AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

Exhibit                                             Description

Schedules

Schedule 5.11                                 Terminated Agreements

THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the “ Agreement ”) is made and entered into as of September 14, 2009 by and among Taleo Corporation, a Delaware corporation (“ Parent ”), Wyoming Acquisition Corporation, a California corporation and a wholly-owned subsidiary of Parent (“ Sub ”), Worldwide Compensation, Inc., a California corporation (the “ Company ”), and with respect to Article VII, Article VIII and Article IX hereof only, Dennis M. Rohan as shareholder representative (the “ Shareholder Representative ”), and U.S. Bank National Association as escrow agent.

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

B.   Parent, Sub and the Company have previously entered into an Agreement and Plan of Merger, dated as of September 3, 2008 (the “ Original Agreement ”), which they desire to amend and restate to effect certain changes with respect to the terms of such acquisition and their agreements with respect thereto, effective as of the date hereof.

C.   Pursuant to the Merger, among other things, and subject to the terms and conditions of this Agreement, all of the issued and outstanding capital stock of the Company, including all of the issued and outstanding Company Options and Company Warrants, shall be converted into the right to receive the consideration set forth herein.

D.   A portion of the consideration otherwise payable by Parent to the Shareholders in connection with the Merger shall be placed in escrow by Parent as partial security for the indemnification obligations set forth in this Agreement.

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

F.   Prior to the execution and delivery of this Agreement, as a material inducement to Parent and Sub to enter into this Agreement, the Company’s board of directors have unanimously approved, and the Shareholders have approved, this Agreement, the Merger and the transactions contemplated hereby.

G.   Concurrent with the execution and delivery of the Original Agreement, as a material inducement to Parent and Sub to enter into the Original Agreement, (i) each of the Key Employees executed an employment offer letter and non-competition agreement, each in substantially the form attached hereto as Exhibit A (an “ Employment Offer and Non-Competition Agreement ”), with Parent to be effective as of the Effective Time, and (ii) each of the Founders entered into a consideration holdback agreement, each in substantially the form attached hereto as Exhibit B (a “ Consideration Holdback Agreement ”).

H.   Concurrent with the execution and delivery of the Original Agreement, Parent, the Company and certain securityholders of the Company have entered into that certain Purchase Option Agreement dated September 3, 2008 (the “ Option Agreement ”), pursuant to which the Company has granted to Parent an exclusive, irrevocable right, in Parent’s sole discretion, to acquire the Company through the merger of a wholly-owned subsidiary of Parent with and into the Company at any time prior to the termination of this Agreement.

I.           Concurrent with the execution and delivery of this Agreement, the Option Agreement shall be terminated and shall no longer have any effect.

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

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

1.2   Effective Time .  Unless this Agreement is earlier terminated pursuant to Section 8.1 hereof, the closing of the Merger (the “ Closing ”) will take place as promptly as practicable after the conditions set forth in Article VI hereof have been satisfied or waived, at the offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California, unless another time or place is mutually agreed upon in writing by Parent and the Company; provided, however , the Closing shall not occur before January 1, 2010.  The date upon which the Closing actually occurs shall be referred to herein as the “ Closing Date .”  On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing an agreement or certificate of merger (or like instrument), in substantially the form attached hereto as Exhibit C , with the Secretary of State of the State of California (the “ Agreement of Merger ”), in accordance with the applicable provisions of California Law (the time of such filing by the Secretary of State of the State of California shall be referred to herein as the “ Effective Time ”).

1.3   Effect of the Merger .  At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of California Law.  Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, except as otherwise agreed to pursuant to the terms of this Agreement, all of the property, rights, privileges, powers and franchises of the Company and Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.4   Certificate of Incorporation and Bylaws . 

(a)   The articles of incorporation of the Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the articles of incorporation of Sub as in effect immediately prior to the Effective Time, until thereafter amended in accordance with California Law and as provided in such articles of incorporation; provided, however , that at the Effective Time, Article I of the articles of

incorporation of the Surviving Corporation shall be amended and restated in its entirety to read as follows: “The name of the corporation is Worldwide Compensation, Inc.”

(b)   The bylaws of the Surviving Corporation shall be amended and restated as of the Effective Time to be identical to the bylaws of Sub, as in effect immediately prior to the Effective Time (other than any express references to the name of Sub in such bylaws, which shall be amended to refer to the Surviving Corporation) until thereafter amended in accordance with California Law and as provided in the articles of incorporation of the Surviving Corporation and such bylaws.

1.5   Directors and Officers . 

(a)   Directors of Surviving Corporation .  The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation immediately after the Effective Time, each to hold the office of a director of the Surviving Corporation in accordance with the provisions of California Law and the articles of incorporation and bylaws of the Surviving Corporation until their successors are duly elected and qualified.

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

(c)   Directors of Subsidiaries of Surviving Corporation .  Parent, the Company and the Surviving Corporation shall cause the directors of Sub immediately prior to the Effective Time to be the directors of any Subsidiaries immediately after the Effective Time, each to hold office as a director of each such Subsidiary in accordance with the provisions of the laws of the respective jurisdiction of organization and the respective bylaws or equivalent organizational documents of each such Subsidiary.

(d)   Officers of Subsidiaries of Surviving Corporation .  Parent, the Company and the Surviving Corporation shall cause the officers of Sub immediately prior to the Effective Time to be the officers of any Subsidiaries immediately after the Effective Time, each to hold office as an officer of each such Subsidiary in accordance with the provisions of the laws of the respective jurisdiction of organization and the bylaws or equivalent organizational documents of each such Subsidiary.

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

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

(i)   “ Accounts Payable Adjustment Amount ” shall mean an amount, if any, equal to the aggregate dollar value of all Stale Accounts Payable as of the Closing Date.

(ii)   “ Aggregate Option Exercise Price ” shall mean an amount equal to the lesser of (A) $75,000, or (B) the aggregate exercise price for all Company Options and Company Warrants issued and outstanding immediately prior to the Effective Time.

(iii)   “ Aggregate Series A Liquidation Preference ” shall mean (A) the Per Share Series A Consideration, multiplied by (B) the aggregate number of shares of Company Series A Preferred Stock issued and outstanding immediately prior to the Effective Time (after giving effect to any conversion to Company Common Stock occurring immediately prior to the Effective Time), rounded to the nearest one-hundredth (with amounts 0.005 and above rounded up).

(iv)   “ Annual Contract Value ” shall mean, for any Customer Contract between the Company and any customer of the Company, the aggregate Subscription Fees for the 12-month subscription period beginning on January 1, 2010; provided, however , that Annual Contract Value shall exclude: (A) contracts for which properly invoiced fees are more than ninety (90) days past due as of December 31, 2009; (B) contracts for which the Company’s right to invoice or the customer’s payment obligation with respect to Subscription Fees is contingent upon go-live or other customer acceptance that has not occurred as of December 31, 2009, except for contracts in which the Company is entitled to invoice and the customer is obligated to pay prior to any go-live or other customer acceptance more than fifty percent (50%) of the Subscription Fees billable for the twelve-month period immediately after go-live or other customer acceptance; and (C) contracts for which the Company’s right to invoice or the customer’s payment obligation with respect to Subscription Fees is contingent upon delivery of products or service offerings not in commercial existence and not generally available for use by the Company’s customers as of December 31, 2009, or contingent upon the release of any new product or new version of an existing product that has not been made generally available as of the as of December 31, 2009; provided, further , for purposes of calculating the Annual Contract Value: (x) monthly fees for the 12-month subscription period shall be calculated by prorating the total eligible fees on a monthly basis for each contract year of a contract in which a month of the 12-month subscription period falls; and (y) fee calculations for the 12-month subscription period shall assume the same scope of usage, usage levels, and Company products as those at December 31, 2009, unless the contract irrevocably commits the customer to a different scope of usage.

(v)   “ Base Consideration ” shall mean an amount of cash equal to (A)  $13,500,000, plus (B) (1) 2, multiplied by (2) the aggregate amount of New ACV; provided, however , that notwithstanding the foregoing the Base Consideration shall not exceed $16,000,000.

(vi)   “ Business Day ” shall mean each day that is not a Saturday, Sunday or other day on which Parent is closed for business or banking institutions located in San Francisco, California are authorized or obligated by law or executive order to close.

(vii)   “ Common Consideration ” shall mean (A) (1) the Merger Consideration, plus (2) the Aggregate Option Exercise Price, minus (B) the Aggregate Series A Liquidation Preference.

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

(ix)   “ Company Common Stock ” shall mean shares of common stock, no par value per share, of the Company.

(x)   “ Company Equity Stock ” shall mean the Company Transferred Stock, the Company Options and the Company Warrants, taken together.

(xi)   “ Company Indebtedness ” shall mean all liabilities or obligations of the Company (A) for borrowed money, (B) evidenced by notes, bonds, debentures, derivative or similar, instruments, (C) for the deferred purchase price of goods or services (other than trade payables or accruals incurred in the ordinary course of business), and (D) in the nature of a guarantee of any of the obligations described in clauses (A) through (C) above.

