AMENDED AGREEMENT AND PLAN OF MERGER

Agreement and Plan of Merger

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3M COMPANY, | STEELER MERGER CORPORATION, | STEELER MERGER LLC | HIGHJUMP SOFTWARE, INC.

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Title: AMENDED AGREEMENT AND PLAN OF MERGER
Governing Law: Minnesota Date: 2/6/2004
Industry: Conglomerates Law Firm: Dorsey & Whitney LLP Sector: Conglomerates

AMENDED

AGREEMENT AND PLAN OF MERGER
, Parties: 3m company , steeler merger corporation , steeler merger llc , highjump software inc.

Exhibit 2.1

EXECUTION COPY

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AMENDED

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

3M COMPANY,

STEELER MERGER CORPORATION,

STEELER MERGER LLC

AND

HIGHJUMP SOFTWARE, INC.

Dated as of January 14, 2004

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TABLE OF CONTENTS

PAGE

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

1.01. Merger..........................................................2

1.02. Effective Time of the Merger....................................2

1.03. Articles of Incorporation and Bylaws of the Surviving

Corporation.....................................................2

1.04. Board of Directors and Officers of the Surviving

Corporation.....................................................2

1.05. Conversion of Shares; Merger Consideration......................3

1.06. Additional Consideration........................................5

1.07. Appraisal Rights................................................5

1.08. Stock Options...................................................6

1.09. Payment for Shares..............................................6

1.10. Distribution of Cash Flow Holdback..............................7

1.11. No Further Rights or Transfers..................................8

1.12. Tax Treatment...................................................8

ARTICLE II CLOSING............................................................9

2.01. Generally.......................................................9

2.02. Deliveries at the Closing.......................................9

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................9

3.01. Organization, Standing, Qualification...........................9

3.02. Capitalization.................................................10

3.03. Authorization and Execution....................................10

3.04. No Conflicts...................................................11

3.05. Financial Statements...........................................11

3.06. Absence of Certain Changes or Events...........................12

3.07. Tax Matters....................................................12

3.08. Real Property..................................................14

3.09. Title to Properties............................................15

3.10. Material Contracts.............................................15

3.11. Intellectual Property..........................................16

3.12. Litigation.....................................................20

3.13. Permits, Licenses, Authorizations; Compliance with Laws........20

3.14. Retirement and Benefit Plans...................................20

3.15. Employees......................................................22

3.16. Environmental Matters..........................................24

3.17. Insurance......................................................25

3.18. Customer Relationships.........................................25

3.19. Product Warranty...............................................26

3.20. Conditions Affecting Business..................................26

3.21. No Brokers or Finders..........................................26

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3.22. Disclosure.....................................................26

3.23. Sole Representations and Warranties............................26

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUBSIDIARY....27

4.01. Organization, Good Standing, Equity Ownership..................27

4.02. Authorization and Execution....................................27

4.03. No Conflicts...................................................27

4.04. Litigation.....................................................28

4.05. SEC Filings; Financial Statements..............................28

4.06. No Brokers or Finders..........................................28

4.07. Interim Operations of Merger Subsidiary........................28

4.08. Sole Representations and Warranties............................29

ARTICLE V CONDUCT AND TRANSACTIONS PRIOR TO THE EFFECTIVE TIME...............29

5.01. Operation of Business of the Company Until Effective Time......29

5.02. Shareholder Approval...........................................30

5.03. No Shopping....................................................30

5.04. Access to Information..........................................31

5.05. Confidentiality Agreement......................................31

5.06. Deposit of Escrowed Funds......................................31

5.07. Reasonable Efforts.............................................31

5.08. Amendment of Disclosure Schedules..............................31

5.09. Employment Agreements..........................................32

5.10. Incentive Programs.............................................32

5.11. Retention Program..............................................32

5.12. Registration and Listing of Shares.............................32

5.13. Restrictive Legend on Shares...................................32

5.14. Taxes on Transfer..............................................33

5.15. Conditions to Parent's Obligation to File Registration

Statement......................................................33

5.16. Investment Representations.....................................33

5.17. Stock Ownership Plan...........................................33

5.18. Non-Solicitation Agreements....................................34

5.19. Redemption of Shares...........................................34

5.20. Resignation of Employees.......................................34

ARTICLE VI CONDITIONS PRECEDENT..............................................34

6.01. Conditions to the Obligations of Parent and Merger Subsidiary..34

6.02. Conditions to the Obligations of the Company...................36

ARTICLE VII CONDUCT AND TRANSACTIONS AFTER THE EFFECTIVE TIME................37

7.01. Indemnification................................................37

7.02. Directors and Officers Liability Insurance.....................37

7.03. Confidentiality................................................37

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7.04. Employment Following Effective Time............................38

7.05. Completion of Merger between New LLC and the Company...........38

ARTICLE VIII TERMINATION AND ABANDONMENT.....................................38

8.01. Generally......................................................38

8.02. Procedure and Effect of Termination and Abandonment............39

ARTICLE IX SHAREHOLDER REPRESENTATIVE........................................39

9.01. Designation....................................................39

9.02. Authority......................................................39

9.03. Resignation....................................................40

9.04. Reliance by Third Parties on the Shareholder Representative's

Authority......................................................40

9.05. Exculpation and Indemnification................................40

ARTICLE X INDEMNIFICATION....................................................41

10.01. Indemnification by the Shareholders............................41

10.02. Indemnification by Parent, Merger Subsidiary and New LLC.......41

10.03. Notice of Third-Party Claims...................................42

10.04. Defense of Third-Party Claims..................................42

10.05. Notice of Other Claims.........................................43

10.06. Access and Cooperation.........................................43

10.07. Term of Indemnities............................................43

10.08. Limitations on Liability.......................................43

10.09. Indemnification Escrow Amount and Term.........................45

10.10. Indemnity Definitions..........................................45

ARTICLE XI MISCELLANEOUS PROVISIONS..........................................47

11.01. Survival of Representations, Warranties and Covenants of the

Company, Parent and Merger Subsidiary..........................47

11.02. Amendment and Modification.....................................47

11.03. Waiver of Compliance; Consents.................................47

11.04. Expenses.......................................................47

11.05. Press Releases and Public Announcements........................47

11.06. Additional Agreements..........................................48

11.07. Notices........................................................48

11.08. Assignment.....................................................49

11.09. Interpretation.................................................49

11.10. Dispute Resolution.............................................49

11.11. Governing Law..................................................50

11.12. Counterparts...................................................50

11.13. Headings; Internal References..................................50

11.14. Number; Gender.................................................50

11.15. Entire Agreement...............................................50

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Exhibit 2.1

11.16. Enforcement....................................................50

11.17. Waiver.........................................................51

11.18. Severability...................................................51

11.19. Disclosure Schedules...........................................51

11.20. Definitions....................................................52

EXHIBITS

Exhibit A - Form of Escrow Agreement

Exhibit B - Key Employee Matters

Exhibit C - Form of Incentive Program 1

Exhibit D - Form of Incentive Program 2

Exhibit E - Form of Retention Program

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EXECUTION COPY

AMENDED AGREEMENT AND PLAN OF MERGER

THIS AMENDED AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered

into as of January 14, 2004, by and among 3M COMPANY, a Delaware corporation

("Parent"), STEELER MERGER CORPORATION, a Minnesota corporation and wholly owned

subsidiary of Parent ("Merger Subsidiary"), STEELER MERGER LLC, a Delaware

limited liability company and wholly owned subsidiary of Parent ("New LLC"), and

HIGHJUMP SOFTWARE, INC., a Minnesota corporation (the "Company").

