EXHIBIT 10.118

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER, dated as of March 14 2006 (this “Agreement”),
is entered into by and among Warp Technology Holdings, Inc., operating under the
name Halo Technology Holdings, a Nevada corporation (“Parent”), UCA Merger Sub,
Inc., a Delaware corporation and wholly-owned subsidiary of Parent (“Merger
Sub”) and Unify Corporation, a Delaware corporation (the “Company”). Parent,
Merger Sub and the Company are collectively referred to herein as the “Parties.”

  A.   The respective Boards of Directors of Parent, Merger Sub and the Company
(i) have approved and have declared advisable the merger of Merger Sub with and
into the Company (the “Merger”), upon the terms and subject to the conditions
set forth herein and (ii) have determined that the Merger and the other
transactions contemplated hereby are consistent with, and in furtherance of,
their respective business strategies and goals.

  B.   The Parties desire to make certain representations, warranties, covenants
and agreements in connection with the Merger and also to set forth various
conditions to the Merger.

  C.   For federal income tax purposes, it is intended that the Merger will
qualify as a reorganization under the provisions of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the “Code” or “IRC”), and the Parties
to this Agreement intend to adopt this Agreement as a “plan of reorganization”
within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States
Treasury Regulations; and

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the Parties agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger.

Upon the terms and subject to the conditions set forth in this Agreement, and in
accordance with the Delaware General Corporation Law (the “DGCL”), Merger Sub
shall be merged with and into the Company at the Effective Time. Following the
Effective Time, the separate corporate existence of Merger Sub shall cease and
the Company shall be the surviving corporation (the “Surviving Corporation”),
shall succeed to and assume all the rights and obligations of Merger Sub in
accordance with the DGCL and shall become a wholly-owned subsidiary of Parent.

1.2 Closing.

The closing of the Merger (the “Closing”) will take place at 10:00 a.m. on a
date to be specified by the Parties (the “Closing Date”), which shall be no
later than the second business day after satisfaction or waiver of the
conditions set forth in Article VII (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction or
waiver of those conditions), unless another time or date is agreed to by the
Parties hereto. The Closing will be held at the offices of the Parent at 200
Railroad Avenue, Third Floor, Greenwich, Connecticut 06830 or such other
location as the parties may agree.

1.3 Effective Time.

Subject to the provisions of this Agreement, on the Closing Date, the Parties
shall file a certificate of merger (the “Certificate of Merger”) executed in
accordance with the relevant provisions of the DGCL and shall make all other
filings or recordings required under the DGCL. The Merger shall become effective
at such time (the “Effective Time”) as the Certificate of Merger is filed with
the Secretary of State of the State of Delaware, or at such subsequent date or
time as Parent and the Company shall agree and specify in the Certificate of
Merger.

1.4 Effects of the Merger.

      The Merger shall have the effects set forth in Section 259 of the DGCL.

 
   
1.5
  Certificate of Incorporation and Bylaws.

At the Effective Time, subject to the provisions of Section 6.10, the
certificate of incorporation of the Company shall be amended and restated to be
the same in substance as the certificate of incorporation of Merger Sub as in
effect immediately prior to the Effective Time (except that the name of the
Company will remain unchanged), and said amended and restated certificate of
incorporation shall be the certificate of incorporation of the Surviving
Corporation. At the Effective Time, subject to the provisions of Section 6.10,
the bylaws of the Company shall be amended and restated to be the same in
substance as the bylaws of Merger Sub as in effect immediately prior to the
Effective Time, and such amended and restated bylaws shall be the bylaws of the
Surviving Corporation until thereafter amended.

1.6 Directors and Officers.

The directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation until the next annual meeting of
stockholders of the Surviving Corporation (or their earlier resignation or
removal) and until their respective successors are duly elected and qualified,
as the case may be. The officers of Merger Sub immediately prior to the
Effective Time shall be the officers of the Surviving Corporation, until their
successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation’s certificate of incorporation and bylaws.

1.7 Plan of Reorganization.

For federal income tax purposes, the Merger is intended to constitute a
reorganization within the meaning of Section 368 of the Code. The Parties to
this Agreement hereby adopt this Agreement as a “plan of reorganization” within
the meaning of Sections 1.368-2(g) and 1.368-3(a) of the Income Tax Regulations.

ARTICLE II

EFFECT OF THE MERGER ON THE STOCK OF THE CONSTITUENT CORPORATIONS; EXCHANGE OF
CERTIFICATES

2.1 Effect on Stock.

As of the Effective Time, by virtue of the Merger and without any action on the
part of Merger Sub, the Company or the holders of any securities of the Company
or Merger Sub:

(a) Cancellation of Company Common Stock. Each share of Company Common Stock
that is owned directly by the Company or by Parent or any of their wholly-owned
Subsidiaries, if any, shall automatically be cancelled and retired and shall
cease to exist, and no consideration shall be delivered in exchange therefor.

(b) Conversion of Company Common Stock. Subject to Sections 2.1(e) and 2.2(e),
each issued and outstanding share of Company Common Stock (other than shares to
be cancelled in accordance with Section 2.1(a) and shares exercising appraisal
rights in accordance with Section 2.1(f)) at the Effective Time shall be
converted into the right to receive 0.437 of one share of Parent Common Stock
(the “Exchange Ratio”). The shares of Parent Common Stock issued in exchange for
Company Common Stock, together with the Substitute Options and the Substitute
Warrants, constitutes the “Merger Consideration.” As of the Effective Time and
without any action on the part of the holders thereof, all such shares of
Company Common Stock shall no longer be outstanding and shall automatically be
cancelled and retired and shall cease to exist, and each holder of a certificate
or certificates that immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the “Certificates”) shall cease to
have any rights with respect thereto, except the right to receive (i) the Merger
Consideration and (ii) certain dividends and other distributions in accordance
with Section 2.2(c).

(c) Conversion of Common Stock of Merger Sub. Each issued and outstanding share
of common stock, no par value per share, of Merger Sub shall be converted into
and become one validly issued, fully paid and nonassessable share of common
stock of the Surviving Corporation.

(d) Common Stock Options and Warrants.

(i) Prior to the Effective Time, each outstanding Company Stock Option that
(1) has an exercise price of less than $1.00 per share, and (2) is unexercised
as of the Effective Date shall become and represent an option to purchase (a
“Substitute Option”) the number of shares of Parent Common Stock (rounded down
to the nearest full share) determined by multiplying (X) the number of shares of
Company Common Stock subject to such Company Stock Option immediately prior to
the Effective Time by (Y) the Exchange Ratio, at an exercise price per share of
Parent Common Stock equal to the result of dividing (A) the exercise price of
such Company Stock Option by (B) the Exchange Ratio and rounding the result up
to the nearest tenth of one cent. All other outstanding options to purchase
Company Common Stock shall be cancelled at the Effective Time. All Substitute
Options shall contain substantially the same terms and conditions as the
applicable Company Stock Option.

(ii) Prior to the Effective Time, each outstanding and unexercised warrant to
purchase shares of Company Common Stock (each, a “Company Warrant”) shall become
and represent a warrant to purchase (a “Substitute Warrant”) the number of
shares of Parent Common Stock (rounded down to the nearest full share)
determined by multiplying (X) the number of shares of Company Common Stock
subject to such Company Warrant immediately prior to the Effective Time by
(Y) the Exchange Ratio, on such other terms and subject to such other conditions
as are set forth in the form of Substitute Warrant attached hereto as Exhibit B.

(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to
reflect appropriately the effect of any stock split, reverse stock split, stock
dividend (including any dividend or distribution of securities convertible into
or exercisable or exchangeable for Parent Common Stock or Company Common Stock),
extraordinary dividend, reorganization, recapitalization, reclassification,
combination, exchange of shares or other like change with respect to Parent
Common Stock or Company Common Stock occurring or having a record date on or
after the date hereof and prior to the Effective Time.

(f) Appraisal Rights. Notwithstanding any provision of this Agreement to the
contrary, shares of Company Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by a holder who has
not voted such shares in favor of the Merger and who has or may properly demand
appraisal rights in the manner provided by Section 262 of the DGCL (“Dissenting
Shares”) shall not be converted into a right to receive a portion of the Merger
Consideration unless and until the holder of such shares becomes ineligible for
such appraisal rights. The holders thereof shall be entitled only to such rights
as are granted by Section 262 of the DGCL. Each holder of Dissenting Shares who
becomes entitled to payment for such shares pursuant to Section 262 of the DGCL
shall receive payment therefor from the Parent in accordance with the DGCL;
provided, however, that (a) if any such holder of Dissenting Shares shall have
failed to establish entitlement to appraisal rights as provided in Section 262
of the DGCL, (b) if any such holder of Dissenting Shares shall have effectively
withdrawn demand for appraisal of such shares or lost the right to appraisal and
payment for shares under Section 262 of the DGCL or (c) if neither any holder of
Dissenting Shares nor the Surviving Corporation shall have filed a petition
demanding a determination of the value of all Dissenting Shares within the time
provided in Section 262 of the DGCL, such holder shall forfeit the right to
appraisal of such shares and each such share shall be treated as if it had been,
as of the Effective Time, converted into a right to receive the applicable
portion of the Merger Consideration, without interest thereon, as provided in
Section 2.1(b) of this Agreement. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of any shares of Company
Common Stock, and Parent shall have the right to direct 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, or settle or
offer to settle, any such demands with respect to any holder of Dissenting
Shares before the Effective Time.

2.2 Exchange of Certificates.

(a) Exchange Agent. Prior to the Closing Date, Parent shall enter into an
agreement with such bank or trust company as may be designated by Parent and as
shall be reasonably satisfactory to the Company to act as exchange agent for the
purpose of exchanging Certificates for the Merger Consideration (the “Exchange
Agent”). At or prior to the Effective Time, Parent shall deposit with the
Exchange Agent, for the benefit of the holders of shares of Company Common
Stock, for exchange in accordance with this Article II, through the Exchange
Agent, the Parent Common Stock issuable pursuant to Section 2.1 in exchange for
outstanding shares of Company Common Stock. Parent shall issue the Substitute
Options and Substitute Warrants directly to the holders of outstanding Company
Stock Options and Company Warrants. Parent shall also make available to the
Exchange Agent, from time to time as required after the Effective Time, cash
necessary to pay dividends and distributions in accordance with
Section 2.2(c) and to make payments in lieu of any fractional shares in
accordance with Section 2.2(e). Any certificates of Parent Common Stock and cash
deposited with the Exchange Agent as provided above shall hereinafter be
referred to as the “Exchange Fund.”

(b) Exchange Procedures. As soon as reasonably practicable after the Effective
Time, but no later than two days thereafter, the Exchange Agent shall mail to
each holder of record of a Certificate whose shares were converted into the
Merger Consideration pursuant to Section 2.1 of this Agreement, (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Parent and the Company may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the Merger Consideration. Upon surrender of a Certificate for
cancellation to the Exchange Agent, together with such letter of transmittal,
duly executed, and such other documents as may reasonably be required by the
Exchange Agent, the holder of such Certificate shall be entitled to receive in
exchange therefor a Parent certificate representing that number of whole shares
of Parent Common Stock issuable to such holder pursuant to the Merger, certain
dividends or other distributions in accordance with Section 2.2(c) and cash in
lieu of any fractional share in accordance with Section 2.2(e) that such holder
has the right to receive pursuant to the provisions of this Article II, and the
Certificate so surrendered shall forthwith be cancelled. Any other cash
distributions made in accordance with Section 2.2(c) and 2.2(e) shall be paid by
check or wire transfer. In the event of a transfer of ownership of Company
Common Stock that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a Person other than the Person in whose name the Certificate so
surrendered is registered if such Certificate shall be properly endorsed or
otherwise be in proper form for transfer and the Person requesting such issuance
shall pay any transfer or other non-income taxes required by reason of the
issuance of shares of Parent Common Stock to a Person other than the registered
holder of such Certificate or establish to the satisfaction of Parent that such
tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 2.2, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive upon such surrender the
Merger Consideration that the holder thereof has the right to receive pursuant
to the provisions of this Article II, and, if applicable, certain dividends or
other distributions in accordance with Section 2.2(c). No interest will be paid
or will accrue on any cash payable to holders of Certificates pursuant to the
provisions of this Article II.

(c) Distributions with Respect to Unexchanged Shares. No dividends or other
distributions with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate with
respect to the shares of Parent Common Stock represented thereby, and no cash
payment in lieu of fractional shares shall be paid to any such holder pursuant
to Section 2.2(e), and all such dividends, other distributions and cash in lieu
of fractional shares of Parent Common Stock shall be paid by Parent to the
Exchange Agent and shall be included in the Exchange Fund, in each case until
the surrender of such Certificate in accordance with this Article II. Subject to
the effect of applicable escheat or similar laws, following surrender of any
such Certificate, there shall be paid to the holder of the certificate
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and with a payment date
subsequent to such surrender payable with respect to such whole shares of Parent
Common Stock. Parent shall make available to the Exchange Agent cash for these
purposes.

(d) No Further Ownership Rights in Company Common Stock. All shares of Parent
Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms of this Article II shall be deemed to have been issued
in full satisfaction of all rights pertaining to the shares of Company Common
Stock theretofore represented by such Certificates, subject, however, to the
Surviving Corporation’s obligation to pay any dividends or make any other
distributions with a record date prior to the Effective Time that may have been
authorized or made by the Company on such shares of Company Common Stock that
remain unpaid at the Effective Time, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
shares of Company Common Stock that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates are presented to the
Surviving Corporation or the Exchange Agent for any reason, they shall be
cancelled and exchanged as provided in this Article II, except as otherwise
provided by law.

(e) No Fractional Shares.

(i) No certificates or scrip representing fractional shares of Parent Common
Stock shall be issued upon the surrender for exchange of Certificates, no
dividend or distribution of Parent shall relate to such fractional share
interests and such fractional share interests will not entitle the owner thereof
to vote or to any rights of a stockholder of Parent.

(ii) As promptly as practicable following the Effective Time, Parent shall pay
to each former holder of Company Common Stock an amount in cash equal to the
product obtained by multiplying (A) the fractional share interest to which such
former holder (after taking into account all shares of Company Common Stock held
at the Effective Time by such holder) would otherwise be entitled by
(B) Parent’s Conversion Price.

(iii) As soon as practicable after the determination of the amount of cash, if
any, to be paid to holders of Company Common Stock with respect to any
fractional share interests, the Exchange Agent will make available such amounts
to such holders of Company Common Stock subject to and in accordance with the
terms of Section 2.2(c).

(f) Termination of Exchange Fund. Any portion of the Exchange Fund that remains
undistributed to the holders of the Certificates for twelve (12) months after
the Effective Time shall be delivered to Parent, upon demand, and any holders of
the Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Merger
Consideration and any dividends or distributions with respect to Parent Common
Stock.

(g) No Liability. None of Parent, the Company, Merger Sub, the Surviving
Corporation or the Exchange Agent shall be liable to any Person in respect of
any shares of Parent Common Stock (or dividends or distributions with respect
thereto) or cash from the Exchange Fund in each case properly delivered to a
public official pursuant to any applicable abandoned property, escheat or
similar law. If any Certificate shall not have been surrendered prior to seven
years after the Effective Time, and shall not previously have been required to
be escheated to or become the property of any Governmental Entity, any such
Merger Consideration or cash, dividends or distributions in respect of such
Certificate shall, to the extent permitted by applicable law, become the
property of Parent, free and clear of all claims or interest of any Person
previously entitled thereto.

(h) Investment of Exchange Fund. The Exchange Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent upon termination of the Exchange Fund.

(i) Lost Certificates. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the Person claiming
such Certificate to be lost, stolen or destroyed, the Exchange Agent will issue
in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration and unpaid dividends and distributions on shares of Parent Common
Stock deliverable in respect thereof, in each case pursuant to this Agreement.