(xii)   “ Company Material Adverse Effect ” shall mean any change, event or effect that is, or is reasonably likely to be, materially adverse to the business, assets (whether tangible or intangible), financial condition, operations or capitalization of the Company, taken as a whole with its Subsidiaries ; provided, however , that in no event shall any of the following, alone or in combination with any of the others, be deemed to constitute, nor shall any of the following be taken into account in determining whether there has or will be, a Company Material Adverse Effect: (A) any occurrence or occurrences relating to the industry in which the Company and its Subsidiaries operate, other than that which affects the Company and its Subsidiaries, taken as a whole, disproportionately; (B) any adverse effect (including any loss of or adverse change in the relationship of the Company or its Subsidiaries with their respective customers, suppliers, partners or similar relationship, and excluding any loss of or adverse change in any employee relationship) directly related to the public announcement or pendency of the transactions contemplated by this Agreement; (C) general economic, market or political conditions (including acts of terrorism or war) that do not disproportionately affect the Company and its Subsidiaries, taken as a whole or (D) the taking of any action specifically permitted by this Agreement.

(xiii)   “ Company Optionholder ” shall mean any holder of any Company Option immediately prior to the Effective Time.

(xiv)   “ Company Options ” shall mean all issued and outstanding options (excluding Company Warrants) to purchase or otherwise acquire Company Capital Stock (whether or not vested) held by any employee, consultant or director of the Company or its Subsidiaries.

(xv)   “ Company Preferred Stock ” shall mean the Company Series A Preferred Stock and Company Series B Preferred Stock, taken together.

(xvi)   “ Company Series A Preferred Stock ” shall mean the Series A Preferred Stock, no par value per share, of the Company.

(xvii)   “ Company Series B Preferred Stock ” shall mean the Series B Preferred Stock, no par value per share, of the Company.

(xviii)   “ Company Transferred Stock ” shall mean the Company Common Stock, the Company Series A Preferred Stock and all other shares of capital stock outstanding, if any, of the Company, taken together, other than Company Series B Preferred Stock.

(xix)   “ Company Unvested Common Stock ” shall mean any shares of Company Common Stock issued and outstanding immediately prior to the Effective Time that are unvested.  For purposes of this Agreement, a share of Company Common Stock shall be deemed “unvested” if such share is not vested or is subject to a repurchase option, risk of forfeiture or other condition under any applicable stock restriction agreement or other agreement with the Company.

(xx)   “ Company Warrantholder ” shall mean any holder of any Company Warrant immediately prior to the Effective Time.

(xxi)   “ Company Warrants ” shall mean any issued and outstanding warrants to purchase Company Capital Stock.

(xxii)   “ Continuing Employee ” shall mean each employee of the Company who is an employee of Parent or any of its subsidiaries immediately following the Effective Time.

(xxiii)   “ Court ” shall mean any court or arbitration tribunal of the United States, any domestic state, or any foreign country, and any political subdivision or agency thereof.

(xxiv)   “ Customer Contract ” shall mean a signed and legally binding contract that provides for access to and use of the Company’s online software products.

(xxv)   “ Employee Severance Adjustment Amount ” shall mean an amount, if any, equal to the aggregate dollar value of any Employee Severance Payments and all payroll and employment taxes in connection therewith and which are listed on the Statement of Employee Severance Amounts to be delivered by the Company as provided in Section 5.21 .

(xxvi)   “ Employee Severance Payment ” shall mean any amount payable to any employee of the Company pursuant to a Post-Signing Employee Severance Agreement.

(xxvii)   “ Employment Related Agreements ” means the Employment Offers and Non-Competition Agreements, and Consideration Holdback Agreements

(xxviii)   “ Escrow Agent ” shall mean U.S. Bank National Association or another institution acceptable to Parent and the Shareholder Representative.

(xxix)   “ Escrow Amount ” shall mean fifteen percent (15%) of the Merger Consideration.

(xxxii)   “ Estimated Third Party Expenses ” shall mean the amount of Third Party Expenses (both paid and unpaid) incurred or expected to be incurred by the Company as of the Closing Date as estimated by the Company in good faith and based on reasonable assumptions, as set forth on the Statement of Expenses.

(xxxi)   “ Founders ” shall mean John Halloran, Terrance Lynn Lillie and Donald Al Wright.

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

(xxxiii)   “ Holdback Shares ” shall mean, with respect to each Founder, such Founder’s Company Capital Stock that is issued and outstanding as of the date such Founder enters into his Consideration Holdback Agreement and either (A) is vested as of such date, or (B) a valid and timely filed election under Section 83(b) of the Code has been filed with respect to such stock.

(xxxiv)   “ HSR Act ” shall mean the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

(xxxv)   “ Key Employees ” shall mean John Halloran, Terrance Lynn Lillie, Andrea Staples and Donald Al Wright.

(xxxvi)   “ Knowledge ” or “ Known ” shall mean, with respect to the Company, the actual knowledge of the Key Employees after reasonable inquiry.

(xxxvii)   “ Law ” shall mean any law (statutory, common or otherwise), constitution, treaty, convention, ordinance, equitable principle, code, rule, regulation, executive order, or other similar authority enacted, adopted, promulgated, or applied by any Governmental Entity, each as amended and now in effect.

(xxxviii)     “ Lien ” shall mean any lien, pledge, charge, claim, mortgage, security interest or other encumbrance of any sort except for (A) Taxes and other governmental charges and assessments which are not yet due and payable or the amount of which is being contested in good faith by appropriate proceedings and as to which adequate reserves have been established on the Current Balance Sheet; (B) statutory or common law liens of landlords and of carriers, warehousemen, mechanics and materialmen and other like liens arising in the ordinary course of business for sums not yet delinquent or the amount of which is being contested in good faith by appropriate proceedings and as to which adequate reserves have been established on the Current Balance Sheet; (C) non-exclusive licenses granted in the ordinary course of business; (D) rights granted in confidentiality or nondisclosure agreements entered into in the ordinary course of business providing non-exclusive rights to use confidential information for a limited purpose; (E) non-monetary liens or imperfections on property which do not materially detract from the value of or impair in any material way the existing use of the assets or property affected by such liens or imperfections; (F) statutory or common law liens to secure landlords, lessors or renters under leases or rental agreements confined to the premises rented to the extent that no payment or performance under any such lease or rental agreement is in arrears or is otherwise due; (G) deposits or pledges made in connection with, or to secure payment of, worker’s compensation, unemployment insurance, old age pension programs mandated under applicable Law or other social security; and (H) restrictions on transfer of securities imposed by applicable state and federal securities laws.

(xxxix)   “ Merger Consideration ” shall mean (A) the Base Consideration, minus (B) an amount equal to any Company Indebtedness outstanding immediately prior to the Effective Time, minus (C) the Third Party Expense Adjustment Amount, minus (D) the Accounts Payable Adjustment Amount, minus (E) the Employee Severance Adjustment Amount.

(xl)   “ New ACV ” shall mean the Annual Contract Value for any Customer Contract entered into between the date hereof and December 31, 2009 between the Company and any new customer of the Company, as set forth on a schedule pursuant to Section 5.22 .

(xli)   “ Order ” shall mean any order, ruling, decision, verdict, decree, writ, subpoena, mandate, precept, command, directive, approval, award, judgment, injunction, or other similar determination or finding issued, granted or made by any Governmental Entity or Court.

(xlii)   “ Per Share Common Closing Consideration ” shall mean the amount per share received by the holders of Company Common Stock pursuant to Section 1.6(b) .

(xliii)   “ Per Share Common Consideration ” shall mean an amount equal to (A) the Common Consideration, divided by (B) the Total Outstanding Shares.

(xliv)   “ Per Share Series A Closing Consideration ” shall mean the amount per share received by the holders of Company Series A Preferred Stock pursuant to Section 1.6(b) .

(xlv)   “ Per Share Series A Consideration ” shall mean an amount equal to $0.2466.

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

(xlvii)   “ Plan ” shall mean the Company’s 2007 Stock Incentive Plan.

(xlvii)   “ Post-Signing Employee Severance Agreement ” shall mean any severance, termination, change of control or similar agreement, contract or arrangement entered into with an employee of the Company on or after the date hereof.

(xlix)   “ Pro Rata Escrow Portion ” shall mean, with respect to each Shareholder, an amount equal to the quotient obtained by dividing (A) the amount of cash issuable pursuant to Section 1.6(b) hereof in respect of the shares of Company Capital Stock owned by such Shareholder as of the Effective Time, divided by (B) the aggregate amount of cash issuable to all Shareholders pursuant to Section 1.6(b) hereof in respect of shares of Company Capital Stock as of the Effective Time.

(l)   “ Related Agreements ” shall mean the Agreement of Merger, Nondisclosure Agreement and all other agreements and certificates entered into by the Company in connection with the transactions contemplated herein.

(li)   “ Required Shareholder Vote ” shall mean the affirmative vote of the holders of (i) at least 90% of the outstanding Company Transferred Stock, (ii) at least 90% of the outstanding Company Common Stock, and (iii) at least 90% of the outstanding Company Series A Preferred Stock.

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

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

(liv)   “ Shareholder ” shall mean any holder of any Company Transferred Stock immediately prior to the Effective Time.

(lv)   “ Stale Accounts Payable ” shall mean those accounts payable of the Company that have been outstanding for 45 or more days and which are listed on the Statement of Stale Accounts Payable to be delivered by the Company as provided in Section 5.23 .

(lvi)   “ Subscription Fees ” shall mean fees for access to and use of Company’s online software products (excluding set up, consulting, training and education fees).

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

(lviii)   “ Third Party Expense Adjustment Amount ” shall mean the difference between (A) the Estimated Third Party Expenses and (B) $75,000; provided , that if the Estimated Third Party Expenses are less than $75,000, the Third Party Expense Adjustment Amount shall be $0.

