ASSET PURCHASE AGREEMENT

Asset Purchase Agreement

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NETSCOUT SYSTEMS INC | Quantiva, Inc.

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Title: ASSET PURCHASE AGREEMENT
Governing Law: Massachusetts Date: 4/20/2005
Industry: Computer Networks Law Firm: Choate, Hall & Stewart LLP; McDermott, Will & Emery LLP Sector: Technology

Exhibit 2.1

ASSET PURCHASE AGREEMENT

dated as of

February 12, 2005

between

NetScout Systems, Inc.

and

Quantiva, Inc.

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TABLE OF CONTENTS

Page

----

ARTICLE I -- DEFINITIONS.....................................................1

1.01. Definitions........................................................1

ARTICLE II - PURCHASE AND SALE...............................................5

2.01. Purchase and Sale..................................................5

2.02. Excluded Assets....................................................6

2.03. Assumption of Liabilities..........................................6

2.04. Excluded Liabilities...............................................7

2.05. Assignment of Contracts and Rights.................................7

2.06. Purchase Price; Closing............................................8

2.07. Allocation of Purchase Price.......................................9

ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER......................10

3.01. Corporate Existence and Power.....................................10

3.02. Corporate Authorization...........................................10

3.03. Governmental Authorization........................................11

3.04. Non-Contravention.................................................11

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

3.06. Absence of Certain Changes........................................12

3.07. Personal Property.................................................13

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

3.09. Sufficiency of Purchased Assets...................................14

3.10. Title to Purchased Assets.........................................14

3.11. No Undisclosed Liabilities........................................14

3.12. Litigation........................................................15

3.13. Material Contracts................................................15

3.14. Technology and Intellectual Property..............................16

3.15. Insurance Coverage................................................18

3.16. Compliance with Laws..............................................18

3.17. Employees.........................................................19

3.18. Environmental Compliance..........................................20

3.19. Customers and Suppliers...........................................22

3.20. Transactions with Affiliates; Intercompany Arrangements...........23

3.21. Finders' Fees.....................................................23

3.22. Other Information.................................................23

ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF BUYER........................23

4.01. Organization and Existence........................................23

4.02. Corporate Authorization...........................................23

4.03. Governmental Authorization........................................23

4.04. Non-Contravention.................................................24

4.05. Litigation........................................................24

4.06. Finders' Fees.....................................................24

ARTICLE V - COVENANTS OF SELLER.............................................24

5.01. Conduct of the Business...........................................24

5.02. Access to Information.............................................25

5.03. Notices of Certain Events; Continuing Disclosure..................25

5.04. Trademarks; Tradenames............................................26

5.05. Required Payments.................................................26

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5.06. Financial Statements...............................................26

5.07 End-user Licenses..................................................27

5.08 Other Agreements...................................................27

ARTICLE VI - COVENANTS OF BOTH PARTIES......................................27

6.01. Further Assurances................................................27

6.02. Certain Filings...................................................28

6.03. Public Announcements..............................................28

ARTICLE VII - TAX MATTERS...................................................28

7.01. Tax Definitions....................................................28

7.02. Tax Matters........................................................29

7.03. Tax Cooperation; Allocation of Taxes...............................30

ARTICLE VIII - EMPLOYEE BENEFITS............................................31

8.01. Employee Benefits Definitions......................................31

8.02. ERISA Representations..............................................32

8.03. Employees and Offers of Employment.................................33

8.04. Seller's Employee Benefit Plans....................................33

8.05. No Third Party Beneficiaries.......................................34

ARTICLE IX - CONDITIONS TO CLOSING..........................................34

9.01. Conditions to the Obligations of Each Party.......................34

9.02. Conditions to Obligation of Buyer.................................34

9.03. Conditions to Obligations of Seller...............................36

ARTICLE X - SURVIVAL; INDEMNIFICATION.......................................36

10.01. Survival..........................................................36

10.02. Indemnification...................................................36

10.03 Limitation of Indemnification.....................................37

10.04 Procedures........................................................37

10.05. No Waiver.........................................................38

ARTICLE XI -- TERMINATION...................................................38

11.01. Grounds for Termination..........................................38

11.02. Effect of Termination............................................38

11.03. Break-Up Fee.....................................................38

ARTICLE XII -- MISCELLANEOUS................................................39

12.01. Notices..........................................................39

12.02. Amendments; No Waivers...........................................39

12.03. Expenses.........................................................40

12.04. Successors and Assigns...........................................40

12.05. Governing Law....................................................40

12.06. Counterparts; Effectiveness......................................40

12.07. Entire Agreement.................................................40

12.08. Captions.........................................................40

12.09. Jurisdiction.....................................................40

12.10. Acquisition Sub..................................................40

<PAGE>

ASSET PURCHASE AGREEMENT

AGREEMENT dated as of February 12, 2005 between NetScout Systems, Inc.,

a Delaware corporation ("Buyer"), and Quantiva, Inc., a Delaware corporation

("Seller").

