper form for transfer and that the person

requesting such exchange will have paid to Parent or any agent designated by it

any transfer or other taxes required by reason of the issuance of a certificate

for shares of Parent Common Stock in any name other than that of the registered

holder of the Certificates surrendered, or established to the satisfaction of

Parent or any agent designated by it that such tax has been paid or is not

payable.

No Liability. Notwithstanding anything to the contrary in this

Section 1.9, neither the Exchange Agent, the Surviving Corporation nor any party

hereto shall be liable to a holder of shares of Company Common Stock for any

amount properly paid to a public official pursuant to any applicable abandoned

property, escheat or similar law.

Treatment of Company Options. All options to purchase Company Common

Stock issued under the Company Stock Plans shall be exercised on or prior to the

Closing Date or terminated as of the Effective Time in accordance with the

Company Option Plan (as defined below). Neither the Parent nor the Surviving

Corporation shall assume, become responsible for or otherwise assume any

obligations with respect to, any outstanding options, warrants or other rights

to purchase capital stock of the Company.

Escrow of Parent Common Stock. Upon the Closing, on behalf of the

holders of the Certificates, Parent shall deliver the shares of Parent Common

Stock to be delivered to the Escrow Agent pursuant to Section 1.9(b) (the

"Escrow Shares") to the Escrow Agent. The Escrow Agent shall deposit the Escrow

Shares into the Escrow Fund (as defined in Section 7.2(b)) for the purposes of

securing the indemnification obligations set forth in Article VII of this

Agreement. The Escrow Shares will be represented by a certificate or

certificates issued in the name of the Escrow Agent. The Escrow Fund shall be

held by the Escrow Agent for a period of one year from the Closing Date (the

"Escrow Period"); provided, however that in the event any Indemnitee has made a

claim under Article VII prior to the end of the Escrow Period, then the Escrow

Period shall continue until such

<PAGE>

claim is fully and finally resolved. Distributions of any Escrow Shares from the

Escrow Fund shall be governed by the terms and conditions of the Escrow

Agreement. In the event that this Agreement is adopted by the Company's

stockholders, then all such stockholders shall, without any further act of any

Company stockholder, be deemed to have consented to and approved (i) the use of

the Escrow Fund as collateral to secure the rights of the Indemnitees under

Article VII in the manner set forth herein and in the Escrow Agreement, and (ii)

the appointment of the Company Stockholders' Representative as the

representative under the Escrow Agreement of the Company Stockholders receiving

Merger Consideration under this Agreement and as the attorney-in-fact and agent

for and on behalf of each such Person (other than holders of Dissenting Shares).

No Further Ownership Rights in Company Capital Stock. The shares of

Parent Common Stock and the cash consideration paid in respect of the surrender

for exchange of Company Common Stock in accordance with the terms hereof

(including any cash paid with respect to fractional shares of Parent Common

Stock) shall be deemed to be in full satisfaction of all rights pertaining to

such Company Common Stock, and there shall be no further registration of

transfers on the records of the Surviving Corporation of capital stock that was

outstanding immediately prior to the Effective Time. If, after the Effective

Time, Certificates are presented to the Surviving Corporation for any reason,

they shall be canceled and exchanged as provided in this Article I.

Lost, Stolen or Destroyed Certificates. In the event any certificates

evidencing shares of Company Common Stock 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 and indemnity of that

fact by the holder thereof, such shares of Parent Common Stock and such cash

consideration as may be required pursuant to Section 1.6 hereof; provided,

however, that Parent may, in its discretion and as a condition precedent to the

issuance thereof, require the owner of such lost, stolen or destroyed

certificates to deliver a bond in such amount as it may reasonably direct

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.

Tax Consequences. For federal income tax purposes, the Merger is

intended to constitute a reorganization within the meaning of Section 368 of the

Code. The parties to this Agreement hereby adopt this Agreement as a "plan of

reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the

United States Treasury Regulations.

Accounting Treatment. For accounting purposes, the Merger is intended

to be treated as a "purchase."

Taking of Necessary Action; Further Action. If at any time after the

Effective Time any further action is necessary or desirable to carry out the

purposes of this Agreement and to vest the Surviving Corporation with full

right, title and possession to all assets, property, rights, privileges, powers

and franchises of the Company, then the officers, directors and employees of the

Company, Parent and Merger Sub are fully authorized in the name of their

respective companies or otherwise to take, and will take, all such lawful and

necessary action.