(lix)   “ Total Outstanding Shares ” shall mean the aggregate number of shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time, plus the maximum aggregate number of shares issuable upon full exercise, exchange or conversion of all Company Options, Company Warrants and any other rights (whether vested or unvested) convertible into, exercisable for or exchangeable for, shares of Company Capital Stock issued and outstanding immediately prior to the Effective Time, in each case on an as-converted to Company Common Stock basis; provided, however that Total Outstanding Shares shall not include shares of Company Capital Stock held by Parent.

(b)   Effect on Capital Stock .  At the Effective Time, by virtue of the Merger and without any action on the part of Sub, the Company or the holders of shares of Company Capital Stock, each share of Company Transferred Stock (excluding, for avoidance of doubt, Company Options, Company Unvested Common Stock and Company Warrants, which shall be treated as provided for in Section 1.6(c) below, and shares of Company Capital Stock held by Parent or the Company, which shall be treated as provided for in Section 1.6(d) below) issued and outstanding immediately prior to the Effective Time, upon the terms and subject to the conditions set forth in this Section 1.6 and throughout this Agreement, including the escrow provisions set forth in Article VII hereof, will be cancelled and extinguished and will be converted automatically into the right to receive upon surrender of the certificate representing such shares of Company Transferred Stock in the manner provided in Section 1.8 hereof, such portion of the Merger Consideration as set forth below:

(i)   each outstanding share of Company Series A Preferred Stock will be converted automatically into the right to receive the Per Share Series A Consideration;

(ii)   each outstanding share of Company Common Stock and Company Series A Preferred Stock will be converted automatically into the right to receive the Per Share Common Consideration; provided, however , that in no event shall the holders of Company Series A Preferred Stock receive in excess of $0.7398 per share under this Section 1.6 (and any excess amounts shall be reallocated proportionately in accordance with the Company’s articles of incorporation); and

(iii)   notwithstanding anything set forth in this Section 1.6 , any Dissenting Shares will be treated as set forth in Section 1.7 hereof.

(iv)   Notwithstanding the foregoing, a portion of the consideration payable to each Shareholder pursuant to this Section 1.6(b) with respect to the shares of Company Transferred Stock owned by such Shareholder as of the Effective Time shall be reduced pursuant to the escrow provisions of Section1.8(b)(i) and Article VII hereof.

(v)    Each outstanding share of Company Series B Preferred Stock shall be treated as set forth in Section 1.6(d) .

(c)   Treatment of Company Options, Company Unvested Common Stock and Company Warrants .

(i)    Effect on Company Options .  No outstanding Company Option shall be assumed by Parent.  At the Effective Time, each then-outstanding Company Option (whether or not vested) shall, by virtue of the Merger, be converted into and shall become a right to receive an amount in cash, without interest and less applicable Tax withholdings, equal to the excess, if any, of the Per Share Common Consideration over the per share exercise price of such Company Option (such amount being hereinafter referred to as the “ Option Consideration ”), and each such Company Option shall terminate at the Effective Time.  Any Option Consideration will be paid within 10 Business Days of the Effective Time, subject to Section 1.8(c)(ii) , and in any event no later than March 15 th of the year following the year in which the Closing occurs.

(ii)   Effect on Company Unvested Common Stock .  At the Effective Time, each share of Company Unvested Common Stock issued and outstanding immediately prior to the Effective Time that is unvested as of the Effective Time shall, by virtue of the Merger, be cancelled and extinguished and be converted into and shall become a right to receive an amount in cash, without interest, equal to the Per Share Common Consideration, subject to the escrow provisions of Section1.8(b)(i) and Article VII hereof.

(iii)   Effect on Company Warrants .  No outstanding Company Warrant shall be assumed by Parent.  At the Effective Time, each then outstanding Company Warrant shall, by virtue of the Merger, be converted into and shall become a right to receive an amount in cash, without interest, equal to the excess, if any, of the Per Share Common Consideration over the per share exercise price of such Company Warrant (such amount being hereinafter referred to as the “ Warrant Consideration ”), and each such Company Warrant shall terminate at the Effective Time.

(iv)   Necessary Actions .  Prior to the Effective Time, and subject to the review and approval of Parent, the Company shall take all actions necessary to effect the transactions anticipated by this Section 1.6 under all Company Option agreements, all Company Warrant agreements and any other plan or arrangement of the Company (whether written or oral, formal or informal), including delivering all required notices, obtaining any required consents and amending the terms of the plan.

(d)   Cancellation of Parent Owned and Company Owned Stock .  Each share of Company Capital Stock held by Parent or the Company or any direct or indirect subsidiary of Parent or the Company immediately prior to the Effective Time shall be cancelled and extinguished as of the Effective Time and shall not be converted into the right to receive any portion of the Merger Consideration.

(e)   Withholding Taxes .  Parent, the Company, the Surviving Corporation and the Escrow Agent, shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement to any Person such amounts as may be required to be deducted or withheld therefrom under any provision of federal, state, local or foreign tax law or under any applicable legal requirement and to request any necessary Tax forms, including Form W-9 or the appropriate series of Form W-8, as applicable, or any similar information, from the recipients of payments hereunder.  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.  The Company shall be responsible for collecting, remitting and reporting any Taxes withheld under this Section 1.6(e) arising from payments made under Section 1.6(c) , other than with respect to payments made to holders of Company

  Unvested Common Stock that have been deposited in the Escrow Fund pursuant to Section1.8(b)(i) and Article VII hereof.

(f)   Shareholder Loans .  In the event that any Shareholder has outstanding loans from the Company as of the Effective Time, the consideration payable to such Shareholder pursuant to this Section 1.6 shall be reduced by an amount equal to the sum of the outstanding principal plus accrued interest of such Shareholder’s loans as of the Effective Time.  Such loans shall be satisfied as to the amount by which the consideration is reduced pursuant to this Section 1.6(f) .  To the extent the consideration payable to such Shareholder is so reduced, such amount shall be treated for all purposes under this Agreement as having been paid to such Shareholder.

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

(h)   Retained Consideration .  Notwithstanding the foregoing, by virtue of this Agreement, at the Effective Time Parent will retain the consideration otherwise payable to each Founder with respect to his Holdback Shares up to an amount that is equivalent to eight percent (8%) of the aggregate consideration payable with respect to his Company Equity Stock pursuant to such Founder’s Consideration Holdback Agreement (such amounts retained with respect to the Holdback Shares held by a Founder, the “ Retained Consideration ”).  Such Retained Consideration shall be retained by Parent and subject to permanent retention by Parent (i.e., forfeiture by the applicable Founder) on the terms and subject to the conditions set forth in the applicable Founder’s Consideration Holdback Agreement.

1.7     Dissenting Shares . 

(a)   Notwithstanding any other provisions of this Agreement to the contrary, any shares of Company Transferred Stock held by a holder who has not effectively withdrawn or lost such holder’s appraisal, dissenters’ or similar rights for such shares under California Law, as applicable (collectively, the “ Dissenting Shares ”), shall not be converted into or represent a right to receive the applicable consideration for Company Transferred Stock set forth in Section 1.6 hereof, but the holder thereof shall only be entitled to such rights as are provided by California Law.

(b)   Notwithstanding the provisions of Section 1.7(a)  hereof, if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s appraisal or dissenters’ rights under California Law, as applicable, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares shall automatically be converted into and represent only the right to receive the consideration for Company Transferred Stock, as applicable, set forth in Section 1.6 hereof, without interest thereon, and subject to the provisions of Section 7.4 hereof, upon surrender of the certificate representing such shares.

(c)   The Company shall give Parent (i) prompt notice of any written demand for appraisal received by the Company pursuant to the applicable provisions of California Law, and (ii) the opportunity to participate in all negotiations and proceedings with respect to such demands.  The Company shall not, except with the prior written consent of Parent, make any payment with respect to any such demands or offer to settle or settle any such demands.  Notwithstanding the foregoing, to the extent that Parent, the Surviving Corporation or the Company (i) makes any payment or payments in respect of any Dissenting Shares in excess of the consideration that otherwise would have been payable in respect of such shares in accordance with this Agreement or (ii) incurs any Losses (including reasonable attorneys’ and consultants’ fees, costs and expenses and including any such fees, costs and expenses incurred in connection with investigating, defending against or settling any action or proceeding) in respect of any Dissenting Shares (excluding payments for such shares) ((i) and (ii) together, “ Dissenting Share Payments ”), Parent shall be entitled to recover under the terms of Article VII hereof the amount of such Dissenting Share Payments.

1.8   Surrender of Certificates . 

(a)   Exchange Agent .  U.S. Bank National Association shall serve as the exchange agent (the “ Exchange Agent ”) for the Merger.

(b)   Parent to Provide Cash .

(i)   Within one (1) Business Day following the Effective Time, Parent shall make available to the Company (with respect to payments relating to Company Unvested Common Stock for which the Company has Tax withholding obligations) or the Exchange Agent (with respect to payments relating to all other shares of Company Transferred Stock) for exchange in accordance with this Article I  that portion of the Merger Consideration payable pursuant to Section 1.6 hereof in exchange for outstanding Company Transferred Stock; provided, however , that Parent shall deposit into the Escrow Fund an amount of cash equal to the Escrow Amount out of the aggregate Merger Consideration otherwise payable to the Shareholders pursuant to Section 1.6  hereof.  Parent shall be deemed to have contributed on behalf of each Shareholder such Shareholder’s Pro Rata Escrow Portion of the Escrow Amount to the Escrow Fund, rounded to the nearest cent (with amounts $0.005 and greater rounded up).