RECITALS:

WHEREAS, Seller conducts a business (the "Business") that designs,

develops, manufactures, licenses and markets software products for the

performance of automated analytics for application performance management on

computer networks, provides hosted or online services as well as maintenance and

other related services; and

WHEREAS, Buyer desires to purchase substantially all of the assets of

the Business from Seller, and Seller desires to sell substantially all of the

assets of the Business to Buyer, upon the terms and subject to the conditions

hereinafter set forth;

NOW, THEREFORE, in consideration of the foregoing and the

representations, warranties, covenants and agreements herein contained, the

parties hereto agree as follows:

ARTICLE I

DEFINITIONS

1.01. Definitions. (a) The following terms, as used herein, have the

following meanings:

"Affiliate" means, with respect to any Person, any Person directly or

indirectly controlling, controlled by, or under common control with such other

Person.

"Ancillary Agreements" means the Assignment and Assumption Agreement,

and the Patent Assignment Agreement.

"Balance Sheet" means the unaudited balance sheet of the Business as of

December 31, 2004 found in Schedule 3.05.

"Balance Sheet Date" means December 31, 2004.

"Business's Intellectual Property" means all Intellectual Property that

is owned or held by or on behalf of Seller for use, or that is being, and/or has

been, used, or is currently under development for use, in the Business as it has

been, is currently or is currently planned to be conducted.

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"Closing Date" means the date of the Closing.

"Intellectual Property" means all tangible or intangible proprietary

information and materials, including without limitation:

(a) (i) all inventions (whether patentable or unpatentable and

whether or not reduced to practice), all improvements thereon,

and all patents, patent applications and patent disclosures,

together with all reissuances, continuations,

continuations-in-part, divisions, revisions, extensions and

re-examinations thereof, (ii) all trademarks, services marks,

trade dress, logos, trade names, domain names, and corporate

names, together with all translations, adaptations, derivations

and combinations thereof and including all goodwill associated

therewith, and all applications, registrations and renewals in

connection therewith, (iii) all copyrights and all applications,

registrations and renewals in connection therewith, (iv) all

mask works and all applications, registrations and renewals in

connection therewith, (v) all trade secrets and confidential

business information (including without limitation ideas,

research and development, know-how, formulas, algorithms,

compositions, manufacturing and production process and

techniques, methods, schematics, technology, technical data,

designs, drawings, flowcharts, block diagrams, specifications,

customer and supplier lists, pricing and cost information and

business and marketing plans and proposals), and (vi) all

software and firmware (including data, databases, design

documents, object code, source code and related documentation);

(b) all documents, records and files relating to design, end user

documentation, manufacturing, quality control, sales, marketing

or customer support for, and tangible embodiments of, all

intellectual property described herein; and

product or any third party intellectual property described in

(a) and (b) above.

"Leased Real Property" means all Real Property that is leased or

subleased by Seller.

"Lien" means, with respect to any asset, any mortgage, lien, pledge,

charge, security interest, restriction or encumbrance of any kind in respect of

such asset.

"Material Adverse Change" means a material adverse change in the

business, assets, financial condition or results of operations of Seller or the

Business taken as a whole; provided, that none of the following shall be deemed,

by itself or by themselves, either alone or in combination, to constitute a

Material Adverse Change: (a) any change in the market price or trading volume of

the stock of the Buyer or of any publicly traded companies comparable to the

Buyer, or relating to or resulting from the US or international securities

markets in general; (b) any change arising out of conditions affecting the

economy or industry of the Seller or the Buyer in general, including changes in

technology direction for the performance of automated analytics

<PAGE>

for application performance management on computer networks caused by published

industry standards or caused by current or prospective market demand, other than

changes relating to intellectual property rights or the enforcement or licensing

thereof; (c) with respect to the Seller, delays or cancellations of customer

projects (or contracts) or project implementations involving the Seller and any

third party (including any delay or pause in negotiations with such third party)

which is attributable to the announcement of the transaction contemplated

hereby; or (d) the acquisition, change of control or initial public offering of

any competitor of the Buyer deemed to be a Material Adverse Change.

"Material Adverse Effect" means a material adverse effect on the

business, assets, financial condition or results of operations of Seller or the

Business taken as a whole; provided, that none of the following shall be deemed,

by itself or by themselves, either alone or in combination, to constitute a

Material Adverse Effect: (a) any change in the market price or trading volume of

the stock of the Buyer or of any publicly traded companies comparable to the

Buyer, or relating to or resulting from the US or international securities

markets in general; (b) any change arising out of conditions affecting the

economy or industry of the Seller or the Buyer in general, including changes in

technology direction for the performance of automated analytics for application

performance management on computer networks caused by published industry

standards or caused by current or prospective market demand, other than changes

relating to intellectual property rights or the enforcement or licensing

thereof; (c) with respect to the Seller, delays or cancellations of customer

projects (or contracts) or project implementations involving the Seller and any

third party (including any delay or pause in negotiations with such third party)

which is attributable to the announcement of the transaction contemplated

hereby; or (d) the acquisition, change of control or initial public offering of

any competitor of the Buyer.