(j) Withholding Rights. Each of the Surviving Corporation, Parent and Exchange
Agent shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of shares of Company Common
Stock such amounts as it is required to deduct and withhold with respect to the
making of such payment under the Code and the rules and regulations promulgated
thereunder, or any provision of state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation, Parent or the
Exchange Agent, as the case may be, and delivered to the relevant taxing
authority, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Common
Stock in respect of which such deduction and withholding was made by the
Surviving Corporation, Parent or the Exchange Agent, as the case may be.

2.3 Further Assurances.

At and after the Effective Time, the officers and directors of the Surviving
Corporation shall be authorized to execute and deliver, in the name and on
behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or
assurances and to take and do, in the name and on behalf of the Company or
Merger Sub, any other actions and things reasonably necessary to vest, perfect
or confirm of record or otherwise in the Surviving Corporation any and all
right, title and interest in, to and under any of the rights, properties or
assets acquired or to be acquired by the Surviving Corporation as a result of,
or in connection with, the Merger.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby makes the following representations and warranties to Parent
and Merger Sub as set forth in this Article III, subject to the exceptions
disclosed in writing in the disclosure schedules of the Company delivered
herewith (the “Company Disclosure Schedule”), each of which representations and
warranties are being relied upon by Parent and Merger Sub as an inducement to
enter into and perform this Agreement. For purposes of the Company’s
representations and warranties, references to “Company” include “Company and its
Subsidiaries.” It is acknowledged and agreed by Parent and Merger Sub that any
matter set forth in any schedule, section or subsection of the Company
Disclosure Schedule shall expressly not be deemed to constitute an admission by
the Company, or otherwise imply, that any such matter rises to the level of a
Material Adverse Effect or is otherwise material for purposes of this Agreement
or the Company Disclosure Schedule.

3.1 Corporate Organization.

The Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each Subsidiary of the Company
is duly organized, validly existing and in good standing under the laws of its
jurisdiction of formation. The Company and each Subsidiary has the corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business in each jurisdiction in which the nature of any
business conducted by it or the character or location of any properties or
assets owned or leased by it makes such licensing or qualification necessary,
except where the failure to so qualify or to be in good standing has not had and
would not likely have a Material Adverse Effect. The certificate of
incorporation and bylaws of the Company and corresponding organizational
documents of each Subsidiary, copies of which are attached at Section 3.1 of the
Company Disclosure Schedule, are true, correct and complete copies of such
documents as in effect as of the date of this Agreement. Section 3.1 of the
Company Disclosure Schedule includes a listing of all Subsidiaries of the
Company and all jurisdictions in which the Company or any Subsidiary is
qualified to do business or has assets and/or conducts operations.

3.2 Capitalization.

The authorized capital stock of the Company consists of 45,000,000 shares of
Company capital stock, of which 40,000,000 are designated as Company common
stock (“Company Common Stock”), par value $.001 per share and of which 5,000,000
are designated as preferred shares, par value $.001 per share (“Company
Preferred Shares”). As of the date hereof, there are (i) 29,376,201 shares of
Company Common Stock issued and outstanding and 56,960 shares of Company Common
Stock held in the Company’s treasury, (ii) 1,573,011 shares of Company Common
Stock reserved for issuance upon exercise of Company Stock Options,
(iii) 2,272,715 shares of Company Common Stock reserved for issuance upon
exercise of Company Warrants and (iv) no Company Preferred Shares issued and
outstanding, held in the Company’s treasury or reserved for issuance. All of the
issued and outstanding shares of Company Common Stock have been duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. Other
than as referenced above or disclosed in the Company SEC Reports, the Company
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
purchase or issuance of any Company Common Stock or Company Preferred Shares or
any other equity security of the Company or any securities representing the
right to purchase or otherwise receive any Company Common Stock or any other
equity security of the Company. Except as disclosed in the Company SEC Reports,
the Company owns 100% of the outstanding equity interests in each Subsidiary.
Except for the Stockholder Agreement and except as disclosed in the Company SEC
Reports, there are not as of the date hereof and there will not be at the
Effective Time any stockholder agreements, voting trusts or other agreements or
understandings to which the Company is a party or to which it is bound relating
to the voting of any shares of the capital stock of the Company. Except as
disclosed in the Company SEC Reports, there are no existing rights with respect
to the registration of Company Common Stock under the Securities Act, including,
but not limited to, demand rights or piggy-back registration rights. Except as
disclosed in the Company SEC Reports or as set forth in Section 3.2 of the
Company Disclosure Schedule, since October 31, 2005 through the date hereof no
options or warrants have been issued or accelerated or had their terms modified.

3.3 Authority; No Violation.

(a) The Company has full corporate power and authority to execute and deliver
this Agreement and, subject to receipt of stockholder approval, to consummate
the transactions contemplated hereby. The Board of Directors of the Company has
directed that this Agreement and the transactions contemplated hereby be
submitted to the Company’s stockholders for approval at the Company Stockholders
Meeting. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly and validly approved by the
Board of Directors of the Company. Other than the Company Stockholders Meeting,
no other corporate proceedings on the part of the Company are necessary to
approve this Agreement or to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by the Company
and (assuming due authorization, execution and delivery by Parent and Merger Sub
of this Agreement) will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with its terms, except as
enforcement may be limited by general principles of equity whether applied in a
court of law or a court of equity and by bankruptcy, insolvency and similar laws
affecting creditors’ rights and remedies generally.

(b) Neither the execution and delivery of this Agreement by the Company, nor the
consummation by the Company, of the transactions contemplated hereby, nor
compliance by the Company with any of the terms or provisions hereof, will
(i) violate any provision of the certificate of incorporation or bylaws of the
Company or (ii) assuming that the consents and approvals referred to in
Section 3.4 hereof are duly obtained, (x) violate any Laws applicable to the
Company, or any of its properties or assets, or (y) violate, conflict with,
result in a breach of any provision of or the loss of any benefit under,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the properties or assets of the Company under any of the
terms, conditions or provisions of any Company Contract, or by which they or any
of their respective properties or assets may be bound or affected, except that
in each case for such violations, breaches, defaults, or terminations as would
not likely have, either individually or in the aggregate, a Material Adverse
Effect on the Company.

(c) The Company is not: (i) in violation of its certificate of incorporation or
bylaws or similar documents; (ii) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with or without
the passage of time or the giving of notice, or both) affords to any Person the
right to accelerate any indebtedness or terminate any right; (iii) in default
under or breach of (with or without the passage of time or the giving of notice)
any other contract to which it is a party or by which it or its assets are
bound; or (iv) in violation of any law, regulation, administrative order or
judicial order, decree or judgment (domestic or foreign) applicable to it or its
business or assets, except where any violation, default or breach under items
(ii), (iii), or (iv) could not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect on the Company.

3.4 Consents and Approvals.

(a) Except for (i) the approval of this Agreement by the requisite vote of the
stockholders of the Company, (ii) any required filings with the SEC and state
securities authorities, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware pursuant to the DGCL, and (iv) such
other filings, authorizations, consents, notices or approvals as may be set
forth in Section 3.4(a) of the Company Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
“Governmental Entity”), or with any third party are necessary in connection with
(x) the execution and delivery by the Company of this Agreement and (y) the
consummation by the Company of the Merger and the other transactions
contemplated hereby, except in each case for such consents, approvals or filings
the failure of which to be obtained would not likely have a Material Adverse
Effect on the Company.

(b) The Company has no Knowledge of any reason why approval or effectiveness of
any of the applications, notices, filings or waivers thereof referred to in
Section 3.4(a)  cannot be obtained or granted on a timely basis.

3.5 Reports and Financial Statements.

(a) The Company has previously made available to Parent (including through the
SEC’s EDGAR system) true and complete copies of: (a) the Company’s Annual Report
on Form 10-K filed with the SEC for each of the years ended April 30, 2003
through 2005; (b) the Company’s Quarterly Report on Form 10-Q filed with the SEC
for the quarters ended July 31, 2005 and October 31, 2005; (c) each definitive
proxy statement filed by the Company with the SEC since April 30, 2003; (d) all
Current Reports on Form 8-K filed by the Company with the SEC since April 30,
2003; and (e) each registration statement, prospectus and any amendments or
supplements thereto filed by the Company with the SEC since April 30, 2003. As
of their respective dates (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), such reports, proxy
statements, registration statements, prospectuses, amendments and supplements
(individually a “Company SEC Report” and collectively, the “Company SEC
Reports”) (a) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) and the rules and regulations promulgated
thereunder and (b) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the Company SEC
Reports (including any related notes and schedules) complied as to form, as of
their respective dates of filing with the SEC, in all material respects with all
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, were prepared in accordance with GAAP consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto, and except that unaudited statements do not contain footnotes in
substance or form required by GAAP, as is permitted by Form 10-Q of the Exchange
Act) and fairly presented the financial position of the Company as of the dates
thereof and the results of operations and cash flows for the periods or as of
the dates then ended (subject, where appropriate, to normal year-end
adjustments). Since December 31, 2002, the Company has timely filed all reports
and other filings required to be filed by it with the SEC under the rules and
regulations of the SEC.

(b) Since October 31, 2005, there has not been any material change by the
Company in accounting principles, methods or policies for financial accounting
purposes, except as required by concurrent changes in generally accepted
accounting principles. There are no material amendments or modifications to
agreements, documents or other instruments which previously had been filed by
the Company with the SEC pursuant to the Securities Act or the Exchange Act,
which have not been filed with the SEC but which are required to be filed. The
Company maintains a reasonable process or procedure under which management of
the Company is aware of or authorizes material transactions of the Company such
that such transactions may be recorded on the quarterly and annual financial
reports of the Company in accordance with GAAP. The Company currently conducts
its business in compliance in all material respects with all laws and
regulations as currently applicable to the conduct of its business, including
applicable provisions of the Sarbanes-Oxley Act of 2002.

(c) The Company has no material indebtedness, obligations or liabilities of any
kind (whether accrued, absolute, contingent or otherwise, and whether due or to
become due or asserted or unasserted), and, to the Knowledge of the Company,
there is no reasonable basis for the assertion of any material claim or
liability of any nature against the Company, except for liabilities (i) which
are fully reflected in, reserved against or otherwise described in the Company’s
Quarterly Report on Form 10-Q filed with the SEC for the quarter ended
October 31, 2005, (ii) which have been incurred after the most recent Company
SEC Reports in the ordinary course of business, consistent with past practice,
or (iii) which are obligations to perform under executory contracts in the
ordinary course of business (none of which is a liability resulting from a
breach of contract or warranty, tort, infringement or legal action).

3.6 Broker’s Fees.

Neither the Company nor any of its respective officers or directors has employed
any broker or finder or incurred any liability for any broker’s fees,
commissions or finder’s fees in connection with any of the transactions
contemplated by this Agreement.

3.7 Absence of Certain Changes or Events.

(a) Except as disclosed in the Company SEC Reports (i) neither the Company nor
any of its Subsidiaries has incurred any material liability, except as
contemplated by the Agreement or in the ordinary course of their business
consistent with their past practices, and (ii) no event has occurred which has
had, or is likely to have, individually or in the aggregate, a Material Adverse
Effect on the Company.

(b) The Company and its Subsidiaries have carried on their respective businesses
in the ordinary and usual course consistent with their past practices.

3.8 Legal Proceedings.

(a) Except as disclosed in the Company SEC Reports, the Company is not a party
to any, and there are no pending or to the Knowledge of the Company, threatened,
legal, administrative, arbitration or other proceedings, claims, actions or
governmental or regulatory investigations of any nature against the Company in
which, to the Knowledge of the Company, there is a reasonable probability of any
material recovery against or other material effect upon the Company or which
challenge the validity or propriety of the transactions contemplated by this
Agreement.

(b) Except as disclosed in the Company SEC Reports, there is no injunction,
order, judgment, decree, or regulatory restriction imposed upon the Company or
its assets.

3.9 Taxes and Tax Returns.

(a) The Company has duly filed all Tax Returns required to be filed by it on or
prior to the date hereof (all such returns being accurate and complete in all
material respects), except for such failures to file, taken together, as would
not likely have a Material Adverse Effect on Company, and has duly paid or made
provision on the financial statements for the periods ended April 30, 2005,
July 31, 2005 and October 31, 2005 included in the Company SEC Reports as
referred to in Section 3.5 hereof in accordance with GAAP for the payment of all
material Taxes which have been incurred or are due or claimed to be due from it
by Taxing Authorities on or prior to the date hereof other than Taxes (a) that
(x) are not yet delinquent or (y) are being contested in good faith and set
forth in Section 3.9 of the Company Disclosure Schedule, (b) that have not been
finally determined, and (c) the failure to pay, taken together, would not likely
have a Material Adverse Effect on the

Company. The Internal Revenue Service (“IRS”) has not notified the Company of,
or to the Knowledge of the Company otherwise asserted, that there are any
material deficiencies with respect to the federal income Tax Returns of the
Company. There are no material disputes pending, or to the Knowledge of the
Company claims asserted for, Taxes or assessments upon the Company. In addition,
Tax Returns which are accurate and complete in all material respects have been
filed by the Company for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes and the amounts
shown on such Tax Returns to be due and payable have been paid in full or
adequate provision therefor in accordance with GAAP has been included by the
Company in the financial statements for the periods ended April 30, 2005,
July 31, 2005 and October 31, 2005 and as referred to in Sections 3.5 and 6.6
hereto. The unpaid Taxes of the Company (i) did not, as of the date of any
financial statement referred to in its annual reports filed on Form 10-K or in
Section 6.6 hereto, exceed the reserve for Tax liability (rather than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) set forth on the face of such financial statements (other
than the notes thereto) and (ii) will not as of the Closing Date exceed such
reserve as adjusted for the passage of time though the Closing Date in
accordance with past custom and practice of the Company in filing its Tax
Returns. The Company has not been asked to consent to, and has not consented to,
any currently effective waiver or extension of any statute of limitations with
respect to any Tax. The Company has not made an election under Section 341(f) of
the Code. The Company has provided or made available to Parent complete and
correct copies of its Tax Returns and all material correspondence and documents,
if any, relating directly or indirectly to taxes for the Company’s fiscal years
2004 and 2005. For this purpose, “correspondence and documents” include, without
limitation, amended Tax Returns, claims for refunds, notices from Taxing
Authorities of proposed changes or adjustments to Taxes or Tax Returns, consents
to assessment or collection of Taxes, acceptances of proposed adjustments,
closing agreements, rulings and determination letters and requests therefor, and
all other written communications to or from Taxing Authorities relating to any
material Tax liability of the Company. The Company is not a “foreign person” as
that term is used in § 1.1445-2 of the Treasury Regulations promulgated under
the IRC. The Company is not a “United States real property holding corporation”
within meaning of § 897 of the IRC and was not a “United States real property
holding corporation” on any “determination date” (as defined in § 1.897-2(c) of
such Regulations) that occurred during any relevant period.

(b) For purposes of this Agreement:

“Tax or Taxes” means any tax (including any income tax, capital gains tax,
payroll, employment or withholding tax, value-added tax, franchise tax, sales or
use tax, property tax, net worth tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Taxing Authority or payable pursuant to any tax-sharing agreement or any
other contract relating to the sharing or payment of any such tax, levy,
assessment, tariff, duty, deficiency, or fee.

“Tax Return” means any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Taxing
Authority in connection with the determination, assessment, collection, or
payment of any Tax or in connection with the administration, implementation, or
enforcement of or compliance with any law, regulation or other legal requirement
relating to any Tax.

“Taxing Authority” means any:

(i) nation, state, county, city, town, village, district, or other jurisdiction
of any nature;

(ii) federal, state, local, municipal, foreign, or other government;

(iii) governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal);

(iv) multi-national organization or body; or

(v) body exercising, or entitled to exercise, any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.