RECITALS

A. Parent, Merger Subsidiary, the Company and New LLC previously

executed and delivered an Agreement and Plan of Merger dated as of December 23,

2003 (the "Original Merger Agreement") and desire to amend and restate the

Original Merger Agreement in order to make certain technical changes, the

primary purpose of which is to facilitate compliance with United States federal

securities laws.

B. The Boards of Directors of Parent, Merger Subsidiary and the Company

have determined that it is advisable and in the best interests of their

respective shareholders that the parties consummate the business combination

provided for herein in which Merger Subsidiary will merge with and into the

Company with the Company being the surviving corporation in the merger (the

"Merger").

C. Immediately following the Merger, and in any event no later than the

next business day following the Merger, Parent will cause the Company to merge

with and into New LLC.

D. Parent, as the sole shareholder of Merger Subsidiary, has approved

this Agreement, the Merger and the transactions contemplated by this Agreement

pursuant to actions taken in accordance with the requirements of the Minnesota

Business Corporation Act (the "MBCA") and the Delaware General Corporation Law

(the "DGCL").

E. The Board of Directors of the Company has determined that the Merger

is advisable and in the best interests of the Company and its shareholders and

has directed that this Agreement be submitted to a vote of the shareholders of

the Company (the "Shareholders").

F. The Merger, immediately followed by the merger of the Company with

and into New LLC, is intended to be an integrated transaction that qualifies as

a reorganization under the provisions of Section 368(a) of the United States

Internal Revenue Code of 1986, as amended (the "Code")

G. Reference is made to Section 11.20 hereof, which lists the Sections

within this Agreement where each capitalized term used herein is defined.

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AGREEMENT

NOW, THEREFORE, in consideration of the premises and the

representations, warranties, covenants and agreements in this Agreement, the

parties agree as follows:

ARTICLE I

THE MERGER

1.01. MERGER. At the Effective Time (as hereinafter defined) and in

accordance with the terms and subject to the conditions set forth in this

Agreement and the MBCA, the Merger Subsidiary shall be merged with and into the

Company , the separate corporate existence of the Merger Subsidiary shall

thereupon cease, and the Company shall be the surviving corporation in the

Merger (sometimes hereinafter referred to as the "Surviving Corporation"), and

the Surviving Corporation shall thereupon and thereafter possess all the rights

and obligations of each of the constituent corporations in accordance with the

MBCA. At the Effective Time, the Merger shall have the other effects provided in

the applicable provisions of the MBCA. As set forth in Section 7.05 below, as

soon as possible thereafter, but not later than the close of business on the

first business day immediately following the Effective Time, the Surviving

Corporation, as part of a single plan to which the Merger is a part, shall be

merged with and into New LLC in accordance with the provisions of Minnesota law

and the Delaware General Corporation Law, such that, after giving effect to such

merger, New LLC shall ultimately be the surviving entity in the Merger, and,

where appropriate, the term Surviving Corporation shall refer to New LLC.

1.02. EFFECTIVE TIME OF THE MERGER. Concurrently with the Closing (as

hereinafter defined), the parties hereto shall cause the Merger to be

consummated by filing articles of merger (the "Articles of Merger"), in such

form as required by, and executed in accordance with, the applicable provisions

of the MBCA, with the Secretary of State of the State of Minnesota and shall

make all other filings or recordings required under the MBCA. The Merger shall

become effective upon the filing of the Articles of Merger with the Secretary of

State of the State of Minnesota in accordance with the MBCA or such later date

or time as the parties shall agree and specify in the Articles of Merger. The

term "Effective Time" shall mean the date and time the Merger becomes effective

in accordance with the MBCA.

1.03. ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING

CORPORATION. The Articles of Incorporation of the Company in effect immediately

prior to the Effective Time shall be the Articles of Incorporation of the

Surviving Corporation, until amended in accordance with the laws of the State of

Minnesota and such Articles of Incorporation. The Bylaws of the Company in

effect immediately prior to the Effective Time shall be the Bylaws of the

Surviving Corporation, until further amended in accordance with the laws of the

State of Minnesota, the Articles of Incorporation of the Surviving Corporation

and such Bylaws.

1.04. BOARD OF DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The

directors of Merger Subsidiary immediately prior to the Effective Time shall be

the directors of the Surviving Corporation, each of such directors to hold

office, subject to the applicable provisions of the Articles of Incorporation

and Bylaws of the Surviving Corporation, until the

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expiration of the term for which such director was elected and until his or her

successor is elected and has qualified or as otherwise provided in the Articles

of Incorporation or Bylaws of the Surviving Corporation. The officers of the

Company immediately prior to the Effective Time shall be the officers of the

Surviving Corporation until their respective successors are chosen and have

qualified or as otherwise provided in the Bylaws of the Surviving Corporation.

1.05. CONVERSION OF SHARES; MERGER CONSIDERATION.

(a) Parent shall pay to the holders of convertible preferred

stock, preferred stock, common stock, warrants, stock options, and any

other securities or ownership rights in Company, an aggregate merger

consideration of $68,000,000. At the Effective Time, by virtue of the

Merger and without any action on the part of Parent, Merger Subsidiary,

the Company or the holders of any of the following securities,

$68,000,000 in aggregate merger consideration shall be paid by Parent

as follows:

(i) each holder of shares of common stock of the

Company issued and outstanding immediately prior to the

Effective Time (other than with respect to any shares of

Company Common Stock with respect to which such holders

thereof have perfected appraisal rights pursuant to Section

1.07, and any shares redeemed by the Company pursuant to

Section 5.19) shall receive the consideration set forth across

from such holder's name on Schedule 1.05, as such schedule

shall be updated by the parties hereto immediately prior to

the Effective Time to reflect any exercise of outstanding

stock options or redemption of shares between the date of the

Original Merger Agreement and the Effective Time, in shares of

common stock of Parent ("Parent Common Stock") based upon the

Parent Share Value (as hereinafter defined) as of the day

before the Closing Date;

(ii) each holder of shares of preferred stock of the

Company issued and outstanding immediately prior to the

Effective Time (other than with respect to any shares of

preferred stock of the Company which such holders thereof have

perfected appraisal rights pursuant to Section 1.07) and

warrants to acquire shares of preferred stock of the Company

and each holder of warrants outstanding immediately prior to

the Effective Time (collectively, the "Warrants") shall

receive consideration in the amounts set forth across from

such holder's name on Schedule 1.05, as such schedule shall be

updated by the parties hereto immediately prior to the

Effective Time to reflect any exercise of outstanding stock

options or redemption of shares between the date of the

Original Merger Agreement and the Effective Time, in cash

and/or shares of Parent Common Stock based upon the Parent

Share Value (as hereinafter defined) as of the day before the

Closing Date.