"1934 Act" means the Securities Exchange Act of 1934, as amended, and

the rules and regulations promulgated thereunder.

"Owned Real Property" means all Real Property except for Leased Real

Property.

"Person" means an individual, corporation, limited liability company,

partnership, association, trust or other entity or organization, including a

government or political subdivision or an agency or instrumentality thereof.

"to Seller's Knowledge", "Known to Seller" and words of similar import

means the knowledge of Seller and the knowledge of each of Seller's officers,

employees and directors, in each case after reasonable inquiry.

<PAGE>

(b) Each of the following terms is defined in the Section set forth

opposite such term:

Term Section Term Section

------------------------- ----------- --------------------------- -------

Allocation Statement 2.07 Excluded Liabilities 2.04

Apportioned Obligation 7.03 Financial Statements 3.05

Assumed Liabilities 2.03 Hazardous Substance 3.18

Indemnified Party 10.04

Benefit Arrangement 8.01 Indemnifying Party 10.04

Business Recitals Initial Cash Payment 2.06

Closing 2.06 Interested Person 3.21

Code 7.01 IRS 7.03

CoEmployer 8.01 Leases 3.08

Consent 3.05 Multiemployer Plan 8.01

Contracts 2.01 Patent Assignment Agreement 2.06

Conveyance Documents 2.06 Permitted Real Estate Liens 3.08

COBRA 8.03 Personal Property 3.07

COBRA Coverage 8.04 Petty Cash 2.01

Damage 10.02 Post-Closing Tax Period 7.01

Disclosure Schedule Article III Pre-Closing Tax Period 7.01

Employee 8.01 Purchased Assets 2.01

Employee Plan 8.01 Purchase Price 2.06

Environment 3.18 Real Property 2.01

Environmental Law 3.18 Release 3.18

Environmental Liabilities 3.18 Tax 7.01

Environmental Permits 3.18 Tax Return 7.01

ERISA 8.01 Third Party Claim 10.02

ERISA Affiliate 8.01 Transferred Employee 8.01

Escrowed Cash 2.06 Third Party Claim 10.02

Excluded Assets 2.02

<PAGE>

ARTICLE II

PURCHASE AND SALE

2.01. Purchase and Sale. Upon the terms and subject to the conditions of

this Agreement, Buyer agrees to purchase from Seller and Seller agrees to sell,

transfer, assign and deliver, or cause to be sold, transferred, assigned and

delivered, to Buyer at Closing all of the assets, properties and business, other

than the Excluded Assets, of every kind and description, wherever located, real,

personal or mixed, tangible or intangible, owned, held or used in the conduct of

the Business by Seller or any Affiliate of Seller as the same shall exist on the

Closing Date, including all assets shown on the Balance Sheet and not disposed

of in the ordinary course of business since the Balance Sheet Date, and all

assets of the Business acquired by Seller between the Balance Sheet Date and the

Closing Date (the "Purchased Assets"), and including without limitation all

right, title and interest of Seller and its Affiliates in, to and under such of

the foregoing as are more specifically described below:

(a) the Quantiva(R) Analysis System product, software and

technology, the trade name "Quantiva", and all of the Business's

Intellectual Property, including without limitation the items

listed on Schedule 3.14;

(b) all real property and leases and subleases of, and other

interests in real property used by or on behalf of Seller or

held by or on behalf of Seller for use in connection with the

Business, in each case, together with all buildings, fixtures,

and improvements erected thereon, including without limitation

those properties listed on Schedule 3.08 (the "Real Property");

of Seller or held by or on behalf of Seller for use in

connection with the Business, including without limitation,

equipment, furniture, office equipment, computer equipment,

communications equipment, and other tangible property, including

without limitation the items listed on Schedule 3.07;

(d) all raw materials, work-in-process, finished goods, supplies and

other inventories, wherever situated used by or on behalf of

Seller or held by or on behalf of Seller for use in connection

with the Business;

(e) all rights under all contracts, agreements, leases, licenses,

commitments, sales and purchase orders and other instruments

used by or on behalf of Seller or held by or on behalf of Seller

for use in connection with the Business, including without

limitation the items listed on Schedule 3.13 (collectively, the

"Contracts");

(f) all accounts, notes and other receivables used by or on behalf

of Seller or held by or on behalf of Seller for use in

connection with the Business;

<PAGE>

(g) all prepaid expenses and deposits used by or on behalf of Seller

or held by or on behalf of Seller for use in connection with the

Business, including without limitation ad valorem taxes, leases,

license fees and rentals;

(h) all petty cash, not to exceed $1,000, located at operating

facilities of the Business ("Petty Cash"), as well as customer

deposits;