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REPRESENTATIONS AND WARRANTIES OF

THE COMPANY AND SK

The Company and SK hereby represent and warrant to Parent and Merger Sub,

subject to such exceptions as are specifically disclosed in the disclosure

schedules (referencing the appropriate section and paragraph numbers) supplied

by the Company and SK to Parent and Merger Sub and dated as of the date hereof

(the "Disclosure Schedule"), that on the date hereof and as of the Effective

Time as though made at the Effective Time as follows:

Organization of the Company. The Company is a corporation duly

organized, validly existing and in good standing under the laws of the State of

Delaware. The Company has the corporate power to own its properties and to carry

on its business as currently conducted and as currently contemplated to be

conducted. The Company is duly qualified or licensed to do business and is in

good standing as a foreign corporation in New York and in each other

jurisdiction in which it conducts business, except where the failure to be

qualified would not reasonably be expected to have a Material Adverse Effect.

The Company has delivered to Parent a true and correct copy of its Certificate

of Incorporation and Bylaws, including all amendments thereto, each of which is

in full force and effect. Section 2.1 of the Disclosure Schedule lists the

directors and officers of the Company.

Subsidiaries. The Company does not presently own or control, directly

or indirectly, any interest in any other corporation, partnership, trust, joint

venture, association, or other entity.

Capital Structure.

The authorized capital stock of the Company consists of

500,000 shares of Company Common Stock, of which 102,000 shares have been issued

and are outstanding as of the date of this Agreement. There are no authorized

shares of preferred stock. All of the outstanding shares of Company Common Stock

have been duly authorized and validly issued, and are fully paid and

non-assessable. All outstanding shares of Company Common Stock and all

outstanding Company Options, have been issued and granted in compliance with (i)

all applicable securities laws and other applicable legal requirements, and (ii)

all requirements set forth in applicable Contracts (as defined below). Section

2.3(a) of the Disclosure Schedule provides an accurate and complete description

of the terms of each repurchase option which is held by the Company and to which

any shares of capital stock of the Company is subject.

The Company has reserved 25,000 shares of Company Common Stock

for issuance under the Company's 2002 Stock Option and Stock Grant Plan (the

"Company Option Plan"), of which options to purchase 21,513 shares have been

granted as of the date of this Agreement. All options to purchase capital stock

of the Company that have been granted under the Company Stock Option Plan or

otherwise since the Company's inception (the "Company Options") are set forth in

Section 2.3(b) of the Disclosure Schedule, including: (i) the name of the person

granted such Company Option; (ii) the total number of shares of stock that were

subject to such Company Option; and (iii) the date on which such Company Option

was granted and the term of such Company Option. Except as set forth in Section

2.3(b) of the Disclosure Schedule, there is no: (i) outstanding subscription,

option, call, warrant or right (whether or not currently exercisable) to

<PAGE>

acquire any shares of capital stock or other securities of the Company; (ii)

outstanding security, instrument or obligation that is or may become convertible

into or exchangeable for any shares of capital stock or other securities of the

Company; (iii) contract or other arrangement under which the Company is or may

become obligated to sell or otherwise issue any shares of its capital stock or

any other securities of the Company; or (iv) condition or circumstance that may

give rise to or provide a basis for the assertion of a claim by any person or

entity to the effect that such person or entity is entitled to acquire or

receive any shares of capital stock or other securities of the Company.

The requisite vote required to approve the Merger under

applicable law, the Company's Certificate of Incorporation, Bylaws and any other

agreement to which the Company or any other Stockholder of the Company is bound

is as follows: (i) approval by at least five of the Company's seven directors,

and (ii) approval by the holders of a majority of the outstanding Company Common

Stock.