(iii) each option to acquire shares of common stock

of the Company outstanding immediately prior to the Effective

Time shall be cancelled in exchange for a cash payment

described in Section 1.08 and Schedule 1.08, as such schedule

shall be updated by the parties hereto immediately prior to

the Effective Time to reflect any exercise, expiration or

termination of outstanding stock

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options between the date of the Original Merger Agreement and

the Effective Time.

(iv) all other securities of the Company shall be

cancelled and shall have no further force and effect, and the

holders of such securities shall have no right to receive any

portion of the consideration payable by Parent under this

Agreement; and

(v) each share of common stock, $0.01 par value per

share, of the Merger Subsidiary 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, $0.01 par value, of the

Surviving Corporation.

(b) If, during the period between the date hereof and the

Effective Time, any change in the capital stock of Parent shall occur

by reason of reclassification, recapitalization, stock split or

combination, exchange or readjustment of shares, or any stock dividend

thereon with a record date during such period or any similar event, the

amounts of shares of Parent Common Stock issuable pursuant to this

Agreement shall be appropriately adjusted.

the contrary, the sum of (i) the total aggregate amount of cash that

will be paid in the Merger pursuant to this Section 1.05, (ii) any cash

amounts to be paid in exchange for fractional shares, (iii) any cash

amounts to be paid for Dissenting Shares pursuant to Section 1.07, (iv)

any other amounts paid by Parent or the Company to or on behalf of any

shareholder of the Company in connection with the sale or other

disposition of any shares of capital stock of the Company in connection

with the Merger for purpose of Treasury Regulation Section 1.368-1(e),

and (v) the amount of any extraordinary dividend (including any cash

distributions and payments made pursuant to Section 1.06) distributed

and paid by the Company prior to and in connection with the Merger (the

sum of these amounts, the "Aggregate Cash Amount") shall not exceed 50%

of the Aggregate Consideration (as defined in this Section). The

"Aggregate Consideration" shall equal the sum of (i) the Aggregate Cash

Amount, plus (ii) the number of shares of Parent Common Stock to be

issued in the Merger times the average of the highest and lowest quoted

trading price of Parent Common Stock on the date of the Effective Time.

If the Aggregate Cash Amount would exceed 50% of the Aggregate

Consideration, the number of shares of Parent Common Stock that would

be issued to holders of capital stock of the Company shall be increased

and the amount of cash that would be issued to the holders of capital

stock of the Company shall be decreased so that the Aggregate Cash

Amount does not exceed 50% of the Aggregate Consideration. The

foregoing adjustments shall be applied in a manner such that after such

adjustments the sum of (i) the Aggregate Cash Amount and (ii) the

product of the number of shares of Parent Common Stock to be issued in

the Merger multiplied by the Parent Share Value as of the day

immediately prior to the Closing Date, shall be equal to such sum

absent such adjustments.

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(d) For purposes of this Agreement, "Parent Share Value" means

the average of the daily closing prices of a share of Parent Common

Stock (calculated to the nearest 0.0001) on The New York Stock

Exchange, as reported in the New York Edition of the Wall Street

Journal, for the ten (10) consecutive trading days immediately

preceding and including the applicable date.

1.06. ADDITIONAL CONSIDERATION.

(a) Immediately prior to the Effective Time, those persons

whose names are listed on Schedule 1.06(a), including certain holders

of shares of capital stock of the Company, holders of Stock Options (as

hereinafter defined) and an adviser to the Company, shall be entitled

to receive a cash distribution from the Company in the amounts set

forth across from such persons' names on Schedule 1.06(a), as such

schedule shall be updated by the parties hereto immediately prior to

the Effective Time to reflect any exercise, expiration or termination

of outstanding stock options or redemption of shares between the date

of the Original Merger Agreement and the Effective Time. Prior to the

Closing, the Company shall prepare and deliver to Parent a balance

sheet of the Company as of December 9, 2003 (the "Closing Balance

Sheet"). The Cash balance on the Closing Balance Sheet up to

$14,000,000 (less any required tax withholding) shall be distributed as

set forth in Schedule 1.06(a) until working capital equals $500,000

(the amount payable in accordance with the foregoing being referred to

herein as "Closing Cash Consideration").

(b) If the Closing Balance Sheet shows a Cash Balance greater

than the sum of $14,000,000 and the aggregate amount of legal and

accounting fees of the Company incurred in connection with the Merger

(the "Transaction Fees"), then the Cash Balance in excess of the sum of

$14,000,000 and the Transaction Fees shall be distributed pro rata to

the holders of capital stock in the Company until working capital,

after deducting (i) the sum of the amounts distributed under Sections

1.06(a) and 1.06(b) and (ii) the Transaction Fees, equals $500,000 (the

amount payable in accordance with the foregoing being referred to

herein as "Additional Closing Cash Consideration").

1.07. APPRAISAL RIGHTS. Notwithstanding anything in this Agreement to

the contrary, each share (if any) of capital stock of the Company issued and

outstanding immediately before the Effective Time for which the holder has

properly exercised and perfected such holder's demand for appraisal rights under

Sections 302A.471 and 302A.473 of the MBCA (each a "Dissenting Share") shall not

be converted into the right to receive its portion of the consideration

specified in Sections 1.05 and 1.06 at or after the Effective Time unless and

until the holder of such shares withdraws such holder's demand for appraisal

rights or becomes ineligible for appraisal rights. If any such holder fails to

perfect (or otherwise loses) any such appraisal rights, then each such share of

such holder shall be treated as a share that had been converted as of the

Effective Time into the right to receive its portion of the merger consideration

specified in Sections 1.05 and 1.06, without interest. The Company shall give

prompt notice to Parent of each demand received by the Company for payment of

fair value of Common Stock, and Parent shall have the right to participate in

negotiations and proceedings regarding each such demand. The Company shall not,

except with prior written consent of Parent, settle or make any payment

regarding any such demand. Each person holding of record

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or beneficially owning Dissenting Shares who becomes entitled under Sections

302A.471 and 302A.473 of the MBCA and this Section 1.07 to payment of the fair

value of such Dissenting Shares (and any other payments required by Sections

302A.471 and 302A.473 of the MBCA) shall receive payment therefor from the

Surviving Corporation.

