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Sample Business Contracts

Asset Purchase Agreement - Palm Inc. and Be Inc.

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                             AMENDED AND RESTATED
                           ASSET PURCHASE AGREEMENT

   THIS AMENDED AND RESTATED ASSET PURCHASE AGREEMENT (the "Agreement"), is
made and entered into as of September 10, 2001, by and among Palm, Inc., a
Delaware corporation ("Parent"), ECA Subsidiary Acquisition Corporation, a
Delaware corporation and an indirect wholly owned Subsidiary of Parent
("Buyer"), and Be Incorporated, a Delaware corporation ("Seller").

                                   RECITALS

   A. Parent, Buyer and Seller are parties to that certain Asset Purchase
Agreement dated as of August 16, 2001 (the "Existing Agreement Date"), which
provides for the purchase by Buyer from Seller, and the sale by Seller to
Buyer, of substantially all of the assets relating to, required for, used in or
otherwise constituting the Products (as defined therein), in exchange for
shares of common stock of Parent, the assumption of certain liabilities
relating to the Products and the other consideration set forth therein (the
"Existing Agreement").

   B. Concurrently with the execution and delivery of the Existing Agreement,
as a material inducement to Parent and Buyer to enter into the Existing
Agreement, selected Key Employees (as defined below) of Seller entered into
non-competition agreements, substantially in the form attached thereto as
Exhibit A (the "Non-Competition Agreements"), with Parent, each of which shall
become effective as of the Closing Date (as defined therein).

   C. Concurrently with the execution and delivery of the Existing Agreement,
as a material inducement to Parent and Buyer to enter into the Existing
Agreement, certain stockholders of Seller executed and delivered stockholder
support agreements, substantially in the form attached thereto as Exhibit B
(the "Support Agreements"), to Buyer.

   D. It is contemplated that, subject to approval by Seller's stockholders, as
soon as reasonably practicable following the Closing (as defined in the
Existing Agreement) Seller shall wind-up its business operations in accordance
with applicable law.

   E. Parent, Buyer and Seller now desire to amend and restate in its entirety
the Existing Agreement, on the terms and conditions set forth in this
Agreement, in order to reflect certain understandings reached by the parties
subsequent to the execution and delivery of the Existing Agreement.

   NOW, THEREFORE, in consideration of the covenants, representations,
warranties and mutual agreements set forth herein, and for other good and
valuable consideration, intending to be legally bound hereby, the parties
hereto agree as follows:

                                   ARTICLE 1

                                  DEFINITIONS

   1.1 Capitalized Terms. The following capitalized terms shall have the
meanings set forth below:

      (a) "Acquired Assets" shall have the meaning set forth in Section 2.1.

      (b) "Adjustment Amount" means the aggregate amount of all Prepaid Service
   Payments (as defined in Section 5.7) reflected on the Prepaid Service
   Payment Update as of the Closing Date.

      (c) "Agreement" means this Asset Purchase Agreement together with all
   exhibits and schedules hereto.

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      (d) "Allocation" shall have the meaning set forth in Section 3.3.

      (e) "Assumed Liabilities" shall have the the meaning set forth in Section
   2.9.

      (f) "Benefits Liabilities" means any and all claims, debts, liabilities,
   commitments and obligations, whether fixed, contingent or absolute, matured
   or unmatured, liquidated or unliquidated, accrued or unaccrued, known or
   unknown, whenever or however arising, including all costs and expenses
   relating thereto arising under law, rule, regulation, permits, action or
   proceeding before any Governmental Entity, order or consent decree or any
   award of any arbitrator of any kind relating to any Employee Plan,
   Employment Agreement, International Employee Plan or otherwise to an
   Employee.

      (g) "Books and Records" means all papers and records (in paper or
   electronic format) in the care, custody, or control of Seller or any of its
   Subsidiaries relating to the Acquired Assets including, without limitation,
   all purchasing and sales records, customer and vendor lists, accounting and
   financial records, product documentation, product specifications, marketing
   requirement documents and software release orders.

      (h) "Closing" shall have the meaning set forth in Section 3.1.

      (i) "Closing Date" shall have the meaning set forth in Section 3.1.

      (j) "Collateral Agreements" shall have the meaning set forth in Section
   2.4.

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

      (l) "Continuing Employees" shall have the meaning set forth in Section
   7.10.

      (m) "Contract" means any mortgage, indenture, lease, contract, covenant
   or other agreement, instrument or commitment, permit, concession, franchise
   or license.

      (n) "Derivative Work" has the meaning ascribed to it under the United
   States Copyright Law, Title 17 U.S.C. Sec. 101 et. seq., as the same may be
   amended from time to time.

      (o) "Designated Employees" means those employees of Seller listed on
   Schedule 1.1(o) hereto.

      (p) "DOL" shall mean the Department of Labor.

      (q) "Effectively Transferred Contract" means a Transferred Contract as to
   which no consent to assignment is required or as to which a consent to
   assignment is required and has been obtained prior to the Closing.

      (r) "Eligible Contracts" means (i) the Internet Appliance OEM License and
   Distribution Agreement between Be Incorporated and Sony Electronics Inc.
   dated March 13, 2001 (the "Sony Agreement"), (ii) all Contracts of Seller
   that contain license grants to Seller that are not Transferred Contracts on
   the Existing Agreement Date and (iii) all nondisclosure agreements,
   confidentiality agreements or similar Contracts of Seller.

      (s) "Employee" shall mean any current or former or retired employee,
   consultant or director of Seller or any Subsidiary of Seller in his or her
   capacity as such.

      (t) "Employee Plan" means any plan, program, policy, practice, contract,
   agreement or other material arrangement providing for compensation,
   severance, termination pay, deferred compensation, performance awards, stock
   or stock-related awards, fringe benefits or other employee benefits or
   remuneration of any kind, whether written, unwritten or otherwise, funded or
   unfunded, including, without limitation, each "employee benefit plan,"
   within the meaning of Section 3(3) of ERISA, which is or has been
   maintained, contributed to, or required to be contributed to, by Seller for
   the benefit of any Designated Employee, or with respect to which Seller has
   or may have any liability or obligation to any Designated Employee.

      (u) "Employment Agreement" means each management, employment, severance,
   consulting, relocation, repatriation, expatriation, visas, work permit or
   other agreement, contract or understanding between Seller or any Subsidiary
   of Seller and any Designated Employee.

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      (v) "ERISA" means the Employee Retirement Income Security Act of 1974, as
   amended.

      (w) "Excluded Assets" shall have the meaning set forth in Section 2.2.

      (x) "Excluded Contracts" shall mean the Contracts listed on Schedule
   1.1(x).

      (y) "Excluded Liabilities" shall have the meaning set forth in Section
   2.10.

      (z) "GAAP" means United States generally accepted accounting principles,
   as of the Existing Agreement Date.

      (aa) "General Assignment" shall have the meaning set forth in Section
   2.4.

      (bb) "Governmental Entity" means any court, administrative agency or
   commission or other federal, state, county, local or foreign governmental
   authority, instrumentality, agency or commission.

      (cc) "Indemnified Parties" shall have the meaning set forth in Section
   9.2.

      (dd) "Intellectual Property Rights" means any or all of the following and
   all statutory or common law rights throughout the world in, arising out of,
   or associated with: (i) all patents and applications (including provisional
   applications) therefor and all reissues, divisions, renewals, extensions,
   continuations and continuations-in-part thereof (collectively, "Patents");
   (ii) all trade secrets that (A) derive independent economic value, actual or
   potential, from not being generally known to, and not being readily
   ascertainable by proper means by, other persons who can obtain economic
   value from its disclosure or use, and (B) are the subject of efforts that
   are reasonable under the circumstances to maintain its secrecy, and all
   other inventions (whether patentable or not, but which are not the subject
   of issued or published Patents), proprietary information, and know how
   (collectively, "Trade Secrets"); (iii) all works of authorship, copyrights,
   mask works, copyright and mask work registrations and applications
   (collectively, "Copyrights"); (iv) all trade names, trademarks and service
   marks and all trademark and service mark registrations and applications
   (collectively, "Trademarks"); (v) all rights in and to databases and data
   collections (including knowledge databases, customer lists and customer
   databases); and (vi) any similar, corresponding or equivalent rights to any
   of the foregoing types of intellectual property.

      (ee) "International Employee Plan" means each Employee Plan that has been
   adopted or maintained by Seller or any ERISA Affiliate, whether informally
   or formally, or with respect to which Seller or any ERISA Affiliate will or
   may have any liability, for the benefit of Employees who perform services
   outside the United States.

      (ff) "IRS" shall mean the Internal Revenue Service.

      (gg) "Kernel" means the level of an operating system that contains system
   level services, including thread and team management, virtual and protected
   memory management, thread scheduling, interprocess communication (including
   semaphores, ports and thread messages), input/output management and node
   abstraction layer, kernel module management, ELF executable binary loader,
   device driver management, power management and CPU-dependent layer. It also
   includes built-in components that could otherwise be loaded, including
   platform-dependent modules, generic virtual drivers (null and zero drivers),
   generic virtual file-systems (root, pipe and device file systems) and the
   kernel debugger module.

      (hh) "Key Employee" shall have the meaning set forth in Schedule 1.1(hh).

      (ii) "Licensed Intellectual Property" means all Intellectual Property
   Rights that, immediately after the sale and assignment of the Transferred
   Intellectual Property Rights and other Acquired Assets from Seller to Buyer
   occurs, Seller or any of its Subsidiaries has the right to license to the
   extent provided in Section 4.1, without breaching any Contract, without
   infringing any other Person's Intellectual Property Rights, and without
   payment of any royalty, fee or other amount as a result of such license to
   Buyer (unless Buyer assumes the obligation to pay such royalty, fee or other
   amount).

      (jj) "Lien" means, with respect to any asset or right, any mortgage,
   lien, pledge, charge, security interest, claim, equity encumbrance,
   restriction on transfer, conditional sale or other title retention device or

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   arrangement (including, without limitation, a capital lease), transfer for
   the purpose of subjection to the payment of any indebtedness, restriction on
   the creation of any of the foregoing, or encumbrance of any kind whatsoever;
   provided, however, that the term "Lien" shall not include: (i) statutory
   liens for Taxes that are not yet due and payable or are being contested in
   good faith by appropriate proceedings and are disclosed in the Seller
   Disclosure Schedule or that are otherwise not material; (ii) statutory or
   common law liens to secure obligations to landlords, lessors or renters
   under leases or rental agreements confined to the premises rented; (iii)
   deposits or pledges made in connection with, or to secure payment of,
   workers' compensation, unemployment insurance, old age pension or other
   social security programs mandated by applicable law; (iv) statutory or
   common law liens in favor of carriers, warehousemen, mechanics and
   materialmen, to secure claims for labor, materials or supplies and other
   like liens; (v) restrictions on transfer of securities imposed by applicable
   state and federal securities laws; and (vi) contractual restrictions on
   transfer of contractual rights.

      (kk) "Loss" and "Losses" shall have the meanings set forth in Section
   9.2.

      (ll) "Material Adverse Effect" means any (i) change in or effect on the
   Acquired Assets, taken as a whole, that is materially adverse to the
   Acquired Assets, taken as a whole, or (ii) circumstance, change or event
   that materially impairs Buyer's ability to make, use, sell, license,
   distribute, market, build, modify, debug and operate the current version or
   release of the Products in substantially the same manner as Seller prior to
   the Existing Agreement Date (excluding any effect on Buyer's ability to do
   the foregoing caused by the absence of the items licensed under the Excluded
   Contracts or Non-Transferred Licenses or any facts and circumstances unique
   to Buyer).

      (mm) "Non-Transferred Licenses" shall mean license agreements granting
   licenses to Seller that are Transferred Contracts but which do not become
   Effectively Transferred Contracts.

      (nn) "Offer Letter" shall have the meaning set forth in Section 7.10.

      (oo) "Object Code" means computer software, substantially or entirely in
   binary form, which is intended to be directly executable by a computer after
   suitable processing and linking but without the intervening steps of
   compilation or assembly.

      (pp) "Pension Plan" means each Seller Employee Plan which is an "employee
   pension benefit plan," within the meaning of Section 3(2) of ERISA.

      (qq) "Person" means any individual, partnership, firm, corporation,
   association, trust, unincorporated organization or other entity, as well as
   any syndicate or group of any of the foregoing.

      (rr) "Prepaid Service Payment Update" shall have the meaning set forth in
   Section 7.14.

      (ss) "Platform Business" means the business of developing, marketing,
   licensing or distributing operating systems software and associated software
   components and software development tools for portable, handheld and
   wireless solutions, and personal information management (PIM) applications
   designed to run on such operating systems.

      (tt) "Products" means any products of Seller or any of its Subsidiaries
   (including products under development) listed on Schedule 1.1(tt).

      (uu) "PTO" means the United States Patent and Trademark Office.

      (vv) "Registered Intellectual Property" means all United States,
   international and foreign: (i) Patents; (ii) registered Trademarks and
   applications for Trademarks, including intent-to-use applications; (iii)
   registered Copyrights and applications for Copyrights; and (iv) any other
   Intellectual Property Rights that are the subject of an application,
   certificate, filing, registration or other document issued, filed with or
   recorded by any Governmental Entity.

      (ww) "Software" means computer software and code, including assemblers,
   applets, compilers, Source Code, Object Code, data (including image and
   sound data), development tools, design tools and user interfaces, in any
   form or format, however fixed, including Source Code listings and related
   documentation.

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      (xx) "Source Code" means computer software code which may be printed out
   or displayed in human readable form, including related programmer comments
   and annotations, help text, data and data structures, instructions, and
   procedural, object-oriented and other code which may be printed out or
   displayed in human readable form.

      (yy) "Stock Consideration" means that number of shares of Parent's common
   stock, rounded to the nearest number of whole shares (with 0.5 being rounded
   up), equal to the quotient determined by dividing (A) $11,000,000 minus the
   Adjustment Amount by (B) the opening price of Parent's common stock as
   quoted on the Nasdaq National Market on the Closing Date; provided, however,
   that the number of shares of Parent's common stock comprising the Stock
   Consideration shall be increased above such number or decreased below such
   number to the extent provided in Section 7.15.

      (zz) "Subsidiary" means, with respect to any Person, any entity of which
   securities or other ownership interests having ordinary voting power to
   elect a majority of the board of directors or other persons performing
   similar functions are at any time directly or indirectly owned by such
   Person.

      (aaa) "Supplemental Transferred Contracts" means any Eligible Contract of
   Seller which becomes a Transferred Contract in accordance with Section 7.26,
   in addition to the Transferred Contracts listed on Schedule 1.1(eee).

      (bbb) "Tangible Assets" means the tangible assets listed on Schedule
   1.1(bbb); provided, however, that Tangible Assets shall not include any
   tangible manifestation of Software that is delivered pursuant to a written
   agreement or protocol agreed to by Buyer and Seller providing for the remote
   electronic transmission of such Software, except for documentation and
   manuals.

      (ccc) "Tax" and "Taxes" shall mean any and all federal, state, local and
   foreign taxes, assessments and other governmental charges, duties,
   impositions and liabilities, including taxes based upon or measured by gross
   receipts, income, profits, sales, use and occupation, and value added, ad
   valorem, transfer, franchise, withholding, payroll, recapture, employment,
   excise and property taxes as well as public imposts, fees and social
   security charges (including but not limited to health, unemployment and
   pension insurance), together with all interest, penalties and additions
   imposed with respect to such amounts and any obligation under any agreement
   or arrangement with any other person with respect to such amounts and
   including any liability for taxes of a predecessor entity.

      (ddd) "Third Party Software" means any Software owned by a third party or
   in the public domain, including open source Software, public source
   Software, or freeware, or any modification or Derivative Work thereof, and
   also including any version of any Software licensed pursuant to any GNU
   general public license or limited general public license, in each case that
   is used in, incorporated into, or integrated or bundled with the current
   released version of the Products and any more recent versions thereof
   (whether or not released or completed) or Transferred Technology.

      (eee) "Transferred Contracts" means those Contracts listed on Schedule
   1.1(eee) as of the Existing Agreement Date, and shall also include, from and
   after the date Eligible Contracts become Supplemental Transferred Contracts
   in accordance with Section 7.26, any such Supplemental Transferred
   Contracts.

      (fff) "Transferred Intellectual Property Rights" means (i) all
   Intellectual Property Rights (other than Trademarks) owned by Seller or any
   of its Subsidiaries; and (ii) the Transferred Trademarks.

      (ggg) "Transferred Technology" means

          (i) the items listed on Schedule 1.1(ggg); and

          (ii) any other Source Code and other Software, materials and
       information (including development software, development documentation,
       compilers, interpreters, system build software, build scripts, test
       suites, testing tools and documentation, test scripts, bug databases,
       support tools, revision control systems and environments) that are used
       by Seller or any of its Subsidiaries to, or that Seller or any of its
       Subsidiaries has and are reasonably necessary to, build, modify, debug
       and operate the current

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       release or version of the Products, and any more recent versions thereof
       (whether or not released or completed), which Seller has the right to
       deliver and disclose to Buyer without breaching any Contract or
       infringing any other Person's Intellectual Property Rights;

   provided, however, that Transferred Technology shall not include any
   tangible manifestation of Software that is delivered pursuant to a written
   agreement or protocol agreed to by Buyer and Seller providing for the remote
   electronic transmission of such Software, except for documentation and
   manuals.

