AGREEMENT AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (this Agreement) is made and entered into as of January 31, 2004 (the Agreement Date), by and among Sonic Solutions, a California corporation (Parent), Snow Acquisition Corporation, a California corporation and a wholly owned subsidiary of Parent (Sub), and InterActual Technologies, Inc., a California corporation (the Company).

RECITALS

A. Subject to the terms and conditions of this Agreement, Sub will merge with and into the Company in a reverse triangular merger (the Merger), with the Company to be the surviving corporation of the Merger (the Surviving Corporation), all pursuant to the terms and conditions of this Agreement and an Agreement of Merger substantially in the form of Exhibit A (the Agreement of Merger) and the applicable provisions of the laws of the State of California. Upon the effectiveness of the Merger, the outstanding capital stock of the Company will be converted into the right to receive cash consideration as provided in this Agreement and the Agreement of Merger.

B. The board of directors of the Company (i) has determined that the Merger and all related transactions are advisable and fair to, and in the best interests of, the Company and its shareholders, (ii) has approved this Agreement, the Merger and the other transactions contemplated by this Agreement, and (iii) has determined to recommend that the shareholders of the Company adopt and approve this Agreement and approve the Merger.

AGREEMENT

The parties to this Agreement, intending to be legally bound, agree as follows:

1. DEFINITIONS

1.1 Definitions. As used in this Agreement, the terms below shall have the following meanings. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

Action means any action, suit, litigation, proceeding, arbitration, governmental audit, criminal prosecution or unfair labor practice charge, and any claim, inquiry or investigation of which written notice has been provided to the Company.

Aggregate Series B Preference Amount means an aggregate amount equal to the Series B Preference Amount payable with respect to all of the Series B Shares in accordance with Section 2.1.1(b)(i).

Aggregate Series C Preference Amount means an aggregate amount equal to the Series C Preference Amount payable with respect to all of the Series C Shares in accordance with Section 2.1.1(a)(i).

Applicable Law means, collectively, all applicable federal, state, foreign or local laws, ordinances, regulations and rules, and all orders, writs, injunctions, awards, judgments and decrees applicable to the Company or to the Companys assets, properties and business (and any regulations promulgated thereunder).

Code means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

Common Shares means the shares of Common Stock of the Company.

Company Ancillary Agreements means the Voting Agreements and any and all other agreements that are required to be executed by Company pursuant to this Agreement.

Company Intellectual Property means any Intellectual Property that is used or held for use in the business of the Company as currently conducted or as currently proposed to be conducted with respect to the Companys products and services currently under development.

Company Option Plans means the Companys 1999 Stock Option Plan and the Companys 2000 Stock Option Plan.

Company Options means all outstanding options issued by the Company to purchase shares of the capital stock of the Company, including all outstanding options granted under the Company Option Plan and all outstanding options granted outside of the Company Option Plan.

Company Registered Intellectual Property means all of the Registered Intellectual Property owned by, under obligation of assignment to, or filed in the name of, the Company.

Company Warrants means all outstanding instruments issued by the Company which are identified as warrants to purchase shares of the capital stock of the Company.

Encumbrance means any claim, lien, pledge, option, charge, easement, security interest, hypothecation, deed of trust, mortgage, conditional sales agreement, encumbrance, infringement, interference, right of first refusal, preemptive right, community property interest or restriction of any nature (including any restriction on the voting of any security, any restriction on the transfer of any security or other asset, any restriction on the receipt of any income derived from any asset, any restriction on the use of any asset and any restriction on the possession, exercise or transfer of any other attribute of ownership of any asset), or other right of third parties, whether voluntarily incurred or arising by operation of law, and includes, without limitation, any agreement to give any of the foregoing in the future, and any contingent sale or other title retention agreement or lease in the nature thereof.

Fully Diluted Number means the aggregate number of shares of the Companys capital stock that are issued and outstanding immediately prior to the Effective Time, including all Company Options and Company Warrants exercised prior to the Effective Time (each, on an as converted to Common Stock basis).

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Governmental Authority means any court, administrative agency or commission or other governmental authority or instrumentality, foreign or domestic.

Identified Employees means Chris Brown, Todd Collart, Allan Lamkin, Clint Ludeman and Chris Neely.