3.10 Employee Plans.

(a) For purposes of this Section 3.10, references to the Company shall include
the Company and any other entity which together with the Company would be deemed
a “single employer” within the meaning of Section 4001 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”) or Code
Section 414(b), (c) or (m). Section 3.10(a) of the Company Disclosure
Schedule sets forth a true and complete list of each employee benefit plan
(within the meaning of Section 3(3) of ERISA), and each other plan, arrangement
or agreement relating to deferred compensation, fringe benefits, flexible
spending or other benefits of any current or former employee, that is maintained
or contributed to as of the date of this Agreement by the Company or under which
the Company has any material liability (collectively, the “Company Plans”).

(b) The Company has heretofore delivered or made available to Parent true,
correct and complete copies of each of the Company Plans currently in effect and
all related documents, including but not limited to (i) the most recent
determination letter from the IRS (if applicable) for such Company Plan,
(ii) the current summary plan description and any summaries of material
modification, (iii) all annual reports (Form 5500 series) for each Company Plan
filed for the preceding two plan years, and (iv) all substantive correspondence
relating to any such Company Plan addressed to or received from the IRS, the
Department of Labor, the Pension Benefit Guaranty Corporation or any other
governmental agency.

(c) (i) Each of the Company Plans has been operated and administered in all
material respects in compliance with its terms and applicable Laws, including
but not limited to ERISA and the Code, (ii) each of the Company Plans intended
to be “qualified” within the meaning of Section 401(a) of the Code is designed
to be so qualified, any trust created pursuant to any such Company Plan is
designed to be exempt from federal income tax under Section 501(a) of the Code,
each such Company Plan has either received from the IRS a favorable
determination letter to such effect upon which the Company is entitled to rely
as to such matters and which is currently applicable or may rely on a favorable
opinion letter from the IRS as to such matters, and the Company is not aware of
any circumstance or event which could reasonably be expected to jeopardize the
tax-qualified status of any such Company Plan or the tax-exempt status of any
related trust, or which could reasonable be expected to cause the imposition of
any liability, penalty or tax under ERISA or the Code with respect to any
Company Plan, (iii) no Company Plan is subject to Title IV of ERISA, (iv) no
Company Plan provides benefits, including, without limitation, death or medical
benefits (whether or not insured), with respect to current or former employees
of the Company beyond their retirement or other termination of service, other
than (w) coverage mandated by applicable Law, (x) death benefits or retirement
benefits under a Company Plan that is an “employee pension plan,” as that term
is defined in Section 3(2) of ERISA, (y) deferred compensation benefits under a
Company Plan that are accrued as liabilities on the books of the Company, or
(z) benefits the full cost of which is borne by the current or former employee
(or his beneficiary), (vi) no Company Plan is a “multiemployer pension plan,” as
such term is defined in Section 3(37) of ERISA, (vii) all contributions or other
amounts payable by the Company as of the Effective Time with respect to each
Company Plan and all other liabilities of each such entity with respect to each
Company Plan, in respect of current or prior plan years have been paid or
accrued in accordance with generally accepted accounting practices and
Section 412 of the Code, (viii) the Company is not aware that it has engaged in
a transaction in connection with which the Company could be subject to either a
civil penalty assessed pursuant to Section 409 or 502(i) of ERISA or a tax
imposed pursuant to Section 4975 or 4976 of the Code, (ix) there are no pending,
or to the Knowledge of the Company, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Company
Plans or any trusts related thereto by any current or former employee of the
Company, and (x) no Company Plan, program, agreement or other arrangement,
either individually or collectively, provides for any payment by the Company
that would not be deductible under Code Sections 162(a)(1), 162(m) or 404 or
that would constitute a “parachute payment” within the meaning of Code
Section 280G after giving effect to the transactions contemplated by this
Agreement nor would the transactions contemplated by this Agreement accelerate
the time of payment or vesting, or increase the amount of compensation due to
any employee.

(d) (A) None of the employees of the Company is represented in his or her
capacity as an employee of such company by any labor organization; (B) the
Company has not recognized any labor organization nor has any labor organization
been elected as the collective bargaining agent of any of their employees, nor
has the Company signed any collective bargaining agreement or union contract
recognizing any labor organization as the bargaining agent of any of its
employees; and (C) to the Knowledge of the Company, there is no active or
current union organization activity involving the employees of the Company, nor
has there ever been union representation involving employees of the Company.

(e) The Company has provided to Parent a description of all written employment
policies under which the Company is operating.

(f) The Company is in compliance with all Federal, foreign (as applicable), and
state laws regarding employment practices, including laws relating to workers’
safety, sexual harassment or discrimination, except where the failure to so be
in compliance, individually or in the aggregate, would not have a Material
Adverse Effect on the Company.

(g) To the Knowledge of the Company, as of the date hereof, no executive, key
employee or group of employees has any plans to terminate his or her employment
with the Company.

3.11 Contracts.

(a) Except as disclosed in the Company SEC Reports, the Company is not a party
to or bound by any contract, arrangement or commitment (i) with respect to the
employment of any directors, officers, employees or consultants, (ii) which,
upon the consummation of the transactions contemplated by this Agreement will
(either alone or upon the occurrence of any additional acts or events) result in
any payment (whether of severance pay or otherwise) becoming due from Parent,
Merger Sub, the Company, or any of their respective Subsidiaries to any
director, officer or employee thereof, (iii) which materially restricts the
conduct of any line of business by the Company, (iv) with or to a labor union or
guild (including any collective bargaining agreement), or (v) any of the
benefits of which will be increased, or the vesting of the benefits of which
will be accelerated by the occurrence of any of the transactions contemplated by
this Agreement, or the value of any of the benefits of which will be calculated
on the basis of any of the transactions contemplated by this Agreement
(including as to this clause (v), any stock option plan, stock appreciation
rights plan, restricted stock plan or stock purchase plan). Except as disclosed
in the Company SEC Reports or in Section 3.11(a) of the Company Disclosure
Schedule, there are no employment, consulting and deferred compensation
agreements to which the Company is a party. Section 3.11(a) of the Company
Disclosure Schedule sets forth a list of all material contracts (as defined in
Item 601(b)(10) of Regulation S-K or otherwise in an amount greater than
$300,000 per annum) of the Company. Each contract, arrangement or commitment of
the type described in this Section 3.11(a), whether or not set forth in
Section 3.11(a) of the Company Disclosure Schedule, is referred to herein as a
“Company Contract,” and the Company has not received notice of, nor do any
executive officers of such entities know of, any violation of any Company
Contract.

(b) (i) Each Company Contract is valid and binding and in full force and effect,
(ii) the Company has in all material respects performed all obligations required
to be performed by it to date under each Company Contract, and (iii) no event or
condition exists which constitutes or, after notice or lapse of time or both,
would constitute, a default on the part of the Company under any such Company
Contract, except where such default would not be likely to have, either
individually or in the aggregate, a Material Adverse Effect on Company.

3.12 Environmental Matters.

The Company is in material compliance with all Environmental Laws, except as
would not likely have, either individually or in the aggregate, a Material
Adverse Effect on Company. For purposes of this Section 3.12, the term
“Environmental Law” means any applicable Law relating to the protection of human
health and the environment.

3.13 Properties and Assets.

Section 3.13 of the Company Disclosure Schedule lists (i) all real property
owned by the Company; (ii) each real property lease, sublease or installment
purchase arrangement to which the Company is a party; (iii) a description of
each contract for the purchase, sale, or development of real estate to which the
Company is a party; and (iv) all items of the Company’s tangible personal
property and equipment with a book value of $50,000 or more or having any annual
lease payment of $50,000 or more. Except for (a) items reflected in the
Company’s consolidated financial statements as of April 30, 2005, as filed in
the Company’s Annual Report on Form 10-K for the fiscal year ended April 30,
2005, (b) exceptions to title that do not interfere materially with the
Company’s use and enjoyment of owned or leased real property, (c) liens for
current real estate taxes not yet delinquent, or being contested in good faith,
properly reserved against (and reflected on the financial statements referred to
in the Company’s Annual Report on Form 10-K for the fiscal year ended April 30,
2005), and (d) items listed in Section 3.13 of the Company Disclosure Schedule,
the Company has good and, as to owned real property, marketable and insurable
title to all their properties and assets, free and clear of all liens, claims,
charges and other encumbrances. The Company, as lessee, has the right under
valid and subsisting leases to occupy, use and possess all property leased by
them, and the Company has not experienced any material uninsured damage or
destruction with respect to such properties since April 30, 2005. All properties
and assets used by the Company are in good operating condition and repair
suitable for the purposes for which they are currently utilized and, to the
Knowledge of the Company, comply in all material respects with all Laws relating
thereto now in effect or scheduled to come into effect. The Company enjoys
peaceful and undisturbed possession under all leases for the use of all property
under which it is the lessee, and all leases to which the Company is a party are
valid and binding obligations in accordance with the terms thereof. The Company
is not in default with respect to any such lease, and there has occurred no
default by the Company or event which with the lapse of time or the giving of
notice, or both, would constitute a default under any such lease, except where
such default is not likely to have, either individually or in the aggregate, a
Material Adverse Effect. To the Knowledge of the Company, there are no Laws,
conditions of record, or other impediments which interfere materially with the
intended use by the Company of any of the property owned, leased, or occupied by
it.

3.14 Insurance.

Section 3.14 of the Company Disclosure Schedule contains a true, correct and
complete list of all insurance policies and bonds maintained by the Company,
including the name of the insurer, the policy number, the type of policy and any
applicable deductibles, and all such insurance policies and bonds or other
insurance policies and bonds that have, from time to time, in respect of the
nature of the risks insured against and amount of coverage provided are in full
force and effect and have been in full force and effect since their respective
dates of inception. As of the date hereof, the Company has not received any
notice of cancellation or amendment of any such policy or bond, and is not in
default under any such policy or bond, and no coverage thereunder is being
disputed and all material claims thereunder have been filed in a timely fashion.
True, correct and complete copies of all such policies and bonds reflected at
Section 3.14 of the Company Disclosure Schedule, as in effect on the date
hereof, have been made available to Parent.

3.15 Compliance with Applicable Laws.

The Company has complied in all material respects with all Laws applicable to it
or to the operation of its business, except where such noncompliance is not
likely to have, either individually or in the aggregate, a Material Adverse
Effect. To the Knowledge of the Company, the Company has not received any notice
of any material alleged or threatened claim, violation, or liability under any
such Laws that has not heretofore been cured and for which there is no remaining
liability.

3.16 Affiliates.

Each director, executive officer and other person who is an “affiliate” (for
purposes of Rule 145 under the Securities Act of 1933, as amended (the
“Securities Act”)) of the Company is listed at Section 3.16 of the Company
Disclosure Schedule. Except as set forth in the Company SEC Reports filed prior
to the date of this Agreement, since the date of Company’s last proxy statement
to its stockholders, no event has occurred that would be required to be reported
by the Company as a Certain Relationship or Related Transaction, pursuant to
Item 404 of Regulation S-K promulgated by the SEC.

3.17 Ownership of Parent Common Stock.

Neither the Company nor any of its directors, executive officers, or affiliates
(as used above in Section 3.16) (i) beneficially own, directly or indirectly
through an affiliate, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, any shares of outstanding capital stock of Parent (other than those
agreements, arrangements or understandings specifically contemplated hereby).

3.18 Fairness Opinion.

The Company has received an opinion from Douglas Curtis & Allyn LLC to the
effect that, in its opinion, the consideration to be paid to stockholders of the
Company hereunder is fair to such stockholders from a financial point of view.

3.19 Intellectual Property.

(a) Section 3.19 of the Company Disclosure Schedule contains a correct and
complete list of all Company Registered Intellectual Property and all material
unregistered copyrights, trademarks and service marks of the Company.

(b) To the Company’s Knowledge, no Intellectual Property owned by the Company
and no Company Proprietary Software is subject to any proceeding or outstanding
consent, decree, order or judgment (i) restricting in any manner the use thereof
by the Company or (ii) that may affect the validity or enforceability thereof.
To the Company’s Knowledge, no Intellectual Property licensed to the Company and
no Company Licensed Software, either of which is material to the operations of
the Company, is subject to any proceeding or outstanding consent, decree, order
or judgment (i) restricting in any manner the use thereof by the Company or
(ii) that may affect the validity or enforceability thereof.

(c) Each item of Company Registered Intellectual Property is subsisting and in
full force in all material respects in accordance with its terms. All necessary
registration, maintenance and renewal fees currently due and owing in connection
with Company Registered Intellectual Property have been paid and all necessary
documents, recordations and certifications in connection with the 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 Company
Registered Intellectual Property and recording ownership by the Company or any
of its Subsidiaries of such Company Registered Intellectual Property.

(d) To the Knowledge of the Company, the Company is the sole and exclusive owner
of each item of Intellectual Property used by the Company, other than
Intellectual Property that is licensed to the Company, free and clear of any
lien, except Permitted Liens.

(e) Section 3.19 of the Company Disclosure Schedule sets forth a correct and
complete list of (i) the Company Proprietary Software, and (ii) the Company
Licensed Software.

(f) To the Knowledge of the Company, the operations of the Company as currently
conducted, including the Company’s design, development, manufacture, use,
reproduction, display, marketing and sale of the products or services (including
Software) of the Company do not infringe or misappropriate the Intellectual
Property of any third party.

(g) The Company has no Knowledge and has not received during the past six years
written notice from any third party that the operations of the Company as
currently conducted, or any current product or service of the Company infringes
or misappropriates the Intellectual Property of any third party.

(h) To the Knowledge of the Company, no Person is infringing or misappropriating
any Company Intellectual Property that is owned by or exclusively licensed to
the Company.

(i) The Company has taken commercially reasonable steps to protect the rights of
the Company in the Confidential Information and any trade secret or confidential
information of third parties used by the Company.

(j) The Company maintains in place and has taken commercially reasonable steps
to enforce appropriate policies designed to ensure that all Intellectual
Property owned by the Company and developed by employees of the Company is
developed by such employees while working within the scope of their employment
at the time of such development. Where appropriate, the Company has taken
commercially reasonable steps to require its agents, consultants, contractors or
other Persons to execute appropriate instruments of assignment in favor of the
Company as assignee to convey to the Company ownership of Intellectual Property
developed by such agents, consultants, contractors or other Persons on behalf of
the Company.

3.20 Company Information.

This Agreement does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements regarding the Company
herein, in light of the circumstances in which they are made, not misleading.
The Company notice of the Company Stockholders Meeting (except for the portions
thereof relating solely to Parent or any of its Subsidiaries, as to which the
Company makes no representation or warranty) will comply in all material
respects with the provisions of the DGCL.

3.21 Proxy Materials; Registration Statement; Other Information.

None of the information supplied or to be supplied by the Company for inclusion
or incorporation by reference in the Registration Statement on Form S-4 relating
to the registration of the Parent Common Stock to be issued in exchange for
Company Common Stock and issuable upon exercise of the Substitute Options and
the Substitute Warrants (the “Registration Statement”) or the letter to
stockholders, notice of meeting, proxy statement and form of proxy to be
distributed to Company stockholders in connection with the Merger and any
schedules required to be filed with the SEC in connection therewith
(collectively, the “Proxy Materials”) will (i) in the case of the Registration
Statement, at the time it becomes effective or at the Effective Time, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or (ii) in the case of the Proxy Materials, at the time
of the mailing of any of the Proxy Materials and at the time of the Company
Stockholders Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. If at any time prior to the Effective Time any event with
respect to the Company, its officers and directors should occur which is
required to be described in an amendment of, or a supplement to, the Proxy
Materials or the Registration Statement, the Company shall promptly inform
Parent, such event shall be so described, and such amendment or supplement shall
be promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company and Parent. The Registration Statement will (with
respect to the Company) comply as to form in all material respects with the
requirements of the Securities Act and the rules and regulations promulgated
thereunder. The Proxy Materials will (with respect to the Company) comply as to
form in all material respects with the requirements of the Exchange Act and the
rules and regulations promulgated thereunder. Notwithstanding the foregoing, the
Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.