Authority. The Company and SK have all requisite power and authority to

enter into this Agreement and any Related Agreement (as defined below) to which

they are party and to consummate the transactions contemplated hereby and

thereby. The execution and delivery of this Agreement, any Related Agreement to

which the Company and/or SK is party and the consummation of the transactions

contemplated hereby and thereby have been duly authorized by all necessary

corporate action on the part of the Company and/or SK, as applicable. No further

action is required on the part of the Company or SK to authorize the Agreement,

any Related Agreement to which they are a party and the transactions

contemplated hereby and thereby, subject only to the approval of this Agreement

and the transactions contemplated hereby by the Company Stockholders. This

Agreement, any Related Agreement to which the Company is a party and the Merger

have been unanimously approved by the board of directors of the Company, and the

board of directors have recommended to the Company Stockholders to vote in favor

of this Agreement, the Merger and the transactions contemplated thereby. This

Agreement and any Related Agreement to which the Company and/or SK is a party

has been duly executed and delivered by the Company and/or SK, as the case may

be, and assuming the due authorization, execution and delivery by the other

parties hereto and thereto, constitute the valid and binding obligations of the

Company and SK, enforceable against each such party in accordance with their

respective terms, except as such enforceability may be subject to the laws of

general application relating to bankruptcy, insolvency and the relief of debtors

and rules of law governing specific performance, injunctive relief or other

equitable remedies. For the purposes of this Agreement, the term "Related

Agreements" shall mean the Escrow Agreement, the Employment Offer Letters, in

substantially the forms previously provided by Parent to the Company (together,

the "Employment Offer Letters"), the Stockholder Representation Statement

substantially in the form attached hereto as EXHIBIT C (the "Stockholder

Representation Statement"), the Purchaser Representation Questionnaire

substantially in the form attached hereto as EXHIBIT D (the "Purchaser

Representation Questionnaire"), the Release substantially in the form attached

hereto as EXHIBIT E (the "Release"), the Affiliate Agreement substantially in

the form attached hereto as EXHIBIT F (the "Affiliate Agreement"), the

Certificate of Merger, and any other agreements to which the Company and/or SK

is a party that is entered into in order to consummate the transactions

contemplated hereby or thereby.

No Conflict. The execution and delivery by the Company and SK of this

Agreement and any Related Agreement to which the Company and/or SK is a party,

and the consummation of the transactions contemplated hereby and thereby, will

not conflict with or result in any violation of or default under (with or

without notice or lapse of time, or both) or give rise to a right of

termination,

<PAGE>

cancellation, modification or acceleration of any obligation or loss of any

benefit under (any such event, a "Conflict"): (i) any provision of the

Certificate of Incorporation or Bylaws of the Company, each as amended to date;

(ii) any Contract (as defined in Section 2.14(b) below) to which the Company is

a party, or to which SK is subject; or (iii) any judgment, order, decree,

statute, law, ordinance, rule or regulation applicable to the Company, or any of

its properties or assets, or applicable to SK.

Consents. No consent, waiver, approval, order or authorization of, or

registration, declaration or filing with any court, administrative agency or

commission or other federal, state, county, local or other foreign governmental

authority, instrumentality, agency, commission, military division or department,

inspectorate, minister, ministry or public or statutory person (whether

autonomous or not) thereof (or of any political subdivision thereof) (each, a

"Governmental Entity") or any third party, including a party to any agreement

with the Company (so as not to trigger any Conflict), is required by or with

respect to the Company or SK in connection with the execution and delivery of

this Agreement, any of the Related Agreements to which the Company or SK is a

party, or the consummation of the transactions contemplated hereby or thereby,

except for: (i) such consents, waivers, approvals, orders, authorizations,

registrations, declarations and filings as may be required under applicable

securities laws; (ii) the filing of the Certificate of Merger with the Secretary

of State of the State of Delaware; and (iii) the approval of this Agreement and

the transactions contemplated hereby by the Company Stockholders.

Company Financial Statements. Section 2.7 of the Disclosure Schedule

sets forth (i) the Company's unaudited balance sheet as of December 31, 2002,

and the related unaudited statements of income and cash flow for the year ended

December 31, 2002; (ii) the Company's unaudited balance sheet as of December 31,

2003, and the related unaudited statement of income and cash flow for the twelve

month period ended December 31, 2003; and (iii) the Company's unaudited balance

sheet as of January 31, 2004, and the related unaudited statement of income for

the one month period ended January 31, 2004 (collectively, the "Financials").

The Financials are correct in all material respects and have been prepared in

accordance with GAAP consistently applied throughout the periods indicated and

consistent with each other. The Financials present fairly the financial

condition, operating results and cash flows of the Company (and its

predecessors) as of the dates and during the periods indicated therein. The

Company's unaudited balance sheet as January 31, 2004 is referred to hereinafter

as the "Current Balance Sheet". The Company maintains and will continue, prior

to the Effective Time, to maintain a standard system of accounting established

and administered in accordance with GAAP.

No Undisclosed Liabilities. The Company has no liability, indebtedness,

obligation, expense, claim, deficiency, guaranty or endorsement of any type,

whether accrued, absolute, contingent, matured, unmatured or other (whether or

not required to be reflected in financial statements in accordance with GAAP),

which individually or in the aggregate (i) has not been adequately reflected in

the Current Balance Sheet; or (ii) has not arisen in the ordinary course of

business consistent with past practices since January 31, 2004, and which are

not, individually or in the aggregate, material.