(ii)   Within one (1) Business Day following the Effective Time, Parent shall make available to the Company for exchange in accordance with this Article I  that portion of the Merger Consideration payable pursuant to Section 1.6 hereof in exchange for outstanding Company Options, and the Company shall cause such payments, less applicable Taxes, to be made to holders of Company Options and shall timely remit all appropriate Taxes to the appropriate taxing authority.

(c)   Exchange Procedures .

(i)   As soon as commercially practicable after the Closing Date, Parent (with respect to payments relating to Company Unvested Common Stock for which the Company has Tax withholding obligations) or the Exchange Agent (with respect to payments relating to all other shares of Company Transferred Stock) shall mail an appropriate letter of transmittal in Parent’s standard form to the Shareholders at the address set forth opposite each such Shareholder’s name on the Spreadsheet.  After receipt

of such letter of transmittal and any other documents that Parent or the Exchange Agent may require in order to effect the exchange (the “ Exchange Documents ”), the Shareholders will surrender the certificates and agreements representing their shares of Company Transferred Stock to the Company or the Exchange Agent (such certificates and agreements representing shares of Company Transferred Stock, the “ Company Stock Certificates ”) for cancellation together with duly completed and validly executed Exchange Documents.  Upon surrender of a Company Stock Certificate for cancellation to the Company or the Exchange Agent, or such other agent or agents as may be appointed by Parent, together with such Exchange Documents, duly completed and validly executed in accordance with the instructions thereto, subject to the terms of Section 1.8(d) hereof, the holder of such Company Stock Certificate shall be entitled to receive from the Company (with respect to payments relating to Company Unvested Common Stock for which the Company has Tax withholding obligations) or the Exchange Agent (with respect to payments relating to all other shares of Company Transferred Stock) in exchange therefor, the cash amounts (less the amount of cash to be deposited in the Escrow Fund pursuant to Section 1.8(b)(i) and Article VII hereof, the amount of Retained Consideration to be retained pursuant to Section 1.6(h) , and any withholding Tax required to be withheld pursuant to applicable laws) to which such holder is entitled pursuant to Section 1.6 hereof, and the Company Stock Certificate so surrendered shall be cancelled.  Until so surrendered, each Company Stock Certificate outstanding after the Effective Time will be deemed, for all corporate purposes thereafter, to evidence only the right to receive cash amounts payable, if any, in exchange for shares of Company Transferred Stock into which such shares of Company Transferred Stock shall have been so converted.  No portion of the Merger Consideration will be paid to the holder of any unsurrendered Company Stock Certificate with respect to shares of Company Transferred Stock formerly represented thereby until the holder of record of such Company Stock Certificate shall surrender such Company Stock Certificate and the Exchange Documents pursuant hereto.

(ii)  As soon as commercially practicable after the Closing Date, the Company shall mail to each Company Optionholder an acknowledgement in Parent’s standard form at the address set forth opposite each such holders name on the Spreadsheet.  After receipt of such acknowledgement, duly completed and validly executed in accordance with the instructions thereto, the Company Optionholder shall be entitled to receive from the Company, at the next administratively practicable date, the cash amounts to which such Company Optionholder is entitled pursuant to Section 1.6 hereof, after giving effect to any withholding Tax required to be withheld pursuant to applicable laws.  No interest will be paid or accrued on the consideration payable to the Company Optionholders.

(d)   Transfers of Ownership .  If any cash amounts are to be disbursed to a Person other than the Person whose name is reflected on the Company Stock Certificate surrendered in exchange therefor, it will be a condition of the issuance or delivery thereof that the certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the person requesting such exchange will have paid to Parent or any agent designated by it any transfer or other taxes required by reason of the payment of any portion of the Merger Consideration in any name other than that of the registered holder of the certificate surrendered, or established to the satisfaction of Parent or any agent designated by it that such tax has been paid or is not payable.

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

(f)   Exchange Agent to Return Undistributed Consideration .  At any time following the six (6) month anniversary of the Closing Date, Parent shall be entitled to require the Exchange Agent to deliver to Parent or its designated successor or assign all Merger Consideration that has been deposited with the Exchange Agent pursuant to this Agreement, and any and all interest thereon or other income or proceeds thereof, not disbursed to the holders of Company Stock Certificates pursuant to this Agreement, and thereafter the holders of Company Stock Certificates shall be entitled to look only to Parent as general creditors thereof with respect to any and all cash amounts and shares of Parent Common Stock that may be payable or issuable to such holders of Company Stock Certificates and duly executed letters of transmittal and related documents (if any) in the manner set forth in this Agreement.  No interest shall be payable for the cash amounts delivered to Parent pursuant to the provisions of this Section 1.8(f) and which are subsequently delivered to the holders of Company Stock Certificates.

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

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

1.11   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, Parent and the Surviving Corporation and the officers and directors of Parent and the Surviving Corporation are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

Subject to such exceptions as are specifically disclosed in the Company Disclosure Schedule dated as of the date hereof (each of which disclosures, in order to be effective, shall clearly reference the appropriate section and, if applicable, subsection of this Article II to which it relates and each of which disclosures shall be deemed to be incorporated by reference into the representations and warranties made in this Article II  delivered by the Company to Parent concurrently with the execution of this Agreement (the “ Company Disclosure Schedule”), the Company hereby represents and warrants to Parent and Sub, as of the date hereof and as of the Effective Time, as follows:

2.1   Organization of the Company . 

(a)   The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California.  The Company has the corporate power to own its properties and to carry on its business as currently conducted.  The Company is duly qualified or licensed to do business and in good standing as a foreign corporation in each jurisdiction in which the character or location of its assets or properties (whether owned, leased or licensed) or the nature of its business make such qualifications necessary, except where the failure to so qualify would be material to the Company and its Subsidiaries, taken as a whole.  The Company has delivered a true and correct copy of its Articles of Incorporation, as amended to date (the “ Articles of Incorporation ”) and bylaws, as amended to date (the “ Bylaws ”), each in full force and effect as of the date hereof (collectively, the “ Charter Documents ”), to Parent.  The Board of Directors of the Company has not approved or proposed any amendment to any of the Charter Documents.

(b)   Section 2.1(b) of the Disclosure Schedule lists the directors and officers of the Company, separately noting which of such directors and officers has any rights to indemnification from the Company.

(c)   Section 2.1(c) of the Disclosure Schedule lists every state or foreign jurisdiction in which the Company has Employees or facilities or otherwise conducts its business.

2.2   Company Capital Structure . 

(a)   The authorized capital stock of the Company consists of 35,000,000 shares of Common Stock, of which 19,245,080 shares are issued and outstanding, 7,597,882 shares of Series A Preferred Stock, of which 7,597,882 shares are issued and outstanding, and 5,102,040 shares of Series B Preferred Stock, of which 5,102,040 shares are issued and outstanding.  The Company Series A Preferred Stock and the Company Series B Preferred Stock are convertible on a one-share for one-share basis into Company Common Stock.  As of the date hereof, the capitalization of the Company is as set forth in Section 2.2(a) of the Disclosure Schedule.  The Company Capital Stock is held by the persons with the domicile addresses and in the amounts set forth in Section 2.2(a) of the Disclosure Schedule, which further sets forth for each such person the number of shares held, class and/or series of such shares and the number of the applicable stock certificates representing such shares.  All outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Charter Documents, or any agreement to which the Company is a party or by which it is bound other than preemptive rights in favor of the Company or preemptive rights granted pursuant to the Amended and Restated Right of First Refusal and Co-Sale Agreement dated as of September 3, 2008.  All outstanding shares of Company Capital Stock and Company Options have been issued or repurchased (in the case of shares that were outstanding and repurchased by the Company or any Shareholder of the Company) in compliance with all applicable federal, state, foreign, or local statutes, laws, rules, or regulations, including federal and state securities laws, and were issued, transferred and repurchased (in the case of shares that were outstanding and repurchased by the Company or any Shareholder of the Company) in accordance with any right of first refusal or similar right or limitation, including those in the Charter Documents.  The Company has not, and will not have, suffered or incurred any liability (contingent or otherwise) or claim, loss, liability, damage, deficiency, cost or expense relating to or arising out of the issuance or repurchase of any Company

Capital Stock or Company Options, or out of any agreements or arrangements relating thereto (including any amendment of the terms of any such agreement or arrangement).  There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock.  The Company has no other capital stock authorized, issued or outstanding.

(b)   Section 2.2(b) of the Disclosure Schedule sets forth for all holders of Company Unvested Common Stock, the name of the holder of such Company Unvested Common Stock, the date of purchase of such Company Unvested Common Stock, the purchase price of such Company Unvested Common Stock, the repurchase price of such Company Unvested Common Stock, whether such Company Unvested Common Stock was acquired pursuant the exercise of an incentive stock option and the vesting schedule for such Company Unvested Common Stock, including the grant date, the extent vested to date, whether the vesting of such Company Unvested Common Stock is subject to acceleration as a result of the transactions contemplated by this Agreement or any other events (including a complete description of any such acceleration provisions) and whether, to the Knowledge of the Company, the holder has made a timely election with the Internal Revenue Service under Section 83(b) of the Code with respect to such Company Unvested Common Stock.  All holders of Company Unvested Common Stock are current employees of the Company.