(i) all of Seller's rights, claims, credits, causes of action or

rights of set-off against third parties relating to the

Business, including, without limitation, unliquidated rights

under manufacturers', licensors' and vendors' warranties and

indemnities;

(j) all transferable licenses, permits or other governmental

authorizations affecting, or relating in any way to, the

Business, including without limitation the items listed on

Schedule 3.03;

(k) all books, records, files and papers, whether in hard copy or

computer format used by or on behalf of Seller or held by or on

behalf of Seller for use in connection with the Business,

including, without limitation, engineering information, sales

and promotional literature, manuals and data, sales and purchase

correspondence, lists of present and former suppliers, lists of

present and former customers, personnel and employment records,

and all information relating to Taxes imposed on or with respect

to the Business; provided, that Seller may retain under

confidentiality one copy of information relating to tax and

other governmental filings and proceedings solely for the

purpose of Seller's preparation of Tax returns and other

governmental filings required by Seller following the Closing;

and

(l) all goodwill associated with the Business or the Purchased

Assets, together with the right to represent to third parties

that Buyer is the successor to the Business.

2.02. Excluded Assets. Buyer expressly understands and agrees that the

following assets and properties of Seller (the "Excluded Assets") shall be

excluded from the Purchased Assets:

(a) all of Seller's cash and cash equivalents on hand and in banks,

less outstanding checks or transfers, except for Petty Cash, and

notes receivable from shareholders of Seller.

2.03. Assumption of Liabilities. Upon the terms and subject to the

conditions of this Agreement, Buyer agrees, effective at the Closing, to assume

the following liabilities (the "Assumed Liabilities"):

(a) all liabilities and obligations expressly scheduled to be

performed after the Closing Date under the Contracts

specifically assumed by Buyer and identified as assumed

Contracts on Schedule 2.03 (other than liabilities or

obligations

<PAGE>

attributable to any failure by Seller prior to the Closing to

comply with the terms thereof).

2.04. Excluded Liabilities. Notwithstanding any provision in this

Agreement or any other writing to the contrary, Buyer is assuming only the

Assumed Liabilities and is not assuming any other liability or obligation of

Seller or any Affiliate of Seller (or any predecessor owner of all or part of

its business and assets) of whatever nature whether presently in existence or

arising or asserted hereafter. All such other liabilities and obligations shall

be retained by and remain obligations and liabilities of Seller or its

Affiliates (all such liabilities and obligations not being assumed being herein

referred to as the "Excluded Liabilities"). Without limiting the foregoing, none

of the following shall be Assumed Liabilities for the purposes of this

Agreement:

(a) all liabilities and obligations arising out of or relating to

the Business or the operations or affairs of Seller on or prior

to the Closing Date, including without limitation any

liabilities and obligations arising out of or relating to any

facts, conditions or circumstances which occurred or existed

prior to the Closing, including without limitation any claims by

security holders or former security holders of Seller;

(b) any and all liabilities and obligations of Seller for Taxes,

including without limitation any Taxes that arise as a result of

the transactions contemplated by this Agreement and Taxes

described on Schedule 3.12;

employee or consultant benefits or compensation arrangements,

including, without limitation, any liabilities or obligations

for accrued vacation time or pay and any liabilities and

obligations under any of Seller's employee benefit agreements,

plans or other arrangements listed on Schedule 8.02;

(d) any Environmental Liabilities;

(e) any liability or obligation relating to an Excluded Asset;

(f) all warranty, sales returns and allowance claims or expenses of

Seller in respect of products sold or licensed or services

rendered by the Business prior to the Closing;

(g) any liability or obligation relating to the Contracts not

specifically assumed by the Buyer, including without limitation

those Contracts listed on Schedule 2.04; and

(h) any liability or obligation under any equity or equity-like

securities of Seller, including without limitation stock

options, rights and warrants and stock plans.

2.05. Assignment of Contracts and Rights. Anything in this Agreement to

the contrary notwithstanding, this Agreement shall not constitute an agreement

to assign any Purchased Asset

<PAGE>

or any claim or right or any benefit arising thereunder or resulting therefrom

if an attempted assignment thereof, without consent of a third party thereto,

would constitute a breach or other contravention thereof or adversely affect in

any material respect the rights of Buyer or Seller thereunder. Seller and Buyer

will use their commercially reasonable efforts (but without any payment of money

by Seller or Buyer) to obtain the consent of the other parties to any such

Purchased Asset or claim or right or any benefit arising thereunder for the

assignment thereof to Buyer as Buyer may reasonably request. If such consent is

not obtained, or if an attempted assignment thereof would be ineffective or

would adversely affect the rights of Seller thereunder so that Buyer would not

in fact receive all such rights, Seller and Buyer will cooperate in a mutually

agreeable arrangement under which Buyer would obtain the benefits and assume, to

the extent provided under this Agreement, obligations thereunder in accordance

with this Agreement, including subcontracting, sub-licensing, or subleasing to

Buyer, or under which Seller would enforce for the benefit of Buyer, with Buyer

assuming Seller's obligations, any and all rights of Seller against a third

party thereto. Seller will promptly pay to Buyer when received all monies

received by Seller under any Purchased Asset or any claim or right or any

benefit arising thereunder. In such event, Seller and Buyer shall, to the extent

the benefits therefrom and obligations thereunder have not been provided by

alternate arrangements satisfactory to Buyer, negotiate in good faith an

adjustment in the consideration paid by Buyer for the Purchased Assets.