No Changes. Except as set forth on Section 2.9 of the Disclosure

Schedule, since December 31, 2002, there has not been, occurred or arisen any of

the following with respect to the Company:

transaction except in the ordinary course of business

consistent with past practices;

<PAGE>

amendments or changes to the organizational documents of the

Company;

capital expenditure or capital expenditure commitment

exceeding $10,000 individually or $20,000 in the aggregate;

payment, discharge or satisfaction, in any amount in excess of

$10,000 in any one case, or $20,000 in the aggregate, of any claim, liability or

obligation (absolute, accrued, asserted or unasserted, contingent or otherwise),

other than payment, discharge or satisfaction in the ordinary course of business

of liabilities reflected or reserved against in the Current Balance Sheet;

destruction of, damage to or loss of any material assets or

material business or loss of any material customer (whether or not covered by

insurance);

labor trouble or claim of wrongful discharge or other unlawful

labor practice or action;

change in accounting methods or practices (including any

change in depreciation or amortization policies or rates) other than as required

by GAAP;

change in any election in respect of Taxes (as defined below),

adoption or change in any accounting method in respect of Taxes, agreement or

settlement of any claim or assessment in respect of Taxes, or extension or

waiver of the limitation period applicable to any claim or assessment in respect

of Taxes;

revaluation by the Company of any of its assets;

declaration, setting aside or payment of a dividend or other

distribution (whether in cash, stock or property) in respect of any share of

capital stock, or any split, combination or reclassification in respect of any

share of capital stock, or any issuance or authorization of any issuance of any

other securities in respect of, in lieu of or in substitution for any share of

capital stock, or any direct or indirect repurchase or redemption of any share

of capital stock (or options or other rights convertible into, exercisable or

exchangeable therefor);

increase in the salary or other compensation (cash, equity or

otherwise) payable or to become payable to any officers, directors, employees or

advisors, or the declaration, payment or commitment or obligation of any kind

for the payment of a severance payment, termination payment, bonus or other

additional salary or compensation (cash, equity or otherwise) to any such

person, in any amount in excess of $10,000 in any one case, or $20,000 in the

aggregate;

agreement, contract, covenant, instrument, lease, license or

commitment to which the Company is party or by which it or any of its assets are

bound or any termination, extension, amendment or modification of the terms of

any agreement, contract, covenant, instrument, lease, license or commitment to

which the Company is party or by which it or any of its assets are bound, in any

amount in excess of $10,000 in any one case, or $20,000 in the aggregate;

sale, lease or other disposition of any of the material assets

or material properties or any creation of any security interest in such material

assets or material properties;

<PAGE>

loan to any person or entity, incurring by the Company of any

indebtedness, guaranteeing of any indebtedness, issuance or sale of any debt

securities or guaranteeing of any debt securities of others, except for advances

to employees for travel and business expenses in the ordinary course of business

consistent with past practices that are set forth on Section 2.9(n) of the

Disclosure Schedule or with respect to indebtedness in a principal amount not in

excess of $10,000 in any one case, or $20,000 in the aggregate;

waiver or release of any right or claim, including any

write-off or other compromise of any account receivable in any amount in excess

of $10,000 in any one case, or $20,000 in the aggregate;

the commencement, settlement, notice or threat of any lawsuit

or proceeding or other investigation against the Company or its affairs, or any

reasonable basis for any of the foregoing;

notice to the Company, nor its directors, officers or managers

or advisors of any claim or potential claim of ownership by any person other

than the Company of the Company Intellectual Property (as defined in Section

2.13 below) owned by or developed or created by the Company or of infringement

by the Company of any other person's Intellectual Property (as defined in

Section 2.13 below);

issuance or sale, or contract to issue or sell, of any capital

stock, or any securities, warrants, options or rights to purchase any of the

foregoing;

any (i) sale or license of any Company Intellectual Property

or entering into of any agreement with respect to the Company Intellectual

Property with any person or entity or with respect to the Intellectual Property

of any person or entity; (ii) purchase or license of any Intellectual Property

or entering into of any agreement with respect to the Intellectual Property of

any person or entity, (iii) agreement with respect to the development of any

Intellectual Property with a third party, or (iv) change in pricing or royalties

set or charged by the Company to its customers or licensees or in pricing or

royalties set or charged by persons who have licensed Intellectual Property to

the Company;

agreement or modification to any agreement pursuant to which

any other party was granted marketing, distribution, development or similar

rights of any type or scope with respect to any products or technology of the

Company;

hiring or termination of employees;

event or condition of any character that has had or is

reasonably likely to have a Material Adverse Effect; or

agreement by the Company or any officer, manager or employee

thereof on behalf of the Company to do any of the things described in the

preceding clauses (a) through (v) (other than negotiations with Parent and its

representatives regarding the transactions contemplated by this Agreement).

<PAGE>

Tax Matters.