(c)   Except for the Plan, neither the Company nor any of its Subsidiaries has ever adopted, sponsored or maintained any stock option plan or any other plan or agreement providing for equity compensation to any person.  The Company has reserved 3,000,000 shares of Company Common Stock for issuance to employees and directors of, and consultants to, the Company upon the issuance of stock or the exercise of options granted under the Plan, of which (i) 820,000 shares are issuable, upon the exercise of outstanding, unexercised options granted under the Plan, (ii) 2,015,000 shares have been issued upon the exercise of options or purchase of restricted stock granted under the Plan and remain outstanding and (iii) 165,000 shares remain available for future grant.  No shares of Company Common Stock are issuable upon the exercise of outstanding Company Options that have not been issued under the Plan.  No shares of Company Capital Stock are issuable upon the exercise of outstanding Company Warrants.   Section 2.2(c) of the Disclosure Schedule sets forth for each outstanding Company Option and Company Warrant, the name of the holder of such option, restricted stock unit or warrant, the domicile address of such holder, the number of shares of Company Capital Stock issuable upon the exercise of such option or warrant or pursuant to such restricted stock unit, the exercise price of such option or warrant, and whether such option is a nonstatutory option or intended to qualify as an incentive stock option as defined in Section 422 of the Code.  True and complete copies of all agreements and instruments relating to or issued under the Plan have been provided to Parent and such agreements and instruments have not been amended, modified or supplemented, and there are no agreements to amend, modify or supplement such agreements or instruments from the forms thereof provided to Parent.

(d)   Except for the Company Options and Company Warrants, there are no options, warrants, calls, rights, convertible securities, commitments or agreements of any character, written or oral, to which the Company or any of its Subsidiaries is a party or by which the Company is bound obligating the Company to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any shares of the capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such option, warrant, call, right, commitment or agreement. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the equity of the Company or any of its Subsidiaries (whether payable in equity, cash or otherwise).  Except as contemplated hereby, there are no voting trusts, proxies, or other agreements or understandings with respect to the voting stock of the Company or any of its Subsidiaries.  There are no agreements to which the Company or any of its Subsidiaries is a party relating to the registration, sale or transfer (including agreements relating to rights of first refusal, co-sale rights or “drag-along” rights) of any Company Capital Stock.  As a result of the Merger, Parent will be the sole record and beneficial holder of all issued and outstanding Company Capital Stock and all rights to acquire or receive any shares of Company Capital Stock, whether or not such shares of Company Capital Stock are outstanding.

(e)   There are no outstanding loans to Shareholders.

(f)   The allocation of the Merger Consideration set forth in Section 1.6(b) hereof is consistent with the articles of incorporation of the Company as amended as of immediately prior to the Effective Time.

(g)   The information contained in the Spreadsheet will be complete and correct as of the Closing Date.

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

2.4   Authority .  The Company has all requisite power and authority to enter into this Agreement and any Related Agreements to which it is a party and to consummate the transactions contemplated hereby and thereby.  The execution and delivery of this Agreement and any Related Agreements to which the Company is a party and the consummation of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further action is required on the part of the Company to authorize the Agreement and any Related Agreements to which it is a party and the transactions contemplated hereby and thereby.  This Agreement and the transactions contemplated hereby have been unanimously approved by the Board of Directors of the Company.  This Agreement and the transactions contemplated hereby have been approved by the Required Shareholder Vote.  This Agreement and each of the Related Agreements to which the Company is a party have been duly executed and delivered by the Company and assuming the due authorization, execution and delivery by the other parties hereto and thereto, constitute the valid and binding obligations of the Company enforceable against it in accordance with their respective terms, subject to (a) laws of general application relating to bankruptcy, insolvency and the relief of debtors, and (b) rules of law governing performance, injunctive relief and other equitable remedies.

2.5   No Conflict .  The execution and delivery by the Company of this Agreement and any Related Agreement to which the Company is a party, and the consummation of the transactions contemplated hereby and thereby, will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (any such event, a “ Conflict ”) (a) any provision of the Charter Documents or the organizational documents of any of its Subsidiaries, as amended, (b) any material mortgage, indenture, lease (including, without limitation, all Lease Agreements), contract, covenant, plan, insurance policy or other agreement, instrument or commitment, permit, concession, franchise or license (each a “ Contract ” and collectively the “ Contracts ”) to which the Company is a party or by which any of its properties or assets (whether tangible or intangible) are bound, or (c) any judgment, order, decree, statute,

law, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries or any of their respective properties or assets (whether tangible or intangible) except in the case of (c) where any such conflict, violation, or default would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.   Section 2.5 of the Disclosure Schedule sets forth all necessary notices, consents, waivers and approvals as are required under any Contracts in connection with the Merger, or for any such Contract to remain in full force and effect without limitation, modification or alteration after the Effective Time so as to preserve all rights of, and benefits to, the Company and its Subsidiaries under such Contracts from and after the Effective Time.  Following the Effective Time, the Surviving Corporation will be permitted to exercise all of its rights under the Contracts without the payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or any of its Subsidiaries, as the case may be, would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Agreement not occurred.

2.6   Consents .  No consent, notice, waiver, approval, order or authorization of, or registration, declaration or filing with any court, tribunal, administrative agency or commission or other federal, state, county, local or other foreign governmental authority, instrumentality, agency or commission, or regional or international organization (each, a “ Governmental Entity ”) or any third party, including a party to any agreement with the Company or any of its Subsidiaries (so as not to trigger any Conflict), is required by, or with respect to, the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement and any Related Agreement to which the Company or any of its Subsidiaries is a party or the consummation of the transactions contemplated hereby and thereby, except for (a) such consents, notices, waivers, approvals, orders, authorizations, registrations, declarations and filings as may be required under applicable securities laws, (b) the filing of the Agreement of Merger with the Secretary of State of the State of California, and (c) the expiration or early termination of any applicable waiting periods under the HSR Act relating to the transactions contemplated hereby, and/or any material foreign antitrust approvals required to be obtained prior to the Merger in connection with the transactions contemplated hereby, if any.

2.7   Company Financial Statements .  Section 2.7 of the Disclosure Schedule sets forth the Company’s (i) audited consolidated balance sheet as of December 31, 2006, 2007 and 2008, and the related consolidated statements of income, cash flow and shareholders’ equity for the twelve (12) month periods then ended (the “ Year-End Financials ”), and (ii) unaudited consolidated balance sheet as of the most recently completed fiscal quarter (the “ Balance Sheet Date ”), and the related unaudited consolidated statements of income, cash flow and shareholders’ equity for the year-to-date period then ended (the “ Interim Financials ”).  The Year-End Financials and the Interim Financials (collectively referred as the “ Financials ”) are true and correct in all material respects and have been prepared in accordance with GAAP consistently applied on a consistent basis throughout the periods indicated and consistent with each other (except that the Interim Financials do not contain footnotes and other presentation items that may be required by GAAP).  The Financials present fairly the Company’s consolidated financial condition, operating results and cash flows as of the dates and during the periods indicated therein, subject in the case of the Interim Financials to normal year-end adjustments, which are not material in amount or significance in any individual case or in the aggregate.  The Company’s unaudited consolidated balance sheet as of the Balance Sheet Date is referred to hereinafter as the “ Current Balance Sheet .”  The Company has not had any dispute with any of its auditors regarding accounting matters or policies during any of its past three full fiscal years or during the current fiscal year-to-date.  The books and records of the Company and each Subsidiary have been, and are being maintained in all material respects in accordance with applicable legal and accounting requirements and the Financials are consistent with such books and records.  Neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any

similar Contract relating to any transaction or relationship between or among the Company or any of its Subsidiaries, on the one hand, and any unconsolidated affiliate, including any structured finance, special purpose or limited purpose Person on the other hand, or any “off-balance sheet arrangement” (as defined in Item 303(a) of Regulation S-K of the SEC).

2.8   Internal Controls .  The Company and each of its Subsidiaries has established and maintains, adheres to and enforces a system of internal accounting controls which management of the Company believes, without having conducted an evaluation of such controls, are effective in providing reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP (including the Financials), including policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect, in all material respects, the transactions and dispositions of the assets of the Company and its Subsidiaries, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company and its Subsidiaries are being made only in accordance with appropriate authorizations of management and the Board of Directors of the Company and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition use or disposition of the assets of the Company and its Subsidiaries.  To the Company’s Knowledge, none of the Company, any of its Subsidiaries, any Employee thereof, or the Company’s independent auditors has identified or been made aware of (i) any significant deficiency or material weakness in the system of internal accounting controls utilized by the Company and its Subsidiaries, (ii) any fraud or other wrongdoing that involves the Company’s management or other Employees who have a role in the preparation of financial statements or the internal accounting controls utilized by the Company and its Subsidiaries or (iii) any claim or allegation regarding any of the foregoing.

2.9   No Undisclosed Liabilities .  Neither the Company nor any of its Subsidiaries has any 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), in excess of $50,000 individually or $100,000 in the aggregate, except for those which (i) have been reflected in the Current Balance Sheet, or (ii) have arisen in the ordinary course of business consistent with past practices since the Balance Sheet Date.