      (hhh) "Transferred Trademarks" means the Product names and other
   Trademarks, if any, listed on Schedule 1.1(hhh).

   1.2 Construction.

      (a)  For purposes of this Agreement, whenever the context requires: the
   singular number will include the plural, and vice versa; the masculine
   gender will include the feminine and neuter genders; the feminine gender
   will include the masculine and neuter genders; and the neuter gender will
   include the masculine and feminine genders.

      (b) Any rule of construction to the effect that ambiguities are to be
   resolved against the drafting party will not be applied in the construction
   or interpretation of this Agreement.

      (c) As used in this Agreement, the words "include" and "including" and
   variations thereof will not be deemed to be terms of limitation, but rather
   will be deemed to be followed by the words "without limitation."

      (d) Except as otherwise indicated, all references in this Agreement to
   "Articles," "Schedules," "Sections" and "Exhibits" are intended to refer to
   Articles, Schedules, Sections and Exhibits to this Agreement.

      (e) The headings in this Agreement are for convenience of reference only,
   will not be deemed to be a part of this Agreement, and will not be referred
   to in connection with the construction or interpretation of this Agreement.

                                   ARTICLE 2

                               PURCHASE AND SALE

   2.1 Purchase and Sale of Assets. On the Closing Date, and subject to the
terms and conditions set forth in this Agreement, but subject to Section 2.2,
Seller will sell, convey, transfer and assign to Buyer, and Buyer will purchase
from Seller, all of Seller's right, title and interest in and to all of the
following assets, free and clear of any and all Liens (collectively, the
"Acquired Assets"):

      (a) the Tangible Assets;

      (b) the Transferred Intellectual Property Rights;

      (c) all goodwill of Seller or any of its Subsidiaries appurtenant to the
   Transferred Trademarks;

      (d) the Transferred Technology (for avoidance of doubt, with respect to
   portions of the Transferred Technology that are owned by Persons other than
   Seller or its Subsidiaries, the rights in such portions of the Transferred
   Technology to be transferred and assigned to Buyer are the rights of Seller
   and its Subsidiaries under the Effectively Transferred Contracts as
   described in clause (e) below);

      (e) all rights of Seller or any of its Subsidiaries under the Effectively
   Transferred Contracts, other than payment obligations under such Transferred
   Contracts (including accounts receivable) earned by Seller or any of its
   Subsidiaries as a result of performance by Seller or any of its Subsidiaries
   prior to the Closing Date; and

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      (f) all rights to recover past, present and future damages for the
   breach, infringement or misappropriation, as the case may be, of any of the
   Transferred Intellectual Property Rights and Effectively Transferred
   Contracts (other than payment obligations under such Transferred Contracts).

   2.2 Excluded Assets. The parties expressly acknowledge and agree that
notwithstanding anything to the contrary in this Agreement, the Acquired Assets
and Transferred Contracts do not include, and Seller does not have and shall be
under no obligation to sell, assign or otherwise transfer to Buyer any of
Seller's fixed assets (other than Tangible Assets), cash and cash equivalents
or receivables, the Sony Agreement, the Excluded Contracts, or any other
assets, claims, causes of action, contracts, licenses or agreements set forth
on Schedule 2.2 hereto, or any other assets, claims, causes of action,
contracts, licenses or agreements not included within the Acquired Assets and
Transferred Contracts as defined herein (collectively, the "Excluded Assets"),
which Excluded Assets shall remain for all purposes the properties and assets
of Seller.

   2.3 Delivery of Acquired Assets. At the Closing, Seller shall deliver to
Buyer all of the Tangible Assets and Transferred Technology. Without limiting
the foregoing, all Software included in the Transferred Technology shall, at
Buyer's request, be delivered to Buyer by electronic means.

   2.4 Assignments. At the Closing, Seller shall deliver to Buyer, duly
executed by Seller, and Seller shall deliver to Buyer, duly executed by Buyer:
(i) an Assignment and Assumption Agreement and Bill of Sale substantially in
the form of Exhibit C hereto (the "General Assignment"); (ii) the copyright
registrations and assignments required pursuant to Section 2.5, the patent
assignments required pursuant to Section 2.6 and the trademark assignments
required pursuant to Section 2.7; and (iii) such other instruments of
conveyance, assignment and transfer as Buyer may reasonably request in order to
vest in Buyer good and valid title in and to the Acquired Assets (the General
Assignment and the other instruments referred to in clauses (i), (ii) and (iii)
being collectively referred to herein as the "Collateral Agreements").

   2.5 Transfer of Product Software Copyrights. For each Copyright included in
the Transferred Intellectual Property Rights for which Seller has filed a
copyright registration with the United States Copyright Office, Seller shall
deliver to Buyer at Closing an assignment, on a form reasonably acceptable to
Buyer, to record the transfer of such copyright to Buyer in the United States
Copyright Office. If Seller has not registered the copyright in a Product prior
to the Closing Date, Seller shall deliver to Buyer at the Closing an
application, on the applicable form, to register such copyright in each Product
with the United States Copyright Office.

   2.6 Transfer of Patent Rights. For each of Seller's Patents included in the
Transferred Intellectual Property Rights, Seller shall deliver to Buyer at
Closing an assignment in form reasonably acceptable to Buyer to evidence the
transfer of such Patents to Buyer. Such assignment shall specify Buyer as the
owner by assignment of such Patents.

   2.7 Transfer of Trademarks. For each of the Transferred Trademarks, Seller
shall deliver to Buyer at Closing an assignment in form reasonably acceptable
to Buyer to evidence the transfer of such Trademarks to Buyer. Such assignment
shall specify Buyer as the owner by assignment of such Trademarks.

   2.8 Transferred Contracts. At the Closing, Seller shall deliver to Buyer all
of the Transferred Contracts to the extent not previously delivered to Buyer.

   2.9 Assumed Liabilities. As of the Closing, Buyer hereby agrees to assume
the following, and only the following (collectively, the "Assumed
Liabilities"): the obligations of Seller or any of its Subsidiaries under the
Transferred Contracts, in each case solely to the extent such obligations arise
from and after the Closing Date; provided, however, that notwithstanding the
foregoing, Buyer shall be responsible for liabilities that arise solely out of
its ownership or operation of the Acquired Assets or its performance of the
Transferred Contracts on or subsequent to the Closing Date. As of the Closing,
Parent shall be deemed to guarantee the obligations of Buyer under the Assumed
Liabilities.

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   2.10 Excluded Liabilities. Except for the Assumed Liabilities, Buyer is not
assuming any other debt, liability, duty or obligation, whether known or
unknown, fixed or contingent, of Seller or any of its Subsidiaries (the
"Excluded Liabilities"). Without limiting the foregoing, all liabilities of
Seller and its Subsidiaries, including any liabilities for Taxes, arising from
or related to: (i) Seller's operations or the operation of any of its
Subsidiaries, whenever arising or incurred, including Seller's or any of its
Subsidiaries' sale or ownership of the Products and Acquired Assets through the
Closing Date; (ii) Seller's or any of its Subsidiaries' termination of any
Contracts that are not Transferred Contracts; (iii) the Sony Agreement, (iv)
the employment or engagement by Seller of employees, agents, consultants or
independent contractors through the Closing Date; or (v) any Benefit
Liabilities, shall be Excluded Liabilities and shall remain the responsibility
of Seller, unless any such liabilities described in this sentence are otherwise
included within the Assumed Liabilities.

                                   ARTICLE 3

                           CLOSING AND CONSIDERATION

   3.1 Closing. The closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of Wilson Sonsini Goodrich &
Rosati, Professional Corporation, in Palo Alto, California at 6:30 a.m., local
time, two (2) business days following the satisfaction or written waiver of the
last of the conditions of Closing as set forth in ARTICLE 8 hereof, or on such
other date as the parties may mutually determine (the "Closing Date").

   3.2 Stock Consideration. At the Closing, Parent and Buyer shall cause to be
issued to Seller a duly authorized and issued stock certificate representing
the Stock Consideration, and following the Closing, to the extent that the
Resale Registration Statement is filed with the SEC and the provisions of
Section 7.15 apply, (i) in the case where the number of shares issuable upon
the effectiveness of the Resale Registration Statement is increased pursuant to
Section 7.15(b), Parent and Buyer shall cause to be issued to Seller
immediately upon the effectiveness of the Resale Registration Statement an
additional stock certificate representing the number of any such whole shares
of Parent's common stock required to be issued to Seller in accordance with
such Section, and (ii) in the case where the number of shares issuable upon the
effectiveness of the Resale Registration Statement is decreased pursuant to
Section 7.15(b), Parent and Buyer shall, upon delivery by Seller for
cancellation to Buyer of the original stock certificate issued to Seller, cause
to be issued to Seller immediately upon the effectiveness of the Resale
Registration Statement a replacement stock certificate representing the total
number of shares of Parent's common stock representing the Stock Consideration,
as adjusted in accordance with such Section. In addition, whether at the
Closing (in the event the Form S-4 Registration Statement has been declared
effective under the Securities Act prior to the Closing) or upon the
effectiveness of the Resale Registration Statement (in the event the Form S-4
Registration Statement has not been declared effective under the Securities Act
prior to the Closing), Parent and Buyer shall, at the request of Seller,
deliver such other instruments, coordinate with Parent's transfer agent, and
use commercially reasonable efforts to do and perform such other acts and
things as may be reasonably necessary to enable Seller to immediately sell,
transfer or otherwise liquidate the shares of Parent's common stock
constituting the Stock Consideration in the public markets.

   3.3 Allocation of Consideration. The parties hereto intend that the purchase
be treated as a taxable transaction for federal and state income tax purposes.
Prior to the Closing Date, Buyer and Seller shall negotiate in good faith and
determine the allocation of the Stock Consideration among the Acquired Assets
(the "Allocation"). The Allocation shall be conclusive and binding upon Buyer
and Seller for all purposes, and the parties agree that all returns and reports
(including IRS Form 8594) and all financial statements shall be prepared in a
manner consistent with (and the parties shall not otherwise file a Tax return
position inconsistent with) the Allocation unless required by the IRS or any
other applicable taxing authority.

   3.4 Transfer Taxes. Buyer and Seller shall each be responsible for fifty
percent (50%) of the aggregate amount of any sales, use, excise or similar
Taxes that may be payable in connection with the sale or purchase of

                                      A-8

<PAGE>

the Acquired Assets and the granting of the licenses hereunder, including any
sales, use, excise or similar transfer Taxes. The parties hereto shall
cooperate with each other and use their reasonable best efforts to minimize the
transfer Taxes attributable to the sale of the Acquired Assets, including but
not limited to the transfer of all Software by remote electronic transmission.

                                   ARTICLE 4

                               LICENSE TO BUYER

   4.1 License of Licensed Intellectual Property. Effective as of the Closing
(and subject to the conditions thereto set forth herein), Seller shall be
deemed to have granted to Buyer under all of the Licensed Intellectual
Property, a royalty-free, fully-paid, world-wide, perpetual, irrevocable,
non-terminable, transferable right and license, with the right to grant and
authorize sublicenses, to fully exercise, use and otherwise exploit the
Licensed Intellectual Property in any manner and without limitation, including
the right and license under Copyrights to copy, create Derivative Works from,
distribute, publicly perform and display and transmit Software products and
other copyrightable works, and under Patent rights to make, have made, use,
sell, offer for sale and import products. To the extent that the foregoing
license is broader in any respect (including, without limitation, the rights
being licensed, the duration and revocability of the license, the geographic
scope of the license, and the transferability of the license) than the license
Seller has the right to grant without breaching any Contract, without
infringing any other Person's Intellectual Property Rights, and without being
required to pay any additional royalty, fee or other amount to any other Person
as a result of such license to Buyer, then the foregoing license will be deemed
to be limited in all such respects to the license Seller has the right to grant
without breaching any Contract, without infringing any other Person's
Intellectual Property Rights, and without being required to pay any royalty,
fee or other amount to any other Person. If, in order to grant the foregoing
license to Buyer with respect to any Licensed Intellectual Property owned by
any Person other than Seller or its Subsidiaries, Seller is required to notify
any such other Person of the license, obtain the approval or  consent of any
such other Person, provide a copy of the license agreement to any such other
Person, obtain Buyer's written agreement to any particular term or condition
(each, a "Pass-Through Term"), or comply with any obligation, condition, or
requirement (collectively, "Sublicensing Requirements"), the foregoing license
will be effective with respect to such Licensed Intellectual Property only if
and when (a) Buyer authorizes Seller in writing to comply with such
Sublicensing Requirements, (b) Seller complies with all applicable Sublicensing
Requirements, (c) Buyer agrees in writing to be bound by and to comply with all
applicable Pass-Through Terms, if any, and (d) Buyer pays any royalty, fee or
other amount which is authorized by Buyer and is required to be paid by Seller
as the result of such license to Buyer.

   4.2 Bankruptcy. The license granted to Buyer under Section 4.1 is, and shall
otherwise be deemed to be, for purposes of Section 365(n) of the United States
Bankruptcy Code, a license to rights of "Intellectual Property Rights" as
defined thereunder.

                                   ARTICLE 5

                   REPRESENTATIONS AND WARRANTIES OF SELLER

   Except as disclosed in the disclosure schedule delivered to Parent and Buyer
on the Existing Agreement Date (the "Seller Disclosure Schedule"), Seller
hereby represents and warrants to Parent and Buyer, as of the Existing
Agreement Date (except to the extent such representations and warranties
address matters as of a particular date or period, in which case such
representations and warranties are made as of such date or period), as follows:

   5.1 Organization of Seller.

      (a) Except as set forth in Section 5.1(a) of the Seller Disclosure
   Schedule, Seller has no Subsidiaries.

                                      A-9

<PAGE>

      (b) Seller is a corporation duly organized, validly existing and in good
   standing under the laws of the jurisdiction of its incorporation and has all
   necessary corporate power and authority: (i) to conduct its business in the
   manner in which its business is currently being conducted; (ii) to own and
   use its assets in the manner in which its assets are currently owned and
   used; and (iii) to perform its obligations under all Contracts by which it
   is bound.

      (c) Seller is qualified to do business as a foreign corporation, and is
   in good standing, under the laws of all jurisdictions where the nature of
   its business requires such qualification and where the failure to so qualify
   would have a Material Adverse Effect.

      (d) Seller has delivered or made available to Buyer a true and correct
   copy of the certificate of incorporation (including any certificate of
   designations) and bylaws of Seller and similar governing instruments, each
   as amended to date (collectively, the "Seller Charter Documents"), and each
   such instrument is in full force and effect. Seller is not in violation of
   any of the provisions of Seller Charter Documents.

   5.2 Authority. Seller has all requisite corporate power and authority to
enter into this Agreement and the Collateral Agreements and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of
this Agreement and the Collateral Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of Seller, and, except for approval by
the stockholders of Seller, no further action is required on the part of
Seller, any of its Subsidiaries or any of Seller's stockholders to authorize
the Agreement and the Collateral Agreements and the transactions contemplated
hereby. A vote of the holders of a majority of the outstanding shares of
Seller's common stock is sufficient for Seller's stockholders to approve and
adopt this Agreement and approve the transactions contemplated hereby and the
Dissolution (as defined in Section 7.16). This Agreement and the transactions
contemplated hereby have been approved by the Board of Directors of Seller.
This Agreement has been duly executed and delivered by Seller and, assuming the
due authorization, execution and delivery by Parent and Buyer, constitutes a
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to any applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect relating
to creditors' rights generally or to other equitable remedies.

   5.3 No Conflict. The execution and delivery of this Agreement by Seller do
not, and the execution and delivery of the Collateral Agreements by Seller and
the performance of this Agreement and the Collateral Agreements by Seller will
not, (i) conflict with or violate the Seller Charter Documents, (ii) subject to
obtaining the approval and adoption of this Agreement by Seller's stockholders
as contemplated in Section 7.16, conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to Seller or any of its
Subsidiaries or by which any of their properties is bound or affected, or (iii)
result in any breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or impair the rights of
Seller or any of its Subsidiaries or alter the rights or obligations of any
third party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the properties or assets of Seller or any of its Subsidiaries pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise, concession, or other instrument or obligation to which Seller or any
of its Subsidiaries is a party or by which Seller, any of its Subsidiaries or
the Acquired Assets are bound or affected, except with respect to clauses (ii)
and (iii), for the matters set forth on Section 5.3 of the Seller Disclosure
Schedule and for matters the existence of which would not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.

   5.4 SEC Filings; Seller Financial Statements.

      (a) Seller has delivered or made available to Parent (through reference
   to documents filed by EDGAR or otherwise) accurate and complete copies of
   all forms, reports and documents filed by Seller with the Securities and
   Exchange Commission ("SEC") since January 1, 2000 (the "Seller SEC
   Reports"), which are all the forms, reports and documents required to be
   filed by Seller with the SEC since such date. As of their

                                     A-10

<PAGE>

   respective dates, the Seller SEC Reports (i) were prepared in accordance and
   complied in all material respects with the requirements of the Securities
   Act of 1933, as amended (the "Securities Act"), or the Securities Exchange
   Act of 1934, as amended (the "Exchange Act"), as the case may be, and the
   rules and regulations of the SEC thereunder applicable to such Seller SEC
   Reports and (ii) did not at the time they were filed contain any untrue
   statement of a material fact or omit to state a material fact required to be
   stated therein or necessary in order to make the statements therein, in the
   light of the circumstances under which they were made, not misleading.