3.22 Unlawful Payments and Contributions.

To the Knowledge of the Company, neither the Company nor any of its respective
directors, officers, employees or agents has, with respect to the businesses of
the Company, (i) used any funds for any unlawful contribution, endorsement,
gift, entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any Person or entity.

3.23 Listings.

Except as set forth in Section 3.23 to the Company Disclosure Schedule, the
Company’s securities are not listed, or quoted, for trading on any U.S. domestic
or foreign securities exchange.

3.24 Permits.

The Company holds all licenses, permits, registrations, orders, authorizations,
approvals and franchises which are required to permit it to conduct its business
as presently conducted, except where the failure to hold such licenses, permits,
registrations, orders, authorizations, approvals or franchises could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company. All such licenses, permits, registrations,
orders, authorizations, approvals and franchises are now, and will be after the
Closing, valid and in full force and effect, and Surviving Corporation shall
have full benefit of the same, except where the failure to be valid and in full
force and effect or to have the benefit of any such license, permit,
registration, order, authorization, approval or franchise could not reasonably
be expected to, individually or in the aggregate, have a Material Adverse Effect
on the Company or Surviving Corporation. The Company has not received any
notification of any asserted present failure (or past and unremedied failure) by
it to have obtained any such license, permit, registration, order,
authorization, approval or franchise, except where such failure could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on the Company or Surviving Corporation.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby make the following representations and warranties
to Company as set forth in this Article IV, subject to the exceptions disclosed
in writing in the disclosure schedules of the Parent and Merger Sub delivered
herewith (the “Parent and Merger Sub Disclosure Schedule”), each of which
representations and warranties are being relied upon by Company as an inducement
to enter into and perform this Agreement. It is acknowledged and agreed by
Company that any matter set forth in any schedule, section or subsection of the
Parent and Merger Sub Disclosure Schedule shall expressly not be deemed to
constitute an admission by the Parent and/or Merger Sub, as the case may be, or
otherwise imply, that any such matter rises to the level of a Material Adverse
Effect or is otherwise material for purposes of this Agreement or the Parent and
Merger Sub Disclosure Schedule.

4.1 Corporate Organization.

Each of Parent, Merger Sub and Parent’s other Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of their state
or incorporation of organization. Each of Parent, Merger Sub and Parent’s other
Subsidiaries has the corporate power and authority to own or lease all of its
properties and assets and to carry on its business as it is now being conducted,
and is duly licensed or qualified to do business in each jurisdiction in which
the nature of any business conducted by it or the character or location of any
properties or assets owned or leased by it makes such licensing or qualification
necessary, except where the failure to so qualify or to be in good standing has
not had and would not likely have a Material Adverse Effect on Parent. Gupta
Technologies, LLC, a Delaware limited liability company, David Corporation, a
California corporation, Foresight Software, Inc., a Delaware corporation,
Process Software, LLC, a Delaware limited liability company, Profitkey
International, LLC, a Delaware limited liability company, and Empagio, Inc., a
Delaware corporation, a Delaware limited liability company are the only
Subsidiaries of Parent, that qualify as a “Significant Subsidiary” as such term
is defined in Regulation S-X promulgated by the Securities and Exchange
Commission (the “SEC”). Section 4.1 of the Parent and Merger Sub Disclosure
Schedule includes a listing of all subsidiaries of Parent and all jurisdictions
in which Parent or any Subsidiary of Parent is qualified to do business or has
assets and/or conducts operations.

4.2 Capitalization.

(a) The authorized capital stock of Parent consists of 150,000,000 shares of
common stock (“Parent Common Stock”), par value $0.00001 per share and
50,000,000 shares of preferred stock, par value $0.00001 per share (“Parent
Preferred Shares”), of which 16,000,000 shares of Series C Preferred Stock have
been designated and 8,863,636 shares of Series D Preferred Stock have been
designated. As of the date hereof, there are (i) 7,810,840 shares of Parent
Common Stock issued and outstanding and 0 shares of Parent Common Stock held in
Parent’s treasury, (ii) 56,094,178 shares of Parent Common Stock reserved for
issuance upon exercise of outstanding stock options or otherwise,
(iii) 13,362,688 shares of Series C Preferred Stock issued and outstanding and
(iv) 7,045,545 shares of Series D Preferred Stock issued and outstanding. There
no issued and outstanding shares of Parent’s Series A Preferred Stock or
Series B Preferred Stock. All of the issued and outstanding Parent Common Stock
have been duly authorized and validly issued and are fully paid, nonassessable
and free of preemptive rights, with no personal liability attaching to the
ownership thereof. Except as disclosed in the Parent SEC Reports, Parent does
not have and is not bound by any outstanding subscriptions, options, warrants,
calls, commitments or agreements of any character calling for the purchase or
issuance of any Parent Common Stock or Parent Preferred Shares or any other
equity security of Parent or any securities representing the right to purchase
or otherwise receive any Parent Common Stock or any other equity security of
Parent. Except as disclosed in the Parent SEC Reports, there are not as of the
date hereof and there will not be at the Effective Time any stockholder
agreements, voting trusts or other agreements or understandings to which Parent
is a party or to which it is bound relating to the voting of any shares of the
capital stock of Parent. Except as disclosed in the Parent SEC Reports, there
are no existing rights with respect to the registration of Parent Common Stock
under the Securities Act, including, but not limited to, demand rights or
piggy-back registration rights. Except as disclosed in the Parent SEC Reports
since December 31, 2005 through the date hereof no options or warrants have been
issued or accelerated or had their terms modified.

(b) Except as disclosed in the Parent SEC Reports, Parent owns, directly or
indirectly, all of the issued and outstanding shares of capital stock of each of
its Subsidiaries, free and clear of all liens, charges, encumbrances and
security interests whatsoever, and all of such shares are duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights,
with no personal liability attaching to the ownership thereof. No Subsidiary has
or is bound by any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character calling for the purchase or issuance
of any shares of capital stock or any other equity security of such Subsidiary
or any securities representing the right to purchase or otherwise receive any
shares of capital stock or any other equity security of such Subsidiary.

4.3 Authority; No Violation.

(a) Each of Parent and Merger Sub has full corporate power and authority to
execute and deliver this Agreement and, subject to the required regulatory
approvals specified herein, to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly approved by the
Boards of Directors of Parent and Merger Sub, and no other corporate proceedings
on the part of Parent and Merger Sub are necessary to approve this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Merger Sub and
(assuming due authorization, execution and delivery by Company of this
Agreement) will constitute valid and binding obligations of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with
its terms, except as enforcement may be limited by general principles of equity
whether applied in a court of law or a court of equity and by bankruptcy,
insolvency and similar laws affecting creditors’ rights and remedies generally.

(b) Neither the execution and delivery of this Agreement by Parent and Merger
Sub, nor the consummation by Parent and Merger Sub, of the transactions
contemplated hereby, nor compliance by Parent and Merger Sub with any of the
terms or provisions hereof, will (i) violate any provision of the certificate of
incorporation or bylaws of Parent, Merger Sub and each of its Subsidiaries or
(ii) assuming that the consents and approvals referred to in Section 4.4 hereof
are duly obtained, (x) violate any Laws applicable to Parent, Merger Sub and
each of Parent’s other Subsidiaries, or any of their respective properties or
assets, or (y) violate, conflict with, result in a breach of any provision of or
the loss of any benefit under, constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, result in
the termination of or a right of termination or cancellation under, accelerate
the performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Parent, Merger Sub and each of Parent’s other
Subsidiaries under any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Parent, Merger Sub and each of Parent’s other
Subsidiaries is a party, or by which they or any of their respective properties
or assets may be bound or affected, except in each case for such violations,
breaches, defaults, or terminations as would not likely have, either
individually or in the aggregate, a Material Adverse Effect on Parent.

(c) Parent is not: (i) in violation of its certificate of incorporation or
bylaws or similar documents; (ii) in default in the performance of any
obligation, agreement or condition of any debt instrument which (with or without
the passage of time or the giving of notice, or both) affords to any Person the
right to accelerate any indebtedness or terminate any right; (iii) in default
under or breach of (with or without the passage of time or the giving of notice)
any other contract to which it is a party or by which it or its assets are
bound; or (iv) in violation of any law, regulation, administrative order or
judicial order, decree or judgment (domestic or foreign) applicable to it or its
business or assets, except where any violation, default or breach under items
(ii), (iii), or (iv) could not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect on Parent.

4.4 Consents and Approvals.

(a) Except for (i) any required filings with the SEC and state securities
authorities, (ii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware pursuant to the DGCL, (iii) such other filings,
authorizations, consents, notices or approvals as may be set forth in
Section 4.4(a) of the Parent and Merger Sub Disclosure Schedule, no consents or
approvals of or filings or registrations with any Governmental Entity, or with
any third party are necessary in connection with (x) the execution and delivery
by Parent or Merger Sub of this Agreement and (y) the consummation by Parent or
Merger Sub of the Merger and the other transactions contemplated hereby, except
in each case for such consents, approvals or filings the failure of which to be
obtained would not likely have a Material Adverse Effect on Parent or Merger
Sub. The approval of the stockholders of Parent is not required in connection
with the execution and delivery by Parent or Merger Sub of this Agreement and
the consummation by Parent or Merger Sub of the Merger and the other transaction
contemplated hereby.

(b) Parent and Merger Sub have no Knowledge of any reason why approval or
effectiveness of any of the applications, notices or filings referred to in
Section 4.4(a) cannot be obtained or granted on a timely basis.

4.5 Adequate Resources.

Parent has or will have at the Effective Time cash on hand or borrowing
availability under financing arrangements from financially responsible third
Parties, or a combination thereof, in an aggregate amount sufficient to enable
Parent to pay in full all fees and expenses payable by Parent in connection with
this Agreement and the transactions contemplated hereby.

4.6 Legal Proceedings.

(a) Except as disclosed in the Parent SEC Reports, Parent and Merger Sub are not
party to any, and there are no pending or to the Knowledge of Parent or Merger
Sub, threatened, legal, administrative, arbitration or other proceedings,
claims, actions or governmental or regulatory investigations of any nature
against Parent or Merger Sub in which, to the Knowledge of Parent or Merger Sub,
there is a reasonable probability of any material recovery against or other
material effect upon Parent or which challenge the validity or propriety of the
transactions contemplated by this Agreement.

(b) There is no injunction, order, judgment, decree, or regulatory restriction
imposed upon Parent, Merger Sub, or their respective assets.

4.7 Broker’s Fees.

Neither Parent nor any Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker’s fees, commissions or finder’s fees in connection with any of the
transactions contemplated by this Agreement.

4.8 Reports and Financial Statements.

(a) Parent has previously made available to the Company (including through the
SEC’s EDGAR system) true and complete copies of (a) Parent’s Annual Reports on
Form 10-KSB filed with the SEC for each of the years ended June 30, 2003 through
2005; (b) Parent’s Quarterly Reports on Form 10-QSB filed with the SEC for the
quarters ended September 30, 2005 and December 31, 2005; (c) each definitive
proxy statement filed by Parent with the SEC since December 31, 2003; (d) each
registration statement, prospectus and any amendments or supplements thereto
filed by Parent with the SEC since December 31, 2003; and (e) all Current
Reports on Form 8-K filed by Parent with the SEC since December 31, 2003. As of
their respective dates (or if amended or superseded by a filing prior to the
date of this Agreement, then on the date of such filing), such reports, proxy
statements, registration statements, prospectuses, supplements and amendments
(individually a “Parent SEC Report” and, collectively, “Parent SEC Reports”)
(a) complied as to form in all material respects with the applicable
requirements of the Securities Act, the Exchange Act, and the rules and
regulations promulgated thereunder and (b) did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and unaudited consolidated interim financial
statements included in the Parent SEC Reports (including any related notes and
schedules) complied as to form, as of their respective dates of filing with the
SEC, in all material respects with all applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, were
prepared in accordance with past practice and GAAP consistently applied during
the periods involved (except as otherwise disclosed in the notes thereto) and
fairly presented the financial position of Parent and its consolidated
Subsidiaries as of the dates thereof and the results of their operations and
their cash flows for the periods or as of the dates then ended (subject, where
appropriate, to normal year-end adjustments). Since June 30, 2003, Parent has
timely filed all material reports and other filings required to be filed by it
with the SEC under the rules and regulations of the SEC.

(b) Since December 31, 2005, there has not been any material change by Parent in
accounting principles, methods or policies for financial accounting purposes,
except as required by concurrent changes in generally accepted accounting
principles. There are no material amendments or modifications to agreements,
documents or other instruments which previously had been filed by Parent with
the SEC pursuant to the Securities Act or the Exchange Act, which have not been
filed with the SEC but which are required to be filed. Parent maintains a
reasonable process or procedure under which management of Parent is aware of or
authorizes material transactions of Parent such that such transactions may be
recorded on the quarterly and annual financial reports of Parent in accordance
with GAAP. Parent currently conducts its business in compliance in all material
respects with all laws and regulations as currently applicable to the conduct of
its business, including the Sarbanes-Oxley Act of 2002.

(c) Parent has no material indebtedness, obligations or liabilities of any kind
(whether accrued, absolute, contingent or otherwise, and whether due or to
become due or asserted or unasserted), and, to the Knowledge of Parent, there is
no reasonable basis for the assertion of any material claim or liability of any
nature against Parent, except for liabilities (i) which are fully reflected in,
reserved against or otherwise described in the Parent’s Quarterly Report on Form
10-QSB filed with the SEC for the quarter ended December 31, 2005 or in Parent
SEC Reports filed after such Quarterly Report, (ii) which have been incurred
after the most recent Parent SEC Reports in the ordinary course of business,
consistent with past practice, or (iii) which are obligations to perform under
executory contracts in the ordinary course of business (none of which is a
liability resulting from a breach of contract or warranty, tort, infringement or
legal action).

4.9 Absence of Certain Changes or Events.

(a) Except as disclosed in the Parent SEC Reports (i) neither Parent nor any of
its Subsidiaries has incurred any material liability, except as contemplated by
the Agreement or in the ordinary course of their business consistent with their
past practices, and (ii) no event has occurred which has had, or is likely to
have, individually or in the aggregate, a Material Adverse Effect on Parent.

(b) Subject to the acquisitions and financing described in the Parent SEC
Reports, since June 30, 2005, Parent and its Subsidiaries have carried on their
respective businesses in the ordinary and usual course consistent with their
past practices.