Intellectual Property means any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States, international and foreign patents and applications therefor and all reissues, divisions, divisionals, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and all patents, applications, documents and filings claiming priority to or serving as a basis for priority thereof; (ii) all inventions (whether or not patentable), invention disclosures, improvements, trade secrets, proprietary information, know how, computer software programs (in both source code and object code form), technology, technical data and customer lists, tangible or intangible proprietary information, and all documentation relating to any of the foregoing; (iii) all copyrights, copyrights registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all industrial designs and any registrations and applications therefor throughout the world; (v) all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (vi) all databases and data collections and all rights therein throughout the world; (vii) all moral and economic rights of authors and inventors, however denominated, throughout the world; (viii) all Web addresses, sites and domain names and numbers; and (ix) any similar or equivalent rights to any of the foregoing anywhere in the world.

Knowledge means, with respect to any fact, circumstance, event or other matter in question, the actual knowledge of such fact, circumstance, event or other matter of Todd R. Collart; provided that such person shall be deemed to have made reasonable inquires of those directors, officers, employees and consultants of the Company whom such person reasonably believes would have actual knowledge of the matters represented.

Liability means any direct or indirect liability, indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or endorsement of or by any Person of any type, known or unknown, and whether accrued, absolute, contingent, matured, unmatured or other.

Material Adverse Effect on the Company means any change, event, circumstance or effect, whether or not such change, event, circumstance or effect is caused by or arises in connection with a breach of a representation, warranty, covenant or agreement of the Company in this Agreement, that is materially adverse to the current or future business, assets (including intangible assets), results of operations, financial condition or prospects of the Company, or to the transactions contemplated by this Agreement.

Merger Consideration means an amount of cash equal to $8,800,000.00 United States dollars.

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Person means any person or entity, including without limitation any individual, trustee, corporation, partnership, limited partnership, limited liability company, trust, unincorporated organization, business association, firm, joint venture or Governmental Authority.

Preferred Shares means the Series A Shares, the Series B Shares and the Series C Shares.

Principal Shareholders means each of Christopher F. Brown, Todd R. Collart, Collart Family Living Trust dated 12/24/86, Fenwick Family Trust U/D/T dated 3/26/84, Janet R. Green, Cynthia A. Halstead, Macrovision Corporation, Ritek Corporation and Warner Music Group Inc.

Publicly Available Software means each of (i) any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software (e.g. Linux), or pursuant to similar licensing and distribution models; and (ii) any software that requires as a condition of use, modification, and/or distribution of such software that such software or other software incorporated into, derived from, or distributed with such software (a) be disclosed or distributed in source code form; (b) be licensed for the purpose of making derivative works; or (c) be redistributable at no or minimal charge. Publicly Available Software includes, without limitation, software licensed or distributed pursuant to any of the following licenses or distribution models similar to any of the following: (a) GNUs General Public License (GPL) or Lesser/Library GPL (LGPL), (b) the Artistic License (e.g. PERL), (c) the Mozilla Public License, (d) the Netscape Public License, (e) the Sun Community Source License (SCSL), (f) the Sun Industry Standards License (SISL), (g) the BSD License and (h) the Apache Software License.

Registered Intellectual Property means all United States, international and foreign: (i) patents and patent applications (including provisional applications and design patents and applications) and all reissues, divisions, divisionals, renewals, extensions, counterparts, continuations and continuations-in-part thereof, and all patents, applications, documents and filings claiming priority thereto or serving as a basis for priority thereof; (ii) registered trademarks, service marks, applications to register trademarks, applications to register service marks, intent-to-use applications, or other registrations or applications related to trademarks; (iii) registered copyrights and applications for copyright registration; (iv) domain names and Internet numbers; and (v) any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any state, government or other public legal authority.

Remaining Consideration means the Merger Consideration less the sum of (i) the Aggregate Series B Preference Amount plus (ii) the Aggregate Series C Preference Amount.

Remaining Consideration Per Share means the Remaining Consideration divided by the Fully Diluted Number.

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Series A Shares means the shares of Series A Preferred Stock of the Company.

Series B Shares means the shares of Series B Preferred Stock of the Company.

Series C Shares means the shares of Series C Preferred Stock of the Company.

Shareholders Holdback Contribution means, with respect to each shareholder of the Company, the product obtained by multiplying (a) the Holdback Amount (as defined in Section 2.2(d)) by (b) a fraction, the numerator of which is the total amount of cash otherwise payable to such shareholder pursuant to the provisions of Section 2.1.1, and the denominator of which is the Merger Consideration.