      (b) Each of the consolidated financial statements (including, in each
   case, any related notes thereto) contained in Seller SEC Reports (the
   "Seller Financials") (i) complied as to form in all material respects with
   the published rules and regulations of the SEC with respect thereto, (ii)
   were prepared in accordance with GAAP applied on a consistent basis
   throughout the periods involved (except as may be indicated in the notes
   thereto or, in the case of unaudited interim financial statements, as may be
   permitted by the SEC on Form 10-Q under the Exchange Act) and (iii) fairly
   presented the financial position of Seller as at the respective dates
   thereof and the results of Seller's operations and cash flows for the
   periods indicated, except that the unaudited interim financial statements
   may not contain footnotes and were or are subject to normal and recurring
   year-end adjustments. The balance sheet of Seller contained in the Form 10-Q
   of Seller filed on August 14, 2001 is hereinafter referred to as the "Seller
   Balance Sheet."

      (c) Except as disclosed in the Seller Financials, since the date of
   Seller Balance Sheet Seller has incurred no liabilities required under GAAP
   to be set forth on a consolidated balance sheet (absolute, accrued,
   contingent or otherwise), except for liabilities incurred (i) since the date
   of the Seller Balance Sheet in the ordinary course of business consistent
   with past practices or (ii) pursuant to this Agreement, which liabilities
   would not reasonably be expected, individually or in the aggregate, to have
   a Material Adverse Effect.

   5.5 Transferred Contracts. True and complete copies of all of the
Transferred Contracts as of the Existing Agreement Date have been delivered to
Buyer. Each such Transferred Contract is in full force and effect. None of
Seller, any of its Subsidiaries or, to Seller's knowledge, any other party
thereto is in default or breach under the terms of any such Transferred
Contract and, to the Seller's knowledge, no event or circumstance has occurred
that, with notice or lapse of time or both, would reasonably be expected to
constitute any event of default thereunder.

   5.6 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity or any third
party, including a party to any agreement with Seller or any of its
Subsidiaries, is required by or with respect to Seller or any of its
Subsidiaries in connection with the execution and delivery of this Agreement
and the Collateral Agreements or the consummation of the transactions
contemplated hereby, except for the filing of the Proxy Statement/Prospectus
(as defined in Section 7.15) with the SEC in accordance with the Exchange Act,
and the Consents listed on Section 5.6 of the Seller Disclosure Schedule.

   5.7 Support and Service Contracts. Section 5.7 of the Seller Disclosure
Schedule sets forth a true and complete list of all Transferred Contracts
pursuant to which Seller or any of its Subsidiaries is obligated to provide
support, maintenance or other services to third parties following the Existing
Agreement Date, together with the amounts of prepaid fees that are associated
with the executory support, maintenance and other service obligations under
such Transferred Contracts and the portion of such fees attributable to
obligations to be performed subsequent to the Existing Agreement Date (each, a
"Prepaid Service Payment"). Each Prepaid Service Payment is as reflected in the
Books and Records.

                                     A-11

<PAGE>

   5.8 No Liquidation, Insolvency, Winding-Up

      (a) Except as contemplated by this Agreement, no order has been made or
   petition presented, or resolution passed by the board of directors or
   stockholders of Seller for the dissolution or winding-up of Seller and there
   is not outstanding:

          (i) any petition or order for the winding-up of Seller;

          (ii) any appointment of a receiver over the whole or part of the
       undertaking of assets of Seller;

          (iii) any petition or order for administration of Seller;

          (iv) any voluntary arrangement between Seller and any of its
       creditors;

          (v) any assignment for the benefit of Seller's creditors or similar
       creditor arrangement or remedy;

          (vi) any voluntary petition, involuntary petition or order for relief
       with respect to the Seller under the Bankruptcy Code, 11 U.S.C. section
       101, et. seq.;

          (vii) any distress or execution or other process levied in respect of
       Seller which remains undischarged; and

          (viii) any unfulfilled or unsatisfied judgment or court order against
       Seller.

      (b) Seller is not now insolvent, and will not be rendered insolvent by
   any of the transactions contemplated by this Agreement. As used in this
   section, "insolvent" means either of the following:

          (i) at fair valuations, the sum of Seller's debts and other
       liabilities, including, without limitation, contingent liabilities, is
       greater than all of Seller's assets, provided that (A) such assets are
       not to include any rights of Seller or any successor to Seller under any
       fraudulent transfer, preference or similar theories to recover Seller's
       property that was transferred, concealed or removed, and (B) the
       valuation of such assets is to assume that the Closing occurs, but
       otherwise is to be based on liquidation values of any assets not being
       sold to Buyer under this Agreement (assuming a liquidation within 120
       days following the Closing), and

          (ii) Seller is not generally paying its debts as they come due
       (within the meaning of Section 3439 of the California Civil Code).

      (c) Upon occurrence of the transfers of property from Seller to Buyer
   under this Agreement, Seller will have adequate capital for any business or
   transaction in which Seller is or will be engaged.

      (d) Seller has not incurred, does not intend to incur, and does not
   reasonably believe it will incur debts beyond its ability to pay as such
   debts mature or become due.

      (e) Seller intends to and will wind-up its business operations in
   accordance with applicable law as soon as reasonably practicable after the
   Closing consistent with this Agreement and in a manner providing for full
   payment to or adequate provision for all creditors. The parties agree that
   notwithstanding anything to the contrary herein, the Dissolution (as defined
   herein) shall not mandate that Seller effect the dissolution of its
   corporate entity in accordance with Delaware law except to the extent that
   the failure to do so would have a Material Adverse Effect or would
   materially adversely impact Parent or Buyer.

   5.9 Restrictions on Business Activities. There is no agreement (not to
compete or otherwise), commitment, judgment, injunction, order or decree to
which Seller or any of its Subsidiaries is a party which has or could
reasonably have the effect of prohibiting the transactions contemplated by this
Agreement, or which could reasonably have a Material Adverse Effect.

   5.10 Title to Properties; Absence of Liens and Encumbrances.

      (a) Seller does not own any real property.

      (b) Seller has good and valid title to or, in the case of leased
   properties and assets, valid leasehold interests in, all of the Acquired
   Assets, free and clear of any Liens.

      (c) None of the Subsidiaries of Seller has, or will as of the Closing
   Date have, any right, title or interest in, or to any of the Acquired Assets
   or any of the Transferred Contracts.

                                     A-12

<PAGE>

   5.11 Intellectual Property.

      (a) Section 5.11(a) of the Seller Disclosure Schedule lists all
   Registered Intellectual Property Rights included among the Transferred
   Intellectual Property Rights. All such Registered Intellectual Property
   Rights are currently in compliance with formal legal requirements (including
   payment of filing, examination and maintenance fees and proofs of use), are
   valid (except with respect to pending applications for any patents,
   trademarks, or other forms of intellectual property, as to which no
   representation or warranty concerning validity is made) and subsisting, and
   are not subject to any unpaid maintenance fees or taxes or actions. All such
   Registered Intellectual Property Rights have been assigned to Seller and
   such assignments have been properly recorded prior to the Closing. There are
   no pending proceedings or actions before any court or tribunal (including
   the PTO or equivalent authority anywhere in the world) related to any such
   Registered Intellectual Property Rights.

      (b) Each item of Transferred Intellectual Property Rights embodied in or
   relating to the Transferred Technology is free and clear of any Liens.

      (c) To the extent that any Transferred Intellectual Property Rights
   embodied in or relating to the Transferred Technology were originally owned
   or created by or for any third party, including any contractor or employee
   of Seller and any predecessor of Seller: (i) Seller has a written agreement
   with such third party or parties with respect thereto, pursuant to which
   Seller has obtained complete, unencumbered and unrestricted ownership and is
   the exclusive owner of, all such Transferred Intellectual Property Rights by
   valid assignment or otherwise; and (ii) the assignment by Seller to Buyer
   hereunder of such Transferred Intellectual Property Rights will not violate
   such third party agreements.

      (d) Seller has not transferred ownership of, or granted any license of or
   right to use that is in effect as of the Existing Agreement Date, or
   authorized the retention of any rights to use, any Transferred Intellectual
   Property Right embodied in or relating to the Transferred Technology to any
   other Person, except for non-exclusive Object Code end-user licenses, and
   non-exclusive end-user licenses to immaterial portions of the Source Code,
   granted to customers in the ordinary course of business.

      (e) The Transferred Technology delivered to Buyer under this Agreement
   includes all Source Code, tools, and other Software used by Seller to, or
   necessary to, build, modify, debug and operate the current versions or
   releases of the Products in substantially the same manner as Seller did so
   prior to the Existing Agreement Date, except for those items licensed to
   Seller under the Excluded Contracts and the Non-Transferred Licenses which
   Seller is prohibited from providing to Buyer under the Excluded Contracts or
   the Non-Transferred Licenses. The Acquired Assets and the Licensed
   Intellectual Property, along with the Intellectual Property Rights licensed
   under the Excluded Contracts or the Non-Transferred Licenses, are sufficient
   to make, use, sell, license, distribute and market the current version or
   release of the Products in substantially the same manner as Seller did so
   prior to the Existing Agreement Date without infringing or misappropriating
   any other Person's Intellectual Property Rights. Seller has the right to
   deliver all Software and other materials and information delivered to Buyer
   under this Agreement without infringing or misappropriating any other
   Person's Intellectual Property Rights.

      (f) Seller hereby represents and warrants to Parent and Buyer, only as of
   the Closing Date, that Section 5.11(f) of the Seller Disclosure Schedule to
   be delivered pursuant to Section 7.2(h) will list all Third Party Software
   in the Transferred Technology.

      (g) No government funding, facilities of a university, college, other
   educational institution or research center or funding from third parties was
   used in the development of the Transferred Technology.

      (h) To the knowledge of Seller, the making, using, selling, licensing and
   distribution of the current version or release of the Products by Seller
   does not (i) infringe or misappropriate the Intellectual Property Rights of
   any Person, or (ii) constitute unfair competition or trade practices under
   the laws of any jurisdiction. Seller has not received written notice from
   any Person claiming that the making, using, selling, licensing or
   distribution of the current versions or releases of the Products infringes
   or misappropriates the

                                     A-13

<PAGE>

   Intellectual Property Rights of any Person or constitutes unfair competition
   or trade practices under the laws of any jurisdiction.

      (i) There are no Contracts between Seller and any other Person with
   respect to the Acquired Assets, including the Transferred Intellectual
   Property Rights, under which there is any pending dispute or (to Seller's
   knowledge) threatened dispute regarding the scope of such Contract or
   performance under such Contract.

      (j) To the knowledge of Seller, no Person is infringing or
   misappropriating the Transferred Intellectual Property Rights embodied in or
   relating to the Transferred Technology.

      (k) Seller has taken all reasonable steps that are required to protect
   its rights in the Trade Secrets associated with or related to the
   Transferred Technology, and Seller has taken reasonable steps to prevent
   misappropriation of any Trade Secrets of any third party.

      (l) Except as set forth in Section 5.11(l) of the Disclosure Schedule, no
   third party possesses any copy of any Source Code for the Kernel for any
   Product. In addition, no third party possesses any copy of any other Source
   Code for any Product, other than portions of the Source Code the use of
   which by any other Person would not have a Material Adverse Effect.

      (m) There is no Third Party Software incorporated in the Kernel for the
   current version of any Product.

      (n) Seller has and enforces a policy requiring each employee and
   consultant of Seller to execute a proprietary rights and confidentiality
   agreement substantially in a form that Seller has delivered to Buyer, and
   all current and former employees and consultants of Seller or any of its
   Subsidiaries who have created or modified in any material respect any of the
   Transferred Technology have executed such an agreement, except where the
   failure to have obtained such an agreement would not reasonably be expected,
   individually or in the aggregate, to have a Material Adverse Effect.

      (o) No Transferred Intellectual Property Rights embodied in or relating
   to the Transferred Technology are subject to any proceeding or outstanding
   decree, order, judgment, or stipulation that restricts the use, transfer or
   licensing thereof or may affect the validity, use, or enforceability
   thereof.

      (p) To the extent that Seller has distributed or licensed any Product to
   an end user pursuant to any form of encryption key, no third party has had
   access to any such keys enabling disclosure of such keys to a third party.

   5.12 Litigation. There is no action, suit, claim, proceeding or
investigation of any nature pending or (to the knowledge of Seller) threatened
relating to the Products, the Acquired Assets or the Designated Employees as of
the Existing Agreement Date. To the knowledge of Seller, there is no
investigation or other proceeding pending or threatened relating to the
Acquired Assets or the Designated Employees by or before any Governmental
Entity as of the Existing Agreement Date. There are no judgments, orders,
decrees, citations, fines or penalties heretofore assessed against Seller or
any of its Subsidiaries under any foreign, federal, state or local law that
would reasonably have a Material Adverse Effect.

   5.13 Brokers' or Finders' Fees. Except as set forth in Section 5.13 of the
Seller Disclosure Schedule, Seller has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or agents'
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.

   5.14 Tax Matters

      (a) Tax Returns and Audits.

          (i) To the extent failure to do so could reasonably have a Material
       Adverse Effect or would materially adversely impact Parent or Buyer,
       Seller and each of its Subsidiaries has prepared and timely filed all
       required federal, state, local and foreign returns, estimates,
       information statements and

                                     A-14

<PAGE>

       reports ("Returns") relating to any and all Taxes concerning or
       attributable to Seller, its Subsidiaries or the operations of Seller and
       its Subsidiaries and such Returns are true and correct and have been
       completed, in all material respects, in accordance with applicable law.

          (ii) To the extent failure to do so could reasonably have a Material
       Adverse Effect or would materially adversely impact Parent or Buyer,
       Seller and each of its Subsidiaries (A) has paid all Taxes shown to be
       due on such returns and (B) has withheld with respect to its employees
       all federal, state and foreign income taxes and social security charges
       and similar fees, Federal Insurance Contribution Act, Federal
       Unemployment Tax Act and other Taxes required to be withheld.

          (iii) To the extent failure to do so could reasonably have a Material
       Adverse Effect or would materially adversely impact Parent or Buyer,
       neither Seller nor any of its Subsidiaries has been delinquent in the
       payment of any Tax, nor is there any Tax deficiency outstanding,
       assessed or proposed against Seller, nor has Seller executed any waiver
       of any statute of limitations on or extending the period for the
       assessment or collection of any Tax.

          (iv) No audit or other examination of any Return of Seller or any of
       its Subsidiaries is presently in progress, nor has Seller or any of its
       Subsidiaries been notified in writing of any request for such an audit
       or other examination pursuant to which an assessment could reasonably
       have a Material Adverse Effect or would materially adversely impact
       Parent or Buyer.

          (v) Seller is not aware of, and knows no factual basis for the
       assertion of any material claim for Taxes for which Buyer would become
       liable as a result of the transactions contemplated by this Agreement
       and the Collateral Agreements.

   5.15 Power of Attorney. There are no outstanding powers of attorney executed
on behalf of Seller in respect of the Acquired Assets except as granted to
Buyer hereunder.

   5.16 Compliance with Laws. Seller and each of its Subsidiaries have complied
with, are not in violation of, and have not received any notices of violation
with respect to, any foreign, federal, state or local statute, law or
regulation with respect to the sale and distribution of the Products, or
otherwise with respect to the Acquired Assets, except for any non-compliance or
violations the existence of which would not reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.

   5.17 Product Warranties. Except for any of the following the existence of
which would not reasonably be expected, individually or in the aggregate, to
have a Material Adverse Effect, (i) each Product manufactured, sold, leased,
licensed or delivered by Seller has been done so in conformity with all
applicable contractual commitments and all express and implied warranties, and
(ii) Seller has no liability for replacement or repair thereof or other damages
in connection therewith.

   5.18 Employee Matters.

      (a) Pension Plan. Seller has never maintained, established, sponsored,
   participated in, or contributed to, any Pension Plan which is subject to
   Title IV of ERISA or Section 412 of the Code.

      (b) Scheduled Employees. Concurrent with the execution of the Existing
   Agreement, Seller delivered to Buyer a written statement that contains the
   names of individuals (including dependents) (i) currently receiving COBRA
   continuation coverage under any heath plan of Seller, (ii) terminated within
   115 days prior to the Existing Agreement Date, (iii) employed by Seller as
   of the date immediately preceding the Existing Agreement Date and who will
   be terminated in connection with the acquisition, and (iv) who are
   Designated Employees.

      (c) Multiemployer and Multiple Employer Plans. At no time has Seller
   contributed to or been obligated to contribute to any Multiemployer Plan.
   Seller has never maintained, established, sponsored, participated in, or
   contributed to any multiple employer plan, or to any plan described in
   Section 413 of the Code.

                                     A-15

<PAGE>

      (d) No Post-Employment Obligations. Except as set forth in Section
   5.18(d) of the Seller Disclosure Schedule, no Employee Plan provides, or
   reflects or represents any liability to provide retiree health to any person
   for any reason, except as may be required by COBRA or other applicable
   statute.

      (e) Effect of Transaction.

          (i) Except as set forth on Section 5.18(e) of the Seller Disclosure
       Schedule, the execution of this Agreement and the consummation of the
       transactions contemplated hereby will not (either alone or upon the
       occurrence of any additional or subsequent events) constitute an event
       under any Employee Plan or Employment Agreement that will or would
       reasonably result in any payment (whether of severance pay or
       otherwise), acceleration, forgiveness of indebtedness, vesting,
       distribution, increase in benefits or obligation to fund benefits with
       respect to any Employee.