Definition of Taxes. For the purposes of this Agreement, the

term "Tax" or, collectively, "Taxes" shall mean: (i) any and all federal, state,

local and foreign taxes, assessments and other governmental charges, duties,

impositions and liabilities, including taxes based upon or measured by gross

receipts, income, profits, capital gains, capital stock, sales, use and

occupation, and value added, ad valorem, transfer, franchise, withholding,

payroll, recapture, employment, stamp, excise and property taxes, together with

all interest, penalties and additions imposed with respect to such amounts

(whether payable directly or by withholding, and whether or not requiring the

filing of a Return (defined below)); (ii) any liability for the payment of any

amounts of the type described in clause (i) above as a result of being a member

of an affiliated, consolidated, combined or unitary group for any period; and

(iii) any liability for the payment of any amounts of the type described in

clauses (i) or (ii) above as a result of any express or implied obligation to

indemnify any other person or as a result of any obligations under any

agreements or arrangements with any other person with respect to such amounts

and including any liability for taxes of a predecessor entity.

Tax Returns and Audits.

Each member of the Group (as defined below) has

prepared and timely filed all required federal, state, local and foreign

returns, estimates, information statements and reports ("Returns") relating to

any and all Taxes concerning or attributable to itself or its operations and

such Returns are true and correct and have been completed in accordance with

applicable law. For purposes of this Section 2.10, "Group" means, individually

and collectively, (i) the Company, (ii) any subsidiaries of the Company, and

(iii) any individual, trust, corporation, partnership or any other entity as to

which the Company is liable for Taxes incurred by such individual or entity

either as transferee, or pursuant to Treasury Regulation 1.1502-6, or pursuant

to any other foreign, federal, state or local statute, law or regulation.

Each member of the Group (A) has timely paid all

Taxes it is required to pay and withheld and properly remitted with respect to

its employees (and timely paid over to the appropriate Taxing authority) all

federal and state income taxes, Federal Insurance Contribution Act, Federal

Unemployment Tax Act and other Taxes of any kind or nature required to be

withheld, and (B) has accrued on the Current Balance Sheet all Taxes

attributable to the periods preceding the Current Balance Sheet and will not

have incurred any liability for Taxes for the period commencing after the date

of the Current Balance Sheet and ending immediately prior to the Effective Time,

other than in the ordinary course of business.

No member of the Group has been delinquent in the

payment of any Tax, nor is there any Tax deficiency or adjustment outstanding,

assessed or proposed against any member of the Group, nor has any member of the

Group executed any waiver of any statute of limitations on or extending the

period for the assessment or collection of any Tax.

No audit or other examination of any Return of any

member of the Group is presently in progress, nor has any member of the Group

been notified of any request for such an audit or other examination.

<PAGE>

The Company has made available to Parent, its legal

counsel and its accountants, copies of all Returns filed by each member of the

Group for all periods since its inception.

There are (and immediately following the Effective

Time there will be) no liens, pledges, charges, claims, restrictions on

transfer, mortgages, security interests or other encumbrances of any sort

(collectively, "Liens") on the assets of any member of the Group relating or

attributable to Taxes other than Liens for Taxes not yet due and payable.

The Company has no Knowledge of any basis for the

assertion of any claim for Taxes, which, if adversely determined, would result

in any Lien on the assets of the Company.

The Company has not (a) ever been a member of an

affiliated group (within the meaning of Code Section 1504(a)) filing a

consolidated federal income Tax return (other than a group the common parent of

which was Company), (b) ever been a party to any Tax sharing, indemnification or

allocation agreement, or owe any amount under any such agreement (c) any

liability for the Taxes of any person under Treas. Reg. Section 1.1502-6 (or any

similar provision of state, local or foreign law), as a transferee or successor,

by contract, or otherwise and (d) ever been a party to any joint venture,

partnership or other agreement that could be treated as a partnership for Tax

purposes.

No member of the Group 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.

No member of the Group has engaged in a transaction

that is the same 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).

The Company has not disposed of any property in a

transaction being accounted for under the installment method pursuant to Section

453 of the Code.

The Company (i) has not agreed nor is required to

make any adjustment pursuant to Section 481 of the Code by reason of a change in

accounting methods or otherwise; (ii) has no knowledge that any taxing authority

has proposed any such adjustment or change, which proposal is currently pending;

and (iii) does not have an application pending with any taxing authority

requesting permission for any change in accounting methods that relate to its

business and operations.

No power of attorney has been granted by the Company

with respect to any matter relating to Taxes, which power of attorney is

currently in force.

The Company has never been (i) a "passive foreign

investment company," (ii) a "foreign personal holding company," (iii) a "foreign

sales corporation," (iv) a "foreign investment company," or (v) a person other

than a United States person, each within the meaning of the Code.