Voting Agreements means the Voting Agreements in the form of Exhibit 5.4 to be executed by each of the Principal Shareholders in connection with this Agreement.

1.2 Other Definitions. Other capitalized terms defined elsewhere in this Agreement and not defined in Section 1.1 shall have the meanings given to such terms in this Agreement. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the reference.

2. PLAN OF REORGANIZATION

2.1 The Merger. Subject to the terms and conditions of this Agreement, Sub will be merged with and into the Company pursuant to this Agreement and the Agreement of Merger and in accordance with applicable provisions of the laws of the State of California as follows:

2.1.1 Capital Shares. Upon the filing of the Agreement of Merger with the Secretary of State of the State of California (the Effective Time), by virtue of the Merger and without any action on the part of Parent, Sub, the Company or any shareholder of the Company, and subject to the terms and conditions of this Agreement, each share of capital stock of the Company issued and outstanding as of the Effective Time, other than Dissenting Shares (as defined below), shall be cancelled and extinguished and automatically converted into the right to receive, upon surrender of the stock certificates representing such shares of capital stock of the Company, an amount of cash as follows:

(a) Series C Preferred Stock. Each Series C Share issued and outstanding immediately prior to the Effective Time shall be entitled to receive the sum of:

(i) $1.30 plus the amount of all declared but unpaid dividends with respect to such Series C Share as of the Effective Time (such sum, the Series C Preference Amount); plus

(ii) the lesser of $1.30 and an amount equal to the Remaining Consideration Per Share.

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The sum of the amounts set forth in subsections (i) and (ii) above shall be referred to herein as the Series C Stock Amount. Dollar amounts for Series C Shares shall be adjusted to reflect stock dividends, stock splits, combinations, recapitalizations or the like with respect to the Series C Shares after the date of this Agreement.

(b) Series B Preferred Stock. Each Series B Share issued and outstanding immediately prior to the Effective Time shall be entitled to receive the sum of:

(i) $1.20 plus the amount of all declared but unpaid dividends with respect to such Series B Share as of the Effective Time (such sum, the Series B Preference Amount); plus

(ii) the lesser of $1.20 and an amount equal to the Remaining Consideration Per Share.

The sum of the amounts set forth in subsections (i) and (ii) above shall be referred to herein as the Series B Stock Amount. Dollar amounts for Series B Shares shall be adjusted to reflect stock dividends, stock splits, combinations, recapitalizations or the like with respect to the Series B Shares after the date of this Agreement.

(c) Common Stock. Each Common Share issued and outstanding immediately prior to the Effective Time shall be entitled to receive an amount equal to the Remaining Consideration Per Share (the Common Stock Amount).

2.1.2 Options. Each Company Option that has not been exercised prior to the Effective Time shall terminate prior to or at the Effective Time and be of no further force and effect. At the Effective Time, neither Parent nor the Surviving Corporation shall assume any Company Option that had not been exercised prior to the Effective Date. As soon as practicable following the Agreement Date, the Company shall cause a written notice to be delivered to all option holders as required under the Company Option Plans or under any stock option agreement.

2.1.3 Warrants. Each Company Warrant to purchase shares of Common Stock or Preferred Stock of the Company that has not been exercised prior to the Effective Time shall terminate prior to or at the Effective Time and be of no further force and effect. As soon as practicable following the Agreement Date, the Company shall cause a written notice to be delivered to all warrant holders as required under any Company Warrant or other agreement.

2.1.4 Cancellation of Treasury Stock. All shares of capital stock of the Company that are owned by the Company as treasury stock immediately prior to the Effective Time shall automatically be cancelled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

2.1.5 Adjustments for Capital Changes. If, prior to the Merger, the Company recapitalizes through a split-up of its outstanding shares into a greater number, or a combination of its outstanding shares into a lesser number, reorganizes, reclassifies or otherwise

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changes its outstanding shares into the same or a different number of shares of other classes (other than through a split-up or combination of shares provided for in the previous clause), or declares a dividend on its outstanding shares payable in shares or securities convertible into shares, the cash amounts into which the capital stock of the Company is to be converted will be adjusted appropriately so as to maintain the proportionate interests of the holders of Common Shares, on the one hand, and Preferred Shares, on the other hand. In no event shall Parent be obligated to pay an aggregate amount in excess of the Merger Consideration.