      (f) Health Care Compliance. Neither Seller nor any ERISA Affiliate is in
   violation, in any material respect, of the health care continuation
   requirements of COBRA, the requirements of the Family Medical Leave Act of
   1993, as amended, the requirements of the Health Insurance Portability and
   Accountability Act of 1996, the requirements of the Women's Health and
   Cancer Rights Act of 1998, the requirements of the Newborns' and Mothers'
   Health Protection Act of 1996, or any amendment to each such act, or any
   similar provisions of state law applicable to its Employees.

      (g) Employment Matters. Seller: (i) is in compliance in all respects with
   all applicable foreign, federal, state and local laws, rules and regulations
   respecting employment, employment practices, terms and conditions of
   employment and wages and hours, in each case, with respect to Employees;
   (ii) has withheld and reported all amounts required by law or by agreement
   to be withheld and reported with respect to wages, salaries and other
   payments to Employees; (iii) is not liable for any arrears of wages or any
   taxes or any penalty for failure to comply with any of the foregoing; and
   (iv) is not liable for any payment to any trust or other fund governed by or
   maintained by or on behalf of any governmental authority, with respect to
   unemployment compensation benefits, social security or other benefits or
   obligations for Employees (other than routine payments to be made in the
   normal course of business and consistent with past practice).

      (h) Labor. No work stoppage or labor strike against Seller is pending or,
   to the knowledge of Seller, threatened involving any of the Designated
   Employees. Seller does not know of any activities or proceedings of any
   labor union to organize any of the Designated Employees. Except as set forth
   in Section 5.18(h) of the Seller Disclosure Schedule, there are no actions,
   suits, claims, labor disputes or grievances pending, or, to the knowledge of
   Seller, threatened relating to any labor, safety or discrimination matters
   involving any Designated Employee, including, without limitation, charges of
   unfair labor practices or discrimination complaints, which, if adversely
   determined, would, individually or in the aggregate, result in any material
   liability to Seller. Except as set forth in Section 5.18(h) of the Seller
   Disclosure Schedule, Seller is not a party to, or bound by, any collective
   bargaining agreement or union contract with respect to any of the Designated
   Employees and no collective bargaining agreement is currently being
   negotiated by Seller.

   5.19 International Employee Plan. Seller does not now, nor has it in the
last two years had the obligation to, maintain, establish, sponsor, participate
in, or contribute to any International Employee Plan.

   5.20 Business Changes. From June 30, 2001 through the Existing Agreement
Date, except as otherwise contemplated by this Agreement, or as set forth in
Section 5.20 of the Seller Disclosure Schedule:

      (a) There have been no changes in the condition (financial or otherwise),
   business, net worth, assets, operations, obligations or liabilities of
   Seller which, in the aggregate, have had or may be reasonably expected to
   have a Material Adverse Effect.

      (b) Seller has not mortgaged, pledged, or otherwise encumbered any of the
   Acquired Assets.

      (c) Seller has not sold, assigned, licensed, leased, transferred or
   conveyed, or committed itself to sell, assign, license, lease, transfer or
   convey, any of the Acquired Assets except for non-exclusive licenses entered
   into in the ordinary course of business.

                                     A-16

<PAGE>

      (d) There has been no destruction of, damage to or loss of any of the
   Acquired Assets.

      (e) There has been no notice of any claim or potential claim of ownership
   by any Person other than Seller or its Subsidiaries of the Transferred
   Technology, the Transferred Intellectual Property Rights, the Licensed
   Intellectual Property Rights, or the Licensed Technology or of infringement
   by Buyer or its Subsidiaries of any other Person's Intellectual Property
   Rights.

      (f) There has been no dispute, proceeding, litigation, arbitration or
   mediation pending or (to the knowledge of Seller) threatened against Seller
   or any of its Subsidiaries related to the Acquired Assets.

      (g) There has been no event or condition of any character that has had or
   is reasonably likely to have a Material Adverse Effect.

      (h) There has been no agreement by Seller or any of its Subsidiaries or
   any employees, agents or affiliates of Seller or its Subsidiaries to do any
   of the things described in the preceding clauses (a) through (g) (other than
   negotiations with Parent and Buyer and their representatives regarding the
   transactions contemplated by this Agreement).

                                   ARTICLE 6

              REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER

   Except as disclosed in the Disclosure Schedule delivered to Seller on the
Existing Agreement Date (the "Parent Disclosure Schedule"), Parent and Buyer
hereby jointly and severally represent and warrant to Seller, as of the
Existing Agreement Date (except to the extent such representations and
warranties address matters as of a particular date or period, in which case
such representations and warranties are made as of such date or period), as
follows:

   6.1 Organization, Good Standing and Qualification. Each of Parent and Buyer
is a corporation duly organized, validly existing, and in good standing under
the laws of Delaware. Buyer is a wholly owned Subsidiary of El Camino
Acquisition Corporation, which is in turn a wholly owned Subsidiary of Parent.

   6.2 Authority. Each of Parent and Buyer has all requisite corporate power
and authority to enter into this Agreement and the Collateral Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Collateral Agreements and the consummation
of the transactions contemplated hereby and thereby have been duly authorized
by all necessary corporate action on the part of Parent and Buyer. This
Agreement and the Collateral Agreements have been duly executed and delivered
by Parent and Buyer and constitute the valid and binding obligations of Parent
and Buyer, enforceable in accordance with their terms, except as such
enforceability may be limited by principles of public policy and subject to the
rules of law governing specific performance, injunctive relief or other
equitable remedies.

   6.3 No Conflict. Neither the execution and delivery of this Agreement and
the Collateral Agreements, nor the consummation of the transactions
contemplated hereby and thereby, will conflict with, or result in any violation
of, or default under (with or without notice or lapse of time, or both) (i) any
provision of the certificate of incorporation, as amended, and bylaws, as
amended, of Parent or Buyer, (ii) any Contract to which Parent or Buyer or any
of their respective properties or assets are subject and which has been filed
as an exhibit to Parent's filings under the Securities Act or the Exchange Act,
or (iii) any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or Buyer or their respective properties or
assets, except in each case where such conflict, violation or default will not
have a material adverse effect on Parent or Buyer or will not affect the
legality, validity or enforceability of this Agreement or the Collateral
Agreements.

   6.4 SEC Filings. Parent has delivered or made available to Seller (through
reference to documents filed by EDGAR or otherwise) accurate and complete
copies of all forms, reports and documents filed by Parent with

                                     A-17

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the SEC since March 2, 2000 (the "Parent SEC Reports"), which are all the
forms, reports and documents required to be filed by Parent with the SEC since
such date. As of their respective dates, the Parent SEC Reports (i) were
prepared in accordance and complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such Parent
SEC Reports and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
Parent's Subsidiaries is required to file any forms, reports or other documents
with the SEC.

   6.5 Consents. No consent, waiver, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, or any third
party is required by or with respect to Parent or Buyer in connection with the
execution and delivery of this Agreement and the Collateral Agreements or the
consummation of the transactions contemplated hereby, except for such consents,
waivers, approvals, orders, authorizations, registrations, declarations and
filings which, if not obtained or made, would not have a material adverse
effect on Parent or Buyer.

   6.6 Brokers' and Finders' Fees. Neither Parent nor Buyer has incurred, nor
will they incur, directly or indirectly, any liability for brokerage or
finders' fees or agents' commissions or any similar charges in connection with
this Agreement or the transactions contemplated hereby.

                                   ARTICLE 7

                           COVENANTS AND AGREEMENTS

   7.1 Access. During the period commencing on the Existing Agreement Date and
continuing through the earlier of the Closing Date or the termination of this
Agreement, Seller, upon reasonable prior notice from Parent or Buyer to Seller,
and subject to the Confidentiality Agreement, will (a) afford to Buyer and its
representatives, at reasonable times during normal business hours, reasonable
access to the appropriate members of Seller's personnel, Seller's professional
advisors, and Seller's properties, and (b) furnish Buyer and its
representatives with reasonable access to or copies of Transferred Contracts,
relevant Books and Records, and other existing documents and data related to
the Acquired Assets as Buyer may reasonably request (including to enable Buyer
to assess Seller's compliance with its obligations under this Agreement).
Except as otherwise provided herein, no information or knowledge obtained in
any investigation pursuant to this Section 7.1 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties hereto to consummate the transactions contemplated
hereby.

   7.2 Pre-Closing Activities of Seller. Between the Existing Agreement Date
and the earlier of the Closing Date or the termination of this Agreement,
unless otherwise agreed in writing by Parent or Buyer, Seller will:

      (a) conduct its business (as it relates to the Acquired Assets) in a
   commercially reasonable manner;

      (b) pay its debts and Taxes when due, where failure to pay when due would
   be reasonably likely to have a Material Adverse Effect;

      (c) pay or perform other obligations related to the Acquired Assets,
   where failure to pay or perform would be reasonably likely to have a
   Material Adverse Effect;

      (d) use commercially reasonable, good faith efforts to maintain its
   relations and goodwill with suppliers, customers, distributors, licensors,
   licensees, landlords, trade creditors, employees, agents and others having
   business relationships with Seller relating to the Acquired Assets to the
   extent Seller knows or has reason to believe that Buyer intends to have
   business relations with such parties with respect to the Acquired Assets
   following the Closing;

                                     A-18

<PAGE>

      (e) keep Buyer reasonably informed concerning material business or
   operational matters relating to the Acquired Assets;

      (f) use commercially reasonable, good faith efforts to maintain the
   Acquired Assets in their current condition, ordinary wear and tear excepted;

      (g) use commercially reasonable efforts to identify and notify Buyer of
   material Sublicensing Requirements and, upon receipt of Buyer's written
   authorization to do so, comply with the Sublicensing Requirements for the
   Licensed Intellectual Property specified in Buyer's authorization to the
   extent provided in Section 4.1; provided, however, that, with respect to
   those Sublicensing Restrictions that require the consent, approval or other
   action of any third party, Seller shall only be required to use commercially
   reasonable efforts to comply with such Sublicensing Restrictions; and

      (h) complete and deliver to Buyer and Parent Section 5.11(f) of the
   Seller Disclosure Schedule on or before the Closing Date.

   7.3 Conduct Prior to Closing. Except as otherwise expressly permitted by
this Agreement, between the Existing Agreement Date and the earlier of (i) the
Closing Date and (ii) the termination of this Agreement, Seller will not take
any action as a result of which any of the changes or events described in
Section 5.20 of this Agreement would likely or foreseeably occur. In addition,
between the Existing Agreement Date and the earlier of (i) the Closing Date and
(ii) the termination of this Agreement, Seller will not, without the prior
written consent of Parent or Buyer, which consent shall not be unreasonably
withheld:

      (a) take any action to materially impair, encumber, or create a Lien
   against the Acquired Assets;

      (b) except to comply with existing contractual obligations or commitments
   or with respect to non-exclusive licenses entered into in the ordinary
   course of business consistent with past practice, buy, or enter into any
   inbound license agreement with respect to, Third Party Technology or the
   Intellectual Property Rights of any third party to be incorporated in or
   used in connection with the Products or sell, lease or otherwise transfer or
   dispose of, or enter into any outbound license agreement with respect to,
   any of the Acquired Assets with any third party;

      (c) except to comply with existing contractual obligations or commitments
   or with respect to non-exclusive licenses entered into in the ordinary
   course of business consistent with past practice, enter into any Contract
   relating to (i) the sale or distribution of any Product, (ii) any of the
   Acquired Assets, or (iii) any Licensed Intellectual Property (subject to
   Section 7.2(g) above);

      (d) change pricing or royalties charged to customers or licensees of the
   Acquired Assets;

      (e) enter into any strategic arrangement or relationship, development or
   joint marketing arrangement or agreement relating to the Acquired Assets;

      (f) fire, or give notice of termination to, any Designated Employee,
   except as permitted under the terms of that certain Funding Agreement
   between Buyer and Seller of even date herewith (the "Funding Agreement");

      (g) amend or modify, except to the extent required by the terms thereof,
   or violate the terms of, any of the Transferred Contracts;

      (h) adopt or change any accounting method in respect of Taxes, enter into
   any closing agreement, settle any claim or assessment in respect of Taxes,
   or consent to any extension or waiver of the limitation period applicable to
   any claim or assessment in respect of Taxes, in each case where such action
   would reasonably have a Material Adverse Effect; and

      (i) agree in writing or otherwise to take any of the actions described in
   Sections 7.3(a) through (h) above.

                                     A-19

<PAGE>

   7.4 Confidentiality. Each of the parties hereto hereby agrees that the
information obtained in any investigation pursuant to Section 7.1, or pursuant
to the negotiation and execution of this Agreement or the effectuation of the
transactions contemplated hereby, shall be governed by the terms of the Mutual
Nondisclosure Agreement between Parent and Seller dated June 22, 2000, as
amended by Amendment Number 1 to such agreement dated June 21, 2001.

   7.5 Use of Confidential Information. Notwithstanding anything to the
contrary contained herein or in any other agreement of Seller, including any
agreement between Seller and any employee of Seller, after the Closing, Buyer
shall have the unrestricted, sublicensable and transferable right, and Seller
hereby consents to such rights of Buyer, to use, disclose and exploit in any
manner and without restriction any and all confidential information embodied in
any of the Acquired Assets. To the extent that any Designated Employee may be
bound by any agreement or policy of Seller or any of its Subsidiaries that
would in any way limit or restrict the rights of Buyer to such confidential
information hereunder, Seller shall not assert, enforce or otherwise exercise
its rights under such agreement or policy against any Designated Employee or
Buyer.

   7.6 Seller Intellectual Property Covenants. After the Closing, Seller shall
not: (i) transfer or license any Intellectual Property Rights to any third
party; (ii) use, exercise or otherwise exploit any Transferred Technology; or
(iii) disclose any Trade Secrets related to the Transferred Intellectual
Property Rights to any third party. Prior to the Closing, at Seller's request
Seller and Parent shall enter into an escrow agreement with a third party
escrow agent (the "Escrow Agreement") which shall provide that: (1) Seller
shall deposit, with such escrow agent, prior to the Closing, a copy of the
Source Code for the Products (including prior versions thereof) and related
materials or information (the "Escrowed Materials") which Seller reasonably
expects could be necessary for the prosecution or defense of claims or causes
of action by or against Seller for violations of (or that otherwise arise
under) the antitrust laws of any jurisdiction, and (2) Seller shall have the
right to obtain from such escrow agent a copy of the Escrowed Materials that
are reasonably necessary for the prosecution or defense of any such antitrust
claim or cause of action by or against Seller, provided that Seller first
obtains certain protective orders or other reasonable confidentiality
protections as set forth in the Escrow Agreement, and provided further that
Seller shall have the right to use such materials only in connection with such
specific claim or cause of action, and shall return to the escrow agent or
destroy such materials upon the final resolution (including through any
appeals) of such claim or cause of action. Except with respect to Escrowed
Materials released to Seller as described above, after the Closing, upon
written notice from Buyer, Seller shall destroy all copies of Source Code in
Seller's possession or control relating to the current version and all prior
versions of the Product and all copies in Seller's possession or control of
specifications, documentation, and other materials and information relating
thereto.

   7.7 Covenant Not to Compete or Solicit.

      (a) Subject to the Closing, and without limiting Seller's ability to
   prosecute antitrust claims against third parties, beginning on the Closing
   Date and ending on the second (2nd) anniversary of the Closing Date (the
   "Non-Competition Period"), Seller shall not directly or indirectly (other
   than on behalf of Buyer), without the prior written consent of Parent or
   Buyer, engage in a Competitive Business Activity (as defined below) anywhere
   in the Restricted Territory (as defined below). For all purposes hereof, the
   term "Competitive Business Activity" shall mean: (i) engaging in, managing
   or directing persons engaged in any business in competition with Parent's
   Platform Business; (ii) acquiring or having an ownership interest in any
   entity which derives revenues from any business in competition with Parent's
   Platform Business (except for ownership of one percent (1%) or less of any
   entity whose securities have been registered under the Securities Act, or
   Section12 of the Exchange Act); or (iii) participating in the operation,
   management or control of any firm, partnership, corporation, entity or
   business described in clause (ii) of this sentence. For all purposes hereof,
   the term "Restricted Territory" shall mean each and every country, province,
   state, city or other political subdivision of the world including those in
   which Parent is currently engaged in business or otherwise distributes,
   licenses or sells products.

      (b) Subject to the Closing, and beginning on the Closing Date and ending
   on the second (2nd) anniversary of the Closing Date, Seller shall not
   solicit, encourage or take any other action which is intended

                                     A-20

<PAGE>

   to induce or encourage or could reasonably be expected to have the effect of
   inducing or encouraging, any employee of Parent or any Subsidiary of Parent
   or any Continuing Employee to terminate his or her employment with Parent or
   any Subsidiary of Parent; provided, however, that any general solicitation
   of employees not specifically targeted to employees of Parent or any
   Subsidiary of Parent or any Continuing Employee shall not be deemed a
   violation of this Section 7.7(b).