4.10 Taxes and Tax Returns.

(a) Parent and its Subsidiaries have duly filed all Tax Returns required to be
filed by it on or prior to the date hereof (all such returns being accurate and
complete in all material respects), except that all such failures to file, taken
together, as would not likely have a Material Adverse Effect on Parent, and has
duly paid or made provision on the financial statements for the periods ended
December 31, 2004, March 31, 2005, June 30, 2005, September 30, 2005 and
December 31, 2005, and as referred to in Section 4.8 hereof, in accordance with
GAAP for the payment of all material Taxes which have been incurred or are due
or claimed to be due from it by Taxing Authorities on or prior to the date
hereof other than Taxes (a) that (x) are not yet delinquent or (y) are being
contested in good faith and set forth in Section 4.10 of the Parent and Merger
Sub Disclosure Schedule (b) that have not been finally determined, and (c) the
failure to pay, taken together, would not likely have a Material Adverse Effect
on Parent. The IRS has not notified Parent of, or to the Knowledge of Parent
otherwise asserted, that there are any material deficiencies with respect to the
federal income Tax Returns of Parent. There are no material disputes pending, or
to the Knowledge of Parent claims asserted for, Taxes or assessments upon Parent
or any of its Subsidiaries. In addition, Tax Returns which are accurate and
complete in all material respects have been filed by Parent and its Subsidiaries
for all periods for which returns were due with respect to income tax
withholding, Social Security and unemployment taxes and the amounts shown on
such Tax Returns to be due and payable have been paid in full or adequate
provision therefor in accordance with GAAP has been included by Parent in the
financial statements for the periods ended December 31, 2004, March 31, 2005,
June 30, 2005, September 30, 2005 and December 31, 2005, and as referred to in
Section 4.8 hereof. The unpaid Taxes of Parent (i) did not, as of the date of
any financial statement referred to in Parent’s Annual Reports on Form 10-KSB
exceed the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of such financial statements (other than the notes thereto) and
(ii) will not as of the Closing Date exceed such reserve as adjusted for the
passage of time though the Closing Date in accordance with past custom and
practice of Parent in filing its Tax Returns. Neither Parent nor any of its
Subsidiaries has been asked to consent to, and has not consented to, any
currently effective waiver or extension of any statute of limitations with
respect to any Tax. Neither Parent nor any Subsidiary has made an election under
Section 341(f) of the Code. Parent has provided or made available to Company
complete and correct copies of its Tax Returns and all material correspondence
and documents, if any, relating directly or indirectly to taxes for Parent’s
fiscal years 2003 and 2004. For this purpose, “correspondence and documents”
include, without limitation, amended Tax Returns, claims for refunds, notices
from Taxing Authorities of proposed changes or adjustments to Taxes or Tax
Returns, consents to assessment or collection of Taxes, acceptances of proposed
adjustments, closing agreements, rulings and determination letters and requests
therefor, and all other written communications to or from Taxing Authorities
relating to any material Tax liability of Parent or any Subsidiary.

4.11 Employee Plans.

(a) For purposes of this Section 4.11, references to Parent shall include Parent
and any other entity which together with Parent would be deemed a “single
employer” within the meaning of Section 4001 of ERISA or Code Section 414(b),
(c) or (m). Section 4.11(a) of the Parent Disclosure Schedule sets forth a true
and complete list of each employee benefit plan (within the meaning of
Section 3(3) of ERISA), and each other plan, arrangement or agreement relating
to deferred compensation, fringe benefits, flexible spending or other benefits
of any current or former employee, that is maintained or contributed to as of
the date of this Agreement by Parent or under which Parent has any material
liability (collectively, the “Parent Plans”) and that is not otherwise disclosed
in the Parent SEC Reports.

(b) Parent has heretofore delivered or made available to the Company true,
correct and complete copies of each of the Parent Plans and all related
documents, including but not limited to (i) the most recent determination letter
from the IRS (if applicable) for such Parent Plan, (ii) the current summary plan
description and any summaries of material modification, (iii) all annual reports
(Form 5500 series) for each Parent Plan filed for the preceding two plan years,
and (iv) all substantive correspondence relating to any such Parent Plan
addressed to or received from the IRS, the Department of Labor, the Pension
Benefit Guaranty Corporation or any other governmental agency.

(c) (i) Each of the Parent Plans has been operated and administered in all
material respects in compliance with its terms and applicable Laws, including
but not limited to ERISA and the Code, (ii) each of the Parent Plans intended to
be “qualified” within the meaning of Section 401(a) of the Code is designed to
be so qualified, any trust created pursuant to any such Parent Plan is designed
to be exempt from federal income tax under Section 501(a) of the Code, each such
Parent Plan has either received from the IRS a favorable determination letter to
such effect upon which Parent is entitled to rely as to such matters and which
is currently applicable or may rely on a favorable opinion letter from the IRS
as to such matters, and Parent is not aware of any circumstance or event which
could reasonably be expected to jeopardize the tax-qualified status of any such
Parent Plan or the tax-exempt status of any related trust, or which could
reasonably be expected to cause the imposition of any liability, penalty or tax
under ERISA or the Code with respect to any Parent Plan, (iii) no Parent Plan is
subject to Title IV of ERISA, (iv) no Parent Plan provides benefits, including,
without limitation, death or medical benefits (whether or not insured), with
respect to current or former employees of Parent beyond their retirement or
other termination of service, other than (w) coverage mandated by applicable
Law, (x) death benefits or retirement benefits under a Parent Plan that is an
“employee pension plan,” as that term is defined in Section 3(2) of ERISA,
(y) deferred compensation benefits under a Parent Plan that are accrued as
liabilities on the books of Parent, or (z) benefits the full cost of which is
borne by the current or former employee (or his beneficiary), (vi) no Parent
Plan is a “multiemployer pension plan,” as such term is defined in Section 3(37)
of ERISA, (vii) all contributions or other amounts payable by Parent as of the
Effective Time with respect to each Parent Plan and all other liabilities of
each such entity with respect to each Parent Plan, in respect of current or
prior plan years have been paid or accrued in accordance with generally accepted
accounting practices and Section 412 of the Code, (viii) Parent is not aware
that it has engaged in a transaction in connection with which Parent could be
subject to either a civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 or 4976 of the Code, (ix) there
are no pending, or to the Knowledge of Parent, threatened or anticipated claims
(other than routine claims for benefits) by, on behalf of or against any of the
Parent Plans or any trusts related thereto by any current or former employee of
Parent, and (x) no Parent Plan, program, agreement or other arrangement, either
individually or collectively, provides for any payment by Parent that would not
be deductible under Code Sections 162(a)(1), 162(m) or 404 or that would
constitute a “parachute payment” within the meaning of Code Section 280G after
giving effect to the transactions contemplated by this Agreement nor would the
transactions contemplated by this Agreement accelerate the time of payment or
vesting, or increase the amount of compensation due to any employee.

(d) (A) None of the employees of Parent is represented in his or her capacity as
an employee of such company by any labor organization; (B) Parent has not
recognized any labor organization nor has any labor organization been elected as
the collective bargaining agent of any of their employees, nor has Parent signed
any collective bargaining agreement or union contract recognizing any labor
organization as the bargaining agent of any of its employees; and (C) to the
Knowledge of Parent, there is no active or current union organization activity
involving the employees of Parent, nor has there ever been union representation
involving employees of Parent.

(e) Parent has provided or made available to the Company a description of all
written employment policies under which Parent is operating.

(f) Parent is in compliance with all Federal, foreign (as applicable), and state
laws regarding employment practices, including laws relating to workers’ safety,
sexual harassment or discrimination, except where the failure to so be in
compliance, individually or in the aggregate, would not have a Material Adverse
Effect on Parent.

(g) To the Knowledge of Parent, as of the date hereof, no executive, key
employee or group of employees has any plans to terminate his or her employment
with Parent.

4.12 Compliance with Applicable Laws.

Parent and each of its Subsidiaries has complied in all material respects with
all Laws applicable to it or to the operation of its business, except where such
noncompliance would not likely have, either individually or in the aggregate, a
Material Adverse Effect on Parent. To the Knowledge of Parent, neither Parent
nor any of its Subsidiaries has received any notice of any material alleged or
threatened claim, violation, or liability under any such Laws that has not
heretofore been cured and for which there is no remaining liability.

4.13 Affiliates.

Each director, executive officer and other person who is an “affiliate” (for
purposes of Rule 145 under the Securities Act of 1933, as amended (the
“Securities Act”)) of Parent is listed at Section 4.13 of the Parent Disclosure
Schedule. Except as set forth in the Parent SEC Reports filed prior to the date
of this Agreement, since the date of Parent’s last proxy statement to its
stockholders, no event has occurred that would be required to be reported by
Parent as a Certain Relationship or Related Transaction, pursuant to Item 404 of
Regulation S-K promulgated by the SEC.

4.14 Proxy Materials; Registration Statement; Other Information.

None of the information supplied or to be supplied by Parent for inclusion or
incorporation by reference in the Registration Statement or the Proxy Materials
will (i) in the case of the Registration Statement, at the time it becomes
effective or at the Effective Time, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or (ii) in the
case of the Proxy Materials, at the time of the mailing of any of the Proxy
Materials and at the time of the Company Stockholders Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. If at any
time prior to the Effective Time any event with respect to Parent, its officers
and directors should occur which is required to be described in an amendment of,
or a supplement to, the Proxy Materials or the Registration Statement, Parent
shall promptly inform the Company, such event shall be so described, and such
amendment or supplement shall be promptly filed with the SEC and, as required by
law, disseminated to the stockholders of the Company and Parent. The
Registration Statement will (with respect to Parent) comply as to form in all
material respects with the requirements of the Securities Act and the rules and
regulations promulgated thereunder. The Proxy Materials will (with respect to
Parent) comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, Parent makes no representation or warranty with
respect to any information supplied by the Company which is contained in any of
the foregoing documents.

4.15 Ownership of Company Common Stock.

Except as disclosed on the Parent Disclosure Schedule, neither Parent nor any of
its Subsidiaries, directors, executive officers, or affiliates (as such term is
described above in Section 3.16) (i) beneficially own, directly or indirectly
through an affiliate, or (ii) is a party to any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of, in
each case, any shares of outstanding capital stock of Company (other than those
agreements, arrangements or understandings specifically contemplated hereby).

4.16 Takeover Statutes.

The Board of Directors of Parent has approved the terms of this Agreement and to
the knowledge of Parent no state takeover statute or similar statute or
regulation applies or purports to apply to this Agreement, the Merger or any of
the other transaction documents contemplated by this Agreement.

4.17 Unlawful Payments and Contributions.

To the Knowledge of Parent, neither Parent nor any of its respective directors,
officers, employees or agents has, with respect to the businesses of Parent,
(i) used any funds for any unlawful contribution, endorsement, gift,
entertainment or other unlawful expense relating to political activity;
(ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee; (iii) violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment
to any Person or entity.

4.18 Listings.

Parent’s securities are not listed, or quoted, for trading on any U.S. domestic
or foreign securities exchange.

4.19 Permits.

Parent holds all licenses, permits, registrations, orders, authorizations,
approvals and franchises which are required to permit it to conduct its business
as presently conducted, except where the failure to hold such licenses, permits,
registrations, orders, authorizations, approvals or franchises could not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect on Parent. All such licenses, permits, registrations, orders,
authorizations, approvals and franchises are now, and will be after the Closing,
valid and in full force and effect, and Surviving Corporation shall have full
benefit of the same, except where the failure to be valid and in full force and
effect or to have the benefit of any such license, permit, registration, order,
authorization, approval or franchise could not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect on Parent or
Surviving Corporation. Parent has not received any notification of any asserted
present failure (or past and unremedied failure) by it to have obtained any such
license, permit, registration, order, authorization, approval or franchise,
except where such failure could not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect on Parent.

4.20 Parent Information.

This Agreement does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements regarding Parent
herein, in light of the circumstances in which they are made, not misleading.

ARTICLE V

COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1 Covenants of the Company.

During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
or with the prior written consent of Parent, the Company shall carry on its
business in the ordinary course consistent with past practices. The Company will
use its commercially reasonable efforts, consistent with past practices, to
(x) preserve its business organization intact, (y) keep available to itself and
Parent the present services of the employees of the Company and (z) preserve for
itself and Parent the goodwill of the customers of the Company and others with
whom business relationships exist. Without limiting the generality of the
foregoing, and except as set forth in Section 5.1(c) of the Company Disclosure
Schedule or as otherwise contemplated by this Agreement or consented to by
Parent in writing, which consent shall not be unreasonably withheld, conditioned
or delayed, the Company shall not:

(a) declare or pay any dividends on, or make other distributions in respect of,
any of its capital stock;

(b) (i) split, combine or reclassify any shares of its capital stock or issue,
authorize or propose the issuance of any other securities in respect of, in lieu
of or in substitution for shares of its capital stock, or (ii) repurchase,
redeem or otherwise acquire, any shares of the capital stock of the Company, or
any securities convertible into or exercisable for any shares of the capital
stock of the Company;

(c) issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock or any securities convertible into or
exercisable for, or any rights, warrants or options to acquire, any such shares,
or enter into any agreement with respect to any of the foregoing, other than
issuances, deliveries or sales in the ordinary course consistent with past
practices;

(d) amend its certificate of incorporation, bylaws or other similar governing
documents;

(e) make individual capital expenditures of $50,000 in the aggregate;

(f) enter into any new line of business or any material partnership
arrangements, joint development agreements or strategic alliances;

(g) acquire or agree to acquire, by merging or consolidating with, or by
purchasing an equity interest in or the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof;

(h) take any action that is intended or may reasonably be expected to result in
any of the conditions to the Merger set forth in Article VII not being
satisfied, or in a violation of any provision of this Agreement, except, in
every case, as may be required by applicable law;

(i) change its methods of accounting in effect at April 30, 2005, except for
changes effected to comply with Statement of Financial Accounting Standards
No. 86, and except as required by changes in GAAP or regulatory accounting
principles;

(j) (i) except as required by applicable law or this Agreement or to maintain
qualification pursuant to the Code, adopt, amend, renew or terminate any Company
Plan or any agreement, arrangement, plan or policy between the Company and one
or more of its current or former directors or officers, (ii) increase in any
manner the compensation of any director, executive officer or other employee who
is a party to a contract relating to employment or severance referenced in
Section 3.11 of this Agreement, or pay any benefit not required by any plan or
agreement as in effect as of the date hereof (except for the granting of stock
options, stock appreciation rights, restricted shares, restricted share units or
performance units or shares granted in the ordinary course consistent with past
practices), (iii) enter into, modify or renew any contract, agreement,
commitment or arrangement providing for the payment of compensation or benefits
to any director, executive officer or employee who is a party to a contract
relating to employment or severance referenced in Section 3.11 of this
Agreement, (iv) enter into, modify or renew any contract, agreement, commitment
or arrangement providing for the payment of compensation or benefits to any
employee who is not a director or executive officer or who is not a party to a
contract relating to employment or severance referenced in Section 3.11 of this
Agreement, other than normal annual cash increases in pay, consistent with past
practice and not exceeding five percent on average of all employees’ base salary
or wage, and ordinary course offer letters and stock option agreements to new
hires permitted under the immediately following clause, (v) hire any new
employee at an annual compensation in excess of $100,000, or (vi) promote any
employee to a rank of senior vice president or more senior rank;

(k) incur any material indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for the material
obligations of any other individual, corporation or other entity, except for
draw downs from the Company’s existing line of credit in the ordinary course of
business consistent with past practice;

(l) sell, lease, license, encumber or otherwise dispose of any of the Company’s
material properties or assets, except in the ordinary course of business
consistent with past practice, or enter into a material lease, relocate, open or
close any office;

(m) propose or enter into any contract, agreement or commitment relating to the
settlement of any legal, administrative, arbitration or other proceeding, claim,
action or governmental or regulatory investigation of any nature against the
Company in excess of $50,000;

(n) Transfer or license to any person or entity or otherwise extend, amend or
modify any material rights to the Company Intellectual Property (including
rights to resell or relicense the Company Intellectual Property) or enter into
grants to future patent rights, other than transactions entered into in the
ordinary course of business consistent with past practices;

(o) Commence any material litigation other than (i) for the routine collection
of bills, (ii) for software piracy, or (iii) in such cases where the Company in
good faith determines that failure to commence suit would result in the material
impairment of a valuable aspect of the Company’s business, provided that the
Company consults with the Parent prior to the filing of such a suit (except that
the Company shall not require the approval of, and shall not be required to
consult with, Parent with respect to any claim, suit or proceeding by the
Company against Parent or any of its affiliates; and

(p) agree or commit to do any of the actions set forth in (a) - (o) above or
take any action that would result in any of the conditions to the Merger set
forth in Article VII not being satisfied, or, except as otherwise allowed
hereunder, that could reasonably be expected to prevent, impede, interfere with
or significantly delay the transactions contemplated hereby..

The consent of Parent to any action by the Company that is not permitted by any
of the preceding paragraphs shall be evidenced by a writing signed by an officer
of Parent.