2.1.6 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary, each holder of Common Shares or Preferred Shares who has complied with all requirements for perfecting shareholders dissenters rights, as set forth in Chapter 13 of the California General Corporation Law (the California Law), will not be paid the cash consideration as provided in Section 2.1.1 above but instead will be entitled to their rights under the California Law with respect to such shares (Dissenting Shares). The cash consideration payable to the other shareholders of the Company as provided in Section 2.1.1 above shall not be increased as a result of any such amounts not paid as a result of any shareholder exercising their rights under the California Law with respect to their Dissenting Shares.

2.2 Closing Payments.

(a) Payment Agent. Mellon Investor Services LLC shall serve as payment agent (the Payment Agent) in connection with the Merger.

(b) Certificate of Closing Consideration. The calculation of the final Fully Diluted Number, the Aggregate Series C Participation Amount, the Series C Stock Amount, the Series B Participation Amount, the Series B Stock Amount, the Common Stock Amount, the Remaining Consideration, the Remaining Consideration Per Share, the Holdback Amount, each Shareholders Holdback Contribution and the other applicable amounts necessary to calculate the foregoing shall be set forth in a certificate agreed to by the parties prior to the Closing. Agreement on the final calculations shall not be unreasonably withheld or delayed.

(c) Deposits with the Payment Agent. At least one (1) business day prior to the Closing Date, Parent shall deposit with the Payment Agent an amount of cash equal to (i) the sum of the Aggregate Series C Preference Amount, the Aggregate Series B Preference Amount and the aggregate Remaining Consideration to be paid to all of the holders of capital stock of the Company, other than holders of Dissenting Shares, less (ii) the Holdback Amount (as defined below) pursuant to the terms set forth in a Disbursing Agent Agreement to be entered into between the Payment Agent and Parent (the Payment Agent Agreement) substantially in the form of Exhibit 2.2(c). Following the Effective Time, and subject to the exchange procedure provisions of Section 7.2, the Payment Agent will pay to each holder of the capital stock of the Company, other than holders of Dissenting Shares, an aggregate amount equal to the Series C Stock Amount for each share of Series C Preferred Stock of the Company held by such holder, if any, the Series B Stock Amount for each share of Series B Preferred Stock of the Company held by such holder, if any, and the Common Stock Amount for each share of Common Stock of the Company held by such holder, if any, less, in each case, such Shareholders Holdback Contribution (the Closing Consideration). Payments of the Closing Consideration made by the Payment Agent to each of such holders shall be rounded to the nearest whole cent (with $0.005 being rounded up) for each certificate held by such holder.

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(d) Holdback Amount. Parent shall withhold an aggregate amount of cash equal to $880,000.00 of the aggregate cash payable to the shareholders of the Company in the Merger pursuant to Section 2.1.1 (such withheld amount of cash being referred to as the Holdback Amount). The portion of the Holdback Amount withheld by Parent from the amount payable to each shareholder of the Company shall be an amount equal to such Shareholders Holdback Contribution. The Holdback Amount will be paid by Parent to the shareholders of the Company twelve (12) months following the Closing Date (the Holdback Release Date), subject to the terms of Section 11.2. Parent will deposit an amount of cash equal to the Holdback Amount into a separate non-operating bank account on or before the date the aggregate Closing Consideration is deposited with the Payment Agent by Parent pursuant to Section 2.2(c) above, and will use its best efforts to maintain such account in accordance with the purposes of this Agreement.

2.3 Effects of the Merger. At the Effective Time:

(a) the separate existence of Sub will cease and Sub will be merged with and into the Company, and the Company will be the surviving corporation, pursuant to the terms of the Agreement of Merger;

(b) the articles of incorporation and bylaws of the Company, each as amended to date and respectively referred to herein as the Articles of Incorporation and Bylaws, will be amended and restated to read as set forth on Exhibit 1 to the Agreement of Merger, and be amended and restated as of the Effective Time to conform to the bylaws of Sub as in effect immediately prior to the Effective Time, respectively, and be the articles of incorporation and bylaws of the Surviving Corporation;

(c) the directors and officers of Sub immediately prior to the Effective Time will become the directors and officers of the Surviving Corporation;

(d) each share of common stock of Sub will be converted into one share of common stock of the Surviving Corporation;

(e) each share of the capital stock of the Company outstanding immediately prior to the Effective Time (other than Dissenting Shares) will be converted into the right to receive cash as provided in Section 2; and

(f) the Merger will, from and after the Effective Time, have all of the effects provided by applicable law.