1.08. STOCK OPTIONS. At or immediately prior to the Effective Time,

each then outstanding Stock Option (as hereinafter defined) shall be canceled by

the Company in exchange for a cash payment by the Company to the holder of such

Stock Option equal to the difference between (a) the per share amount based upon

(i) the total consideration to be paid to the holders of shares of common stock,

Stock Options and Warrants and preferred stock, on an as converted basis, of the

Company issued and outstanding as of immediately prior to the Effective Time

(the "Fully Diluted Shares"), divided by (ii) the number of Fully Diluted

Shares, and (b) the per share exercise price under the applicable option

agreement multiplied by the number of Stock Options held. The aggregate amount

payable to the holders of Stock Options under this Section 1.08 is set forth on

Schedule 1.08 (which schedule shall be updated by the parties hereto immediately

prior to the Effective Time to reflect any exercise, expiration or termination

of outstanding stock options between the date of the Original Merger Agreement

and the Effective Time) and is referred to herein as the "Option Settlement

Amount." Each such cancellation and payment shall occur pursuant to the terms

and conditions established for such cancellation in the applicable stock option

agreement and the Company's Second Amended and Restated 2000 Stock Option Plan

(the "2000 Plan"). Parent shall fund the total amount set forth in Schedule 1.08

in the column "Paid Out of Merger Consideration" at or immediately prior to the

Effective Time through a cash payment to the Company, after which the Company

shall pay to each holder of Stock Options an amount calculated in accordance

with this Section 1.08 and as set forth in Schedule 1.08 (less any applicable

withholding Taxes). Payment of the Option Settlement Amount in this manner shall

be considered part of and to satisfy in part Parent's obligation to pay the

aggregate merger consideration of $68,000,000 pursuant to Section 1.05. For

purposes of this Agreement, "Stock Options" means the options to purchase shares

of common stock of the Company outstanding immediately prior to the Effective

Time.

1.09. PAYMENT FOR SHARES.

(a) At and after the Effective Time, each holder of a

certificate or certificates representing shares of Common Stock

canceled and extinguished at the Effective Time may surrender such

certificate or certificates to the Parent, to effect the exchange of

such certificate or certificates on such holder's behalf. Until so

surrendered and exchanged, each outstanding certificate which, prior to

the Effective Time, represented shares of Common Stock shall be deemed

to represent and evidence only the right to receive the portion of the

merger consideration to be paid therefor as set forth in Sections 1.05

and 1.06 and until such surrender and exchange, no cash shall be paid

to the holder of such outstanding certificate in respect thereof.

(b) The Parent shall deliver to the Escrow Agent at the

Effective Time (i) $3,400,000 (the "Indemnification Escrow Amount") and

(ii) $500,000 (the "Cash Flow Holdback"), to be held by the Escrow

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

Escrow Agreement, and the Indemnification Escrow Amount and Cash Flow

Holdback (collectively, the "Escrowed Funds") shall be deducted from

the

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amounts otherwise payable to the holders of common stock and preferred

stock of the Company pursuant to Section 1.05, as described in Schedule

1.05.

in whose name the certificate surrendered in exchange therefor is

registered, it shall be a condition to such payment that the

certificate so surrendered shall be properly endorsed and otherwise in

proper form for transfer, and that the person requesting such payment

shall pay to the Company any transfer and other taxes required by

reason of such payment in any name other than that of the registered

holder of the certificate surrendered or shall have established to the

satisfaction of the Company that such tax either has been paid or is

not payable.

(d) No interest shall accrue or be payable with respect to

any, amounts which a holder of shares of capital stock of the Company,

Stock Options or Warrants shall be so entitled to receive. Parent and

the Surviving Corporation shall be authorized to pay the consideration

attributable to any certificate previously issued which has been lost

or destroyed, upon receipt of satisfactory evidence of ownership of the

shares of securities represented thereby and of appropriate

indemnification.

1.10. DISTRIBUTION OF CASH FLOW HOLDBACK.

(a) Within 210 days following the Closing Date, Parent shall

deliver to the Stockholders' Representatives a statement of cash flows

(the "PROPOSED FINAL CASH FLOW STATEMENT") reflecting Parent's

determination of the amount of cash flows generated by the Company from

continuing operations of the Company during the six-month period

immediately following the Closing Date and ending on the six-month

anniversary of the Closing Date, without taking into account any

general corporate allocations of Parent to the Company that do not

specifically relate to the business of the Company, all in accordance

with Schedule 1.10 hereto (the "PROPOSED CASH FLOW AMOUNT"), together

with the books, records, work papers and similar documentation used in

Parent's calculation of the Proposed Cash Flow Amount.

(b) After receipt of the Proposed Final Cash Flow Statement,

the Stockholders' Representatives shall have thirty (30) days to review

the Proposed Final Cash Flow Statement, together with the books,

records, workpapers and similar documentation used by Parent in its

preparation and calculation of the Proposed Cash Flow Amount, and shall

have access to the Company's books, records and personnel upon

reasonable notice and during normal business hours in conducting such

review. The Proposed Final Cash Flow Statement and the Proposed Cash

Flow Amount shall become final and binding (in their final and binding

form, after resolution of any disputes hereunder, the "FINAL CASH FLOW

STATEMENT" and the "FINAL CASH FLOW AMOUNT", respectively) on the

thirtieth day following receipt thereof by the Stockholders'

Representatives unless the Stockholders' Representatives give written

notice of their disagreement (a "NOTICE OF DISAGREEMENT") to Parent

prior to such date. Any Notice of Disagreement shall specify in

reasonable detail the nature and amount of any disagreement so

asserted. If a timely Notice of Disagreement is delivered by the

Stockholders' Representatives, then the parties shall work in good

faith to resolve such

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disagreement, and if the parties cannot resolve such disagreement

within thirty (30) days after delivery by the Stockholders'

Representatives of the Notice of Disagreement to the Proposed Final

Cash Flow Statement and Proposed Cash Flow Amount, such disagreement

shall be referred to a nationally recognized "Big Four" independent

accounting firm mutually satisfactory to Parent and the Stockholders'

Representatives (the "REVIEWING PARTY"), which shall be directed to

resolve such disagreement within thirty (30) days thereafter, and whose

decision shall be final and binding on all parties.

pursuant to this Section 1.10 shall be paid as follows:

(i) if the Reviewing Party determines that the Final

Cash Flow Amount is greater than the Proposed Cash Flow

Amount, all of the fees and expenses of the Reviewing Party

shall be borne by Parent; and

(ii) if the Reviewing Party determines that the Final

Cash Flow Amount is equal to or less than the Proposed Cash

Flow Amount, all of the fees and expenses of the Reviewing

Party shall be disbursed from the Indemnification Escrow

Amount.

(d) If the Final Cash Flow Amount is equal to or greater than

$1.00, Parent shall cause the Escrow Agent to distribute the Cash Flow

Holdback to the Stockholders' Representatives, for further payment pro

rata to the former holders of capital stock of the Company, within

three business days following the date on which the Final Cash Flow

Statement is determined. If the Final Cash Flow Amount is less than

zero, Parent shall cause the Escrow Agent to distribute (i) the Cash

Flow Holdback, plus (ii) the amount of the Final Cash Flow Amount, to

the Stockholders' Representatives for further payment pro rata to the

former holders of capital stock of the Company. Any remaining Cash Flow

Holdback shall be distributed to the Parent within three business days

following the date on which the Final Cash Flow Statement is

determined.

1.11. NO FURTHER RIGHTS OR TRANSFERS. At the Effective Time, all shares

of capital stock of the Company issued and outstanding immediately prior to the

Effective Time shall be canceled and cease to exist, and each holder of a

certificate or certificates that represented shares of capital stock issued and

outstanding immediately prior to the Effective Time shall cease to have any

rights as a Shareholder with respect to the shares of capital stock represented

by such certificate or certificates, except for the right to surrender such

certificate or certificates in exchange for the payment provided pursuant to

Sections 1.05 and 1.06 hereof or to preserve and perfect such holder's right to

receive payment for such holder's shares pursuant to Sections 302A.471 and

302A.473 of the MBCA and Section 1.07 hereof if such holder has validly

exercised and not withdrawn or lost such right, and no transfer of shares of

capital stock issued and outstanding immediately prior to the Effective Time

shall be made on the stock transfer books of the Surviving Corporation.