      (c) The covenants contained in Section 7.7(a) shall be construed as a
   series of separate covenants, one for each country, province, state, city or
   other political subdivision of the Restricted Territory. Except for
   geographic coverage, each such separate covenant shall be deemed identical
   in terms to the covenant contained in Section 7.7(a). If, in any judicial
   proceeding, a court refuses to enforce any of such separate covenants (or
   any part thereof), then such unenforceable covenant (or such part) shall be
   eliminated from this Agreement to the extent necessary to permit the
   remaining separate covenants (or portions thereof) to be enforced. In the
   event that the provisions of this Section 7.7(a) are deemed to exceed the
   time, geographic or scope limitations permitted by applicable law, then such
   provisions shall be reformed to the maximum time, geographic or scope
   limitations, as the case may be, permitted by applicable laws.

      (d) Seller acknowledges (without in any way representing to Parent or
   Buyer any of the following) that (i) the value of the Acquired Assets is an
   integral component of the value to Buyer of the transactions contemplated by
   this Agreement and is reflected in the value of the Stock Consideration to
   be received by Seller, and (ii) Seller's agreement as set forth in Sections
   7.7(a) and 7.7(b) is necessary to preserve the value of the Acquired Assets
   for Buyer following the Closing. Seller also acknowledges that the
   limitations of time, geography and scope of activity agreed to in Section
   7.7(a) are reasonable because, among other things, (A) Seller has had unique
   access to the Trade Secrets and know-how relating to the Acquired Assets,
   including, without limitation, the plans and strategy (and, in particular,
   the competitive strategy) relating to the Acquired Assets, and (B) Seller is
   receiving significant consideration in connection with the consummation of
   the transactions contemplated by this Agreement.

      (e) The parties agree that in the event of a breach or threatened breach
   by Seller of any of the covenants set forth in Sections 7.7(a) and 7.7(b),
   monetary damages alone would be inadequate to fully protect Buyer from, and
   compensate Buyer for, the harm caused by such breach or threatened breach.
   Accordingly, Seller agrees that if it breaches or threatens breach of any
   provision of Sections 7.7(a) and 7.7(b), Buyer shall be entitled to, in
   addition to any other right or remedy otherwise available, the right to seek
   injunctive relief restraining such breach or threatened breach and to
   specific performance of any such provision of Sections 7.7(a) and 7.7(b),
   and Buyer shall not be required to post a bond in connection with, or as a
   condition to, obtaining such relief before a court of competent
   jurisdiction.

   7.8 No Solicitation.

      (a) From and after the Existing Agreement Date until the earlier of (i)
   the Closing Date and (ii) termination of this Agreement pursuant to ARTICLE
   10, neither Seller nor any of its Subsidiaries will, nor will they authorize
   or permit any of their officers, directors or affiliates to, nor will they
   authorize or knowingly permit any of their employees or any investment
   banker, attorney or other advisor or representative retained by them to,
   directly or indirectly, (i) solicit, initiate, knowingly encourage or induce
   the making, submission or announcement of any Acquisition Proposal (as
   hereinafter defined), (ii) engage or participate in any discussions or
   negotiations regarding, or furnish to any person any non-public information
   with respect to, or knowingly take any other action to facilitate or that
   could reasonably be expected to lead to, any Acquisition Proposal, (iii)
   approve, endorse or recommend any Acquisition Proposal other than in
   compliance with Section 7.16(c), or (iv) enter into any letter of intent or
   similar document or any contract agreement or commitment contemplating or
   otherwise relating to any Acquisition Transaction; provided, however, that
   nothing contained in this Section 7.8 shall prohibit the Board of Directors
   of Seller from (i) in response to a bona fide written Acquisition Proposal
   for a Qualifying Acquisition Transaction not solicited by Seller in
   violation of this Section 7.8(a) that the Board of Directors of Seller has
   in good faith concluded (based on, among other things, the advice of a
   financial advisor of nationally recognized reputation), is reasonably likely
   to lead to a Superior Offer, furnishing nonpublic

                                     A-21

<PAGE>

   information to the party making such Acquisition Proposal, and submitting to
   the party making such Acquisition Proposal written questions, the sole
   purpose of which is to elicit clarifications as to the material terms of
   such Acquisition Proposal so as to enable the Board of Directors of Seller
   to make a determination whether to construe such Acquisition Proposal as a
   Superior Offer, to the extent that (A) the Board of Directors of Seller
   concludes in good faith, after consultation with its outside counsel, that
   its fiduciary obligations under applicable law require it to do so, (B) (x)
   concurrently with furnishing any such nonpublic information to, or written
   questions to such party, Seller gives Buyer written notice of Seller's
   intention to furnish nonpublic information, or written questions to such
   party and (y) Seller receives from such party an executed confidentiality
   agreement containing customary limitations on the use and disclosure of all
   nonpublic written and oral information furnished to such party on behalf of
   Seller, the terms of which are at least as restrictive as the terms
   contained in the Confidentiality Agreement, and (C) contemporaneously with
   furnishing any such nonpublic information to such party, Seller furnishes
   such nonpublic information to Buyer (to the extent such nonpublic
   information has not been previously furnished by Seller to Buyer) and (ii)
   in response to a bona fide written Acquisition Proposal not solicited by
   Seller in violation of this Section 7.8(a) that constitutes a Superior
   Offer, engaging in negotiations with the party making such Acquisition
   Proposal to the extent that (A) the Board of Directors of Seller concludes
   in good faith, after consultation with its outside counsel, that its
   fiduciary obligations under applicable law require it to do so, (B) (x)
   concurrently with entering into negotiations with such party, Seller gives
   Buyer written notice of Seller's intention to enter into negotiations with
   such party and (y) Seller receives from such party an executed
   confidentiality agreement containing customary limitations on the use and
   disclosure of all nonpublic written and oral information furnished to such
   party on behalf of Seller, the terms of which are at least as restrictive as
   the terms contained in the Confidentiality Agreement. Seller will
   immediately cease any and all existing activities, discussions or
   negotiations with any parties conducted heretofore with respect to any
   Acquisition Proposal. Without limiting the foregoing, it is understood that
   any violation of the restrictions set forth in the preceding two sentences
   by any officer or director of Seller shall be deemed to be a breach of this
   Section 7.8 by Seller.

      (b) For purposes of this Agreement, "Acquisition Proposal" shall mean any
   offer or proposal (other than an offer or proposal by Parent or Buyer)
   relating to any Acquisition Transaction. For purposes of this Agreement,
   "Acquisition Transaction" shall mean any transaction or series of related
   transactions involving: (i) any purchase from Seller or acquisition by any
   person or "group" (as defined under Section13(d) of the Exchange Act and the
   rules and regulations thereunder) of more than a 15% interest in the total
   outstanding voting securities of Seller or any tender offer or exchange
   offer that if consummated would result in any person or "group" (as defined
   under Section13(d) of the Exchange Act and the rules and regulations
   thereunder) beneficially owning 15% or more of the total outstanding voting
   securities of Seller or any merger, consolidation, business combination or
   similar transaction involving Seller; or (ii) any sale, lease (other than in
   the ordinary course of business), exchange, transfer, license (other than
   non-exclusive licenses in the ordinary course of business), acquisition or
   disposition of more than 15% of the assets of Seller or of any of the
   Acquired Assets, except for an immaterial (individually or in the aggregate)
   portion of such Acquired Assets. In addition, for the purposes of this
   Agreement "Qualifying Acquisition Transaction" shall mean any Acquisition
   Transaction pursuant to which (i) the stockholders of Seller immediately
   preceding such Acquisition Transaction would immediately following such
   Acquisition Transaction hold less than fifty percent (50%) of the aggregate
   equity interests in the Seller (or if the Seller does not survive such
   Acquisition Transaction, in the surviving or resulting entity); or (ii)
   Seller would sell all or substantially all of its assets.

      (c) In addition to the obligations of Seller set forth in paragraph (a)
   of this Section 7.8, Seller as promptly as practicable after learning of any
   of the following matters shall advise Buyer in writing of any Acquisition
   Proposal or any request for non-public information or inquiry which Seller
   reasonably believes would lead to an Acquisition Proposal or to any
   Acquisition Transaction the material terms and conditions of such,
   Acquisition Proposal, or request inquiry, and the identity of the person or
   group making any such request, Acquisition Proposal or inquiry. Seller will
   keep Buyer informed as promptly as practicable after

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<PAGE>

   learning of any of the following matters in all material respects of the
   status and details (including material amendments or proposed material
   amendments) of any such request, Acquisition Proposal or inquiry.

   7.9 Notification of Certain Matters.

      (a) Seller shall give prompt notice to Buyer of (i) the occurrence or
   non-occurrence of any event, the occurrence or non-occurrence of which is
   likely to cause any representation or warranty of Seller contained in this
   Agreement to be untrue or inaccurate in any material respect at the Closing,
   and (ii) any failure of Seller to comply with or satisfy in any material
   respect any covenant or agreement required to be complied with or satisfied
   by it hereunder, in either case such that the conditions set forth in
   Section 8.2(a) might reasonably not be satisfied by the End Date; provided,
   however, that the delivery of any notice pursuant to this Section 7.9(a)
   shall not (a) limit or otherwise affect any remedies available to the party
   receiving such notice or (b) constitute an acknowledgment or admission of a
   breach of this Agreement. No disclosure by Seller pursuant to this Section
   7.9(a), however, shall be deemed to amend or supplement the Seller
   Disclosure Schedule or prevent or cure any misrepresentations, breach of
   warranty or breach of covenant by Seller hereunder.

      (b) Parent or Buyer shall give prompt notice to Seller of (i) the
   occurrence or non-occurrence of any event, the occurrence or non-occurrence
   of which is likely to cause any representation or warranty of Parent or
   Buyer contained in this Agreement to be untrue or inaccurate in any material
   respect at the Closing, and (ii) any failure of Parent or Buyer to comply
   with or satisfy in any material respect any covenant, condition or agreement
   required to be complied with or satisfied by it hereunder, in either case
   such that the conditions set forth in Section 8.3(a) might reasonably not be
   satisfied by the End Date; provided, however, that the delivery of any
   notice pursuant to this Section 7.9(b) shall not (a) limit or otherwise
   affect any remedies available to Seller, or (b) constitute an acknowledgment
   or admission by Parent or Buyer of a breach of this Agreement. No disclosure
   by Parent or Buyer pursuant to this Section 7.9(b), however, shall be deemed
   to amend or supplement the Buyer Disclosure Schedule or prevent or cure any
   misrepresentations, breach of warranty or breach of covenant by Parent or
   Buyer hereunder.

   7.10 New Employment Arrangements. Parent has offered each person who is a
Designated Employee "at-will" employment with Parent, to be effective as of the
Closing Date, subject to proof evidencing a legal right to work in his or her
country of current employment. Such "at-will" employment arrangements have been
set forth in offer letters based on Parent's standard form delivered to the
Designated Employees prior to the Existing Agreement Date (each, an "Offer
Letter"), copies of which have been provided to Seller. At least seven of the
Key Employees executed an Offer Letter prior to or concurrent with the
execution of the Existing Agreement, which Offer Letters shall be effective as
of the Closing Date. Each employee of Seller who becomes an employee of Parent
after the Closing Date shall be referred to hereafter as a "Continuing
Employee." Continuing Employees shall be eligible to receive benefits
consistent with Parent's standard human resources policies. In furtherance of
the foregoing, at the Closing Seller shall terminate all employment agreements
and other arrangements with any Continuing Employees who have accepted
employment with Parent, and waive any non-competition agreements and any duty
of confidentiality owed to Seller by any such Continuing Employee, effective as
of the Closing Date.

   7.11 Public Disclosure. Except as may be required by law or any listing
agreement with a national securities exchange, no party shall issue any
statement or communication to any third party (other than their respective
agents) regarding the subject matter of this Agreement or the transactions
contemplated hereby, including, if applicable, the termination of this
Agreement and the reasons therefor, without the consent of the other party,
which consent shall not be unreasonably withheld. Immediately following the
execution of the Existing Agreement, each of Parent and Seller issued a press
release announcing the execution of the Existing Agreement and the transactions
contemplated thereby, and each of Parent and Seller shall be entitled, in its
discretion, to file a current report with the SEC disclosing the foregoing
matters.

                                     A-23

<PAGE>

   7.12 Consents. Seller shall use commercially reasonable efforts to obtain
the consents, waivers and approvals under any of the Transferred Contracts or
under any contractual restrictions relating to the Tangible Assets that are
necessary to permit the transfer of such Transferred Contracts or Tangible
Assets to Buyer as may be required in connection with this Agreement, as well
as any consents that may be necessary to permit the transfer to Buyer of any
Supplemental Transferred Contracts. Buyer shall reasonably cooperate in
Seller's efforts to obtain such consents, waivers and approvals.

   7.13 COBRA Continuation Coverage. Seller agrees and acknowledges that the
selling group (as defined in Treasury Regulation Section 54.4980B-9, Q&A-3(a))
of which it is a part (the "Selling Group") will continue to offer a group
health plan to employees of Seller after the Closing Date and, accordingly,
that Seller and the Selling Group shall be solely responsible for providing
continuation coverage under COBRA to those individuals who are M&A qualified
beneficiaries (as defined in Treasury Regulation Section 54.4980B-9, Q&A-4(a))
with respect to the transactions contemplated by this Agreement (collectively,
the "M&A Qualified Beneficiaries"). Seller further agrees and acknowledges that
in the event that the Selling Group ceases to provide any group health plan to
any employee prior to the expiration of the continuation coverage period for
all M&A Qualified Beneficiaries (pursuant to Treasury Regulation Section
54.4980B-9, Q&A-8(c)), then Seller shall provide Buyer with (i) written notice
of such cessation as far in advance of such cessation as is reasonably
practicable (and, in any event, at least thirty (30) days prior to such
cessation), and (ii) all information necessary or appropriate for Purchaser to
offer continuation coverage to such M&A Qualified Beneficiaries.

   7.14 Prepaid Service Payment Update. Seller shall prepare and deliver, at
least three(3) business days prior to the Closing Date, an updated Section 5.7
of the Seller Disclosure Schedule estimated as of the Closing Date (the
"Prepaid Service Payment Update"), including an update to each Prepaid Service
Payment contained thereon, that has been prepared on a basis consistent with
Section 5.7 of the Seller Disclosure Schedule delivered on the Existing
Agreement Date.

   7.15 Registration Statement.

      (a) As promptly as practicable after the execution of this Agreement,
   Seller will prepare a proxy statement with respect to the transactions
   contemplated by this Agreement (the "Proxy Statement/Prospectus") and Parent
   shall prepare and file with the SEC a registration statement on Form S-4
   with respect to the registration of the Stock Consideration (the "Form S-4
   Registration Statement"), in which the Proxy Statement/Prospectus will be
   included as a prospectus. Each of Parent and Seller will use all reasonable
   efforts to (i) cause the Form S-4 Registration Statement and the Proxy
   Statement/Prospectus to comply with the rules and regulations promulgated by
   the SEC, (ii) respond promptly to any comments of the SEC, and (iii) have
   the Form S-4 Registration Statement declared effective under the Securities
   Act as promptly as practicable after it is filed with the SEC. As promptly
   as practicable after the effective date of the Form S-4 Registration
   Statement, Seller shall cause the Proxy Statement/Prospectus to be mailed to
   the stockholders of Seller. Each of the Parent and Seller will notify the
   other promptly upon the receipt of any comments from the SEC or its staff or
   any other government officials in connection with any filing made pursuant
   hereto and of any request by the SEC or its staff or any other government
   officials for amendments or supplements to the Form S-4 Registration
   Statement or the Proxy Statement/Prospectus or for additional information.
   Each of the Parent and Seller will supply the other with copies of all
   correspondence between such party or any of its representatives, on the one
   hand, and the SEC, or its staff or any other government officials, on the
   other hand, with respect to the Form S-4 Registration Statement or the Proxy
   Statement/Prospectus. Each party will cause all documents that it is
   responsible for filing with the SEC or other regulatory authorities under
   this Section 7.15 to comply in all material respects with all applicable
   requirements of law and the rules and regulations promulgated thereunder.
   Whenever any event occurs that is required to be set forth in an amendment
   or supplement to the Form S-4 Registration Statement or the Proxy
   Statement/Prospectus, each of Parent and Seller will promptly inform the
   other of such occurrence and cooperate in filing with the SEC or its staff
   or any other government officials, or mailing to stockholders of Seller,
   such amendment or supplement. No amendment or supplement to the Form S-4
   Registration Statement or the Proxy Statement/Prospectus shall be made
   without the approval of Parent and

                                     A-24

<PAGE>

   Seller, which approval shall not be unreasonably withheld or delayed. In the
   event that, at any time prior to the effectiveness of the Form S-4
   Registration Statement under the Securities Act, the SEC shall take the
   position that Form S-4 is not available or is otherwise inappropriate with
   respect to the registration of the Stock Consideration, (i) Parent shall
   issue the Stock Consideration hereunder pursuant to the Resale Registration
   Statement as provided in Section 7.15(b), (ii) the parties shall comply with
   Section 7.15(b) and (iii) Parent shall use commercially reasonable efforts
   to seek a waiver from Foothill Capital Corporation to enable Parent to make
   the Cash Loan in accordance with Section 7.15(c)(the "Waiver").