2.4 Further Assurances. The Company agrees that if, at any time before or after the Effective Time, Parent considers or is advised that any further deeds, assignments or assurances are reasonably necessary or desirable to vest, perfect or confirm in Parent title to any property or rights of the Company, Parent and its proper officers may execute and deliver all such proper deeds, assignments and assurances and do all other things necessary or desirable to vest, perfect or confirm title to such property or rights in Parent and otherwise to carry out the purpose of this Agreement, in the name of the Company or otherwise.

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2.5 Purchase Accounting. The parties intend that the Merger be treated as a purchase for accounting purposes.

2.6 Tax Status. The parties acknowledge that the Merger will not qualify as a tax-free reorganization within the meaning of Section 368 of the Code. Parent makes no representation or warranty to the Company or to any shareholder of the Company regarding the tax consequences of the Merger.

2.7 Tax Withholding Rights. Each of the Surviving Corporation or Parent (or the Payment Agent acting on behalf of the Surviving Corporation or Parent) shall be entitled to deduct and withhold from the consideration otherwise payable to any shareholder of the Company pursuant to this Agreement such amounts as it is required to deduct and withhold with respect to the making of such payment under any provision of federal, state, local or foreign tax law. If the Surviving Corporation, Parent or the Payment Agent, as the case may be, so withholds any such amount, such amounts shall be treated for all purposes of this Agreement as having been paid to such shareholder in respect of which the Surviving Corporation, Parent or the Payment Agent, as the case may be, made such deduction and withholding.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants that, except as set forth in the letter addressed to Parent and Sub dated as of the Agreement Date, a copy of which has been delivered by the Company to Parent and Sub concurrently herewith (the Disclosure Letter), each of the representations, warranties and statements of the Company contained in the following sections of Article 3 is true and correct as of the Agreement Date, and, except for changes expressly contemplated by this Agreement including the related correspondingly numbered schedules, will be true and correct on and as of the Closing Date. For all purposes of this Agreement, the statements contained in the Disclosure Letter and its schedules shall also be deemed to be representations and warranties made and given by the Company under this Article 3. Unless otherwise stated herein, all references to Schedules shall be deemed to refer to schedules to the Disclosure Letter.

3.1 Organization and Good Standing. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California, has the corporate power and authority to own, operate and lease its properties and to carry on its business as now conducted and as proposed to be conducted, and is qualified as a foreign corporation in each jurisdiction in which a failure to be so qualified could reasonably be expected to have a Material Adverse Effect on the Company. The Company has delivered to Parent true and correct copies of the currently effective Articles of Incorporation and Bylaws of the Company, each as amended to date.

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3.2 Power, Authorization and Validity.

3.2.1 Power and Authority. The Company has the right, power, legal capacity and authority to enter into and perform its obligations under this Agreement and the Company Ancillary Agreements. The execution, delivery and performance of this Agreement and the Company Ancillary Agreements by the Company, and, subject to requisite approval of the Merger by the shareholders of the Company, the filing of the Certificate of Merger, have been duly and validly approved and authorized by the Companys board of directors by unanimous vote or written consent.

3.2.2 No Filings. No consent, filing, authorization or approval, governmental or otherwise, is necessary to enable the Company to enter into, and to perform its obligations under, this Agreement and the Company Ancillary Agreements, except for (a) the filing of the Agreement of Merger with the Secretary of State of the State of California, and the filing of appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, if any, and (b) the approval of the shareholders of the Company of the transactions contemplated hereby (including without limitation the Merger).

3.2.3 Binding Obligation. This Agreement and the Company Ancillary Agreements are, or when executed by the Company will be, valid and binding obligations of the Company enforceable in accordance with their respective terms, except as to the effect, if any, of (a) applicable bankruptcy and other similar laws affecting the rights of creditors generally, and (b) rules of law governing specific performance, injunctive relief and other equitable remedies; provided, however, that the Agreement of Merger will not be effective until filed with the Secretary of State of the State of California.