1.12. TAX TREATMENT. The parties intend that the Merger, considered

together with the merger contemplated in Section 7.05 below, be treated as a

reorganization described in

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Section 368(a) of the Code. The parties to this Agreement shall not take a

position on any Tax Returns inconsistent with such treatment unless otherwise

required by law.

ARTICLE II

CLOSING

2.01. GENERALLY. Subject to the fulfillment or waiver of the conditions

precedent set forth in Article VI hereof and the termination provisions set

forth in Article VIII hereof, the closing (the "Closing") of the transactions

contemplated hereby shall occur on the last business day of the calendar month

during which the first business day following the day on which the fulfillment

or waiver of the conditions precedent set forth in Article VI occurs, or on such

other date as Parent and the Company may mutually agree (the "Closing Date").

The Closing shall be held at the offices of Dorsey & Whitney LLP, 50 South Sixth

Street, Suite 1500, Minneapolis, Minnesota 55402, or at such other place as

Parent and the Company may mutually agree.

2.02. DELIVERIES AT THE CLOSING. Subject to the provisions of Articles

VI and VIII hereof, at the Closing:

(a) There shall be delivered to Parent, Merger Subsidiary and

the Company the certificates and other documents and instruments as

contemplated under Article V or VI hereof; and

(b) The Company and Merger Subsidiary shall cause the Articles

of Merger to be filed as provided in Section 1.02 hereof and shall take

any and all other lawful actions and do any and all other lawful things

necessary to cause the Merger to become effective.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent and Merger Subsidiary

that, except as otherwise set forth in the disclosure schedules attached hereto

(the "Disclosure Schedules" and each a "Disclosure Schedule"), the statements in

this Article III are true and correct as of the date of the Original Merger

Agreement (for purposes of this Article III, "the date of this Agreement" shall

mean the date of the Original Merger Agreement).

3.01. ORGANIZATION, STANDING, QUALIFICATION. The Company is a

corporation duly incorporated, validly existing and in good standing under the

laws of the State of Minnesota and has the requisite corporate power and

authority to own, lease and operate all of its properties and assets and to

carry on its business as it is now being conducted. The Company is duly

qualified as a foreign corporation to do business, and is in good standing, in

each jurisdiction where the character of its properties owned, operated or

leased, or the nature of its activities, makes such qualification necessary,

except such jurisdictions where failure to be so qualified would not,

individually or in the aggregate, have a material adverse effect upon the

business, operations, properties or financial condition of the Company

("Material Adverse Effect");

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provided, however, that wherever such term is used in this Agreement, a Material

Adverse Effect will not be deemed to have occurred if the change, circumstance,

event, effect or state of facts results primarily from (a) a change in general

economic conditions, (b) a change in general business conditions in the

Company's industry which does not disproportionately affect the Company or (c)

the disclosure to the public, or pendency, of the Merger and the transactions

contemplated thereby. The copies of the Articles of Incorporation and Bylaws of

the Company that have been made available to Parent are complete and correct as

of the date of this Agreement, and the minute book of the Company that has been

made available to Parent is complete in all material respects and accurately

reflects all material action taken prior to the date of this Agreement by the

Board of Directors of the Company and the Shareholders.

3.02. CAPITALIZATION.

(a) The authorized capital stock of the Company consists of

75,000,000 shares, of which 8,700,000 shares are designated Series A

Convertible Preferred Stock, 7,300,000 shares are designated Series B

Convertible Preferred Stock, 50,000,000 shares are designated Common

Stock and 9,000,000 shares are undesignated shares of capital stock. At

the date hereof, the issued and outstanding capital stock of the

Company consists of 8,646,999 shares of Series A Convertible Preferred

Stock, 7,185,116 shares of Series B Convertible Preferred Stock and

20,284,427 shares of Common Stock. Disclosure Schedule 3.02(a) contains

a complete and correct list of all record owners of shares of capital

stock of the Company and the number of shares owned by each such

person, in each case at the date hereof. All of the outstanding shares

of capital stock of the Company are validly issued, fully paid and

nonassessable. At the date hereof, the Company has no other issued or

outstanding shares of capital stock.

(b) Disclosure Schedule 3.02(b) contains a complete and

correct list of all outstanding and unexercised Stock Options under the

Company's 2000 Stock Option Plan, as amended (the "2000 Plan"),

specifying the name of each optionee, the date on which each Stock

Option was granted, the number of shares of Common Stock that may be

purchased pursuant to each Stock Option, the exercise price at which

such shares may be purchased, the vesting period for each Stock Option

and the expiration date of each Stock Option. Except for the Stock

Options and the Warrants and as otherwise set forth on Disclosure

Schedule 3.02(b), there are no outstanding subscriptions, options,

warrants, calls or other agreements or commitments by which the Company

is bound in respect of the capital stock of the Company, whether issued

or unissued, and no outstanding securities convertible into or

exchangeable for any such capital stock.

capital stock or other equity interest in (or any rights to acquire any

capital stock of or other equity interest in) any corporation,

partnership, joint venture or other entity.

3.03. AUTHORIZATION AND EXECUTION. The Company has the corporate power

and authority to execute and deliver this Agreement and, subject to obtaining

the Shareholder Approval, to consummate the transactions contemplated hereby.

The execution, delivery and performance of this Agreement have been duly and

effectively authorized by the Board of Directors of the Company, and no further

corporate action of the Company, other than the

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Shareholder Approval, is necessary to consummate the transactions contemplated

hereby. This Agreement constitutes a legal, valid and binding obligation of the

Company, enforceable against it in accordance with its terms, except to the

extent that enforceability may be limited by applicable bankruptcy, insolvency

or similar laws affecting the enforcement of creditors' rights generally, and

subject, as to enforceability, to general principles of equity (regardless of

whether enforcement is sought in a court of law or equity).

3.04. NO CONFLICTS. Subject to obtaining the Shareholder Approval and

except as set forth in Disclosure Schedule 3.04, neither the execution and

delivery of this Agreement by the Company, nor the consummation by the Company

of the transactions contemplated hereby, will (i) conflict with or result in a

breach of the Articles of Incorporation or Bylaws, as currently in effect, of

the Company, or (ii) except for the filing of the Articles of Merger as required

by the MBCA and any filing required pursuant to the Hart-Scott-Rodino Antitrust

Improvements Act of 1976, as amended, and the rules and regulations promulgated

thereunder (the "HSR Act"), require any filing with, or consent or approval of,

any governmental authority having jurisdiction over any of the business or

assets of the Company, or (iii) violate any material statute, regulation,

injunction, judgment or order to which the Company is subject, or (iv) result in

a material breach of, or constitute a material default or an event which, with

the passage of time or the giving of notice or both would constitute a material

default, give rise to a right of termination, cancellation or acceleration,

create any entitlement to any payment or benefit, require the consent of any

third party or result in the creation of any lien on the assets of the Company

under any Material Contract (as defined in Section 3.10).