2.10   No Changes .  Since the Balance Sheet Date, except as expressly permitted under, required or specifically consented to by Parent pursuant to Section 4.1 or Section 4.3 hereof, there has not been, occurred or arisen any:

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

(b)   modifications, amendments or changes to the Charter Documents or organizational documents of any Subsidiary;

(c)   expenditure, transaction or commitment exceeding $25,000 individually or $75,000 in the aggregate or any commitment or transaction of the type described in Section 2.13 hereof in any case by the Company or any of its Subsidiaries;

(d)   payment, discharge, waiver or satisfaction, in any amount in excess of $25,000 in any one case, or $75,000 in the aggregate, of any claim, liability, right or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise of the Company or any of its Subsidiaries), other than payments, discharges or satisfactions in the ordinary course of business of liabilities reflected or reserved against in the Current Balance Sheet;

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

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

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

(h)   adoption of or change in any Tax accounting method or material Tax election, closing agreement in respect of Taxes, settlement of any Tax claim or assessment, or extension or waiver of the limitation period applicable to any Tax claim or assessment;

(i)   revaluation by the Company or any of its Subsidiaries of any of its assets (whether tangible or intangible), including writing down the value of inventory or writing off notes or accounts receivable;

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

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

(l)   any termination or extension, or material waiver, amendment or modification of the terms of any agreement, contract, covenant, instrument, lease (including, without limitation, all Lease Agreements), license or commitment to which the Company or any of its Subsidiaries is a party or by which it or any of their respective assets are bound;

(m)   sale, lease, sublease, license or other disposition of any of the assets (whether tangible or intangible) or properties of the Company or any of its Subsidiaries, including the sale of any accounts receivable of the Company or any of its Subsidiaries, or any creation of any security interest in such assets or properties;

(n)   material loan by the Company or any of its Subsidiaries to any Person, or purchase by the Company or any of its Subsidiaries of any debt securities of any Person or amendment to the terms of any outstanding loan agreement, except for advances to employees for travel and business expenses in the ordinary course of business consistent with past practices;

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

(p)   waiver or release of any material right or claim of the Company or any of its Subsidiaries, including any waiver, release or other compromise of any account receivable of the Company or any of its Subsidiaries;

(q)   commencement or settlement of any lawsuit by the Company or any of its Subsidiaries, the commencement, settlement, notice or, to the Knowledge of the Company, threat of any lawsuit or proceeding or other investigation against the Company or any of its Subsidiaries or relating to their respective businesses, properties or assets, or any reasonable basis for any of the foregoing;

(r)   written notice of any claim or potential claim of ownership, interest or right by any person other than the Company or any of its Subsidiaries of the Company Intellectual Property owned by or developed or created by the Company or any of its Subsidiaries or of infringement by the Company or any of its Subsidiaries of any other Person’s Intellectual Property;

(s)   issuance, grant, delivery, sale or purchase, or proposal, contract or agreement to issue, grant, deliver, sell or purchase, by the Company or any of its Subsidiaries, of any shares of Company Capital Stock or shares of capital stock of any of its Subsidiaries or securities convertible into, or exercisable or exchangeable for, shares of Company Capital Stock or shares of capital stock of any of its Subsidiaries, or any subscriptions, warrants, options, rights or securities to acquire any of the foregoing, except for issuances of Company Capital Stock upon the exercise of Company Options or Company Warrants or the conversion of Company Preferred Stock or the grant of options to purchase Company Common Stock to employees of the Company under the Plan in the ordinary course of business and consistent with past practice;

(t)   (i) sale, lease, license or transfer of any Company Intellectual Property or execution, modification or amendment of any agreement with respect to Company Intellectual Property with any Person or with respect to the Intellectual Property of any Person except in the ordinary course of business consistent with past practice, or (ii) purchase or license of any Intellectual Property or execution, modification or amendment of any agreement with respect to the Intellectual Property of any Person, other than non-exclusive, end-user licenses for the Company’s products entered into in the ordinary course of business, (iii) agreement or modification or amendment of an existing agreement with respect to the development of any Intellectual Property with a third party, other than non-exclusive, end-user licenses for the Company’s

  products entered into in the ordinary course of business, or (iv) change in pricing or royalties set or charged by the Company or any of its Subsidiaries to their respective customers or licensees or in pricing or royalties set or charged by Persons who have licensed Intellectual Property to the Company except in the ordinary course of business consistent with past practice;

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

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

(w)   purchase or sale of any interest in real property, granting of any security interest in any real property or lease, license, sublease or other occupancy of any Leased Real Property or other real property by the Company or any of its Subsidiaries;

(x)   acquisition by the Company or any of its Subsidiaries or agreement by the Company or any of its Subsidiaries to acquire by merging or consolidating with, or by purchasing any assets or equity securities of, or by any other manner, any business or corporation, partnership, association or other business organization or division thereof, or other acquisition or agreement to acquire any assets or any equity securities that are material, individually or in the aggregate, to the business of the Company or any of its Subsidiaries;

(y)   grant by the Company or any of its Subsidiaries of any severance, change in control or termination pay (in cash or otherwise) to any Employee, including any officer, except payments made pursuant to written agreements disclosed in the Disclosure Schedule;

(z)    adoption, amendment or termination of any Company Employee Plan, execution or amendment of any Employee Agreement, or payment or agreement by the Company or any of its Subsidiaries to pay any bonus or special remuneration to any director or Employee, or increase or modify the salaries, wage rates or other compensation (including any equity-based compensation) of any Employee, other than non-material increases in the ordinary course of business consistent with past practice;

(aa)   execution of any strategic alliance, affiliate or joint marketing arrangement or agreement by the Company or any of its Subsidiaries;

(bb)   hiring, promotion, demotion or termination or other change to the employment status or title of any employees; or

(cc)   agreement by the Company or any of its Subsidiaries, or any officer or employees on behalf of the Company or any of its Subsidiaries, to do any of the things described in the preceding clauses (a) through (bb) of this Section 2.10 (other than negotiations with Parent and its representatives regarding the transactions contemplated by this Agreement, any Related Agreements and any Employment Related Agreements).

2.11   Accounts Receivable . 

         (a)     The Company has made available to Parent   a list of all accounts receivable of the Company and its Subsidiaries as of the Balance Sheet Date, together with an aging schedule indicating a range of days elapsed since invoice.

         (b)   All of the accounts receivable of the Company and its Subsidiaries arose in the ordinary course of business, are carried at values determined in accordance with GAAP consistently applied, are not subject to any valid set-off or counterclaim, do not represent obligations for goods sold on consignment, on approval or on a sale-or-return basis or subject to any other repurchase or return arrangement and are collectible except to the extent of reserves therefor set forth in the Current Balance Sheet or, for receivables arising subsequent to the Balance Sheet Date, as reflected on the books and records of the Company (which receivables are recorded in accordance with GAAP consistently applied).  No person has any Lien on any accounts receivable of the Company and its Subsidiaries and, to the Knowledge of the Company, no request or agreement for a material deduction or discount has been made with respect to any accounts receivable of the Company and its Subsidiaries.

2.12   Tax Matters . 

(a)   Definition of Taxes .  For the purposes of this Agreement, the term “ Tax ” or, collectively, “ Taxes ” shall mean (i) any and all U.S. federal, state, local and non-U.S. taxes, assessments and other governmental charges, duties, impositions and liabilities, including taxes based upon or measured by gross receipts, income, profits, sales, use and occupation, and value added, ad valorem, transfer, franchise, withholding, payroll, recapture, employment, escheats, excise and property taxes as well as public imposts, fees and social security charges (including health, unemployment, workers’ compensation and pension insurance), together with all interest, penalties and additions imposed with respect to such amounts, (ii) any liability for the payment of any amounts of the type described in clause (i) of this Section 2.12(a) as a result of being or ceasing to be a member of an affiliated, consolidated, combined or unitary group for any period (including any arrangement for group or consortium relief or similar arrangement), and (iii) any liability for the payment of any amounts of the type described in clauses (i) or (ii) of this Section 2.12(a) as a result of any express or implied obligation to indemnify any other person or as a result of any obligation under any agreement or arrangement with any other person with respect to such amounts and including any liability for taxes of a predecessor or transferor or otherwise by operation of law.

(b)   Tax Returns and Audits .

(i)   The Company and each of its Subsidiaries have (a) prepared and timely filed all required U.S. federal, state, local and non-U.S. returns, estimates, information statements and reports, including attachments and amendments thereto (“ Returns ”) relating to any and all Taxes concerning or attributable to the Company or any of its Subsidiaries or their respective operations and such Returns are true and correct and have been completed in accordance with applicable law and (b) timely paid all Taxes they are required to pay.

(ii)   The Company and each of its Subsidiaries have paid or withheld with respect to their respective Employees and other third parties, all U.S. federal, state and non-U.S. income Taxes and social security charges and similar fees, Federal Insurance Contribution Act amounts, Federal Unemployment Tax Act amounts and all other Taxes required to be withheld or paid, and has timely paid over any such withheld Taxes to the appropriate authorities.

(iii)   Neither the Company nor any of its Subsidiaries has been delinquent in the payment of any Tax, nor is there any Tax deficiency outstanding, assessed or proposed against the Company or any of its Subsidiaries, nor has the Company or any of its Subsidiaries executed any waiver of the statute of limitations on or extending the period for the assessment or collection of any Tax.

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

(v)   Neither the Company nor any of its Subsidiaries has any liabilities for unpaid Taxes as of the Balance Sheet Date that have not been accrued or reserved on the Current Balance Sheet, whether asserted or unasserted, contingent or otherwise, and neither the Company nor any of its Subsidiaries has incurred any liability for Taxes since the Balance Sheet Date other than in the ordinary course of business.  The Company and each of its Subsidiaries has identified all uncertain tax positions contained in all Returns filed by the Company or any of its Subsidiaries and has established adequate reserves and made any appropriate disclosures in the Financials in accordance with the requirements of Financial Interpretation No. 48 of FASB Statement No. 109.