The Company does not own "corporate acquisition

indebtedness" within the meaning of Section 279 of the Code.

<PAGE>

No property of the Company is "tax-exempt use

property" within the meaning of Section 168 of the Code.

Executive Compensation Tax. There is no contract, agreement,

plan or arrangement to which any member of the Group is a party, including,

without limitation, the provisions of this Agreement, covering any employee or

former employee of any member of the Group, which, individually or collectively,

could give rise to the payment of any amount that would not be deductible

pursuant to Sections 280G or 404 of the Code.

Restrictions on Business Activities. Except as is described in Section

2.11 of the Disclosure Schedule, there is no agreement (noncompete or

otherwise), commitment, judgment, injunction, order or decree to which the

Company is a party or otherwise binding upon the Company, which has or may

reasonably be expected to have the effect of prohibiting or impairing any

business practice, any acquisition of property, the conduct of business or

otherwise limiting the freedom of the Company to engage in any line of business

or to compete with any person. Without limiting the generality of the foregoing,

the Company has not entered into any agreement under which it is restricted from

selling, licensing or otherwise distributing any of its technology or products

to, or providing services to, customers or potential customers or any class of

customers, in any geographic area, during any period of time or in any segment

of the market, except as is described in Section 2.11 of the Disclosure

Schedule.

Title of Properties; Absence of Liens and Encumbrances; Condition of

Equipment.

The Company does not own any real property, or has never owned

any real property. Section 2.12(a) of the Disclosure Schedule sets forth a list

of all real property currently leased by the Company, the name of the lessor,

the date of the lease and each amendment thereto and, with respect to any

current lease, the aggregate annual rental payable under any such lease. All

such current leases are in full force and effect, are valid and effective in

accordance with their respective terms, and there is no, under any of such

leases, existing default or event of default (or event which with notice or

lapse of time, or both, would constitute a default) by the Company, or to the

Knowledge of the Company, by any other party.

The Company has good and valid title to, or, in the case of

leased properties and assets, valid leasehold interests in, all of its tangible

properties and assets, real, personal and mixed, used or held for use in its

business, free and clear of any Liens, except: (i) as reflected in the Current

Balance Sheet; (ii) Liens for Taxes not yet due and payable; and (iii) such

imperfections of title and encumbrances, if any, which do not detract materially

from the value or interfere materially, or interfere with the present use, of

the property subject thereto or affected thereby.

Section 2.12(c) of the Disclosure Schedule lists all material

items of equipment (the "Equipment") owned or leased by the Company. Such

Equipment is (i) adequate for the conduct of the business as currently conducted

and as currently contemplated to be conducted; and (ii) in good operating

condition, regularly and properly maintained, subject to normal wear and tear.

The Company has sole and exclusive ownership, free and clear

of any Liens, of all customer lists, customer contact information, customer

correspondence and customer licensing and purchasing histories relating to its

current and former customers (the "Customer Information"). No

<PAGE>

person other than the Company possesses any claims or rights with respect to use

of the Customer Information.

Intellectual Property.

Definitions. For all purposes of this Agreement, the following

terms shall have the following respective meanings:

"Intellectual Property" means all intellectual

property rights arising from or associated with the following, whether

protected, created or arising under the laws of the United States or any other

jurisdiction:

trade names, registered and unregistered

trademarks and service marks, Internet domain names, and trade dress rights, and

all applications (including intent to use applications) to register any of the

foregoing (collectively, "Marks");

know-how, inventions, discoveries,

improvements, concepts, ideas, methods, processes, designs, plans, schematics,

drawings, source code, interpreted instruction sets, formulae, technical data,

specifications, research and development information, data bases, and all

technology, whether patentable or not, and any patents or models, industrial

designs and all applications and applications to register any of the foregoing,

including any and all continuation, divisional, continuation-in-part,

reexamination and reissue patent applications, and any patents issuing therefrom

and all foreign counterparts thereof (collectively, "Patents");

source code, interpreted instruction sets,

user manuals, administration manuals, product brochures, web pages, and all

original works of authorship, whether copyrightable or not, and all

registrations and applications for copyright (collectively, "Copyrights");

know-how, inventions, discoveries,

improvements, concepts, ideas, methods, processes, designs, plans, schematics,

drawings, source code, interpreted instruction sets, formulae, technical data,

specifications, research and development information, data bases and other

proprietary or confidential information, including customer lists, technology

and product roadmaps, business and marketing plans and information, financial

information (collectively, "Trade Secrets");

mask work and similar rights, including

rights created under Sections 901-914 of Title 17 of the United States Code,

including all registrations and applications to register any of the foregoing,

and any other rights protecting integrated circuit or chip topographies or

designs (collectively, "Mask Works"); and

moral rights, publicity rights and any other

proprietary, intellectual or industrial property or similar intangible rights of

any kind or nature that do not comprise or are not protected by Marks, Patents,

Copyrights, Trade Secrets or Mask Works (collectively, "Other IP").