3.05. FINANCIAL STATEMENTS. The Company has previously delivered to

Parent its (i) audited financial statements for the twelve months ended March

31, 2003, and (ii) unaudited financial statements for the six-month period ended

September 30, 2003. All of the foregoing financial statements are hereinafter

collectively referred to as the "Financial Statements." The audited Financial

Statements were prepared in accordance with generally accepted accounting

principles applied on a consistent basis throughout the periods involved (except

as may be indicated in the notes thereto) and fairly present, in all material

respects, the financial position of the Company as at the respective dates

thereof and the results of operations and cash flows of the Company for the

periods indicated. The unaudited Financial Statements were prepared by the

Company in accordance with generally accepted accounting principles and

consistent with the past practices of the Company and fairly present, in all

material respects, the financial position of the Company as at the respective

dates thereof and the results of operations for the periods indicated, except

that all unaudited Financial Statements are subject to normal year-end

adjustments and do not contain all footnote disclosures required by generally

accepted accounting principles.

Other than as and to the extent (w) disclosed or reserved against in

the balance sheet (the "Base Balance Sheet") dated as of September 30, 2003 (the

"Base Balance Sheet Date"), (x) set forth in Disclosure Schedule 3.05, (y)

incurred under, or required or permitted to be incurred under, this Agreement,

or (z) incurred in the ordinary course of business since the Base Balance Sheet

Date, the Company has no material liabilities or obligations required to be

disclosed or reserved against on a balance sheet prepared in accordance with

generally accepted accounting principles.

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3.06. ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in

Disclosure Schedule 3.06 or as permitted by Section 5.01 hereof, since the Base

Balance Sheet Date and to and including the date of this Agreement:

(a) there has not been (i) a Material Adverse Effect, (ii) any

declaration, setting aside or payment of any dividend or distribution

(whether in cash, stock or property) in respect of the capital stock of

the Company or any redemption or other acquisition by the Company of

any of the capital stock of the Company or any split, combination or

reclassification of shares of capital stock declared or made by the

Company, (iii) any change in the amount or terms of wages, salary and

other compensation paid to, or benefits provided to any current

employee or current director of the Company (other than changes that

occurred in the ordinary course of business or pursuant to plans,

programs or agreements then existing), or termination of the employment

of any employee of the Company, or (iv) any commitment or agreement to

do any of the foregoing; and

(b) there have not been (i) any extraordinary losses suffered,

(ii) any material assets mortgaged, pledged or made subject to any

lien, charge or other encumbrance, (iii) any liability or obligation

(absolute, accrued or contingent) incurred or any bad debt, contingency

or other reserve increase suffered, except, in each such case, in the

ordinary course of business and consistent with past practice, (iv) any

claims, liabilities or obligations (absolute, accrued or contingent)

paid, discharged or satisfied, other than the payment, discharge or

satisfaction, in the ordinary course of business and consistent with

past practice of claims, liabilities and obligations reflected or

reserved against in the Financial Statements or incurred in the

ordinary course of business and consistent with past practice since the

Base Balance Sheet Date, (v) written off as uncollectible any notes or

accounts receivable, except write-offs in the ordinary course of

business and consistent with past practice, (vi) write down of the

value of any asset or investment on the Company's books or records,

except for depreciation and amortization taken in the ordinary course

of business and consistent with past practice, (vii) any material

change in any method of accounting or accounting practice by the

Company, except for such changes required by reason of changes in

generally accepted accounting principles, (viii) cancellation of any

debts or waiver of any claims or rights in excess of $50,000, or sale,

transfer or other disposition of any properties or assets (real,

personal or mixed, tangible or intangible) in excess of $50,000,

except, in each such case, in transactions in the ordinary course of

business and consistent with past practice, (ix) any single capital

expenditure or commitment (other than expenditures under or related to

software development contracts) in excess of $50,000 for additions to

property or equipment, or aggregate capital expenditures and

commitments in excess of $100,000 for additions to property or

equipment, (x) any transaction entered into by the Company other than

in the ordinary course of business, or (xi) any agreement to do any of

the foregoing.

3.07. TAX MATTERS.

(a) The Company has timely filed or caused to be filed all

Federal, state, local and foreign Tax Returns required to be filed by

it since January 1, 1998 with respect to Taxes and has paid all Taxes

due and owing by the Company (whether or not shown on

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any Tax Return) since such date and all assessments made against it to

the extent such have become due. None of the foregoing Tax Returns

contains any position which is or would be subject to penalties under

Code Section 6662. In addition, the Company has paid or made adequate

provision for the payment of all such Taxes which are due and payable

with respect to the periods covered by such returns pursuant to any

assessment with respect to such Taxes in such jurisdictions, whether or

not in connection with such returns or otherwise due or payable on or

before the Closing Date. The liability for Taxes reflected in the Base

Balance Sheet (i) is sufficient for the payment of all unpaid Taxes,

whether or not disputed, that are accrued or applicable for the period

ended on the Base Balance Sheet Date and for all years and periods

ended prior thereto and (ii) adjusted for the passage of time in a

manner consistent with the past practice of the Company, is sufficient

for the payment of all unpaid Taxes, whether or not disputed, that are

accrued or applicable for all years or periods ending on or prior to

the Closing Date.

(b) All Tax Returns filed by the Company for any taxable

period ending after January 1, 1998 were, as of the date filed,

complete and accurate in all material respects. Except as set forth in

Disclosure Schedule 3.07(b), no Tax Returns filed by the Company, the

due date of which (taking into account all extensions of time to file)

was on or after January 1, 1998, have been audited and no claims for

additional Taxes for any taxable period have been made by any taxing

authority that have not been resolved in full. The Company has not

received a notice of deficiency or assessment of additional Taxes,

which notice or assessment has not been resolved in full. The Company

has not received from any taxing authority (including jurisdictions

where the Company has not filed Tax Returns) any (i) notice indicating

any attempt to open an audit or other review, or (ii) request for

information relating to Tax matters. The Company has not waived any

statute of limitations in respect of Taxes or extended the period for

assessment or payment of any Tax, which period has not since expired.

have been withheld and paid in connection with any amounts paid or

owing to any employee, former employee, independent contractor,

creditor, Shareholder or other third party.

(d) The Company has not been a member of an affiliated group

(as such term is defined in Section 1504 of the Code) filing a

consolidated federal income tax return for any tax year, or portion

thereof, since the date of incorporation of the Company.

(e) There are no liens for Taxes (other than current Taxes not

yet due and payable) upon the assets of the Company.

(f) The Company has not filed a consent under Code Section

341(f) concerning collapsible corporations.

(g) The Company has not been a United States real property

holding corporation within the meaning of Code Section 897(c)(2) during

the applicable period specified in Code Section 897(c)(1)(A)(ii).

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(h) The Company is not a party to (nor will the Company, prior

to the Closing, become a party to) any Tax allocation, indemnity or

sharing agreement.