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

(vii)   There are (and immediately following the Effective Time there will be) no Liens on the assets of the Company or any of its Subsidiaries relating to or attributable to Taxes, other than Liens for Taxes not yet due and payable.  There is no reasonable basis for the assertion of any claim relating or attributable to Taxes which, if adversely determined, would result in any Lien on the assets of the Company or any of its Subsidiaries.

(viii)   Neither the Company nor any of its Subsidiaries has (a) ever been a member of an affiliated group (within the meaning of Code §1504(a)) filing a consolidated U.S. 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, nor does the Company or any of its Subsidiaries owe any amount under any such agreement, (c) any liability for the Taxes of any Person, under Treasury Regulation §1.1502-6 (or any similar provision of state, local or non-U.S. law, and including any arrangement for group or consortium relief or similar arrangements), as a transferee or successor, by contract or agreement, by operation of law or otherwise or (d) ever been a party to any joint venture, partnership or other arrangement that could be treated as a partnership for Tax purposes.

(ix)   Section 2.12(b)(ix) of the Disclosure Schedule sets forth the following information with respect to the Company and each of its Subsidiaries: (1) the basis of the Company and each of its Subsidiaries in its assets; (2) the amount of any net operating loss, net capital loss, unused investment, foreign, or other Tax credit and the amount of any limitation upon any of the foregoing; and (3) the amount of any deferred gain or loss allocable to the Company and each of its Subsidiaries arising out of any deferred intercompany transaction as defined in Treas. Reg. § 1.1502-13 or any similar provision of applicable law.

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

(xi)   Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock intended to qualify for tax-free treatment under Section 355 of the Code.

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

(xiii)   Neither the Company nor any of its Subsidiaries is subject to Tax in any jurisdiction other than its country of incorporation or formation by virtue of having a permanent establishment, place of business or source of income in that jurisdiction.

(xiv)   The Company will not be required to include any income or gain or exclude any deduction or loss from taxable income for any taxable period or portion thereof after the Closing as a result of any (a)  change in method of accounting made prior to the Closing, (b) closing agreement under Section 7121 of the Code executed prior to the Closing, (c) deferred intercompany gain or excess loss account under Treasury Regulations under Section 1502 of the Code in connection with a transaction consummated prior to the Closing (or in each of items (a), (b), or (c), under any similar provision of applicable law), (d) installment sale or open transaction disposition consummated prior to the Closing or (e) prepaid amount received prior to the Closing.

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

(xvi)   The Company and its Subsidiaries are in compliance in all material respects with all applicable transfer pricing laws and regulations, including the maintenance of contemporaneous documentation substantiating the transfer pricing practices and methodology of the Company and its Subsidiaries.  The prices for any property or services (or for the use of any property) provided by or to the Company or any of its Subsidiaries are arm’s length prices for purposes of all applicable transfer pricing laws, including Treasury Regulations promulgated under Section 482 of the Code.

(xvii)   The Company and each of its Subsidiaries use the accrual method of accounting for income tax purposes.

(xviii)   To the extent required, the Company and each of its Subsidiaries has properly reported and/or withheld and remitted on amounts deferred under any Company nonqualified deferred compensation plan subject to Section 409A of the Code pursuant to IRS Notice 2006-100 for the years 2005, 2006 and 2007.

        (c)     Executive Compensation Tax.

(i)   There is no contract, agreement, plan or arrangement to which the Company or any of its Subsidiaries is a party, including the provisions of this Agreement, covering any Employee of the Company or any of its Subsidiaries, which, individually or collectively, could give rise to the payment of any amount that would not be deductible pursuant to Sections 404 or 162(m) of the Code or that would give rise to a penalty under Section 409A of the Code or that would give rise to an Employee penalty and Company reporting obligations under Section 409A of the Code using Federal Form W-2, in Box 12 using Code Z or Form 1099-Misc, in Box 15b and Box 7.

(ii)   There is no agreement, plan, arrangement or other contract covering any Employee that, considered individually or considered collectively with any other such agreements, plans, arrangements or other contracts, will, or could reasonably be expected to, give rise directly or indirectly to the payment of any amount that would be characterized as a “parachute payment” within the meaning of Section 280G(b)(1) of the Code.  There is no agreement, plan, arrangement or other contract by which the Company or any of its Subsidiaries is bound to compensate any Employee for excise taxes paid pursuant to Section 4999 of the Code.   Section 2.12(c)(ii) of the Disclosure Schedule lists all persons who the Company reasonably believes are or will be “disqualified individuals” (within the meaning of Section 280G of the Code and the regulations promulgated thereunder) as determined as of the date hereof and as of the Effective Time.

(iii)   Section 2.12(c)(iii) lists each “nonqualified deferred compensation plan” (as such term is defined in Section 409A(d)(1) of the Code) sponsored or maintained by the Company or any of its Subsidiaries.  Each such nonqualified deferred compensation plan is in material compliance with Section 409A of the Code, the final or proposed regulations thereunder, and any other IRS guidance issued with respect thereto.  No deferred compensation plan existing prior to January 1, 2005, which would otherwise not be subject to Section 409A of the Code, has been “materially modified” at any time after October 3, 2004.  No compensation shall be includable in the gross income of any Employee as a result of the operation of Section 409A of the Code with respect to any arrangements or agreements in effect prior to the Effective Time and the Company has no obligation to gross-up any Employee as a result of Taxes imposed under Section 409A.

(iv)   Each Company Option, stock appreciation right other similar right to acquire Company Common Stock or other Capital Stock of the Company or capital stock of any Subsidiary (i) has an exercise price that has never been and may never be less than the fair market value of the underlying equity as of the date such Company Option, stock appreciation right or other similar right was granted in accordance with all governing documents and in compliance with all applicable law, (ii) has no feature for the deferral of compensation other than the deferral of recognition of income until the later of exercise or disposition of such Company Option, stock appreciation right or other similar right, (iii) to the extent it was granted after December 31, 2004, was granted with respect to a class of stock of the Company or any Subsidiary that is “service recipient stock” (within the meaning of Section 409A any the temporary or final regulations or other IRS guidance issued with respect thereto), and (iv) has at all times been properly accounted for in accordance with GAAP in the Company’s audited financial statements provided to Parent.

2.13   Restrictions on Business Activities .  There is no agreement (non-competition or otherwise), commitment, judgment, injunction, order or decree to which the Company or any of its Subsidiaries is a party or otherwise binding upon the Company or any of its Subsidiaries which has or may reasonably be expected to have the effect of prohibiting or impairing any business practice of the Company or any of its Subsidiaries,

any acquisition of property (tangible or intangible) by the Company or any of its Subsidiaries, the conduct of business by the Company or any of its Subsidiaries, or otherwise limiting the freedom of the Company or any of its Subsidiaries to engage in any line of business or to compete with any person.  Without limiting the generality of the foregoing, neither the Company nor any of its Subsidiaries has entered into any agreement under which the Company or any of its Subsidiaries is restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services to customers or potential customers or any class of customers, in any geographic area, during any period of time, or in any segment of the market.

2.14   Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment; Customer Information . 

(a)   Neither the Company nor any of its Subsidiaries owns any real property, nor has the Company or any of its Subsidiaries ever owned any real property.   Section 2.14(a) of the Disclosure Schedule sets forth a complete and accurate list of all real property currently leased, subleased or licensed by or from the Company or any of its Subsidiaries or otherwise used or occupied by the Company or any of its Subsidiaries (the “ Leased Real Property ”), including the name of the lessor, licensor, sublessor, master lessor and/or lessee, the date and term of the lease, license, sublease or other occupancy right and each amendment thereto and, with respect to any current lease, license, sublease or other occupancy right, the square footage of the premises leased thereunder and the aggregate annual rental payable thereunder.

(b)   The Company has provided Parent true, correct and complete copies of all leases, lease guaranties, subleases, agreements for the leasing, use or occupancy of, or otherwise granting a right in or relating to the Leased Real Property, including all amendments, terminations and modifications thereof and all consents and waivers relating thereto (“ Lease Agreements ”); and there are no other Lease Agreements for real property affecting the Leased Real Property or to which Company or any of its Subsidiaries is bound, other than those identified in Section 2.14(a) of the Disclosure Schedule. All such Lease Agreements are in full force and effect and valid and effective in accordance with their respective terms, and there is not, under any of such Lease Agreements, any existing default, no rentals past due, or event of default (or event which with notice or lapse of time, or both, could constitute a default).  Neither the Company nor any of its Subsidiaries has received any notice of a default, alleged failure to perform, or any offset or counterclaim with respect to any such Lease Agreement, which has not been fully remedied and withdrawn.  The Closing will not affect the enforceability against any Person of any such Lease Agreement or any rights of the Company or any of its Subsidiaries or the Surviving Corporation thereunder or otherwise with respect to any Leased Real Property, including, without limitation, the right to the continued use and possession of the Leased Real Property for the conduct of business as presently conducted.  The Company and its Subsidiaries currently occupy all of the Leased Real Property for the operation of its business except as set forth in Section 2.14(a) of the Disclosure Schedule.  There are no other parties occupying, or with a right to occupy, the Leased Real Property, except as set forth in Section 2.14(a) of the Disclosure Schedule.  Neither the Company nor any of its Subsidiaries owes any brokerage commissions or finders fees with respect to any such Leased Real Property or would owe any such fees if any existing Lease Agreement were renewed pursuant to any renewal options contained in such Lease Agreements.

(c)   The Leased Real Property is sufficient and otherwise suitable for the conduct of the Company’s business as presently conducted.