2.06. Purchase Price; Closing. (a) The purchase price for the Purchased

Assets (the "Purchase Price") shall be as follows:

(i) At the Closing, Buyer shall pay to Seller the amount of

$7,980,491, less the amounts set forth on Schedule 2.06

(Schedule 2.06 to be amended at the Closing pursuant to

Section 5.07 to reflect certain payments by licensees

and on-line customers to Seller from January 1, 2005 to

the Closing Date), in cash (the "Initial Cash Payment"),

and shall assume the Assumed Liabilities.

(ii) For the purpose of securing Seller's obligations under

Article X, Buyer shall hold back an additional One

Million Three Hundred Thirty Thousand Dollars

($1,330,000) in cash to be used to satisfy claims and

obligations under Article X (the "Escrowed Cash"). Buyer

shall withhold the Escrowed Cash in a separate,

interest-bearing account and shall apply such funds in

accordance with Article X to make payments due under

Article X, or to the extent of the remaining Escrowed

Cash to make an additional payment to Seller following

the 16-month anniversary of the Closing and the

resolution and satisfaction of all claims and

obligations under Article X.

(iii) Buyer shall reserve the amount (in cash, restricted

stock or otherwise) of $789,509 for the employees and

consultants of Seller continuing in the Business with

Buyer following the Closing, on the terms and subject to

the conditions set forth in the Retention Agreements.

<PAGE>

(b) The closing (the "Closing") of the purchase and sale of the

Purchased Assets and the assumption of the Assumed Liabilities

hereunder shall take place at the offices of Choate, Hall &

Stewart LLP, Exchange Place, 53 State Street in Boston,

Massachusetts, as soon as possible, but in no event later than

three (3) business days after satisfaction of the conditions set

forth in Article IX, or at such other time or place as Buyer and

Seller may agree. At the Closing,

(i) Buyer shall pay to Seller the Initial Cash Payment to an

account maintained by Seller, such account to be

designated by Seller by written notice to Buyer not

later than two (2) business days prior to the Closing

Date.

(ii) Seller and Buyer shall enter into an Assignment and

Assumption Agreement substantially in the form attached

hereto as Exhibit A, and Seller shall deliver to Buyer

such bills of sale, endorsements, consents, assignments

and other good and sufficient instruments of conveyance

and assignment (the "Conveyance Documents") as the

parties and their respective counsel shall deem

reasonably necessary or appropriate to vest in Buyer all

right, title and interest in, to and under the Purchased

Assets, including without limitation a Patent Assignment

Agreement in the form reasonably requested by Buyer (the

"Patent Assignment Agreement").

(iii) Each of Seller and Buyer shall execute and deliver each

of the Ancillary Agreements to be entered into by it at

the Closing, in each case substantially in the form

attached as an Exhibit to this Agreement.

(iv) Without prejudice to Buyer's rights under Section 9.02

and Articles X and XI, Seller shall deliver to Buyer

revised schedules to this Agreement updating the

information shown thereon to the Closing Date.

(v) Seller and Buyer shall execute and deliver all such

instruments, documents and certificates as may be

reasonably requested by the other party that are

necessary, appropriate or desirable for the consummation

at the Closing of the transactions contemplated by this

Agreement.

2.07. Allocation of Purchase Price. (a) After the Closing, Buyer shall

deliver to Seller a statement (the "Allocation Statement"), setting forth the

value of the Purchased Assets, which shall be used for the allocation of the

Purchase Price and the Assumed Liabilities among the Purchased Assets. The

Allocation Statement shall be prepared in accordance with Section 1060 of the

Internal Revenue Code of 1986, as amended, and the regulations thereunder. The

Allocation Statement shall reflect that the value of each Purchased Asset is its

book value as of the then most recent fiscal year end of the Seller, and any

excess of the Purchase Price over the sum of such book values shall be allocated

to goodwill.

<PAGE>

(b) Seller and Buyer agree to report an allocation of such Purchase

Price among the Purchased Assets in a manner entirely consistent with the

Allocation Statement, and agree to act in accordance with such Allocation

Statement in the preparation of financial statements and filing of all Tax

Returns (including, without limitation, filing Form 8594 with its Federal income

Tax Return for the taxable year that includes the date of the Closing) and in

the course of any Tax audit, Tax review or Tax litigation relating thereto.