      (b) In the event that, at any time prior to the effectiveness of the Form
   S-4 Registration Statement under the Securities Act, the SEC shall take the
   position that Form S-4 is not available or is otherwise inappropriate with
   respect to the registration of the Stock Consideration, Parent shall, at
   Parent's own expense, file with the SEC promptly (and in any event not more
   than two business days) following the Closing, a resale registration
   statement on Form S-3 (the "Resale Registration Statement") under the
   Securities Act to provide for the resale by Seller of such number of shares
   of Parent's common stock as may be required to be issued to Seller in
   accordance with the last sentence of this clause (b), and will use
   commercially reasonable efforts to cause such Resale Registration Statement
   to become effective as promptly as reasonably practicable thereafter;
   provided, however, that Parent will not be required to cause such Resale
   Registration Statement to become effective until at least one (1) Business
   Day after Parent publicly discloses operating results from its most recently
   ended fiscal quarter. Parent will use its reasonable best efforts to keep
   such Resale Registration Statement effective for a period of thirty (30)
   days after such Resale Registration Statement becomes effective; provided,
   however, that at any time after fifteen (15) days after the SEC shall have
   declared the Resale Registration Statement effective, Parent may suspend the
   use of the Resale Registration Statement beginning on the fifteenth (15th)
   day of the last month prior to the end of each fiscal quarter of Parent and
   ending one (1) business day after Parent publicly discloses operating
   results from such fiscal quarter, in keeping with the black-out periods in
   Parent's standard stock trading policy, and during any other black-out
   period designated by Parent under Parent's standard stock trading policy;
   provided, however, that in no event shall Parent suspend the effectiveness
   of the Resale Registration Statement for more than 60 consecutive days.
   Seller shall, on or prior to the Closing Date, complete a selling
   stockholder questionnaire containing customary investment representations in
   such form as may be reasonably provided by Parent not later than the tenth
   (10th) day prior to the Closing Date. In the event that Seller shall have
   failed to furnish such completed questionnaire to Parent on or prior to the
   Closing Date, Parent will be entitled, in its reasonable discretion, to (i)
   defer the filing of the Resale Registration Statement until the earlier to
   occur of the tenth (10th) day after Seller will have furnished such
   information or the thirtieth (30th) day after such Resale Registration
   Statement is otherwise required to filed pursuant to this Section 7.15(b).
   In the event that Parent shall file the Resale Registration Statement, and
   Seller shall not have otherwise disposed of the Stock Consideration prior to
   the effectiveness of the Resale Registration Statement, the Stock
   Consideration shall be increased or decreased so that Seller shall receive
   that number of shares of Parent's common stock, rounded up or down to the
   nearest number of whole shares (with 0.5 being rounded up) equal to the
   quotient determined by dividing (A) $11,000,000 minus the Adjustment Amount,
   by (B) the opening price of Parent's common stock as quoted on the Nasdaq
   National Market on the first trading day following the declaration of
   effectiveness of the Resale Registration Statement.

      (c) Provided that Parent obtains the Waiver, (i) if the Resale
   Registration Statement is not declared effective by the SEC on or prior to
   the 15th day after the Closing Date, Parent shall immediately make a loan to
   Seller of $5,500,000 in cash, and (ii) if the Resale Registration Statement
   is not declared effective by the SEC on or prior to the 30th day after the
   Closing Date, Parent shall immediately make a second loan to Seller of
   $5,500,000 in cash (collectively, the "Cash Loans"). The Cash Loans shall
   not bear any interest. Repayment of each Cash Loan shall be secured by a
   pledge of the Stock Consideration, and Seller and Parent agree to enter into
   a promissory note and security agreement containing customary and reasonable
   terms and conditions relating to such Cash Loan. The Cash Advances shall be
   repayable at any time by Seller, without interest or penalty. In the event
   that Buyer makes the Cash Loan, Seller shall be obligated to sell the Stock
   Consideration promptly (but, in any event, within two business days)
   following the

                                     A-25

<PAGE>

   effectiveness of the Resale Registration Statement and simultaneously repay
   the Cash Loan with the proceeds of such sale.

      (d) In the event that the SEC shall take the position, at any time prior
   to the effectiveness of the Form S-4 Registration Statement under the
   Securities Act, that Form S-4 is not available or is otherwise inappropriate
   with respect to the registration of the Stock Consideration and the Form S-4
   Registration Statement shall not have been declared effective under the
   Securities Act by the Closing, the Stock Consideration issued to Seller at
   Closing shall constitute "restricted securities" within the meaning of Rule
   144 of the Securities Act and will be issued in a private placement
   transaction in reliance upon the exemption from the registration and
   prospectus delivery requirements of Section 5 of the Securities Act afforded
   by Section 4(2) of the Securities Act and Regulation D promulgated
   thereunder and pending the effectiveness of the Registration Statement, will
   be subject to the following legend to identify such privately placed shares
   as being "restricted securities" under the Securities Act, to comply with
   foreign, provincial, state and federal securities laws and to notice the
   restrictions on transfer of such shares:

       "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
       INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
       1933, AS AMENDED (THE "SECURITIES ACT"). THESE SECURITIES MAY NOT BE
       SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS (A) AN
       EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT COVERING SUCH
       SECURITIES, OR (B) A VALID EXEMPTION THEREFROM AND THE CORPORATION
       RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
       REASONABLY SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
       TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION
       AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT."

   7.16 Meeting of Seller's Stockholders

      (a) Seller will take all action necessary in accordance with Delaware law
   and its certificate of incorporation and bylaws to convene a meeting (the
   "Seller Stockholders' Meeting") of Seller's stockholders to consider
   adoption and approval of this Agreement and the dissolution or winding-up of
   Seller's business after the Closing in a manner providing for full payment
   to or adequate provision for creditors in advance of any distribution to
   Seller's stockholders (the "Dissolution") to be held as promptly as
   practicable after the Form S-4 Registration Statement is declared effective
   under the Securities Act or, in the event that the SEC shall take the
   position, at any time prior to the effectiveness of the Form S-4
   Registration Statement under the Securities Act, that Form S-4 is not
   available or is otherwise inappropriate with respect to the registration of
   the Stock Consideration, within 45 days after Seller is notified of the
   SEC's position. Subject to Section 7.16(c), Seller will use its commercially
   reasonable efforts to solicit from its stockholders proxies in favor of the
   adoption and approval of this Agreement and the Dissolution and to take all
   other action necessary or advisable to secure the vote or consent of its
   stockholders required by Delaware law in favor of such matters.
   Notwithstanding anything to the contrary contained in this Agreement, Seller
   may adjourn or postpone the Seller Stockholders' Meeting to the extent
   necessary to ensure that any necessary supplement or amendment to the Proxy
   Statement/Prospectus is provided to Seller's stockholders in advance of a
   vote on this Agreement and the Dissolution or, if as of the time for which
   Seller Stockholders' Meeting is originally scheduled (as set forth in the
   Proxy Statement/Prospectus) there are insufficient shares of Seller's common
   stock represented (either in person or by proxy) to constitute a quorum
   necessary to conduct the business of the Seller Stockholders' Meeting.
   Seller shall ensure that Seller Stockholders' Meeting is called, noticed,
   convened, held and conducted, and that all proxies solicited by Seller in
   connection with Seller Stockholders' Meeting are solicited, in compliance
   with the Delaware law, Seller's certificate of incorporation and bylaws, the
   rules of Nasdaq and all other applicable legal requirements. Seller's
   obligation to call, give notice of, convene and hold the Seller
   Stockholders' Meeting in accordance with this Section 7.16(a) shall not be
   limited to or otherwise affected by the commencement, disclosure,
   announcement or submission to Seller of any Acquisition Proposal (as defined
   in Section 7.8), or by any

                                     A-26

<PAGE>

   withdrawal, amendment or modification of the recommendation of the Board of
   Directors of Seller with respect to this Agreement and the Dissolution.

      (b) Subject to Section 7.16(c): (i) the Board of Directors of Seller
   shall recommend that Seller's stockholders vote in favor of the adoption and
   approval of this Agreement and the approval of the Dissolution at the Seller
   Stockholders' Meeting; (ii) the Proxy Statement/Prospectus shall include a
   statement to the effect that the Board of Directors of Seller has
   recommended that Seller's stockholders vote in favor of the adoption and
   approval of this Agreement and the Dissolution at the Seller Stockholders'
   Meeting; and (iii) neither the Board of Directors of Seller nor any
   committee thereof shall withdraw, amend or modify, or propose or resolve to
   withdraw, amend or modify in a manner adverse to Buyer, the recommendation
   of the Board of Directors of Seller that Seller's stockholders vote in favor
   of the adoption and approval of this Agreement and the approval of the
   Dissolution.

      (c) Nothing in this Agreement shall prevent the Board of Directors of
   Seller from withholding, withdrawing, amending or modifying its
   recommendation in favor of the adoption and approval of this Agreement and
   the approval of the Dissolution if (i) a Superior Offer (as defined below)
   is made to Seller and is not withdrawn, (ii) Seller shall have provided
   written notice to Buyer (a "Notice of Superior Offer") advising Buyer that
   Seller has received a Superior Offer, specifying the material terms and
   conditions of such Superior Offer and identifying the person or entity
   making such Superior Offer, (iii) Buyer shall not have, within five (5)
   business days of Buyer's receipt of the Notice of Superior Offer, made an
   offer that the Board of Directors of Seller by a majority vote determines in
   its good faith judgment (based on, among other things, the advice of a
   financial adviser of nationally recognized reputation) to be at least as
   favorable to Seller's stockholders as such Superior Offer (it being agreed
   that Board of Directors of Seller shall convene a meeting to consider any
   such offer by Buyer promptly following the receipt thereof), (iv) the Board
   of Directors of Seller concludes in good faith, after consultation with its
   outside counsel, that, in light of such Superior Offer, the withholding,
   withdrawal, amendment or modification of such recommendation is required in
   order for the Board of Directors of Seller to comply with its fiduciary
   obligations to Seller's stockholders under applicable law and (v) neither
   Seller nor any of its representatives shall have violated any of the
   restrictions set forth in Section 7.8 or this Section 7.16 in connection
   with such Superior Offer. Seller shall provide Buyer with at least three
   business days' prior notice (or such lesser prior notice as provided to the
   members of Seller's Board of Directors) of any meeting of Seller's Board of
   Directors at which Seller's Board of Directors is reasonably expected to
   consider any Acquisition Transaction (as defined below). Nothing contained
   in this Section shall limit Seller's obligation to hold and convene the
   Seller Stockholders' Meeting (regardless of whether the recommendation of
   the Board of Directors of Seller shall have been withdrawn, amended or
   modified). For purposes of this Agreement "Superior Offer" shall mean a bona
   fide written offer not solicited by Seller in violation of Section 7.8(a) to
   acquire, directly or indirectly, including pursuant to a tender offer,
   exchange offer, merger, consolidation, business combination,
   recapitalization, liquidation, dissolution or similar transaction, for
   consideration consisting of cash or securities, either (x) a
   majority-in-interest of the total outstanding voting securities of Seller,
   if as a result of such transaction, the stockholders of Seller immediately
   preceding such transaction would hold less than fifty percent (50%) of the
   equity interest in the surviving corporation or resulting entity of such
   transaction or (y) all or substantially all the assets of Seller, on terms
   that the Board of Directors of Seller determines, in its good faith judgment
   (based on, among other things, the advice of a financial adviser of
   nationally recognized reputation) to be more favorable to Seller's
   stockholders than the terms of the transaction contemplated by this
   Agreement and is reasonably capable of being consummated; provided, however,
   that any such offer shall not be deemed to be a "Superior Offer" if any
   financing required to consummate the transaction contemplated by such offer
   is not committed and is not likely in the judgment of Seller's Board of
   Directors to be obtained by the entity making such Acquisition Proposal on a
   timely basis.

      (d) Nothing contained in this Agreement shall prohibit Seller or its
   Board of Directors from taking and disclosing to its stockholders a position
   contemplated by Rules14d-9 and 14e-2(a) promulgated under the Exchange Act
   with respect to a Superior Offer; provided, however, that the content of any
   such disclosure shall not be inconsistent with the terms of this Agreement.

                                     A-27

<PAGE>

   7.17 Reasonable Efforts. Subject to the terms and conditions provided in
this Agreement, each of the parties hereto shall use commercially reasonable
efforts to take promptly, or cause to be taken, all actions, and to do
promptly, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated hereby, to obtain all necessary waivers, consents and
approvals and to effect all necessary registrations and filings and to remove
any injunctions or other impediments or delays, legal or otherwise, in order to
consummate and make effective the transactions contemplated by this Agreement
for the purpose of securing to the parties hereto the benefits contemplated by
this Agreement; provided that no party to this Agreement shall be required to
agree to any divestiture of shares of capital stock or of any business, assets
or property of Buyer or its Subsidiaries or affiliates or of Seller, as the
case may be, or the imposition of any material limitation on the ability of any
of them to conduct their businesses or to own or exercise control of such
assets, properties and stock.

   7.18 Change of Control Agreements. Upon the written request of Buyer, Seller
shall take commercially reasonable actions to have any Continuing Employee
waive any right under any change of control agreement with Seller that, if not
waived, would reasonably be expected to have the effect of providing such
Continuing Employee in the future with similar rights in connection with any
future change of control of Parent or Buyer.

   7.19 Post Closing Tax Covenants.

      (a) Subject to Section 7.19(c) below, Seller and its Subsidiaries will be
   responsible for the preparation and filing of all Tax Returns of Seller and
   its Subsidiaries (including Tax Returns required to be filed after the
   Closing Date) to the extent such Tax Returns include or relate to the use or
   ownership of the Acquired Assets by Seller or any of its Subsidiaries, or to
   sales, use and employment taxes. The Tax Returns of Seller and its
   Subsidiaries to the extent they relate to the Acquired Assets or to sales,
   use and employment taxes shall be true, complete and correct and prepared in
   accordance with applicable law in all material respects. Seller and its
   Subsidiaries will be responsible for and make all payments of Taxes shown to
   be due on such Tax Returns to the extent they relate to the Acquired Assets
   or to sales, use and employment taxes.

      (b) Buyer will be responsible for the preparation and filing of all Tax
   Returns it is required to file with respect to Buyer's ownership or use of
   the Acquired Assets attributable to taxable periods (or portions thereof)
   commencing on or after the Closing Date. Buyer's Tax Returns, to the extent
   they related to the Acquired Assets, shall be true, complete and correct and
   prepared in accordance with applicable law in all material respects. Buyer
   will make all payments of Taxes shown to be due on such Tax Returns to the
   extent they relate to the Acquired Assets.

      (c) In the case of any real or personal property taxes (or other similar
   Taxes) attributable to the Acquired Assets which returns cover a taxable
   period commencing before the Closing Date and ending thereafter, Buyer shall
   prepare such returns and make all payments required with respect to any such
   return; provided, however, Seller will promptly reimburse Buyer upon receipt
   of a copy of the filed Tax return to the extent any payment made by Buyer
   relates to that portion of the taxable period ending on or before the
   Closing Date which amount shall be determined and prorated on a per diem
   basis.

      (d) To the extent relevant to the Acquired Assets, each party shall (i)
   provide the other with such assistance as may reasonably be required in
   connection with the preparation of any Tax Return and the conduct of any
   audit or other examination by any taxing authority or in connection with
   judicial or administrative proceedings relating to any liability for Taxes
   and (ii) retain and provide the other with all records or other information
   that may be relevant to the preparation of any Tax Returns, or the conduct
   of any audit or examination, or other proceeding relating to Taxes. Seller
   and its Subsidiaries shall retain all documents, including prior years' Tax
   Returns, supporting work schedules and other records or information with
   respect to all sales, use and employment tax returns and, absent the receipt
   by Seller or any of its Subsidiaries of the relevant Sales Tax Certificates,
   shall not destroy or otherwise dispose of any such records for six (6) years
   after closing without the prior written consent of Buyer or Parent.

                                     A-28

<PAGE>

      (e) On or before September 14, 2001, Seller shall file or cause to be
   filed properly completed applications or other appropriate forms of request
   with (i) California's Employment Development Department (or any other
   appropriate or analogous governmental agency) to obtain a certificate of
   release as authorized in, and pursuant to, California's Unemployment
   Insurance Code sections 1731 through and including 1734, and, to the extent
   available under analogous law, a certificate of release or payment pursuant
   to the law of Washington state (the "Employment Tax Certificates") and (ii)
   California's State Board of Equalization to obtain a certificate of receipt
   of payment of all sales and use taxes as authorized in and pursuant to
   California Revenue and Taxation Code sections 6811 through and including
   6814 and, to the extent available under analogous law, a certificate of
   payment pursuant to the law of Washington state (the "Sales and Use Tax
   Certificates"). The Employment Tax Certificates and the Sales and Use Tax
   Certificates are collectively referred to as the "State Tax Certificates".

   7.20 Employee Withholding. Seller shall prepare and furnish to Continuing
Employees a Form W-2 which shall reflect all wages and compensation paid to
Continuing Employees for that portion of the calendar year in which the Closing
Date occurs during which the Continuing Employees were employed by Seller.
Seller shall furnish to Parent the Forms W-4 and W-5 of each Continuing
Employee. Parent shall send to the appropriate Social Security Administration
office a duly completed Form W-3 and accompanying copies of the duly completed
Forms W-2. It is the intent of the parties hereunder that the obligations of
Parent and Seller under this Section 7.20 shall be carried out in accordance
with Section 5 of Revenue Procedure 96-60.