(d)   The Company and its Subsidiaries have good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its tangible properties and assets, real, personal and mixed, used or held for use in its business, free and clear of any Liens, except (i) as reflected in the Current Balance Sheet, (ii) Liens for Taxes not yet due and payable, and (iii) such imperfections of title and encumbrances, if any, which do not detract from the value or interfere with the present use of the property subject thereto or affected thereby.  Each Lease Agreement constitutes the entire agreement of the landlord and the tenant thereunder, and no term or condition thereof has been modified or amended, except as described in Section 2.14(a) of the Disclosure Schedule and shown in the copies of the Lease Agreements that have previously been delivered by the Company to Parent.  The Company and its Subsidiaries have not transferred or assigned any interest in any such Lease Agreement, nor has the Company or any of its Subsidiaries subleased or otherwise granted rights of use or occupancy of any of the premises described therein to any other Person.

(e)   Section 2.14(e) of the Disclosure Schedule lists all material items of equipment (the “ Equipment ”) owned or leased by the Company or any of its Subsidiaries, and such Equipment is (i) adequate for the conduct of the business of the Company or any of its Subsidiaries 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.

(f)   The Company and its Subsidiaries have 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 ”).

2.15   Intellectual Property . 

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

“ Intellectual Property ” shall mean any or all of the following (i) works of authorship, including computer programs, source code, and executable code, whether embodied in software, firmware or otherwise, architecture, documentation, designs, files, records, and data, (ii) inventions (whether or not patentable), discoveries, improvements, and technology, (iii) proprietary and confidential information, trade secrets and know how, (iv) databases, data compilations and collections and technical data, (v) logos, trade names, trade dress, trademarks and service marks, (vi) domain names, web addresses and sites, (vii) tools, methods and processes, (viii) devices, prototypes, schematics, breadboards, netlists, maskworks, test methodologies, verilog files, emulation and simulation reports, test vectors and hardware development tools, and (ix) any and all instantiations of the foregoing in any form and embodied in any media.

“ Intellectual Property Rights ” shall mean worldwide common law and statutory rights associated with (i) patents and patent applications, (ii) copyrights, copyright registrations and copyright applications, “moral” rights and mask work rights, (iii) the protection of trade and industrial secrets and confidential information, (iv) other proprietary rights relating to intangible intellectual property, (v) trademarks, trade names and service marks, (vi) analogous rights to those set forth above, and (vii) divisions, continuations, renewals, reissuances and extensions of the foregoing (as applicable).

“ Company Intellectual Property ” shall mean any and all Intellectual Property and Intellectual Property Rights that are owned or purported to be owned by or exclusively licensed to the Company or any of its Subsidiaries.

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

(b)   Section 2.15(b)(1) of the Disclosure Schedule (i) lists all Registered Intellectual Property owned or purported to be owned by, or filed in the name of, the Company or any of its Subsidiaries (the “ Company Registered Intellectual Property ”) and (ii) lists any proceedings or actions before any Governmental Entity (including the United States Patent and Trademark Office (the “ PTO ”) or equivalent authority anywhere in the world) in which any of the Company Registered Intellectual Property is involved, including any proceedings or actions in which claims are raised relating to the validity, enforceability, scope, ownership or infringement of any of the Company Registered Intellectual Property.   Section 2.15(b)(2) of the Disclosure Schedule lists all products and services (including products, technologies and services currently under development) offered or planned by Company to be offered by the Company or any of its Subsidiaries and all material Intellectual Property owned or purported to be owned or exclusively licensed by the Company or any of its Subsidiaries.

(c)   Each item of Company Registered Intellectual Property is subsisting and not invalid , and all necessary registration, maintenance and renewal fees in connection with such Company Registered Intellectual Property have been paid and all necessary documents and certificates in connection with such Company Registered Intellectual Property have been filed with the relevant patent, copyright, trademark or other authorities in the United States or foreign jurisdictions, as the case may be, for the purposes of maintaining such Registered Intellectual Property.  There are no actions that must be taken by the Company within 60 days of the Closing Date, 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 Company Registered Intellectual Property.  In each case in which the Company or any of its Subsidiaries has acquired any Intellectual Property Rights from any person, the Company and its Subsidiaries have obtained a valid and enforceable assignment sufficient to irrevocably transfer all rights in such Intellectual Property and the associated Intellectual Property Rights (including the right to seek past and future damages with respect thereto) to the Company or any of its Subsidiaries and, to the maximum extent provided for by, and in accordance with, applicable laws and regulations, the Company and its Subsidiaries have recorded each such assignment with the relevant governmental authorities, including the PTO, the U.S. Copyright Office, or their respective equivalents in any relevant foreign jurisdiction, as the case may be.

(d)   To the Knowledge of Company, all Company Intellectual Property will be fully transferable, alienable and/or licensable by Surviving Corporation and/or Parent without restriction and without payment of any kind to any third party.

(e)   (Each item of Company Intellectual Property, including all Company Registered Intellectual Property listed in Section 2.15(b) of the Disclosure Schedule, and all Intellectual Property exclusively licensed to the Company or any of its Subsidiaries, is free and clear of any Liens other than those set forth on Section 2.15(e) of the Disclosure Schedule.  The Company is the exclusive owner or exclusive licensee of all Company Intellectual Property.

(f)   To the extent that any Intellectual Property has been developed or created independently or jointly by any person other than the Company or any of its Subsidiaries for which the Company or any of its Subsidiaries has, directly or indirectly, provided consideration for such development or creation, the Company or its Subsidiaries have a written agreement with such person with respect thereto, and the Company or its Subsidiaries thereby have obtained ownership of, and is the exclusive owner of, all such Intellectual Property therein and associated Intellectual Property Rights by operation of law or by valid assignment, and has required the waiver of all non assignable rights, including all author or moral rights, except where the failure to request such waiver would not have a material adverse effect on Company or its Subsidiaries.

(g)   Neither the Company nor any of its Subsidiaries has (i) 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 or Intellectual Property Rights that is or was Company Intellectual Property, to any other person or (ii) permitted the Company’s or any Subsidiary’s rights in such Company Intellectual Property to enter into the public domain.

(h)   All Intellectual Property used in the conduct of Company’s or any Subsidiary’s business as presently conducted or planned by the Company to be conducted by the Company or any of its Subsidiaries was written and created solely by either (i) employees of the Company or any of its Subsidiaries acting within the scope of their employment who have assigned all of their rights, including all Intellectual Property Rights therein, to the Company or any of its Subsidiaries or (ii) by third parties who have validly and irrevocably assigned all of their rights, including all Intellectual Property Rights therein, to the Company or any of its Subsidiaries, and no third party owns or has any rights to any of the Company Intellectual Property.

(i)   Other than the Open Source Software listed in Section 2.15(u) of the Disclosure Schedule, “off-the-shelf” or “shrink wrap” software priced at less than $10,000 per copy that is commercially available on substantially the same terms to Parent and is not used in the design, development or maintenance of the Company products or services (“ Off-The-Shelf Software ”), and the licenses set forth on Section 2.15(i)(1) of the Disclosure Schedule, the Company Intellectual Property constitutes, to the Company’s knowledge, all of the Intellectual Property and Intellectual Property Rights that are used in, necessary to or otherwise would be infringed by the conduct of the business of the Company or any of its Subsidiaries as it currently is conducted or planned by Company to be conducted, including the design, development, manufacture, use, import, marketing, licensing out and sale of any product, technology or service (including  products, technology or services currently under development).  Other than the Open Source Software listed in Section 2.15(u) and Off-The-Shelf Software, Section 2.15(i)(2) of the Disclosure Schedule sets forth to the Company’s knowledge all third party software (including  firmware or other software embedded in hardware) and any other third party Intellectual Property that is used in or necessary to the conduct of the business of the Company or any of its Subsidiaries as it currently is conducted or planned by Company to be conducted, including the design, development, manufacture, use, import, marketing, licensing out and sale of any product, technology or service.   Section 2.15(i)(2) of the Disclosure Schedule also specifies how such Intellectual Property is used or planned by Company to be used by the Company or any of its Subsidiaries, under what licenses, and whether there is or has been any material failure to comply with the terms of these licenses.

(j)   Other than (i) licenses for the Open Source Software listed in Section 2.15(u) of the Disclosure Schedule or for Off-The-Shelf Software, and the licenses identified on Section 2.15(i)(1) of the Disclosure Schedule, (ii) non exclusive end-user licenses for the Company’s or any Subsidiary’s products

entered into in the ordinary course of business and materially the same in substance as the Company’s or any Subsidiary’s standard form(s) of end user license including attachments (which form(s) is or are attached to Section 2.15(j) of the Disclosure Schedule), (iii) employee proprietary information and invention assignment agreements that are materially the same in substance as the Company or any Subsidiary’s standard forms (which form(s) is or are attached to Section 2.15(j) of the Disclosure Schedule), (iv) independent contractor agreements that are materially the same in substance as the Company or any Subsidiary’s standard forms (which form(s) is or are attached to Section 2.15(j) of the Disclosure Schedule), and (v)  confidentiality or non-disclosure agreements entered into in the ordinary course of business, Section 2.15(j) of the Disclosure Schedule lists all contracts, licenses and agreements to which the Company is a party with respect to any Intellectual Property and Intellectual Property Rights.

(k)   No third party that has licensed Intellectual Property or Intellectual Property Rights to the Company or any of its Subsidiaries has rights to ownership of or a license to improvements or derivative works made by the Company or any of its Subsidiaries of the Intellectual Property or Intellect