"Company Intellectual Property" means any

Intellectual Property that is owned by, controlled by or exclusively licensed to

the Company.

"Company Products" means all products sold, licensed,

leased or delivered by the Company, including all source code for any software

products and all services provided by or through the Company on or prior to the

Closing Date.

<PAGE>

"Company Software" shall mean any software (including

firmware and other software embedded in hardware devices, source code, compiled

programs, interpreted instruction sets, scripts, makefiles, and the like) owned,

developed (or currently being developed) for internal or commercial use, used,

marketed, distributed, licensed or sold by the Company at any time (other than

non-customized third-party software licensed to the Company for internal use on

a non-exclusive basis).

"Scheduled Intellectual Property" shall mean (A) any

Company Intellectual Property; and (B) any other Intellectual Property that is

used or contemplated to be used in connection with the business of the Company,

or that is licensed to the Company (other than non-customized third-party

software licensed to the Company for internal use on a non-exclusive basis), the

use or ownership of which is material, or reasonably expected to be material to

the business and operations of the Company.

"Registered Intellectual Property" shall mean

Intellectual Property that have been issued registered, filed, certified or

otherwise perfected by recordation or currently pending with any state,

government or other public legal authority anywhere in the world.

"Technology" shall mean: (A) the Company Products

provided or proposed to be provided by the Company in connection with its

business; or (B) the technology, tools, materials, products and services used

and/or proposed to be used in the operation of the business of the Company.

Section 2.13(b) of the Disclosure Schedule contains an

accurate and complete list of all Scheduled Intellectual Property. The Company

owns or has the right to use, as currently used or anticipated to be used, all

Scheduled Intellectual Property, including the manufacture, marketing and

distribution of the Company Products.

Section 2.13(c) of the Disclosure Schedule contains an

accurate and complete list of all Registered Intellectual Property that is

owned, controlled or exclusively licensed to the Company, specifying as to each

the nature of such right, any jurisdiction that has issued a registration with

respect thereto or in which an application for such a registration is pending,

and any applicable registration or application number. Section 2.13(c) of the

Disclosure Schedule also contains an accurate and complete list of all outside

counsel (including patent and trademark agents), and contact information

therefor, who are responsible for the prosecution or registration of Registered

Intellectual Property scheduled in Section 2.13(c), specifying the particular

Registered Intellectual Property for which each such outside counsel is so

responsible. Each item of Registered Intellectual Property that is owned,

controlled or exclusively licensed to the Company is valid and subsisting, and

all necessary registration, maintenance and renewal fees in connection with such

Registered Intellectual Property have been paid and all necessary documents and

certificates in connection with such Registered Intellectual Property have been

filed with the relevant authorities in the United States or foreign

jurisdictions, as the case may be. All Patents, Marks, and Copyrights listed in

the Section 2.13(c) of the Disclosure Schedule are valid, enforceable and in

full force and were prosecuted (or registered, as applicable) in good faith, and

all prosecutions for any Registered Intellectual Property are proceeding in the

ordinary course and no party responsible for any such prosecution will cease or

delay such prosecution upon Closing.

<PAGE>

Section 2.13(d) of the Disclosure Schedule contains an

accurate and complete list of all licenses, sublicenses and other agreements,

including source code escrow agreements, pursuant to which any person other than

the Company is authorized to use any Company Intellectual Property or authorized

to obtain any Company Intellectual Property under any circumstances. The Company

has not transferred ownership of, or granted any exclusive license of or

exclusive right to use, or authorized the retention of any exclusive rights to

use or joint ownership of, any Intellectual Property that is or was Company

Intellectual Property, to any other person or entity. All Company Intellectual

Property, is free and clear of any Liens or other encumbrances.

Section 2.13(e) of the Disclosure Schedule contains an

accurate and complete list of all licenses, sublicenses and other agreements as

to which the Company is a party and pursuant to which the Company is authorized

to use any Scheduled Intellectual Property owned or otherwise controlled by any

third party. The Company has not granted an exclusive license in any such

Scheduled Intellectual Property, and the Company has not agreed to license or

sublicense any Scheduled Intellectual Property, except as described in Section

2.13(e) of the Disclosure Schedule.