5.2 Covenants of Parent

During the period from the date of this Agreement and continuing until the
Effective Time, except as expressly contemplated or permitted by this Agreement,
or with the prior written consent of the Company, Parent shall carry on its
business in the ordinary course consistent with past practices. Without limiting
the generality of the foregoing, and except as set forth in the Parent and
Merger Sub Disclosure Schedule or as otherwise contemplated by this Agreement or
consented to by the Company in writing, which consent shall not be unreasonably
withheld, conditioned or delayed, Parent:

(a) shall notify the Company of any emergency or other change in the normal
course of its or its Subsidiaries’ respective businesses or in the operation of
its or its Subsidiaries’ respective properties and of any complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) of any Governmental Entity if such emergency, change, complaint,
investigation or hearing would likely have a Material Adverse Effect on Parent;

(b) shall notify the Company of any material transaction;

(c) shall not declare or pay any dividends on, or make other distributions in
respect of, any of its capital stock (other than dividends on the Series C
Preferred Stock and the Series D Preferred Stock);

(d) shall not (i) split, combine or reclassify any shares of its capital stock
or issue, authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock, or
(ii) repurchase, redeem or otherwise acquire, any shares of the capital stock of
Parent, or any securities convertible into or exercisable for any shares of the
capital stock of Parent;

(e) amend its certificate of incorporation, bylaws or other similar governing
documents (other than an amendment to change the name of the Parent to “Halo
Technology Holdings, Inc.”);

(f) shall not modify its operating model in any material respect;

(g) shall not acquire or agree to acquire any business or entity if the
acquisition or announcement of the agreement for an acquisition would adversely
affect the timing of the Merger or the preparation and distribution of the Proxy
Materials and Registration Statement;

(h) shall not take any action that is intended or may reasonably be expected to
result in any of the conditions to the Merger set forth in Article VII not being
satisfied, or in a violation of any provision of this Agreement, except, in
every case, as may be required by applicable law;

(i) shall not change its methods of accounting in effect at June 30, 2005,
except for changes effected to comply with Statement of Financial Accounting
Standards No. 86, and except as required by changes in GAAP or regulatory
accounting principles;

(j) shall not sell, lease, license, encumber or otherwise dispose of any of
Parents or any of Parent’s Subsidiaries’ material properties or assets, except
in the ordinary course of business consistent with past practice; and

(k) shall not agree or commit to do any of the actions set forth in (a) -
(j) above or take any action that would result in any of the conditions to the
Merger set forth in Article VII not being satisfied, or, except as otherwise
allowed hereunder, that could reasonably be expected to prevent, impede,
interfere with or significantly delay the transactions contemplated hereby.

The consent of the Company to any action by Parent that is not permitted by any
of the preceding paragraphs shall be evidenced by a writing signed by an officer
of the Company.

5.3 Compliance with Antitrust Laws.

Each of Parent and the Company shall use its reasonable best efforts to resolve
objections, if any, which may be asserted with respect to the Merger under
antitrust laws, including, without limitation, the HSR Act. In the event a suit
is threatened or instituted challenging the Merger as violative of antitrust
laws, each of Parent and the Company shall use its reasonable best efforts to
avoid the filing of, or resist or resolve such suit. Parent and the Company
shall use their reasonable best efforts to take such action as may be required:
(a) by the Antitrust Division of the Department of Justice or the Federal Trade
Commission in order to resolve such objections as either of them may have to the
Merger under antitrust laws, or (b) by any federal or state court of the United
States, in any suit brought by a private party or Governmental Entity
challenging the Merger as violative of antitrust laws, in order to avoid the
entry of, or to effect the dissolution of, any injunction, temporary restraining
order, or other order which has the effect of preventing the consummation of the
Merger. Reasonable best efforts shall not include, among other things and to the
extent Parent so desires, the willingness of Parent to accept an order agreeing
to the divestiture, or the holding separate, of any assets of Parent or the
Company.

5.4 No Solicitation.

(a) From and after the date of this Agreement until the Effective Time or the
earlier termination of this Agreement in accordance with its terms, the Company
will not, and will not permit its directors, officers, investment bankers,
affiliates, representatives and agents to, (i) solicit, initiate, or encourage
(including by way of furnishing information), or take any other action to
facilitate, any inquiries or proposals that constitute, or could reasonably be
expected to lead to, any Company Acquisition Proposal, or (ii) engage in, or
enter into, any negotiations or discussions concerning any Company Acquisition
Proposal. Notwithstanding the foregoing, in the event that, notwithstanding
compliance with the preceding sentence, the Company receives a Company Superior
Proposal the Company may, to the extent that the Board of Directors of the
Company determines in good faith (in consultation with outside counsel) that
such action would be required by its fiduciary duties, participate in
discussions regarding any Company Superior Proposal in order to be informed and
make a determination with respect thereto. In such event, the Company shall,
(i) no less than twenty four (24) hours prior to participating in any such
discussions, inform Parent of the material terms and conditions of such Company
Superior Proposal, including the identity of the Person making such Company
Superior Proposal. and (ii) promptly keep Parent informed of the status
including any material change to the terms of any such Company Superior
Proposal. The Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing.

(b) For Purposes of this Agreement:

“Company Acquisition Proposal” means any bona fide inquiry, proposal or offer
relating to any (i) merger, consolidation, business combination, or similar
transaction involving the Company, (ii) sale, lease or other disposition,
directly or indirectly, by merger, consolidation, share exchange or otherwise,
of any assets of the Company in one or more transactions, (iii) issuance, sale,
or other disposition of (including by way of merger, consolidation, share
exchange or any similar transaction) securities (or options, rights or warrants
to purchase such securities, or securities convertible into such securities) of
the Company, (iv) liquidation, dissolution, recapitalization or other similar
type of transaction with respect to the Company, (v) tender offer or exchange
offer for Company securities; in the case of (i), (ii), (iii), (iv) or
(v) above, which transaction would result in a third party (or its shareholders)
acquiring more than twenty percent (20%) of the voting power of the Company or
the assets representing more than twenty percent (20%) of the net income, net
revenue or assets of the Company on a consolidated basis, (vi) transaction which
is similar in form, substance or purpose to any of the foregoing transactions,
or (vii) public announcement of an agreement, proposal, plan or intention to do
any of the foregoing, provided, however, that the term “Company Acquisition
Proposal” shall not include the Merger and the transactions contemplated
thereby.

“Company Superior Proposal” means any offer not solicited by the Company, or by
other persons in violation of the first sentence of Section 5.4(a), and made by
a third party to consummate a tender offer, exchange offer, merger,
consolidation or similar transaction which would result in such third party (or
its shareholders) owning, directly or indirectly, more than fifty percent (50%)
of the Company Shares then outstanding (or of the surviving entity in a merger)
or all or substantially all of the assets of Company, and otherwise on terms
which the Board of Directors of the Company determines in good faith (based on
its consultation with a financial advisor and other such matters that it deems
relevant) would, if consummated, result in a transaction more favorable to the
Company’s stockholders than the Merger and, in the reasonable good faith
judgment of the Board of Directors of the Company after consultation with its
financial advisor, the persons or entity making such Company Superior Proposal
has the financial means to conclude such transaction.

(c) Neither the Board of Directors of the Company nor any committee thereof
shall, except as required by their fiduciary duties as determined in good faith
in consultation with outside counsel, (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Merger Sub, the approval or
recommendation by the Board of Directors of the Company or such committee of
this Agreement or the Merger, (ii) approve, recommend, or otherwise support or
endorse any Company Acquisition Proposal, or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
similar agreement with respect to any Company Acquisition Proposal. Nothing
contained in this Section 5.4 shall prohibit the Company from taking and
disclosing to its stockholders a position contemplated by Rule 14d-9 or 14e-2
promulgated under the Exchange Act or from making any disclosure to the
Company’s stockholders if, in the good faith judgment of the Board of Directors
of the Company, in consultation with outside counsel, such disclosure is
necessary for the Board of Directors to comply with its fiduciary duties under
applicable law.

(d) In addition to the obligations of the Company set forth in paragraphs (a)
and (c) of this Section 5.4, the Company will promptly (and in any event within
twenty-four (24) hours) advise Parent, orally and in writing, if any Company
Acquisition Proposal is made or proposed to be made or any information or access
to properties, books or records of the Company is requested in connection with a
Company Acquisition Proposal, the principal terms and conditions of any such
Company Acquisition Proposal or potential Company Acquisition Proposal or
inquiry and the identity of the party making such Company Acquisition Proposal,
potential Company Acquisition Proposal or inquiry. . The Company will keep
Parent advised of the status and details (including amendments and proposed
amendments) of any such request or Company Acquisition Proposal.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 Cooperation.

(a) The Company and Parent shall together, or pursuant to an allocation of
responsibility to be agreed upon between them:

(i) prepare and file with the SEC as soon as is practicable the Proxy Materials
and the Registration Statement registering the Parent Common Stock be issued in
exchange for Company Common Stock and issuable upon exercise of the Substitute
Options and the Substitute Warrants, and shall use all reasonable best efforts
to cause the Proxy Materials and the Registration Statement to comply with the
rules and regulations promulgated by the SEC, to cause the Registration
Statement to qualify as a resale registration statement with respect to shares
of Parent Common Stock of Persons who are “affiliates” within the meaning of
Rule 145 under the Securities Act, to respond promptly to any comments of the
SEC or its staff, and to have the Proxy Materials cleared by the SEC under the
Exchange Act and the Registration Statement declared effective by the SEC under
the Securities Act as promptly as practicable after it is filed;

(ii) as soon as reasonably practicable take all such action as may be required
under state blue sky or securities laws of every jurisdiction of the United
States in which any registered holder of Company Common Stock has an address of
record on the record date for determining the stockholders entitled to notice of
and to vote and the Company Stockholders Meeting; provided, however, that Parent
shall not be required (A) to qualify to do business as a foreign corporation in
any jurisdiction in which it is not now qualified or (B) to file a general
consent to service of process in any jurisdiction.;

(iii) cooperate with one another in order to lift any injunctions or remove any
other impediment to the consummation of the transactions contemplated herein;
and

(iv) cooperate with one another in obtaining opinions of DLA Piper Rudnick Gray
Cary US LLP, counsel to the Company, and Day, Berry and Howard, tax counsel to
Parent, dated as of the date the Registration Statement is declared effective
satisfying the requirements of Item 601 of Regulation S-K promulgated under the
Securities Act and opinions of DLA Piper Rudnick Gray Cary US LLP and Day, Berry
and Howard, dated as of the Effective Time, to the effect that the Merger
qualifies as a reorganization under the provisions of Section 368(a) of the
Code. In connection therewith, each of the Company and Parent shall deliver to
DLA Piper Rudnick Gray Cary US LLP and Day, Berry and Howard representation
letters dated as of the date of such opinions in form and substance satisfactory
to such counsel.

(b) Subject to the limitations contained in Section 6.2, the Company and Parent
shall each furnish to one another and to one another’s counsel all such
information as may be required in order to effect the foregoing actions and each
represents and warrants to the other that no information furnished by it in
connection with such actions or otherwise in connection with the consummation of
the transactions contemplated by this Agreement will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated in order to make any information so furnished, in light of the
circumstances under which it is so furnished, not misleading.

(c) No party to this Agreement knows of any fact or has taken, or will take, any
action that could reasonably be expected to prevent the Merger from qualifying
as a reorganization within the meaning of Section 368(a) of the Code.

(d) The Company will use all reasonable best efforts to cause the Proxy
Materials to be mailed to the Company’s stockholders as promptly as practicable
after the Registration Statement is declared effective under the Securities Act.
The Company shall promptly furnish to Parent all information concerning the
Company, its Subsidiaries and the Company’s stockholders that may be required or
reasonably requested in connection with any action contemplated by this
Section 6.1. If any event relating to the Company occurs that is required to be
disclosed in an amendment or supplement to the Registration Statement or the
Proxy Materials, or if the Company becomes aware of any information that is
required to be disclosed in an amendment or supplement to the Registration
Statement or the Proxy Materials, then the Company shall promptly inform Parent
thereof and shall cooperate with Parent in filing such amendment or supplement
with the SEC and, if appropriate, in mailing such amendment or supplement to the
stockholders of the Company. If any event relating to Parent or any of its
Subsidiaries occurs that is required to be disclosed in an amendment or
supplement to the Registration Statement or the Proxy Materials, or if Parent
becomes aware of any information that is required to be disclosed in an
amendment or supplement to the Registration Statement or the Proxy Materials,
then Parent shall promptly inform the Company thereof and shall cooperate with
the Company in filing such amendment or supplement with the SEC.

(e) The Company and Parent will cooperate with one another in preparing and
filing all necessary documentation to effect any other applications, notices,
petitions and filings, and to obtain as promptly as practicable, all permits,
consents, approvals and authorizations of all other third Parties and
Governmental Entities which are necessary or advisable to consummate the
transactions contemplated by this Agreement. The Company and Parent shall have
the right to review in advance, and to the extent practicable each will consult
the other on, in each case subject to applicable laws relating to the exchange
of information, all the information relating to the Company or Parent, as the
case may be, which appears in any filing made with, or written materials
submitted to, any third party or any Governmental Entity in connection with the
transactions contemplated by this Agreement; provided, however, that nothing
contained herein shall be deemed to provide either party with a right to review
any information provided by the other party to any Governmental Entity on a
confidential basis in connection with the transactions contemplated hereby. In
exercising the foregoing right, each of the Parties shall act reasonably and as
promptly as practicable. The Parties agree that they will consult with each
other with respect to the obtaining of all permits, consents, approvals and
authorizations of all third Parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement and each
of the Parties will keep the other apprised of the status of matters relating to
contemplation of the transactions contemplated herein.

(i) The Company shall, upon request, furnish Parent with all information
concerning the Company and its directors, officers and stockholders and such
other matters as may be reasonably necessary in connection with any statement,
filing, notice or application made by or on behalf of Parent to any Governmental
Entity in connection with the Merger or the other transactions contemplated by
this Agreement

(ii) Parent, Merger Sub and the Company shall promptly advise each other upon
receiving any communication from any Governmental Entity whose consent or
approval is required for consummation of the transactions contemplated by this
Agreement.

6.2 Access to Information.

(a) Upon reasonable notice and subject to applicable Laws relating to the
exchange of information, the Company and Parent shall accord to the officers,
employees, accountants, counsel and other representatives of the other party,
access, during normal business hours during the period prior to the Effective
Time, to all its properties, books, contracts, commitments and records.

(b) No investigation by either of the Parties or their respective
representatives shall affect the representations and warranties of the other set
forth herein.

6.3 Stockholder Meeting

The Company shall take all reasonable steps necessary to duly call, give notice
of, convene and hold a meeting of its stockholders promptly after the date of
this Agreement for the purpose of voting upon the approval of this Agreement and
the Merger (the “Company Stockholders Meeting”). Management and the Board of
Directors of the Company shall recommend to the Company’s stockholders approval
of this Agreement, including the Merger, and the transactions contemplated
hereby, together with any matters incident thereto, and shall oppose any third
party proposal or other action that is inconsistent with this Agreement or the
consummation of the transactions contemplated hereby; provided, however, that
the Company shall not be obligated to recommend or oppose, as the case may be,
if the Board of Directors of the Company determines in good faith, after
consultation with counsel, that such recommendation or opposition, as the case
may be, would result in a breach of its fiduciary duties under applicable
Delaware law.

6.4 Legal Conditions to Merger.

Each of Parent and the Company shall use their reasonable best efforts (a) to
take, or cause to be taken, all actions necessary, proper or advisable to comply
promptly with all legal requirements which may be imposed on such party with
respect to the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement and (b) to
obtain (and to cooperate with the other party to obtain) any consent,
authorization, order or approval of, or any exemption by, any Governmental
Entity and any other third party which is required to be obtained by the Company
or Parent in connection with the Merger and the other transactions contemplated
by this Agreement.