3.3 Capitalization.

3.3.1 Authorized and Outstanding Capital Stock. The authorized capital stock of the Company consists of 50,000,000 shares of Common Stock, of which 11,155,075 shares are issued and outstanding as of the Agreement Date, and 6,913,850 shares of Preferred Stock. Of the authorized shares of Preferred Stock, 2,476,350 shares are designated Series A Preferred Stock, 2,138,850 of which are issued and outstanding as of the Agreement Date, 1,437,500 shares are designated Series B Preferred Stock, all of which are issued and outstanding as of the Agreement Date, and 3,000,000 shares are designated Series C Preferred Stock, 2,659,012 of which are issued and outstanding as of the Agreement Date. Schedule 3.3.1 contains a complete and accurate list of all shareholders of the Company as of the Agreement Date, which Schedule 3.3.1 shall be updated by the Company and delivered to Parent at the Closing to reflect the shareholders of the Company as of immediately prior to the Effective Time, giving effect to the exercise or termination, as applicable, of Company Options and Company Warrants, as set forth in Section 2.1.2 and 2.1.3, respectively, as well as any conversions of outstanding shares of the Companys Preferred Stock into a corresponding number of shares of the Companys Common Stock.

3.3.2 Capital Stock Status. All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fully paid and

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nonassessable, are not subject to any right of rescission, are not subject to preemptive right by statute, the Articles of Incorporation or Bylaws of the Company, or any agreement or document to which the Company is a party or by which it is bound, and have been offered, issued, sold and delivered by the Company in compliance with all registration or qualification requirements (or applicable exemptions therefrom) of applicable federal and state securities laws. All repurchases by the Company of shares of capital stock of the Company have been effected in accordance with the Articles of Incorporation and Bylaws of the Company, and any agreements or other instruments to which such shares were subject, and Applicable Law, and no repurchase by the Company of shares of capital stock of the Company was paid for in intangible property, in whole or in part.

3.3.3 No Voting Agreements; No Restrictions; No Dividends. Other than as provided for in (i) the Articles of Incorporation or Bylaws of the Company, (ii) that certain Amended and Restated Shareholder Rights Agreement dated effective as of March 31, 2000, as amended by that certain Amendment No. 1 dated effective as of June 28, 2001, by and between the Company and certain of its shareholders (the Shareholder Rights Agreement), and (iii) the Voting Agreements, there are no voting agreements, voting trusts, proxies, rights of first refusal or other restrictions applicable to any of the capital stock of the Company, Company Options or Company Warrants, or any other outstanding securities of the Company, or to the conversion of any shares of capital stock in the Merger, pursuant to any agreement or obligation to which the Company is a party or, to the Companys Knowledge, pursuant to any other agreement or obligation. There is no Liability for dividends accrued but unpaid with respect to the Companys outstanding securities.

3.3.4 Options, Warrants and Other Rights. As of the Agreement Date: (i) an aggregate of 2,000,000 shares of Common Stock of the Company are reserved and authorized for issuance pursuant to the Companys 1999 Option Plan, of which options to purchase a total of 1,204,000 shares of Common Stock of the Company are outstanding, 394,075 shares of Common Stock have been exercised and remain outstanding and 401,925 shares of Common Stock are available for grant. An aggregate of 2,000,000 shares of Common Stock of the Company are reserved and authorized for issuance pursuant to the Companys 2000 Option Plan, of which options to purchase a total of 1,209,000 shares of Common Stock of the Company are outstanding, 100,000 shares of Common Stock have been exercised and remain outstanding and 691,000 shares of Common Stock are available for grant; (ii) an aggregate of 1,385,810 shares of Common Stock of the Company are reserved and authorized for issuance outside of the Company Option Plans, all of which are outstanding; and (iii) warrants to purchase a total of 83,333 shares of the Common Stock of the Company, and warrants to purchase a total of 337,500 shares of the Series A Preferred Stock of the Company, are outstanding. Schedule 3.3.4 contains a list of all holders of Company Options and Company Warrants, and the number of options and warrants (including number of vested and unvested shares, exercise prices and vesting schedules, if applicable) held by each, and, in the case of the Company Options, whether each such option is a nonstatutory option or an incentive stock option as defined in Section 422 of the Code as of the Agreement Date. Except as set forth in this Section, and as otherwise provided for in the Articles of Incorporation, Bylaws and Shareholder Rights Agreement, there are no options, warrants, calls, rights, commitments, conversion privileges or preemptive or other rights or agreements outstanding to purchase any of the Companys authorized but unissued capital stock or any

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securities convertible into or exchangeable for shares of capital stock of the Company or obligating the Company to grant, extend, accelerate the vesting of, change the price of, or otherwise amend or enter into any such option, warrant, call, right, commitment, conversion privilege or other right or agreement. The holders of Company Options and Company Warrants have been or will be given, or will have properly waived, any required notice of the Merger prior to the Effective Time, and all such rights will be exercised or terminated at or prior to the Effective Time.

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