Forms 8594 relating to this transaction, each party shall deliver to the other

party a copy of its Form 8594.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

Except as set forth in the disclosure schedules dated as of the date

hereof and delivered herewith to Buyer (which disclosure schedules identify the

section and subsection to which each disclosure therein relates; provided, that

any matter disclosed pursuant to one section or subsection of Article III is

deemed disclosed for all other sections or subsections of Article III, if such

matter relates to more than one section or subsection of Article III and the

level of particularity and manner of disclosure of the matter expressly

disclosed in one section or subsection of the disclosure schedules would make a

reasonable person aware that such disclosure is relevant to such other sections

or subsections), Seller hereby represents and warrants to Buyer as of the date

hereof and as of the Closing Date that:

3.01. Corporate Existence and Power. Seller is a corporation duly

incorporated, validly existing and in good standing under the laws of its

jurisdiction of incorporation, and has all corporate powers and all governmental

licenses, authorizations, consents and approvals required to carry on the

Business as now conducted. Seller is duly qualified to do business as a foreign

corporation and is in good standing in each jurisdiction where the character of

the property owned or leased by it or the nature of its activities makes such

qualification necessary, except for those jurisdictions where the failure to be

so qualified would not, individually or in the aggregate, have a Material

Adverse Effect. Seller has heretofore delivered to Buyer true and complete

copies of the corporate charter and bylaws of Seller as currently in effect.

Seller has no subsidiaries and does not own or control, directly or

indirectly, any shares or any right to acquire shares of capital stock of any

other corporation or any interest in any partnership, joint venture or other

non-corporate business enterprise.

3.02. Corporate Authorization. The execution, delivery and performance

by Seller of this Agreement and each of the Ancillary Agreements, and the

consummation by Seller of the transactions contemplated hereby and thereby are

within Seller's corporate powers have been duly authorized by all necessary

corporate action on the part of Seller. Each of this Agreement and each

Ancillary Agreement to which Seller is a party has been duly executed and

delivered by

<PAGE>

Seller and constitutes a valid and binding agreement of Seller, enforceable in

accordance with its terms.

3.03. Governmental Authorization; Consents. (a) The execution, delivery

and performance by Seller of this Agreement and each of the Ancillary Agreements

to which Seller is a party require no action by or in respect of, or filing

with, any governmental body, agency, official or authority.

(b) Except as set forth in Schedule 3.03, no consent, approval,

waiver or other action (a "Required Consent") by any Person (other than any

governmental body, agency, official or authority referred to in (a) above) under

any contract, agreement, indenture, lease, instrument or other document to which

Seller is a party or is bound is required or necessary for the execution,

delivery and performance by Seller of this Agreement and each Ancillary

Agreement to which Seller is a party, or for the consummation of the

transactions contemplated hereby or thereby.

3.04. Non-Contravention. The execution, delivery and performance by

Seller of this Agreement and each Ancillary Agreement to which Seller is a

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

do not and will not (i) contravene or conflict with the corporate charter or

bylaws of Seller, (ii) assuming compliance with the matters referred to in

Section 3.03(a), contravene or conflict with any provision of any law,

regulation, judgment, injunction, order, Permit or decree binding upon or

applicable to Seller or the Business; (iii) assuming the receipt of all Required

Consents, constitute a default (with or without notice or lapse of time, or

both) under or give rise to any right of termination, cancellation or

acceleration of any right or obligation of Seller, or to a loss of any benefit,

relating to the Business to which Seller is entitled under any provision of any

agreement, contract or other instrument binding upon Seller or (iv) result in

the creation or imposition of any Lien on any Purchased Asset.

3.05. Financial Statements. (a) Attached as Schedule 3.05 are true and

complete copies of:

(i) the audited balance sheets as of December 31, 2001 and

2002 and the related audited statements of operations,

shareholders' equity and cash flows of Seller for each

of the 12 months ended December 31, 2001 and 2002;

(ii) the unaudited balance sheet of Seller as of December 31,

2003 and the related unaudited statements of operations,

shareholders' equity and cash flows of Seller for the 12

months then ended; and

(iii) the Balance Sheet of Seller as of December 31, 2004 and

the related unaudited statements of operations,

shareholders' equity and cash flows of Seller for the 12

months then ended ((i), (ii) and (iii), collectively,

the "Financial Statements").

<PAGE>

(b) Each of the balance sheets included in the Financial Statements

fairly presents in all material respects the financial position of Seller as of

its date, and the other statements included in the Financial Statements fairly

present in all material respects the results of operations, shareholders' equity

and cash flows, as the case may be, of Seller for the periods therein set forth,

in each case in accordance with generally accepted accounting principles

consistently applied.

and the related audited statements of operations, shareholders' equity and cash

flows of Seller for each of the 12 months ended December 31, 2003 and 2004, as

delivered to Buyer pursuant to Section 5.06, shall fairly represent in all

material respects the financial position of Seller as of its date and the

results of operations, shareholders' equity and cash flows, as the case may be,

of Seller for the periods therein set forth, in each case in accordance with

generally accepted accounting principles consistently applied.