(i) There is no contract, agreement, plan or arrangement

covering any employee or former employee of the Company that,

individually or in the aggregate, could give rise to the payment

(taking into consideration any payment made under Section 1.08 of this

Agreement) of any amount that would not be deductible pursuant to

Section 280G of the Code.

(j) The Company has not entered into any transaction that is

considered a "reportable transaction" under Treasury Regulation Section

1.6011-4(b).

(k) The Company has not had any "ownership change" as that

phrase is defined in Code Section 382.

(l) The Company and the Shareholders have not taken (and will

not take from the date of this Agreement to the Closing date) any

action which would cause the Merger to fail to qualify for tax-free

reorganization treatment under Code Section 368(a).

(m) Disclosure Schedule 3.07(b) sets forth, as of the most

recent practicable date, (as well as on an estimated pro forma basis as

of the Closing giving effect to the consummation of the transactions

contemplated hereby) the amount of any net operating loss, net capital

loss, unused investment credit or other credit.

(n) For purposes of this Agreement, the term "Tax" or "Taxes"

means all taxes, including without limitation, any income, corporation,

gross receipts, profits, gains, capital stock, capital duty, franchise,

withholding, social security, unemployment, disability, property,

wealth, welfare, stamp, excise, occupation, sales, use, value added,

alternative minimum, estimated, or other similar tax (including any

fee, assessment or other charge in the nature of or in lieu of any tax)

imposed by any governmental entity (whether Federal, state, local,

municipal, foreign or otherwise) or political subdivision thereof, and

any interest, penalties, additions to tax or additional amounts in

respect of the foregoing, and including any transferee or secondary

liability in respect of any tax (whether imposed by law, contractual

agreement or otherwise) and any liability in respect of any tax as a

result of being a member of any affiliated, consolidated, combined,

unitary or similar group. The term "Tax Return" means all returns,

declarations, reports, statements and other documents required to be

filed in respect of Taxes, and any claims for refunds of Taxes,

including any amendments or supplements to any of the foregoing.

3.08. REAL PROPERTY. The real property demised by the leases described

in Disclosure Schedule 3.08 (the "Leases") constitutes all of the real property

owned, used or occupied by the Company (the "Real Property"). The Company does

not own any Real Property. The Real Property has access, sufficient for the

conduct of the Company's business as now conducted, to public roads and to all

utilities, including electricity, sanitary and storm sewer, potable water,

natural gas and other utilities, used in the operation of the business of the

Company at that location. Each of the Leases is in full force and effect.

Neither the Company

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nor, to the knowledge of the Company, any other party thereto is in material

default under or in respect of any of the Leases.

3.09. TITLE TO PROPERTIES. The Company owns or holds by valid lease or

license all of its personal property reflected in the Base Balance Sheet or

acquired after the Base Balance Sheet Date (except for any assets sold in

accordance with Section 3.06(b)(viii), and assets sold after the Base Balance

Sheet Date in the ordinary course of business and consistent with past

practice), free and clear of all mortgages, claims, liens, security interests,

charges and encumbrances, except (i) liens which may arise for current Taxes and

assessments not yet due and payable or which are being contested in good faith

and in respect of which adequate reserves have been established, (ii)

imperfections in title and liens easements, and other liens, claims and

encumbrances which were not incurred in connection with the borrowing of money

or the obtaining of advances or credit and which do not materially detract from

the value of or materially interfere with the present use of the properties

subject thereto or affected thereby, and (iii) liens which are disclosed in

Disclosure Schedule 3.09 ("Permitted Liens").

3.10. MATERIAL CONTRACTS. Except as set forth in Disclosure Schedule

3.10, the Company is not a party to or bound by any:

(a) contract with any labor union or any collective bargaining

agreement,

(b) bonus, pension, profit sharing, retirement, deferred

compensation, savings, stock purchase, stock option, hospitalization,

insurance or other plan providing similar employee benefits or

compensation;

contract;

(d) sales representative, distributorship, or similar

agreement;

(e) lease, whether as lessor or lessee, with respect to any

real property;

(f) contract as licensor or licensee for the license of any

patent, know-how, trademark, trade name, service mark, copyright or

other intangible asset (other than non-negotiated licenses of

commercially available computer software);

(g) loan or guaranty agreement, indenture or other instrument,

contract or agreement under which any money has been borrowed or loaned

or any note, bond or other evidence of indebtedness has been issued

(other than trade accounts payable or receivable and other indebtedness

incurred in the ordinary course of business and not for money

borrowed);

(h) mortgage, security agreement, sale-leaseback agreement or

other agreement which effectively creates a lien on any assets of the

Company;

(i) contract restricting the Company in any material respect

from engaging in business or from competing with any other parties;

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(j) purchase or sale order for merchandise or supplies which

(i) was not entered into in the ordinary course of business, involves

payments of $100,000 or more, and is not terminable by the Company

without cost or penalty upon sixty (60) days' or less notice, or (ii)

is a standing or similar order with a remaining term of more than one

(1) year, that involves payments of $100,000 or more, and is not

terminable by the Company without cost or penalty upon sixty (60) days'

or less notice;

(k) plan of reorganization;

(l) contract involving the acquisition or disposition of

$50,000 or more in assets, other than contracts involving the purchase

or sale of inventory or products in the ordinary course of business;

(m) partnership, limited liability company or joint venture

agreement;

(n) contract or commitment to loan money to any person, to

guarantee indebtedness of any person, or to make an equity investment

in any person;

(o) escrow agreement for software;

(p) any other contract (excluding purchase and sale orders not

required by the terms in clause (j) above to be set forth in Disclosure

Schedule 3.10) that is not otherwise set forth in Disclosure Schedule

3.10, except such contracts as (x) involve payments of $50,000 or less

a year and (y) are terminable by the Company without cost or penalty

upon sixty (60) days' or less notice; or

(q) any contract requiring the consent of a third party upon a

change in control.

All of the foregoing are hereinafter collectively called "Material Contracts."

To the extent Material Contracts are evidenced by documents, true and correct

copies thereof have been delivered or made available to the Parent unless

otherwise noted in Disclosure Schedule 3.10. Except as set forth in Disclosure

Schedule 3.10, (i) the Material Contracts are valid and enforceable in

accordance with their respective terms with respect to the Company and, to the

knowledge of the Company, are valid and enforceable in accordance with their

respective terms with respect to any other party thereto, and (ii) there is not

under any of the Material Contracts any existing breach, default or event of

default by the Company or, to the knowledge of the Company, any other party

thereto.

3.11. INTELLECTUAL PROPERTY

(a) As used in this Section 3.11, "Intellectual Property

Rights" means patents, patent applications, inventions, trademarks

(registered and unregistered), trademark applications, service marks

(registered and unregistered), service mark applications, business

names, design rights, copyrights (registered and unregistered), domain

names and Know-How. As used in this Section 3.11, "Know-How" means any

and all technical or business information of the type generally treated

as proprietary and confidential by a business, including, but not

limited to, trade secrets, manufacturing processes, quality

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control processes, drawings, product specifications, research and

development results, customer lists and other customer information,

supplier information, regulatory information, business methods and

financial information. As used in this Section 3.11, "IP Embodiments"

means all embodiments or uses of the Intellectual Property Rights,

tangible or intangible (including, for example, but not limited to,

each item of computer software and databases.