   7.21 Termination of Compaq Agreement. Prior to September 19, 2001, Seller
shall deliver a notice of termination to Compaq Computer Corporation in
accordance with Section 14.1 of the Web Appliance OEM License and Distribution
Agreement between Seller and Compaq. Seller shall use commercially reasonable
efforts to obtain the consent of Compaq to terminate all maintenance and other
obligations that continue beyond the end of the term. Buyer shall reasonably
cooperate in Seller's efforts to obtain such consent.

   7.22 Additional Documents and Further Assurances. Each party hereto, at the
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be reasonably
necessary or desirable for effecting the consummation of this Agreement and the
transactions contemplated hereby. Without limiting the foregoing, at any time
or from time to time after the Closing, at Buyer's request and expense, Seller
shall at the expense of Buyer: (i) execute and deliver to Buyer such other
instruments of sale, transfer, conveyance, assignment and confirmation; (ii)
provide such materials and information; (iii) take such other actions, as Buyer
may reasonably deem necessary or desirable in order effectively to transfer,
convey and assign to Buyer, to confirm Buyer's title to, all of the Acquired
Assets, and, to the full extent permitted by law, to put Buyer in actual
possession and operating control of the Acquired Assets; and (iv) provide
reasonable assistance and information in connection with the filing,
prosecution and enforcement of the Transferred Intellectual Property Rights. In
the event Seller is unable or unwilling to execute any document described in
clause (i) above, Seller hereby appoints Buyer as its attorney-in-fact to
execute such documents on its behalf. Such appointment shall be deemed a power
coupled with an interest and is therefore irrevocable. Buyer shall only
exercise such power if Seller fails to execute the necessary document within
thirty (30) business days of Buyer's written request to do so.

   7.23 Disclosure by Seller. None of the information supplied or to be
supplied by or on behalf of Seller for inclusion or incorporation by reference
in the Form S-4 Registration Statement or the Resale Registration Statement, if
applicable, will, at the time such documents are filed with the SEC or at the
time either the Form S-4 Registration Statement or the Resale Registration
Statement, if applicable, becomes effective under the Securities Act, 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 the light of the circumstances under which they are made, not
misleading. None of the information supplied or to be supplied by or on behalf
of Seller for inclusion or incorporation by reference in the Proxy
Statement/Prospectus to be filed with the SEC, will, at the time the Proxy
Statement/Prospectus is mailed to the stockholders of Seller, or at the time of
the Seller Stockholders' Meeting, contain any untrue statement of a material
fact or omit to state any material fact required

                                     A-29

<PAGE>

to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. The
Proxy Statement/Prospectus will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations promulgated by
the SEC thereunder, except that no representation or warranty is made by Seller
with respect to statements made or incorporated by reference therein based on
information supplied by Parent or Buyer for inclusion or incorporation by
reference in the Proxy Statement/Prospectus.

   7.24 Disclosure by Buyer or Parent. None of the information supplied or to
be supplied by or on behalf of Parent or Buyer for inclusion or incorporation
by reference in the Form S-4 Registration Statement or the Resale Registration
Statement, if applicable, will, at the time such documents are filed with the
SEC or at the time either the Form S-4 Registration Statement or the Resale
Registration Statement becomes effective under the Securities Act, 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
the light of the circumstances under which they are made, not misleading. None
of the information supplied or to be supplied by or on behalf of Parent or
Buyer for inclusion or incorporation by reference in the Proxy
Statement/Prospectus to be filed with the SEC, will, at the time the Proxy
Statement/Prospectus is mailed to the stockholders of Seller, or at the time of
the Seller 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 the light of the
circumstances under which they are made, not misleading. The Form S-4
Registration Statement and the Resale Registration Statement, if applicable,
will comply as to form in all material respects with the provisions of the
Securities Act and the rules and regulations promulgated by the SEC thereunder,
except that no representation or warranty is made by Parent or Buyer with
respect to statements made or incorporated by reference therein based on
information supplied by Seller for inclusion or incorporation by reference in
the Form S-4 Registration Statement or the Resale Registration Statement, if
applicable.

   7.25 Sublicensing Requirements. To the extent that Seller was not able prior
to the Closing Date to identify all material Sublicensing Requirements or, upon
receipt of Buyer's written authorization to do so, to comply with the
Sublicensing Requirements for the Licensed Intellectual Property specified in
Buyer's authorization, Seller shall do so until the earlier of (a) six (6)
months after the Closing Date or (b) the date on which Seller files its
certificate of dissolution with the Secretary of State of the State of
Delaware; provided, however, that, with respect to those Sublicensing
Restrictions that require the consent, approval or other action of any third
party, Seller shall only be required to use commercially reasonable efforts to
comply with such Sublicensing Restrictions.

   7.26 Supplemental Transferred Contracts. At any time prior to the Closing,
if Buyer elects, in its sole discretion, to assume one or more additional
Eligible Contracts of Seller by delivering a written notice of such election to
Seller, Seller agrees that such an Eligible Contract shall thereafter be
considered a Transferred Contract hereunder, unless Seller reasonably
determines in good faith that Seller cannot transfer such Eligible Contract to
Buyer due to a change in circumstances between the Existing Agreement Date and
the date of Buyer's written notice. Seller shall deliver true and complete
copies of all Supplemental Transferred Contracts to Buyer.

                                   ARTICLE 8

                           CONDITIONS TO THE CLOSING

   8.1 Conditions to Obligations of Each Party. The respective obligations of
Parent, Buyer and Seller to effect the transactions contemplated hereby shall
be subject to the satisfaction, at or prior to the Closing, of the following
conditions, any of which may be waived, in writing, by Parent and Buyer (on the
one hand) and Seller (on the other hand):

                                     A-30

<PAGE>

      (a) No Order. No Governmental Entity shall have enacted, issued,
   promulgated, enforced or entered any statute, rule, regulation, executive
   order, decree, injunction or other order (whether temporary, preliminary or
   permanent) which is in effect and which has the effect of making the
   transactions contemplated hereby illegal or otherwise prohibiting the
   consummation of the transactions contemplated hereby.

      (b) No Injunctions or Restraints; Illegality. No temporary restraining
   order, preliminary or permanent injunction or other order issued by any
   court of competent jurisdiction or other legal restraint or prohibition
   preventing the consummation of the transactions contemplated hereby shall be
   in effect, nor shall any proceeding brought by a Governmental Entity seeking
   any of the foregoing be pending.

      (c) Stockholder Approval. This Agreement shall have been approved and
   adopted, and the Dissolution shall have been duly approved, by the requisite
   vote under applicable law and the certificate of incorporation of Seller by
   the stockholders of Seller.

      (d) Governmental Approval. Any governmental or regulatory notices,
   approvals or other requirements necessary to consummate the transactions
   contemplated hereby and shall have been given, obtained or complied with, as
   applicable.

   8.2 Additional Conditions to the Obligations of Parent and Buyer. The
obligations of Parent and Buyer to consummate the transactions contemplated
hereby shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions, any of which may be waived, in writing,
exclusively by Parent and Buyer:

      (a) Representations, Warranties and Covenants. (i) The representations
   and warranties of Seller in this Agreement shall have been true and correct
   on the date they were made and shall be true and correct on and as of the
   Closing Date as though such representations and warranties were made on and
   as of such date, except in either case to the extent that the aggregate of
   all breaches thereof has not had and would not reasonably be expected to
   have a Material Adverse Effect (without giving effect to any limitation as
   to "materiality" or "Material Adverse Effect" set forth therein) and except
   to the extent such representations and warranties address matters as of a
   particular date or period, in which case such representations and warranties
   shall be true and correct as of such date or period (and in any event,
   subject to the foregoing Material Adverse Effect qualification), and (ii)
   Seller shall have performed and complied in all material respects with all
   covenants and obligations under this Agreement required to be performed and
   complied with by Seller as of the Closing.

      (b) Litigation. There shall be no action or proceeding of any nature
   pending or threatened with respect to the Acquired Assets against Seller or
   any of its Subsidiaries where such action is reasonably likely to have a
   Material Adverse Effect.

      (c) Opinion of Financial Advisor. Buyer shall have received an opinion of
   a financial advisor or appraiser, in form and substance reasonably
   acceptable to Buyer, that (i) Seller is not insolvent as of the Closing
   Date, and (ii) the sale of the Acquired Assets will not cause Seller to be
   insolvent immediately following the Closing. Notwithstanding anything to the
   contrary in this Agreement, Buyer shall bear and incur all costs related to
   the issuance of such opinion, and Buyer agrees that any opinion in
   substantially the form of Exhibit D hereto shall presumptively be deemed to
   be acceptable to Buyer.

      (d) New Employment Arrangements. At least seven of the Key Employees
   (provided that such seven Key Employees include both Key Employees set forth
   on Schedule 8.2(d)) and at least 33 of the Designated Employees other than
   the Key Employees shall have entered into "at-will" employment arrangements
   with Parent pursuant to their execution of an Offer Letter and shall be
   employees of Seller immediately prior to the Closing. In addition, effective
   as of the Closing Date, Seller shall have terminated all employment
   agreements and other arrangements with the Continuing Employees and waived
   all of its rights with respect to any duty of confidentiality owed to Seller
   by any such Continuing Employee with respect to the Acquired Assets or any
   other intellectual property or technology of Seller.

                                     A-31

<PAGE>

      (e) Non-Competition Agreements. Each of the Key Employees set forth on
   Schedule 8.2(e) shall have executed Non-Competition Agreements concurrent
   with the execution and delivery of the Existing Agreement and such
   Non-Competition Agreements shall be in full force and effect as of the
   Closing Date.

      (f) Certificate of Seller. Buyer shall have received a certificate,
   validly executed by a duly authorized officer of Seller for and on its
   behalf (the "Certificate of Seller"), to the effect that, as of the Closing,
   each of the conditions specified in Section 8.2(a) and Section 8.2(b) have
   been satisfied.

      (g) Certificate of Secretary of Seller. Buyer shall have received a
   certificate, validly executed by the Secretary of Seller, certifying as to
   (i) the terms and effectiveness of the certificate of incorporation and the
   bylaws of Seller, (ii) the valid adoption of resolutions of the Board of
   Directors of Seller approving this Agreement, and (iii) the valid adoption
   and approval of this Agreement and approval of the Dissolution by the
   stockholders of Seller.

      (h) Prepaid Service Payment Update. Buyer shall have received from Seller
   the Prepaid Service Payment Update pursuant to Section 7.14.

      (i) Deliveries. Seller shall have delivered to Buyer executed copies of
   the Collateral Agreements.

      (j) State Tax Certificates. Buyer shall have received from Seller
   certified copies of the completed and date stamped applications or filings
   made in satisfaction of the covenant in Section 7.19(e) or, if received,
   true and complete copies of the State Tax Certificates.

   8.3 Additional Conditions to Obligations of Seller. The obligations of
Seller to consummate and effect the transactions contemplated hereby shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Seller:

      (a) Representations, Warranties and Covenants. (i) The representations
   and warranties of Parent and Buyer in this Agreement shall have been true
   and correct on the date they were made and shall be true and correct on and
   as of the Closing Date as though such representations and warranties were
   made on and as of such date, except in either case to the extent that the
   aggregate of all breaches thereof has not had and would not reasonably be
   expected to have a material adverse effect on Parent or Buyer (without
   giving effect to any limitation as to "materiality" or "material adverse
   effect" set forth therein) and except to the extent such representations and
   warranties address matters as of a particular date or period, in which case
   such representations and warranties shall be true and correct as of such
   date or period (and in any event, subject to the foregoing material adverse
   effect qualification), and (ii) Parent and Buyer shall have performed and
   complied in all material respects with all covenants and obligations under
   this Agreement required to be performed and complied with by Parent or Buyer
   as of the Closing.

      (b) Certificate of Parent and Buyer. Seller shall have received a
   certificate, validly executed by an executive officer of both Parent and
   Buyer for and on behalf of each of them (the "Certificate of Buyer"), to the
   effect that, as of the Closing, each of the conditions specified in Section
   8.3(a) have been satisfied.

      (c) Certificate of Secretaries of Parent and Buyer. Seller shall have
   received certificates, validly executed by the Secretaries of Parent and
   Buyer, certifying as to (i) the terms and effectiveness of the certificates
   of incorporation and the bylaws of Parent and Buyer, and (ii) the valid
   adoption of resolutions of the Board of Directors of Parent and Buyer
   approving this Agreement.

      (d) Deliveries. Buyer shall have delivered to Seller executed copies of
   the Collateral Agreements.

      (e) Securities Approvals. Parent shall have received all state securities
   laws or "blue sky" permits and authorizations necessary to issue the Stock
   Consideration.

      (f) Effectiveness of Registration Statement. The Form S-4 Registration
   Statement shall have become effective in accordance with the provisions of
   the Securities Act, and no stop order shall have been issued and still be
   pending, and no proceeding for that purpose shall have been initiated or be
   threatened by the SEC with respect to the Form S-4 Registration Statement,
   and Parent shall have duly authorized and issued and made available for
   delivery to Seller at the Closing a stock certificate that in form and
   substance is

                                     A-32

<PAGE>

   sufficient to enable Seller to immediately sell on the open market the
   shares of Parent's common stock comprising the Stock Consideration;
   provided, however, that in the event that, at any time prior to the
   effectiveness of the Form S-4 Registration Statement under the Securities
   Act, the SEC shall take the position that Form S-4 is not available or is
   otherwise inappropriate with respect to the registration of the Stock
   Consideration, this condition shall be deemed to have been satisfied if
   Parent duly and validly issues the Stock Consideration to Seller in a
   transaction exempt from the registration requirements of the Securities Act,
   and provides Seller with evidence reasonably satisfactory to Seller that
   Parent is prepared to file the Resale Registration Statement immediately
   following the Closing.

                                   ARTICLE 9

          SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION

   9.1 Survival of Representations, Warranties and Covenants. The
representations and warranties of Seller contained in this Agreement, or in the
Certificate of Seller, shall terminate on the earliest of (i) the first
anniversary of the Closing Date, (ii) the date on which Seller files its
certificate of dissolution with the Delaware Secretary of State and (iii) the
date 15 days following the delivery of a Dissolution Notice; provided, however,
that a termination pursuant to clause (iii) shall be rescinded if a certificate
of dissolution is not filed with the Delaware Secretary of State within 30 days
following the delivery of such Dissolution Notice. A "Dissolution Notice" shall
mean a notice delivered by Seller to Buyer indicating Seller's good faith
intention to file a certificate of dissolution with the Delaware Secretary of
State within 30 days. The representations and warranties of Buyer contained in
this Agreement, or in any certificate or other instrument delivered pursuant to
this Agreement, shall terminate at the Closing.

   9.2 Indemnification. Seller agrees to indemnify and hold Parent and Buyer
and their respective officers, directors and affiliates (collectively, the
"Indemnified Parties"), harmless against all claims, losses, liabilities,
damages, deficiencies, costs and expenses, including reasonable attorneys' fees
and expenses of investigation and defense (hereinafter individually a "Loss"
and collectively "Losses") incurred or sustained by the Indemnified Parties, or
any of them, arising out of (i) any breach or inaccuracy of a representation or
warranty of Seller contained in this Agreement as of the Existing Agreement
Date (or such other particular date or period that is addressed by such
representation or warranty) and as of the Closing Date or in the Certificate of
Seller, (ii) any failure by Seller to perform or comply with any covenant given
or made by it contained in this Agreement, or (iii) any failure on the part of
Seller to perform and discharge in full the Excluded Liabilities.

   9.3 Indemnification Procedure. An Indemnified Party seeking indemnification
pursuant to Section 9.2 shall deliver an Officer's Certificate to Seller.
Seller may object to such claim by written notice to such Indemnified Party
specifying the basis for Seller's objection, within thirty (30) days following
receipt by Seller of notice from such Indemnified Party regarding such claim.
If no objection is made, Seller shall promptly pay the claim. For the purposes
hereof, "Officer's Certificate" shall mean a certificate signed in good faith
by any executive officer of Buyer: (1) stating that Buyer has paid, sustained,
incurred, or properly accrued, or reasonably anticipates that it will have to
pay, sustain, incur, or accrue Losses, and (2) specifying in reasonable detail
the individual items of Losses included in the amount so stated, the date each
such item was paid, sustained, incurred, or properly accrued, or the basis for
such anticipated liability, and the nature of the misrepresentation, breach of
warranty or covenant or Excluded Liability to which such item is related.

   9.4 Resolution of Conflicts; Arbitration.

      (a) In case Seller shall object in writing to any claim or claims made in
   any Officer's Certificate to recover Losses within thirty (30) days after
   delivery of such Officer's Certificate, Seller and Buyer shall attempt in
   good faith to agree upon the rights of the respective parties with respect
   to each of such claims. If Seller and Buyer should so agree, a memorandum
   setting forth such agreement shall be prepared and signed by both parties
   and Seller shall promptly pay to the Indemnified Party the amount of the
   claim agreed upon, if any.