(d) Buyer's internal controls over financial reporting are effective

in ensuring Buyer's ability to record, process, summarize and report financial

information, as well as the accuracy and completeness of the Financial

Statements. Buyer's auditors are independent for all purposes of the

Sarbanes-Oxley Act of 2002, the 1934 Act and the rules and regulations of the

Securities and Exchange Commission, and are registered with the Public Company

Accounting Oversight Board.

3.06. Absence of Certain Changes. Since the Balance Sheet Date, except

as set forth in Schedule 3.06, Seller has conducted the Business in the ordinary

course consistent with past practices, and there has not been, with respect to

Seller, any:

(a) Material Adverse Change or any event, occurrence, development or

state of circumstances or facts which could reasonably be

expected to result in a Material Adverse Change, or any

condition, event or occurrence which, individually or in the

aggregate, could reasonably be expected to prevent or materially

delay Seller's ability to consummate the transactions

contemplated by this Agreement or perform its obligations

hereunder or under the Ancillary Agreements;

(b) payment or grant of any right relating to the Business by Seller

to any Interested Person, or any charge by any Interested Person

to Seller relating to the Business, or other transaction between

Seller relating to the Business and any Interested Person,

except in any such case for employee compensation payments in

the ordinary course of business of Seller consistent with past

practice.

indebtedness for borrowed money with respect to the Business;

(d) creation or assumption by Seller of any Lien on any Purchased

Asset;

<PAGE>

(e) damage, destruction or other casualty loss (whether or not

covered by insurance) affecting the Business or any Purchased

Asset;

(f) transaction or commitment made, or any contract or agreement

entered into, by Seller relating to the Business or any

Purchased Asset (including the acquisition or disposition of any

assets) or any relinquishment by Seller of any contract or other

right, in either case, material to the Business;

(g) change in any method of Tax or financial accounting or

accounting practice or any making of a Tax election or change of

an existing election by Seller with respect to the Business;

(h) (i) grant of any severance or termination pay to any employee of

the Business, (ii) entering into of any employment, deferred

compensation or other similar agreement (or any amendment to any

such existing agreement) with any employee of the Business,

(iii) change in benefits payable under existing severance or

termination pay policies of Seller relating to the Business or

employment agreements to which any employee of the Business is a

party or (iv) change in compensation, bonus or other benefits

payable to employees of the Business;

(i) labor dispute or grievance, or any activity or proceeding by a

labor union or representative thereof to organize any employees

of the Business, or any lockouts, strikes, slowdowns, work

stoppages or threats thereof by or with respect to any such

employees;

(j) employee terminations and/or layoffs, and Seller has preserved

intact and kept available the services of present employees, in

each case in accordance with past practice,

(k) capital expenditure, or commitment for a capital expenditure,

for additions or improvements to property, plant and equipment;

(l) action which, if it had been taken or occurred after the

execution of this Agreement, would have required the consent of

Buyer pursuant to this Agreement;

(m) waiver, termination or loss by Seller of any material right or

benefit; or

(n) agreement, undertaking or commitment to do any of the foregoing.

3.07. Personal Property. (a) Seller has good and marketable title to, or

in the case of leased personal property has valid leasehold interests in, all

personal property (including without limitation equipment, inventory,

receivables and furniture) (whether tangible or intangible) used in the Business

(the "Personal Property"). Schedule 3.07 lists all Personal Property. None of

such Personal Property is subject to any Liens, other than Liens disclosed on

Schedule 3.07.

<PAGE>

(b) The Personal Property has no material defects, is in good

operating condition and repair (ordinary wear and tear excepted), and is

generally adequate for the uses to which it is being put.

subleases for Personal Property.

3.08. Real Property. (a) None of the Real Property is owned by Seller.

All of the Real Property is leased by Seller as lessee or sublessee.

(b) Schedule 3.08 completely and accurately describes all leases and

subleases of Real Property (the "Leases"), together with a description of all

buildings and material fixtures and improvements erected thereon.

enforceable in accordance with their respective terms, and there does not exist

under any such Lease any default by Seller or, to Seller's Knowledge, by any

other Person, or any event that, with notice or lapse of time or both, would

constitute a default by Seller or, to Seller's Knowledge, by any other Person.

Seller has delivered to Buyer complete and accurate copies of all Leases,

including all amendments and agreements related thereto. All rent and other

charges currently due and payable under the Leases have been paid.

(d) Seller is the holder of the lessee's interest under the Leases

and has neither assigned the Leases nor subleased all or any portion of the

premises leased thereunder. Seller has not made any alterations, additions or

improvements to the premises leased under the Leases that are required to be

removed (or of which lessor could require removal) at the termination of the

respective Lease terms.

3.09. Sufficiency of Purchased Assets. As of the date of this Agreement,

the Purchased Assets and the Excluded Assets together constitute, and on the

Closing Date will constitute, all of the assets or property used or held for use

in the Business as of each such date. On the Closing Date, the Purchased Assets

will be generally adequate to conduct the Business as currently conducted;

provided, however, that Buyer acknowledges that Seller has been incurring

operating losses since its inception.