6.5 Employees.

(a) To the extent permissible under the applicable provisions of the Code and
ERISA, for purposes of crediting periods of service for eligibility to
participate and vesting, but not for benefit accrual purposes, under the
Section 401(k) plan maintained by Parent, as applicable, individuals who are
employees of the Company at the Effective Time and who become eligible to
participate in such plans will be credited with periods of service with the
Company before the Effective Time as if such service had been with Parent, as
applicable.

(b) If required by Parent in writing delivered to the Company not less than five
business days before the Closing Date, the Company shall, on the Closing Date or
effective one day prior to the Closing Date contingent on the Closing occurring,
(i) terminate any Company Plan that includes a qualified cash or deferred
arrangement within the meaning of Code Section 401(k) (collectively, the “401(k)
Plans”) and no further contributions shall be made to any 401(k) Plan after such
termination, or (ii) freeze the 401(k) Plans and no further contributions shall
be made to any 401(k) Plan after such freeze, or (iii) cause the 401(k) Plans to
be merged in to the Parent 401(k) Plan as soon as administratively possible
after the Closing Date and the participants of the 401(k) Plans shall be
governed by the Parent 401(k) Plan. The Company shall provide to Parent
(i) certified copies of resolutions adopted by the Board of Directors of the
Company, as applicable, authorizing such termination and (ii) an executed
amendment to each 401(k) Plan in form and substance reasonably satisfactory to
Parent to conform the plan document for such 401(k) Plan with all applicable
requirements of the Code and regulations thereunder relating to the
tax-qualified status of such 401(k) Plan. To the extent the applicable 401(k)
Plan has been amended pursuant to this section, Parent will not be obligated to
make any matching or other employer contributions to any 401(k) Plan after the
Merger.

(c) After the Effective Time, except to the extent that Parent or its
Subsidiaries continues Company Plans in effect, employees of the Company who
become employed by Parent or any of its Subsidiaries will be eligible for
employee benefits that Parent or such Subsidiary, as the case may be, provides
to its employees generally and, except as otherwise required by this Agreement,
on substantially the same basis as is applicable to such employees, provided
that nothing in this Agreement shall require any duplication of benefits. Parent
will or will cause its Subsidiaries to give credit to employees of the Company,
with respect to the satisfaction of the limitations as to pre-existing condition
exclusions and waiting periods for participation and coverage that are
applicable under the employee welfare benefit plans (within the meaning of
Section 3(1) of ERISA) of Parent and credit employees of the Company with an
amount equal to the credit that any such employee had received as of the
Effective Time towards the satisfaction of any co-insurance, co-payment,
deductible or out-of-pocket limit under the comparable employee welfare benefit
plans of the Company.

6.6 Subsequent Financial Statements.

As soon as reasonably available, but in no event more than thirty (30) days
after the end of each month, the Company and Parent will deliver the unaudited
financial statements of such party as of the end of each such month to the other
party.

6.7 Additional Agreements.

In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, or to vest the Surviving
Corporation with full title to all properties, assets, rights, approvals,
immunities and franchises of any of the Parties to the Merger, the proper
officers and directors of each of Parent and the Company shall take all such
necessary action as may be reasonably requested by Parent.

6.8 Advice of Changes.

Parent and the Company shall promptly advise each other of any change or event
that, individually or in the aggregate, has or would likely have a Material
Adverse Effect on it or to cause or constitute a material breach of any of its
representations, warranties or covenants contained herein. From time to time
prior to the Effective Time, each party will promptly supplement or amend its
disclosure schedule delivered in connection with the execution of this Agreement
to reflect any matter which, if existing, occurring or known at the date of this
Agreement, would have been required to be set forth or described in such
disclosure schedule or which is necessary to correct any information in such
disclosure schedule which has been rendered inaccurate thereby. No supplement or
amendment to such disclosure schedule shall have any effect for the purpose of
determining satisfaction of the conditions set forth in Sections 7.2(a) or
7.3(a) hereof, as the case may be.

6.9 Current Information.

During the period from the date of this Agreement to the Effective Time, each of
Parent and the Company will cause one or more of its designated representatives
to confer on a regular and frequent basis (not less than semi-monthly) with
representatives of the other Party and to report the general status of their
respective ongoing operations. Parent and the Company will promptly notify each
other of any material change in the normal course of business or in the
operation of their properties and of any governmental complaints, investigations
or hearings (or communications indicating that the same may be contemplated), or
the institution or the threat of litigation involving Parent and the Company,
and will keep each other fully informed of such events.

6.10 Execution of the Certificate of Merger.

Prior to the Effective Time, Parent, Merger Sub and the Company each shall
execute and deliver the Certificate of Merger in a form reasonably satisfactory
to the Parties.

6.11 Indemnification and Insurance.

(a) In the event of any threatened or actual claim, action, suit, proceeding or
investigation, whether civil, criminal or administrative, in which any person
who is now, or has been at any time prior to the date of this Agreement, or who
becomes prior to the Effective Time, a director or officer or employee of the
Company (the “Indemnified Parties”) is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of, or
pertaining to (i) the fact that he is or was a director, officer or employee of
the Company or any of its predecessors or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the Parties agree to cooperate and defend against
and respond thereto to the extent permitted by applicable law and the
certificate of incorporation and bylaws of the Company. It is understood and
agreed that after the Effective Time, Parent and Surviving Corporation shall
indemnify and hold harmless, as and to the fullest extent permitted by
applicable law and the certificate of incorporation and bylaws of the Company as
in effect immediately prior to the Effective Time, each such Indemnified Party
against any losses, claims, damages, liabilities, costs, expenses (including
reasonable attorney’s fees and expenses in advance of the final disposition of
any claim, suit, proceeding or investigation to each Indemnified Party to the
fullest extent permitted by law upon receipt of any undertaking required by
applicable law), judgments, fines and amounts paid in settlement (“Damages”) in
connection with any such threatened or actual claim, action, suit, proceeding or
investigation, and in the event of any such threatened or actual claim, action,
suit, proceeding or investigation (whether asserted or arising before or after
the Effective Time), the Indemnified Parties may retain counsel reasonably
satisfactory to Parent; provided, however, that (1) Parent shall have the right
to assume the defense thereof and upon such assumption Parent shall not be
liable to any Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by any Indemnified Party in connection with
the defense thereof, except that if Parent elects not to assume such defense or
counsel for the Indemnified Parties reasonably advises the Indemnified Parties
that there are issues which raise conflicts of interest between Parent and the
Indemnified Parties, the Indemnified Parties may retain counsel reasonably
satisfactory to Parent, and Parent shall pay the reasonable fees and expenses of
such counsel for the Indemnified Parties, (2) Parent shall be obligated pursuant
to this paragraph to pay for only one counsel for each Indemnified Party,
(3) Parent shall not be liable for any settlement effected without its prior
written consent (which consent shall not be unreasonably withheld or delayed),
and (4) Parent shall not be obligated pursuant to this paragraph to the extent
that a final judgment determines that any Damages are as a result of the gross
negligence or willful misconduct or result from a decision made by the
Indemnified Party when the Indemnified Party had no good faith belief that he or
she was acting in the best interests of the Company. Any Indemnified Party
wishing to claim indemnification under this Section 6.11, upon learning of any
such claim, action, suit, proceeding or investigation, shall notify Parent
thereof; provided, however, that the failure to so notify shall not affect the
obligations of Parent under this Section 6.11 except to the extent such failure
to notify materially prejudices Parent. Parent’s obligations under this
Section 6.11 continue in full force and effect for a period of five years from
the Effective Time; provided, however, that all rights to indemnification in
respect of any claim asserted or made within such period shall continue until
the final disposition of such claim.

If Parent or any of its successors or assigns shall consolidate with or merge
into any other entity and shall not be the continuing or surviving entity of
such consolidation or merger or shall transfer all or substantially all of its
assets to any entity, then and in each case, the successors and assigns of
Parent shall assume the obligations set forth in this Section 6.11.

Parent shall ensure than any officer or director of the Company who becomes an
executive officer or director of Parent on or after the Effective Time shall, at
the time such person becomes an executive officer or director of Parent, be
named as an insured under Parent’s directors and officers liability policy to
the same extent as other executive officers and directors of Parent.

(b) Company shall purchase for the benefit of the persons serving as executive
officers and directors of the Company immediately prior to the Effective Time,
directors’ and officers’ liability insurance coverage for five years after the
Effective Time, under either Company’s policy in existence on the date hereof,
or under a policy of similar coverage and amounts containing terms and
conditions which are generally not less advantageous than the Company’s current
policy, and in either case, with respect to acts or omissions occurring prior to
the Effective Time which were committed by such executive officers and directors
in their capacity as such (“Tail Insurance”). Company shall not purchase Tail
Insurance with a premium of more than $200,000.

6.12 Takeover Statute.

If any “fair price,” “moratorium,” “control share acquisition” or other form of
antitakeover statute or regulation shall become applicable to the transactions
contemplated hereby, each of the Company and Parent and the members of their
respective Boards of Directors shall grant such approvals and take such actions
as are reasonably necessary so that the transactions contemplated hereby may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to eliminate or minimize the effects of such statute or regulation
on the transactions contemplated hereby.

6.13 Accountants’ “Comfort” Letters.

The Company and Parent will each use reasonable best efforts to cause to be
delivered to each other letters from their respective independent accountants,
dated a date within two business days before the date of the Registration
Statement, in form reasonably satisfactory to the recipient and customary in
scope for comfort letters delivered by independent accountants in connection
with registration statements on Form S-4 under the Securities Act.

6.14 Additional Reports.

The Company and Parent shall each furnish to the other copies of any reports of
the type referred to in Sections 3.5 and 4.8 that it files with the SEC on or
after the date hereof, and each of the Company and Parent, as the case may be,
represents and warrants that as of the respective dates thereof, such reports
will not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Any unaudited consolidated interim financial statements included in
such reports (including any related notes and schedules) will fairly present the
financial position of the Company or Parent and its consolidated Subsidiaries,
as the case may be, as of the dates thereof and the results of operations and
changes in financial position or other information included therein for the
periods or as of the date then ended (subject, where appropriate, to normal
year-end adjustments), in each case in accordance with past practice and GAAP
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto).

6.15 Termination of Employee Stock Purchase Plan

On or before the Closing Date, the Company shall terminate it’s Employee Stock
Purchase Plan (the “ESPP”). On the earlier of March 31, 2006, or the date the
ESPP expires by its own terms, the Company shall suspend contributions to the
ESPP.

6.16 Stockholders Agreement.

Concurrently with the execution and delivery of this Agreement, each of Special
Situations Funds, AWM Investment Company, Inc. and Diker Management LLC and any
entity owed or controlled by any of them shall execute and deliver the
Stockholder Agreement.

ARTICLE VII

CONDITIONS PRECEDENT

7.1 Conditions to Each Party’s Obligation To Effect the Merger.

The respective obligation of each party to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of the following conditions:

(a) Stockholder Approvals. This Agreement and the Merger shall have been
approved and adopted by the affirmative vote of the holders of at least a
majority of the outstanding shares of the Company Common Stock entitled to vote
thereon.

(b) No Injunctions or Restraints; Illegality. No order, injunction or decree
issued by any court or agency of competent jurisdiction or other legal restraint
or prohibition preventing the consummation of the Merger or any of the other
transactions contemplated by this Agreement shall be in effect. No statute,
rule, regulation, order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which prohibits, restricts or
makes illegal consummation of the Merger.

(c) Registration Statement. The Registration Statement shall have been declared
effective in accordance with the provisions of the Securities Act and no stop
order suspending such effectiveness shall have been issued and remain in effect.

(d) Employment Agreements. Parent and Todd Wille shall have entered into a
mutually acceptable employment agreement in substantially the form attached
hereto as Exhibit C.

7.2 Conditions to Obligations of Parent.

The obligation of Parent and Merger Sub to effect the Merger is also subject to
the satisfaction or waiver by Parent at or prior to the Effective Time of the
following conditions:

(a) Representations and Warranties. The representations and warranties of the
Company set forth in this Agreement that are qualified as to materiality or
words of similar import shall be true and correct in all respects, and those not
so qualified shall be true and correct in all material respects, as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date; provided, however, that for purposes of this paragraph, all
such representations and warranties shall be deemed to be true and correct
unless the failure or failures of such representations and warranties to be so
true and correct in all material respects or true and correct in all respects,
as the case may be, either individually or in the aggregate, will likely have a
Material Adverse Effect on the Company. Parent shall have received a certificate
signed on behalf of the Company by each of the Chief Executive Officer and the
Chief Financial Officer of the Company to the foregoing effect.

(b) Performance of Covenants and Agreements of the Company. The Company shall
have performed in all material respects all covenants and agreements required to
be performed by it under this Agreement at or prior to the Closing Date, except
where failure to perform would not likely have a Material Adverse Effect on
Company. Parent shall have received a certificate signed on behalf of the
Company by each of the Chief Executive Officer and the Chief Financial Officer
of the Company to such effect.

(c) Consents under Agreements. The consent, approval or waiver of each person
whose consent or approval shall be required in order to permit the succession by
the Surviving Corporation pursuant to the Merger to any obligation, right or
interest of the Company under any Company Contract shall have been obtained
except for those, the failure of which to obtain, will not likely have a
Material Adverse Effect on the Company or the Surviving Corporation.

(d) No Material Adverse Change. There shall have been no changes in the
business, operations, condition (financial or otherwise), assets or liabilities
of the Company regardless of whether or not such events or changes are
inconsistent with the representations and warranties given herein) that
individually or in the aggregate has had or would likely have a Material Adverse
Effect on Parent.

(e) Stockholder Agreements. Each Stockholder Agreement shall remain in full
force and effect.

(f) Dissenter’s or Appraisal Rights. To the extent available to the holders of
the Company Common Stock in connection with the Merger, holders of not more than
ten (10%) of the Company Common Stock shall have exercised and not withdrawn
prior to the Effective Time dissenter’s or appraisal rights.

7.3 Conditions to Obligations of the Company.

The obligation of the Company to effect the Merger is also subject to the
satisfaction or waiver by the Company at or prior to the Effective Time of the
following conditions:

(a) Representations and Warranties. The representations and warranties of Parent
and Merger Sub set forth in this Agreement that are qualified as to materiality
or words of similar import shall be true and correct in all respects, and those
not so qualified shall be true and correct in all material respects, as of the
date of this Agreement and (except to the extent such representations and
warranties speak as of an earlier date) as of the Closing Date as though made on
and as of the Closing Date; provided, however, that for purposes of this
paragraph, such representations and warranties shall be deemed to be true and
correct unless the failure or failures of such representations and warranties to
be so true and correct in all material respects or true and correct in all
respects, as the case may be, either individually or in the aggregate, will
likely have a Material Adverse Effect on Parent. The Company shall have received
a certificate signed on behalf of both Parent and Merger Sub by each of the
President or any Executive Vice President and the Chief Financial Officer or
Treasurer of Parent to the foregoing effect.

(b) Performance of Covenants and Agreements of Parent. Parent shall have
performed in all material respects all covenants and agreements required to be
performed by it under this Agreement at or prior to the Closing Date, except
where failure to perform would not likely have a Material Adverse Effect on
Parent. The Company shall have received a certificate signed on behalf of both
Parent by each of the President or any Executive Vice President and the Chief
Financial Officer or Treasurer of Parent to such effect.

(c) Consents under Agreements. The consent or approval or waiver of each person
(other than the Governmental Entities referred to in Section 7.1(b)) whose
consent or approval shall be required in connection with the transactions
contemplated hereby under any loan or credit agreement, note, mortgage,
indenture, lease, license or other agreement or instrument to which Parent is a
party or is otherwise bound shall have been obtained, except where failure to
obtain such consent, approval or waiver would not likely have a Material Adverse
Effect on Parent.

(d) No Material Adverse Change. There shall have been no changes in the
business, operations, condition (financial or otherwise), assets or liabilities
of the Parent regardless of whether or not such events or changes are
inconsistent with the representations and warranties given herein) that
individually or in the aggregate has had or would likely have a Material Adverse
Effect on Parent.