                                     A-33

<PAGE>

      (b) If no such agreement can be reached after good faith negotiation and
   prior to sixty (60) days after delivery of an Officer's Certificate, Buyer
   or Seller may demand arbitration of the matter unless the amount of the Loss
   is at issue in pending litigation with a third party, in which event
   arbitration shall not be commenced until such amount is ascertained or both
   parties agree to arbitration, and in either such event the matter shall be
   settled by arbitration conducted by one arbitrator mutually agreeable to
   Buyer and Seller. In the event that, within thirty (30) days after
   submission of any dispute to arbitration, Buyer and Seller cannot mutually
   agree on one arbitrator, then, within fifteen (15) days after the end of
   such thirty (30) day period, Buyer and Seller shall each select one
   arbitrator. The two arbitrators so selected shall select a third arbitrator.
   If Seller does not select an arbitrator during this fifteen (15) day period,
   then the parties agree that the arbitration will be conducted by one
   arbitrator selected by Buyer.

      (c) Any such arbitration shall be held in Santa Clara County, California,
   under the rules then in effect of the American Arbitration Association. The
   arbitrator(s) shall determine how all expenses relating to the arbitration
   shall be paid, including without limitation, the respective expenses of each
   party, the fees of each arbitrator and the administrative fee of the
   American Arbitration Association. The arbitrator or arbitrators, as the case
   may be, shall set a limited time period and establish procedures designed to
   reduce the cost and time for discovery while allowing the parties an
   opportunity, adequate in the sole judgment of the arbitrator or majority of
   the three arbitrators, as the case may be, to discover relevant information
   from the opposing parties about the subject matter of the dispute. The
   arbitrator or a majority of the three arbitrators, as the case may be, shall
   rule upon motions to compel or limit discovery and shall have the authority
   to impose sanctions, including attorneys' fees and costs, to the same extent
   as a competent court of law or equity, should the arbitrators or a majority
   of the three arbitrators, as the case may be, determine that discovery was
   sought without substantial justification or that discovery was refused or
   objected to without substantial justification. The decision of the
   arbitrator or a majority of the three arbitrators, as the case may be, as to
   the validity and amount of any claim in such Officer's Certificate shall be
   final, binding, and conclusive upon the parties to this Agreement. Such
   decision shall be written and shall be supported by written findings of fact
   and conclusions which shall set forth the award, judgment, decree or order
   awarded by the arbitrator(s). Within thirty (30) days of a decision of the
   arbitrator(s) requiring payment by one party to another, such party shall
   make the payment to such other party.

      (d) Judgment upon any award rendered by the arbitrator(s) may be entered
   in any court having jurisdiction.

   9.5 Third-Party Claims. In the event Buyer becomes aware of a third-party
claim which Buyer reasonably believes is reasonably likely to result in a
demand for indemnification pursuant to this ARTICLE 9, Buyer shall notify
Seller in writing of such claim, and Seller shall be entitled, at its expense,
to participate in, but not to determine or conduct, the defense of such claim.
Buyer shall have the right in its sole discretion to conduct the defense of and
settle any such claim; provided, however, that except with the written consent
of Seller, no settlement of any such claim with third-party claimants shall be
determinative of the amount of Losses relating to such matter. In the event
that Seller has consented to any such settlement, Seller shall have no power or
authority to object under any provision of this ARTICLE 9 to the amount of any
claim by Buyer against Seller with respect to such settlement.

   9.6 Maximum Payments; Remedy

      (a) Except with respect to (A) any Excluded Liabilities, and (B) Taxes
   referred to in Section 3.4 and 5.14 that are owed by Seller and which Buyer
   may become obligated to pay, the aggregate maximum amount the Indemnified
   Parties may recover from Seller pursuant to the indemnity set forth in
   Section 9.2 or otherwise for Losses, or otherwise in respect of any breaches
   of any of the representations, warranties or covenants of Seller hereunder
   or in the Certificate of Seller, shall be limited to $3,300,000.

      (b) The maximum amount an Indemnified Party may recover from Seller in
   respect of Losses arising out of any Excluded Liabilities shall not be
   limited.

                                     A-34

<PAGE>

      (c) Without limiting the effect of any of the other limitations set forth
   herein, Seller shall not be required to make any indemnification payment
   hereunder until such time as the total amount of all Losses that have been
   suffered or incurred by any one or more of the Indemnified Parties and to
   which any Indemnified Party is entitled to indemnification hereunder, or to
   which any one or more of the Indemnified Parties has or have otherwise
   become subject with respect to which any Indemnified Party is entitled to
   indemnification hereunder, exceeds $100,000 in the aggregate, at which point
   Seller shall indemnify the full amount of such claims and all claims
   thereafter, subject to any other applicable limitations under this ARTICLE
   9.

      (d) The right of Parent and Buyer hereto and their related Indemnified
   Parties to assert indemnification claims and receive indemnification
   payments pursuant to this ARTICLE 9 shall be the sole and exclusive right
   and remedy exercisable by Parent and Buyer with respect to any breach by
   Seller of any representation, warranty or covenant hereunder or other matter
   with respect to which such indemnification is provided; provided, however,
   that the foregoing clause of this sentence shall not be deemed a waiver by
   any Indemnified Party of any right to specific performance or injunctive
   relief, or any right or remedy they may otherwise have against any Person
   that has committed fraud with respect to this Agreement.

      (e) Nothing herein shall limit the liability of Seller, Buyer or Parent
   for any breach or inaccuracy of any representation, warranty or covenant
   contained in this Agreement if the Closing does not occur.

   9.7 Liability of Parent and Buyer. The fact that neither Parent nor Buyer is
obligated to indemnify Seller hereunder shall not be construed so as to limit
the rights or remedies that Seller may otherwise have against Parent or Buyer,
whether under this Agreement or applicable law, in the event of (a) any breach
or inaccuracy of a representation or warranty of Parent or Buyer contained in
this Agreement or in the Certificate of Buyer, (ii) any failure by Parent or
Buyer to perform or comply with any covenant given or made by either of them
contained in this Agreement, or (iii) any failure on the part of Buyer to
perform and discharge in full the Assumed Liabilities.

                                  ARTICLE 10

                       TERMINATION, AMENDMENT AND WAIVER

   10.1 Termination. Except as provided in Section 10.3, this Agreement may be
terminated and the transactions contemplated hereby abandoned at any time prior
to the Closing whether before or after the requisite approval of the
stockholders of Seller:

      (a) by mutual written consent duly authorized by the Boards of Directors
   of Parent, Buyer and Seller;

      (b) by any party if the Closing Date shall not have occurred for any
   reason (i) in the event that the SEC has determined to review the Form S-4
   Registration Statement, by December 31, 2001, or (ii) in the event the SEC
   has determined not to review the Form S-4 Registration Statement, by
   November 30, 2001 (in either case, the "End Date"); provided, however, that
   the right to terminate this Agreement under this Section 10.1(b) shall not
   be available to any party whose (or whose affiliate's) action or failure to
   act has been a principal cause of or resulted in the failure of the Closing
   Date to occur on or before such date and such action or failure to act
   constitutes a material breach of this Agreement;

      (c) by any party if a Governmental Entity shall have issued an order,
   decree or ruling or taken any other action, in any case having the effect of
   permanently restraining, enjoining or otherwise prohibiting the transactions
   contemplated hereby, which order, decree, ruling or other action is final
   and nonappealable;

      (d) by any party if (i) the Seller Stockholders' Meeting (including any
   adjournments and postponements thereof) shall not have been held and
   completed prior to the End Date or shall have been held and completed and
   the stockholders of Seller shall have taken a final vote on a proposal to
   adopt and

                                     A-35

<PAGE>

   approve this Agreement and the transactions contemplated by this Agreement;
   and (ii) this Agreement and the transactions contemplated by this Agreement
   shall not have been adopted and approved at the Seller Stockholders' Meeting
   (and shall not have been adopted and approved at any adjournment or
   postponement thereof) by the required approval of the stockholders of
   Seller; provided, however, that the right to terminate this Agreement under
   this Section 10.1(d) shall not be available to Seller where the failure to
   hold the Seller Stockholders' Meeting and to obtain Seller stockholder
   approval shall have been caused by (A) the action or failure to act of
   Seller and such action or failure to act constitutes a breach by Seller of
   this Agreement or (B) a material breach of any Support Agreement by any
   party thereto other than Buyer; provided further, however, that the right to
   terminate this Agreement under this Section 10.1(d) shall not be available
   to Parent or Buyer where the failure to hold the Seller Stockholders'
   Meeting and to obtain Seller stockholder approval shall have been caused by
   the action or failure to act of Parent or Buyer and such action or failure
   to act constitutes a breach by Parent or Buyer of this Agreement;

      (e) by Buyer (at any time prior to the adoption and approval of this
   Agreement and the approval of the Dissolution by the required vote of the
   stockholders of Seller) if a Seller Triggering Event (as defined below)
   shall have occurred;

      (f) by Seller (at any time prior to the adoption and approval of this
   Agreement and the approval of the Dissolution by the required vote of the
   stockholders of Seller) if Parent shall have breached (and failed to cure
   within 10 days after notice of such breach is delivered by Seller to Parent)
   any of its obligations under the Funding Agreement;

      (g) by Seller (at any time prior to the adoption and approval of this
   Agreement and the approval of the Dissolution by the required vote of the
   stockholders of Seller) in the event that (i) at any time prior to the
   effectiveness of the Form S-4 Registration Statement under the Securities
   Act, the SEC shall take the position that Form S-4 is not available or is
   otherwise inappropriate with respect to the registration of the Stock
   Consideration, and (ii) Parent shall not have obtained the Waiver within ten
   (10) business days following the taking of such position by the SEC;

      (h) by Buyer, upon a breach of any representation, warranty, covenant or
   agreement on the part of Seller set forth in this Agreement, or if any
   representation or warranty of Seller shall have become untrue, in either
   case such that the conditions set forth in Section 8.2(a) would not be
   satisfied by the End Date, provided, that if such inaccuracy in Seller's
   representations and warranties or breach by Seller is curable by Seller
   through the exercise of its commercially reasonable efforts, then Buyer may
   not terminate this Agreement under this Section 10.1(h) prior to the End
   Date, provided Seller continues to exercise commercially reasonable efforts
   to cure such breach (it being understood that Buyer may not terminate this
   Agreement pursuant to this paragraph (h) if it shall have materially
   breached this Agreement or if such breach by Seller is cured prior to the
   End Date); and

      (i) by Seller, upon a breach of any representation, warranty, covenant or
   agreement on the part of Parent or Buyer set forth in this Agreement, or if
   any representation or warranty of Parent or Buyer shall have become untrue,
   in either case such that the conditions set forth in Section 8.3(a) would
   not be satisfied by the End Date, provided, that if such inaccuracy in
   Parent's or Buyer's representations and warranties or breach by Parent or
   Buyer is curable by Parent or Buyer through the exercise of its commercially
   reasonable efforts, then Seller may not terminate this Agreement under this
   Section 10.1(i) prior to the End Date, provided Parent or Buyer (as the case
   may be) continues to exercise commercially reasonable efforts to cure such
   breach (it being understood that Seller may not terminate this Agreement
   pursuant to this paragraph (i) if it shall have materially breached this
   Agreement or if such breach by Parent or Buyer is cured prior to the End
   Date).

   For the purposes of this Agreement, a "Seller Triggering Event" shall be
deemed to have occurred if: (i) the Board of Directors of Seller or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Buyer its recommendation in favor of the
adoption and approval of this Agreement or the approval of the Dissolution;
(ii) Seller shall have failed to include in the Proxy Statement/

                                     A-36

<PAGE>

Prospectus the recommendation of the Board of Directors of Seller in favor of
the adoption and approval of the Agreement and the approval of the Dissolution;
(iii) the Board of Directors of Seller fails to reaffirm its recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Dissolution within ten (10) days after Buyer requests in writing that such
recommendation be reaffirmed following the public announcement of an
Acquisition Proposal; (iv) the Board of Directors of Seller or any committee
thereof shall have approved or recommended any Acquisition Proposal; or (v) a
tender or exchange offer relating to securities of Seller shall have been
commenced by a Person unaffiliated with Buyer and Seller shall not have sent to
its securityholders pursuant to Rule 14e-2 promulgated under the Securities
Act, within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that Seller recommends
rejection of such tender or exchange offer.

   10.2 Notice of Termination. Any termination of this Agreement under Section
10.1 will be effective immediately upon the delivery of written notice thereof
by the terminating party to the other parties hereto (or, in the case of
termination pursuant to Section 10.1(h) or Section 10.1(i), on the date
specified therein).

   10.3 Effect of Termination. In the event of termination of this Agreement as
provided in Section 10.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of any party hereto, or its
affiliates, officers, directors or stockholders, provided that each party shall
remain liable for any breaches of this Agreement prior to its termination; and
provided further that, the provisions of Section 7.4, Section 7.10, ARTICLE 11
and this Section 10.3 of this Agreement shall remain in full force and effect
and survive any termination of this Agreement. Notwithstanding the foregoing,
no termination of this Agreement shall relieve any party from liability for any
breach hereof prior to such termination.

   10.4 Amendment. This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of each of the
parties hereto.

   10.5 Extension; Waiver. At any time prior to the Closing, Buyer, on the one
hand, and Seller, on the other hand, may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations of the other
party hereto, (ii) waive any inaccuracies in the representations and warranties
made to such party contained herein or in any document delivered pursuant
hereto, and (iii) waive compliance with any of the agreements or conditions for
the benefit of such party 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 an instrument in writing signed on behalf of such party.

                                  ARTICLE 11

                                    GENERAL

   11.1 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
messenger or courier service, or mailed by registered or certified mail (return
receipt requested) or sent via facsimile (with acknowledgment of complete
transmission) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice); provided, however,
that notices sent by mail will not be deemed given until received:

      (a) if to Buyer, to:

                             Palm, Inc.
                             5470 Great America Parkway
                             Santa Clara, California 95052
                             Attention: General Counsel
                             Telephone No.: (408) 878-9000
                             Facsimile No.: (408) 878-2750

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                             with a copy to:
                             Wilson Sonsini Goodrich & Rosati
                             Professional Corporation
                             650 Page Mill Road
                             Palo Alto, California 94304
                             Attention: Katharine A. Martin, Esq.
                                     Robert Sanchez, Esq.
                             Telephone No.: (650) 493-9300
                             Facsimile No.: (650) 493-6811

      (b) if to Seller, to:

                             Be Incorporated
                             800 El Camino Real
                             Menlo Park, California 94025
                             Attention: General Counsel
                             Telephone No.: (650) 462-4100
                             Facsimile No.: (650) 462-4129

                             with a copy to:
                             Cooley Godward LLP
                             5 Palo Alto Square
                             3000 El Camino Real
                             Palo Alto, California 94306
                             Attention: David Lipkin, Esq.
                             Telephone No.: (650) 843-5000
                             Facsimile No.: (650) 849-7400

   11.2 Entire Agreement; Assignment. This Agreement, the Exhibits hereto, the
Seller Disclosure Schedule, the Parent Disclosure Schedule, the Non-Disclosure
Agreement, the Collateral Agreements and the documents and instruments and
other agreements among the parties hereto referenced herein: (i) constitute the
entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings both written and oral,
among the parties with respect to the subject matter hereof; (ii) are not
intended to confer upon any other person any rights or remedies hereunder; and
(iii) shall not be assigned by operation of law or otherwise, except that Buyer
may assign its rights and delegate its obligations hereunder to Parent. The
Existing Agreement is hereby amended and restated in its entirety by this
Agreement, and each of Seller, Buyer and Parent agree that, without limiting
any liability that any party may have by reason of any breach of the Existing
Agreement, this Agreement shall from and after the date first set forth above
supersede in its entirety the Existing Agreement.

   11.3 Severability. In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further
agree to replace such void or unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.

   11.4 Other Remedies. Any and all remedies herein expressly conferred upon a
party will be deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the exercise by a
party of any one remedy will not preclude the exercise of any other remedy.

   11.5 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, REGARDLESS OF THE LAWS

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THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF.

   11.6 Jurisdiction and Venue. Each of the parties hereto irrevocably consents
to the exclusive jurisdiction and venue of any court within Santa Clara County,
State of California, in connection with any matter based upon or arising out of
this Agreement or the matters contemplated herein, agrees that process may be
served upon them in any manner authorized by the laws of the State of
California for such persons and waives and covenants not to assert or plead any
objection which they might otherwise have to such jurisdiction, venue and such
process.

   11.7 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.

   11.8 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY AND ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF ANY PARTY HERETO IN NEGOTIATION,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

   11.9 Fees and Expenses. Except as otherwise provided herein, whether or not
the transactions contemplated herein are consummated, all expenses, including
without limitation all legal, accounting, financial advisory, consulting and
other fees, incurred in connection with the negotiation or effectuation of this
Agreement or consummation of such transactions, shall be the obligation of the
respective party incurring such expenses.

   11.10 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

                 [Remainder of Page Intentionally Left Blank]

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<PAGE>

   IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the date first above written.

                                          PALM, INC.

                                          By: /s/ Judy Bruner
                                              _________________________________

                                          Name: Judy Bruner
                                                _______________________________

                                          Title: Senior Vice President and
                                                _______________________________
                                             Chief Financial Officer
                                                _______________________________

                                          BE INCORPORATED

                                          By: /s/ Steve Sakoman
                                              _________________________________

                                          Name: Steve Sakoman
                                                _______________________________

                                          Title: Chief Operating Officer
                                                _______________________________

                                          ECA SUBSIDIARY ACQUISITION
                                          CORPORATION

                                          By: /s/ Stephen Yu
                                              _________________________________

                                          Name: Stephen Yu
                                                _______________________________

                                          Title: President
                                                _______________________________

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