To the extent that any Scheduled Intellectual Property has

been developed or created independently or jointly by any person other than the

Company for which the Company has, directly or indirectly, paid or otherwise

sought to obtain rights thereon, the Company has obtained a written, valid and

enforceable assignment sufficient to irrevocably transfer all rights in such

Intellectual Property to the Company and, to the maximum extent provided for by,

and in accordance with, applicable laws and regulations, the Company is the sole

and exclusive owner of, all such Intellectual Property and the Company has

recorded each such assignment with the relevant governmental authorities,

including the U.S. Patent & Trademark Office, the U.S. Copyright Office, or

their respective equivalents in any relevant foreign jurisdiction, as the case

may be. No person who has licensed Intellectual Property to, or provided

Technology to, the Company has ownership rights or license rights to

improvements or enhancements made by the Company in such Intellectual Property

or Technology.

The Company has taken reasonable steps sufficient to secure

and protect for the Company's benefit all Company Intellectual Property,

including without limitation reasonable steps sufficient to safeguard and

maintain the secrecy and confidentiality of the Company Intellectual Property

not otherwise protected by Mark, Patent, Mask Work, or Copyright. Without

limitation on the generality of the foregoing and except as set forth in Section

2.13(g) of the Disclosure Schedule, the Company has obtained confidentiality and

inventions assignment agreements, in sufficient form that have protections and

conditions substantially similar in effect to those forms previously provided to

Parent by Company, from all of the past and present employees, independent

contractors and consultants of the Company involved in the creation or

development of Company Intellectual Property. No independent contractor or

consultant who has performed services related to the Company's business has (or

upon Closing, will have) any right, title, or interest in any Scheduled

Intellectual Property.

The Scheduled Intellectual Property constitutes all the

Intellectual Property used in and/or necessary to conduct the business of the

Company as it currently is conducted or is currently contemplated to be

conducted, including without limitation the design, development, manufacture,

use, import and sale of Company Products and Technology (including Company

Products and Technology currently under development), except for such Company

Intellectual Property that is not material, or reasonably expected to be

material, to the business or operations of the Company.

<PAGE>

There are no contracts, licenses or agreements between the

Company and any other person with respect to Scheduled Intellectual Property

under which there is any dispute regarding the scope of such agreement, or

performance under such agreement including with respect to any payments to be

made or received by the Company thereunder. There are no actions that must be

taken by the Company within sixty (60) calendar days of the Closing, including

the payment of any registration, maintenance or renewal fees or the filing of

any documents, applications or certificates for the purposes of maintaining,

perfecting or preserving or renewing any such Scheduled Intellectual Property.

Neither this Agreement nor the transactions contemplated by

this Agreement, including the assignment to Parent by operation of law or

otherwise (to the extent that such transactions are deemed to effect such

assignment) of any contracts or agreements to which the Company is a party, will

result in: (i) Parent, Merger Sub or the Company granting to any third party any

right to any Intellectual Property or Technology owned by, controlled by, or

licensed to, any of Parent, Merger Sub or the Company; (ii) Parent, Merger Sub

or the Company being bound by, or subject to, any non-compete or other material

restriction on the operation or scope or its respective businesses; or (iii)

Parent, Merger Sub or the Company being obligated to pay any royalties or other

material amounts to any third party in excess of those payable by any of Parent,

Merger Sub or the Company, respectively, in the absence of this Agreement or the

transactions contemplated hereby. The execution, delivery, and performance of

this Agreement, and the consummation of the transactions contemplated hereby,

will not: (1) breach, violate, conflict with or otherwise adversely affect any

agreement governing any Scheduled Intellectual Property (including any licenses

to use the Scheduled Intellectual Property); (2) affect any rights or

obligations with respect to the Scheduled Intellectual Property, including the

scope of any licenses thereof or the terms and conditions under which any such

Scheduled Intellectual Property may be used; (3) cause the forfeiture or

termination or give rise to a right of forfeiture or termination of any

Scheduled Intellectual Property; (4) in any way impair the right of Parent to

use any Scheduled Intellectual Property as currently used or anticipated to be

used; (5) in any way impair the right of Parent to bring any action for the

unauthorized use or disclosure, infringement or misappropriation of Company

Intellectual Property; or (6) in any way require the delivery to any third party

or give the right to receive by any third party any source code related to any

Company Products.

To the Knowledge of the Company, no person is infringing or

misappropriating any Company Intellectual Property. The operation of the

business of the Company as it currently is conducted or is currently

contemplated to be conducted, including but not limited to the design,

development, use, import, manufacture and sale of the Company Products and

Technology (including products, technology or services currently under

development) has not, does not and will not infringe or misappropriate the

Intellectual Property of any person, violate the rights of any person (including

rights to privac

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