(b) Disclosure Schedule 3.11 identifies each patent,

registered trademark, trade name and registered copyright as well as

all IP Embodiments that the Company owns or has the right to use

pursuant to license, sublicense, agreement, or permission for operation

of the businesses of the Company as presently conducted and as

presently proposed to be conducted. The Company owns or has a valid

right to use all Intellectual Property Rights that are used by the

Company, all Intellectual Property Rights that are necessary to the

operation of the business of the Company, and all Intellectual Property

Rights that are embodied in the IP Embodiments of the Company. All

Intellectual Property Rights and all IP Embodiments owned or used by

the Company immediately prior to the Closing hereunder will be owned or

available for use by the Parent on identical terms and conditions

immediately subsequent to the Closing hereunder. The Company has taken

all action necessary to maintain and protect all Intellectual Property

Rights and all IP Embodiments related to the operation of the

businesses of the Company that the Company owns or uses.

interfered with, infringed upon, misappropriated, or otherwise come

into conflict with any Intellectual Property Rights of third parties

related to the operation of the businesses of the Company. To the

knowledge of the Company, neither the past nor current use of the IP

Embodiments of the Company (i) has violated or infringed upon, or is

violating or infringing upon, the rights of any person or other party;

(ii) breaches any duty or obligation owed to any person or other party;

or (iii) violates the privacy or any law relating to the privacy of any

person or third party. The Company has not received any charge,

complaint, claim, demand, or notice alleging any such interference,

infringement, misappropriation, or violation (including any claim that

the Company must license or refrain from using any Intellectual

Property Right or IP Embodiment of any third party). To the knowledge

of the Company, (a) no third party has interfered with, infringed upon,

misappropriated, or otherwise come into conflict with any Intellectual

Property Rights of the Company, (b) the Intellectual Property Rights of

the Company are not invalid or unenforceable, and (c) there are no

grounds that the Intellectual Property Rights of the Company are

invalid or unenforceable.

(d) With respect to all Intellectual Property Rights and all

IP Embodiments of the Company: (i) the Company possesses all right,

title, and interest in and to the item, free and clear of any security

interest, license, or other restriction; (ii) the item is not subject

to any outstanding injunction, judgment, order, decree, ruling, or

charge; (iii) no action, suit, proceeding, hearing, investigation,

charge, complaint, claim, or demand is pending or is threatened which

challenges the legality, validity, enforceability, use, or ownership of

the item; (iv) at no time has the Company ever agreed to indemnify any

third party for or against any interference, infringement,

misappropriation, or other

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conflict with respect to the item; (v) there are no liens, licenses or

other encumbrances affecting any Intellectual Property Rights or IP

Embodiments other than those identified on Disclosure Schedule 3.11;

and (vi) the Company will make available to the Parent correct and

complete copies of all IP Embodiments at Closing.

(e) Disclosure Schedule 3.11(a) identifies all material

Intellectual Property Rights and IP Embodiments that any third party

owns and that the Company uses pursuant to license, sublicense,

agreement, or permission. The Company has delivered to the Parent

correct and complete copies of all such material licenses, sublicenses,

agreements, and permissions (as amended to date). With respect to all

Intellectual Property Rights and IP Embodiments identified in

Disclosure Schedule 3.11(a): (i) the license, sublicense, agreement, or

permission covering the item is legal, valid, binding, enforceable, and

in full force and effect; (ii) the license, sublicense, agreement, or

permission will continue to be legal, valid, binding, enforceable, and

in full force and effect on identical terms following the consummation

of the transactions contemplated hereby; (iii) no party to the license,

sublicense, agreement, or permission is in material breach or default,

and no event has occurred which with notice or lapse of time would

constitute a breach or default or permit termination, modification, or

acceleration thereunder; (iv) no party to the license, sublicense,

agreement, or permission has repudiated any material provision thereof;

(v) with respect to each sublicense, the representations and warranties

set forth in subsections (i) through (iv) above are true and correct

with respect to the underlying license; (vi) there is no outstanding

injunction, judgment, order, decree, ruling, or charge; and (vii) no

action, suit, proceeding, hearing, investigation, charge, complaint,

claim, or demand is pending or, to the knowledge of the Company, is

threatened which challenges the legality, validity, or enforceability

of any Intellectual Property Right.

(f) To the knowledge of the Company, the Company will not

interfere with, infringe upon, misappropriate, or otherwise come into

conflict with any Intellectual Property Right of third parties as a

result of the continued operation of its businesses as presently

conducted and as presently proposed to be conducted.

(g) Upon Parent's reasonable request, the Company and the

employees of the Company will fully cooperate with Parent to file one

or more U.S. provisional and non-provisional patent applications and

associated PCT patent applications based on invention(s) conceived

before Closing.

(h) All IP Embodiments of the Company were, with respect to

that any author or developer of any IP Embodiment of the Company was

not an employee of the Company at the time such person contributed to

such IP Embodiments, such author or developer has irrevocably assigned

to the Company in writing all copyrights and other proprietary rights

in such person's work with respect to such IP Embodiments.

(i) With respect to the computer software listed on Disclosure

Schedule 3.11: (i) the Company maintains machine-readable

master-reproducible copies, source code

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listings, technical documentation and user manuals for the most current

releases or versions thereof and for all earlier releases or versions

thereof currently being supported by them; (ii) in each case, the

machine-readable copy substantially conforms to the corresponding

source code listing; (iii) it is written in the language set forth on

Disclosure Schedule 3.11, for use on the hardware set forth on

Disclosure Schedule 3.11 with standard operating systems; (iv) it does

not include any "open source" computer software, or any computer

software that is subject to any "GNU Public License," or any other

"free" software license containing equivalent provisions, (v) it can be

maintained and modified by reasonably competent programmers familiar

with such language, hardware and operating systems; (vi) in each case,

it operates in accordance with all contractual requirements,

specifications and documentation (including, but not limited to, any

user documentation) without material operating defects, (vii) the

Company has not received any communication that the computer software

has failed, or is failing, to perform as represented or warranted to

any licensee, (viii) the computer software shall, under normal use and

service, record, store, process, present and communicate information

and data with calendar dates falling on or after January 1, 2000 in the

manner, and with the same functionality, as the computer records,

stores, processes, presents and communicates information and data with

calendar dates on or before December 31, 1999, (ix) except with respect

to demonstration or trial copies, the computer software does not

contain, and the Company has taken reasonable precautions to prevent

the presence of, any malicious code, program, or other internal

component (e.g., computer virus, computer worm, computer time bomb, or

similar component) which could damage, destroy, or alter the computer

software or other software, firmware, or hardware used by Parent or any

customer, or which could, in any unintended manner, reveal, damage,

destroy, or alter any data or other information accessed through or

processed by the computer software.

(j) The Company has not disclosed or delivered to any escrow

agent or to any other person or party, or permitted the disclosure to

any escrow agent or to any other person or party of, the source code

(or any aspect or portion thereof) for or relating to any p

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