(e) Additional Investment. Parent shall have received at least $2,000,000 in new
money equity investment between the date hereof and the Effective Time.

(f) Capitalization. On or prior to the Effective Time (i) the holders of
outstanding shares of the Parent’s Preferred Stock shall have converted such
shares of preferred stock into common stock of Parent and (ii) the holders of
convertible promissory notes of Parent listed on Schedule 7.3(f) shall have
converted such promissory notes into shares of Common Stock of Parent.

ARTICLE VIII

TERMINATION AND AMENDMENT

8.1 Termination.

This Agreement may be terminated at any time prior to the Effective Time,
whether before or after approval by the stockholders of the Company of the
matters presented in connection with the Merger:

(a) by mutual consent of Parent and the Company in a written instrument, if the
Board of Directors of each so determines by a vote of a majority of the members
of its entire Board;

(b) by either Parent or the Company upon written notice to the other party
(i) 30 days after the date on which any request or application for a regulatory
approval shall have been denied or withdrawn at the request or recommendation of
the Governmental Entity which must grant such regulatory approval, unless within
the 30-day period following such denial or withdrawal the Parties agree to file,
and have filed with the applicable Governmental Entity, a petition for rehearing
or an amended application; provided, however, that no party shall have the right
to terminate this Agreement pursuant to this Section 8.1(b), if such denial or
request or recommendation for withdrawal shall be due to the failure of the
party seeking to terminate this Agreement to perform or observe the covenants
and agreements of such party set forth herein;

(c) by either Parent or the Company if the Merger shall not have been
consummated on or before September 30, 2006, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe the covenants and agreements of
such party set forth herein;

(d) by either Parent or the Company (provided that the terminating party is not
in breach of its obligations under Section 6.3 hereof) if the approval of the
stockholders of the Company hereto required for the consummation of the Merger
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held Company Stockholders Meeting or at any adjournment or
postponement thereof;

(e) by either Parent or the Company if there shall have been a breach of any of
the representations or warranties set forth in this Agreement on the part of the
other party, if such breach, individually or in the aggregate, has had or is
likely to have a Material Adverse Effect on the breaching party, and such breach
shall not have been cured within 30 days following receipt by the breaching
party of written notice of such breach from the other party hereto or such
breach, by its nature, cannot be cured prior to the Closing;

(f) by either Parent or the Company if there shall have been a breach of any of
the covenants or agreements set forth in this Agreement on the part of the other
party, if such breach, individually or in the aggregate, has had or is likely to
have a Material Adverse Effect on the breaching party, and such breach shall not
have been cured within 30 days following receipt by the breaching party of
written notice of such breach from the other party hereto or such breach, by its
nature, cannot be cured prior to the Closing;

(g) by Parent, if the management of the Company or its Board of Directors, for
any reason, (i) fails to call and hold a Company Stockholders Meeting to
consider and approve this Agreement and the transactions contemplated hereby,
(ii) fails to recommend to stockholders the approval of this Agreement and the
transactions contemplated hereby, (iii) fails to oppose any third party proposal
that is inconsistent with the transactions contemplated by this Agreement other
than as expressly permitted by Section 5.4 of this Agreement, or (iv) violates
Section 5.4 of this Agreement;

(h) by Parent or the Company if the Company has complied with Section 5.4 above,
and has given written notice to Parent that the Company has agreed to enter into
a Company Superior Proposal; provided, however, that such termination under this
Section 8.1(h) shall not be effective unless and until the Company shall have
complied with breakup fee provisions of Section 8.2 below.

8.2 Effect of Termination; Termination Fee.

(a) Except as set forth in this Section 8.2, in the event of termination of this
Agreement by either Parent or the Company as provided in this Article VIII, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of the Parties or their respective affiliates, officers,
directors or stockholders except (x) with respect to the treatment of
confidential information, the payment of expenses pursuant to Section 9.2, and
Article IX generally, (y) to the extent that such termination results from the
willful breach of a Party of any of its representations or warranties, or any of
its covenants or agreements or (z) intentional or knowing misrepresentation in
connection with this Agreement or the transactions contemplated hereby.

(b) In the event that (i)(1) a Company Acquisition Proposal or the intention to
make a Company Acquisition Proposal shall have been made directly to the
stockholders of the Company generally or otherwise publicly announced by the
Company or the Person making such Company Acquisition Proposal, (2) such Company
Acquisition Proposal or intention is not irrevocably and publicly withdrawn
prior to the vote of the Company stockholders at the duly held Company
Stockholders Meeting, and (3) this Agreement is terminated by either the Company
or Parent (x) pursuant to Section 8.1(c) due to the Company Stockholders Meeting
not occurring as a result of such Company Acquisition Proposal or
(y) Section 8.1(d), (ii) this Agreement is terminated by Parent pursuant to
Section 8.1(g) or (iii) this Agreement is terminated by either the Company or
Parent pursuant to Section 8.1(h), then the Company shall promptly, but in no
event later than the date of such termination, pay Parent a fee equal to
$600,000 (the “Company Termination Fee”), payable by wire transfer of same day
funds. The Company acknowledges that the agreements contained in this
Section 8.2(b) are an integral part of the transactions contemplated by this
Agreement, and that, without these agreements, Parent would not enter into this
Agreement, and accordingly, if the Company fails promptly to pay the amount due
pursuant to this Section 8.2(b), and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 8.2(b), the Company shall pay to Parent its costs and
expenses (including reasonable attorneys’ fees and expenses) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank, N.A. in effect on the date such payment was required to be made.

(c) If this Agreement is terminated under circumstances in which the Parent is
entitled to receive a Company Termination Fee, the payment of such Company
Termination Fee shall be the sole and exclusive remedy available to such party,
except in the event of (x) a willful breach by the other party of any provision
of this Agreement or (y) the intentional or knowing misrepresentation in
connection with this Agreement or the transactions contemplated hereby, in which
event the non-breaching Party shall have all rights, powers and remedies against
the breaching Party which may be available at law or in equity. All rights,
powers and remedies provided under this Agreement or otherwise available in
respect hereof at law or in equity shall be cumulative and not alternative, and
the exercise of any such right, power or remedy by any Party shall not preclude
the simultaneous or later exercise of any other such right, power or remedy by
such Party.

8.3 Amendment.

Subject to compliance with applicable law, this Agreement may be amended by the
Parties, by action taken or authorized by their respective Board of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of the Company; provided, however, that after any
approval of the transactions contemplated by this Agreement by the Company’s
stockholders, there may not be, without further approval of such stockholders,
any amendment of this Agreement which reduces the amount or changes the form of
the consideration to be delivered to the Company stockholders hereunder other
than as contemplated by this Agreement. This Agreement may not be amended except
by an instrument in writing signed on behalf of each of the Parties.

8.4 Extension; Waiver.

At any time prior to the Effective Time, the Parties, by action taken or
authorized by their respective Boards of Directors, may, to the extent legally
allowed, (a) extend the time for the performance of any of the obligations or
other acts of the other Parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such Party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.

ARTICLE IX

GENERAL PROVISIONS

9.1 Nonsurvival of Representations, Warranties and Agreements.

The respective representations and warranties made by the Company, Parent and
Merger Sub in this Agreement or in any instrument delivered pursuant to this
Agreement shall not survive the Effective Time and no Person shall have any
liability or obligation in connection with any such representation or warranty
following the Effective Time.

9.2 Expenses.

All costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense. The Registration Statement filing fee shall be borne by Parent and the
cost of printing the Registration Statement and the Proxy Materials shall be
borne one-half by Parent and one-half by the Company.

9.3 Notices.

All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally, mailed by registered or certified mail
(return receipt requested), or if sent by facsimile or delivered by an express
courier (with confirmation) to the Parties at the following addresses (or at
such other address for a party as shall be specified by like notice):

(a) if to Parent and Merger Sub, to:

Halo Technology Holdings
200 Railroad Avenue, Third Floor
Greenwich, Connecticut 06830
Attn: Ernest (JR) Mysogland
Tel: (203) 422-2950
Fax: (203) 422-5329

(b) if to Company, to:

Unify Corporation
2101 Arena Blvd., Suite 100
Sacramento, California 95834
Attn: Todd E. Wille

Tel: (916) 928-6387

Fax: (916) 928-6408

with a copy (which shall not constitute notice) to:

DLA Piper Rudnick Gray Cary US LLP
400 Capitol Mall, Suite 2400
Sacramento, CA 95814
Attn: Kevin A. Coyle
Tel: (916) 930-3200Fax: (916) 930-3201

9.4 Interpretation.

When a reference is made in this Agreement to Sections, Exhibits or Schedules,
such reference shall be to a Section of or an Exhibit or Schedule to this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
“include”, “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation”.

9.5 Counterparts.

This Agreement may be executed in counterparts, all of which shall be considered
one and the same agreement and shall become effective when counterparts have
been signed by each of the Parties and delivered to the other Parties, it being
understood that all Parties need not sign the same counterpart. A facsimile or
electronic transmission of a signed counterpart of this Agreement shall be
sufficient to bind the party or Parties whose signature(s) appear thereon.

9.6 Entire Agreement.

This Agreement (including the disclosure schedules, documents and the
instruments referred to herein) constitutes the entire agreement and supersedes
all prior agreements and understandings, both written and oral, among the
Parties with respect to the subject matter hereof, other than the
Confidentiality Agreement by and among Parent and the Company, dated as of
October 2, 2005 (which shall survive the execution and termination of this
Agreement).

9.7 Governing Law.

This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware, without regard to any applicable conflicts of law rules.

9.8 Enforcement of Agreement.

The Parties agree that irreparable damage would occur in the event that the
provisions of this Agreement were not performed in accordance with its specific
terms or were otherwise breached. It is accordingly agreed that the Parties
shall be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions thereof in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.

9.9 Severability.

Any term or provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or affecting the validity
or enforceability of any of the terms or provisions of this Agreement in any
other jurisdiction. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.

9.10 Publicity.

Except as otherwise required by law or the rules of any exchange on which the
Company Common Stock or the Parent Common Stock is or may become listed, so long
as this Agreement is in effect, neither Parent nor the Company shall, or shall
permit any of Parent’s Subsidiaries to, issue or cause the publication of any
press release or other public announcement with respect to, or otherwise make
any public statement concerning, the transactions contemplated by this
Agreement, without the consent of the other party, which consent shall not be
unreasonably withheld or delayed.

9.11 Assignment; Limitation of Benefits.

Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the Parties (whether by operation of law or
otherwise) without the prior written consent of the other Parties. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the Parties and their respective successors and
assigns. Except for Section 6.11, this Agreement (including the documents and
instruments referred to herein) is not intended to confer upon any person other
than the Parties any rights or remedies hereunder, and the covenants,
undertakings and agreements set out herein shall be solely for the benefit of,
and shall be enforceable only by, the Parties hereto and their permitted
assigns.

9.12 Additional Definitions.

In addition to any other definitions contained in this Agreement, the following
words, terms and phrases shall have the following meanings when used in this
Agreement.

“Company Intellectual Property” means any Intellectual Property that is owned by
or licensed to the Company, including the Company Software.

“Company Licensed Software” means all third party Software used by the Company
except for “off the shelf” or other software widely available through regular
commercial distribution channels on standard terms and conditions.

“Company Proprietary Software” means all Software owned by the Company.

“Company Registered Intellectual Property” means all of the Registered
Intellectual Property owned by or filed in the name of the Company.

“Company Software” means the Company Licensed Software and the Company
Proprietary Software.

“Company Stock Option” means options granted to Company employees, officers,
directors or consultants to acquire Company Common Stock, including without
limitation options granted pursuant to the Company’s 2001 Stock Option Plan and
the Company’s 1991 Stock Option Plan.

“Confidential Information” means any data or information of the Company
(including trade secrets) that is valuable to the operation of the Company’s
business and not generally known to the public or competitors.

“GAAP” means generally accepted accounting principles as applied in the United
States of America.

“HSR Act” means the United States Hart-Scott Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.

“Intellectual Property” means all intellectual property rights, including:
(a) all United States and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals and continuations
thereof; (b) all inventions (whether patentable or not), invention disclosures,
improvements, mask works, trade secrets, manufacturing processes, test and
qualification processes, designs, schematics, proprietary information, know-how,
technology, technical data and customer lists; (c) all works of authorship
(whether copyrightable or not), copyrights, copyright registrations and
applications therefor throughout the world; (d) all industrial designs and any
registrations and applications therefor throughout the world; (e) all Software;
and (f) all internet uniform resource locators, domain names, trade names,
logos, slogans, designs, trade dress, common law trademarks and service marks,
and trademark and service mark and trade dress registrations and applications
therefor throughout the world.

“Knowledge” with respect to any entity, refers to the knowledge of such entity’s
directors and officers in the ordinary course of their duties in such positions
without inquiry.

“Laws” means any and all statutes, laws, ordinances, rules, regulations, orders,
permits, judgments, injunctions, decrees, case law and other rules of law
enacted, promulgated or issued by any Governmental Entity.

“Material Adverse Effect” means with respect to Parent, Merger Sub or the
Company, as the case may be, a condition, event, change or occurrence that is
reasonably likely to have a material adverse effect upon (A) the financial
condition, results of operations, business or properties of Parent, Merger Sub
or the Company, as the case may be, and its Subsidiaries taken as a whole (other
than as a result of (i) any change, effect, event or occurrence relating to the
United States economy or financial or securities markets in general, (ii) any
change, effect, event or occurrence relating to the software applications
industry to the extent not affecting such party to a materially greater extent
than it affects other Persons in the software applications industry, (iii) any
change, effect, event or occurrence relating to the announcement or performance
of this Agreement and the transactions contemplated hereby, (iv) with respect to
the Company or Parent, any change, effect, event or occurrence resulting from
any action or omission taken with the prior consent of the other Party, and (v) 
effects arising from war or terrorism), or (B) the ability of Parent, Merger Sub
or the Company to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.

“Permitted Liens” means in the case of Intellectual Property, license agreements
entered into in the ordinary course.

“Person” means any natural person, corporation, business trust, joint venture,
association, company, firm, partnership or other entity or government or
Governmental Entity.

“Registered Intellectual Property” means all United States and foreign:
(a) patents and patent applications (including provisional applications);
(b) registered trademarks, service marks and trade dress, and applications to
register trademarks, service marks and trade dress; (c) registered copyrights
and applications to register copyrights; and (d) domain name registrations.

“Software” means all computer software programs, together with any error
corrections, updates, modifications, or enhancements thereto, in both
machine-readable form and human-readable form.

"Special Situations Funds” means Special Situations Fund III, L.P., Special
Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P.,
Special Situations Technology Fund, L.P., and Special Situations Technology Fund
II, L.P.

“Stockholder Agreement” means the Stockholder Agreements in the form of
Exhibit A attached hereto between the Parent and each of Special Situations
Funds, AWM Investment Company, Inc. and Diker Management LLC and any entity owed
or controlled by any of them.

“Subsidiary” with respect to any party means any corporation, partnership or
other organization, whether incorporated or unincorporated, which is
consolidated with such party for financial reporting purposes.

IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed and delivered by their respective officers thereunto
duly authorized as of the date first above written.

WARP TECHNOLOGY HOLDINGS, INC.,

operating under the name

HALO TECHNOLOGY HOLDINGS

         
By:
      Ernest (JR) Mysogland
 
       
 
  Name:   Ernest (JR) Mysogland

Title: Executive Vice President

UCA MERGER SUB, INC.

     
By:
  Ernest (JR) Mysogland
 
   
 
  Name: Ernest (JR) Mysogland
Title: President and Sole Director

UNIFY CORPORATION

         
By:
      Todd E. Wille
 
       
 
  Name:   Todd E. Wille

Title: Chief Executive Officer