3.10. Title to Purchased Assets. Upon consummation of the transactions

contemplated hereby, Buyer will have acquired good and marketable title in and

to, or a valid leasehold interest in, each of the Purchased Assets, free and

clear of all Liens.

3.11. No Undisclosed Liabilities. Except as disclosed in the Financial

Statements or set forth in Schedule 3.11, there are no liabilities of the

Business of any kind whatsoever relating to the Purchased Assets or the Business

to be conducted by Buyer, whether accrued, contingent, absolute, determined,

determinable or otherwise, and there is no existing condition, situation or set

of circumstances which could reasonably be expected to result in such a

liability, other than

<PAGE>

liabilities incurred in the ordinary course of business consistent with past

practices since the Balance Sheet Date, which in the aggregate are not material

to the Business, taken as a whole.

3.12. Litigation. Except as disclosed in Schedule 3.12 of the Disclosure

Schedule, there is no claim, action, suit, investigation or proceeding (or any

basis therefor) pending against, or to the Seller's Knowledge, threatened

against or affecting, Seller, the Business, any Purchased Asset or any employee

of Seller (in his capacity as such), or to Seller's Knowledge, any Affiliate,

consultant or security holder of Seller (in his or its capacity as such), or the

transactions contemplated hereby before any court or arbitrator or any

governmental body, agency, official or authority. Neither Seller nor to Seller's

Knowledge any Affiliate, employee, consultant or security holder of Seller (in

his or its capacity as such) has pending or to Seller's Knowledge is threatening

or contemplating any claim, action, suit, investigation or proceeding relating

to or affecting Seller, the Business or the transactions contemplated hereby.

3.13. Material Contracts. (a) Except for the Contracts disclosed in

Schedule 3.13, as of the date of this Agreement, with respect to the Business,

Seller is not a party to or subject to any:

(i) lease;

(ii) contract for the purchase of materials, supplies, goods,

services, equipment or other assets providing for annual

payments by Seller of, or pursuant to which in the last

year Seller paid, in the aggregate $5,000 or more;

(iii) purchase order, license agreement or sales, maintenance,

development, OEM, value added reseller, distribution,

reseller, teaming, co-marketing or other similar

agreement providing for the sale or license by Seller of

materials, supplies, goods, services, equipment,

software products or other assets;

(iv) partnership, joint venture or other similar contract

arrangement or agreement;

(v) contract relating to indebtedness for borrowed money or

the deferred purchase price of property (whether

incurred, assumed, guaranteed or secured by any asset);

(vi) employment or consulting agreement;

(vii) license, technology transfer, franchise or other

agreement in respect of any Intellectual Property or

other property owned or used by Seller;

(viii) agency, dealer, sales representative or other similar

agreement;

<PAGE>

(ix) contract or other document that limits the freedom of

Seller to compete in any line of business or with any

Person or in any area to own, operate, sell, transfer,

pledge or otherwise dispose of or encumber any Purchased

Asset;

(x) contract or commitment with or for the benefit of any

Interested Person; or

(xii) other contract or commitment that is material to the

Business taken as a whole.

(b) Each Contract disclosed in any Schedule to this Agreement or

required to be disclosed pursuant to Section 3.13(a) is a valid and binding

agreement of Seller and is in full force and effect, and neither Seller nor, to

Seller's Knowledge, any other party thereto is in default in any material

respect under the terms of any such Contract, nor, to Seller's Knowledge, has

any event or circumstance occurred that, with notice or lapse of time or both,

would constitute an event of default thereunder.

3.14. Technology and Intellectual Property. (a) Schedule 3.14(a) lists:

(i) all patents and all trademarks, service marks, copyrights and mask works,

and any applications and renewals for any of the foregoing used by or on behalf

of Seller for the benefit of the Business; (ii) all hardware products and tools,

software and firmware products and tools and services that are currently sold,

published, offered, or under development by or on behalf of Seller for the

benefit of the Business; and (iii) all licenses (in and out), sublicenses and

other agreements to which Seller is a party and pursuant to which Seller or any

other Person is authorized to use any of the Business's Intellectual Property or

exercise any other right with regard thereto. The disclosures described in

clause (iii) of the preceding sentence include the identities of the parties to

the relevant agreements, a brief description of the nature and subject matter

thereof, the term thereof and the applicable payment terms (or summary of any

formula or procedure for determining such payment terms).

(b) Each item of the Business's Intellectual Property is either: (i)

owned solely by Seller free and clear of any liens; or (ii) rightfully used and

authorized for use by Seller and its successors pursuant to a valid, enforceable

and transferable (without consent) written license. All of the Business's

Intellectual Property that is used by Seller pursuant to a license or other

grant of a right by a third party to use its proprietary information is

separately identified as such under Schedule 3.14(b). Seller has

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