Exhibit 10.2

AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SELECT COMFORT CORPORATION
SCC SUBSIDIARY CORP.
BAM LABS, INC.
AND
SHAREHOLDER REPRESENTATIVE SERVICES LLC

AS STOCKHOLDER REPRESENTATIVE

September 9, 2015

 

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TABLE OF CONTENTS
 
 
 
Page
ARTICLE I THE MERGER
1
 
1.1
The Merger
1
 
1.2
Closing and Effective Times
1
 
1.3
Organizational Documents of the Surviving Corporation and Surviving Entity
2
 
1.4
Directors and Officers of the Surviving Corporation and Surviving Entity
2
 
1.5
General Effects of the Merger
2
 
1.6
Effect of Merger on Capital Stock of Constituent Corporations
2
 
1.7
Payment of Merger Consideration for Company Capital Stock
4
 
1.8
Withholding Taxes
5
 
1.9
Taking of Further Action
6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY
6
 
2.1
Organization and Good Standing
6
 
2.2
Authority and Enforceability
6
 
2.3
Governmental Approvals and Consents
7
 
2.4
No Conflicts
7
 
2.5
Company Capital Structure
7
 
2.6
Company Subsidiaries
9
 
2.7
Company Financial Statements; Internal Financial Controls
9
 
2.8
No Undisclosed Liabilities
9
 
2.9
No Changes
10
 
2.10
Tax Matters
10
 
2.11
Real Property
13
 
2.12
Tangible Property
13
 
2.13
Intellectual Property
13
 
2.14
Privacy Matters
20
 
2.15
Material Contracts
21
 
2.16
Employee Benefit Plans
24
 
2.17
Employment Matters
26
 
2.18
Governmental Authorizations
27
 
2.19
Litigation
27
 
2.20
Insurance
27
 
2.21
Compliance with Legal Requirements
28
 
2.22
FDA Compliance
29
 
2.23
Interested Party Transactions
30
 
2.24
Books and Records
30
 
2.25
Third Party Expenses
31
 
2.26
Top Customers and Top Suppliers
31
 
2.27
Representations Complete
31
 
2.28
Disclaimer of Warranties
31
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
32
 
3.1
Organization and Standing
32
 
3.2
Authority and Enforceability
32
 
3.3
Governmental Approvals and Consents
32
 
3.4
Cash Resources
32
 
 
 
 

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ARTICLE IV CONDUCT OF COMPANY BUSINESS DURING PENDENCY OF TRANSACTION
32
 
4.1
Affirmative Obligations of the Company
32
 
4.2
Forbearance of the Company
33
ARTICLE V ADDITIONAL AGREEMENTS
35
 
5.1
Non-Solicitation of Competing Acquisition Proposals
35
 
5.2
Stockholder Approval
36
 
5.3
Governmental Approvals
37
 
5.4
General Efforts to Close
38
 
5.5
Access to Information
38
 
5.6
Notification of Certain Matters
39
 
5.7
Indemnification of Directors and Officers
39
 
5.8
Contracts
40
 
5.9
Employee Matters
40
 
5.10
Third Party Expenses
41
 
5.11
Closing Date Balance Sheet
41
 
5.12
Spreadsheet
42
 
5.13
Tax Matters
42
ARTICLE VI CONDITIONS TO THE MERGER
43
 
6.1
Conditions to Obligations of Each Party
43
 
6.2
Additional Conditions to the Obligations of Parent and Merger Sub
43
 
6.3
Additional Conditions to Obligations of the Company
45
ARTICLE VII POST-CLOSING INDEMNIFICATION
45
 
7.1
Survival of Representations and Warranties
45
 
7.2
Indemnification
46
 
7.3
Limitations on Indemnification
47
 
7.4
Indemnification Claim Procedures
49
 
7.5
Third Party Claims
50
 
7.6
Stockholder Representative
50
ARTICLE VIII PRE-CLOSING TERMINATION OF AGREEMENT
52
 
8.1
Termination
52
 
8.2
Effect of Termination
53
ARTICLE IX GENERAL PROVISIONS
53
 
9.1
Certain Interpretation
53
 
9.2
Amendment
53
 
9.3
Waiver
54
 
9.4
Assignment
54
 
9.5
Notices
54
 
9.6
Confidentiality
55
 
9.7
Public Disclosure
55
 
9.8
Entire Agreement
55
 
9.9
No Third Party Beneficiaries
55
 
9.10
Specific Performance and Other Remedies
55
 
9.11
Severability
56
 
9.12
Governing Law
56
 
9.13
Costs and Expenses
56
 
 
 
 
 
 
 
 
 
 
 
 

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9.14
Exclusive Jurisdiction
56
 
9.15
Resolution of Conflicts; Arbitration
57
 
9.16
USA Patriot Act Compliance
58
 
9.17
Counterparts
58

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INDEX OF EXHIBITS
Annex    Description
Annex A    Certain Defined Terms
Exhibit    Description
Exhibit A    Form of Certificate of Merger
Exhibit B    Form of Letter of Transmittal
Exhibit C    Form of Stockholder Written Consent
Exhibit D    Form of Joinder Agreement
Exhibit E    Form of 280G Waivers
Exhibit F    Form of Escrow Agreement
Exhibit G    Form of Non-Competition and Non-Solicitation Agreements
Exhibit H    Form of Non-Solicitation Agreement

Schedules
Schedule 5.8(b)    Terminated Contracts
Schedule A-1    Key Employees
Schedule A-2    Individuals Executing Non-Solicitation Agreements
Schedule A-3    Transaction Bonuses
Schedule A-4    Accounts Receivable

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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as
of September 9, 2015 by and among Select Comfort Corporation, a Minnesota
corporation (“Parent”), SCC Subsidiary Corp., a Delaware corporation and a
wholly owned subsidiary of Parent (“Merger Sub”), BAM Labs, Inc., a Delaware
corporation (the “Company”), and Shareholder Representative Services LLC, a
Colorado limited liability company solely in its capacity as stockholder
representative (the “Stockholder Representative”). All capitalized terms that
are used but not defined herein shall have the respective meanings ascribed
thereto in Annex A.
W I T N E S S E T H:
WHEREAS, the boards of directors of each of Parent, Merger Sub and the Company
have determined that it would be advisable and in the best interests of each
corporation and their respective stockholders that Parent acquire the Company
through the statutory merger of Merger Sub with and into the Company, pursuant
to which the Company would become a wholly-owned subsidiary of Parent (the
“Merger”), upon the terms and conditions set forth in this Agreement and in
accordance with the applicable provisions of Delaware Law, and in furtherance
thereof, have approved this Agreement, the Merger and the other transactions
contemplated by this Agreement and the Related Agreements (the “Transactions”).
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements, as more fully set forth
herein, in connection with the Merger and the other Transactions.
NOW, THEREFORE, in consideration of the mutual agreements, covenants and other
premises set forth herein, the mutual benefits to be gained by the performance
thereof, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and accepted, the parties hereto
hereby agree as follows:
ARTICLE I
THE MERGER
1.1    The Merger.     At the Effective Time (as defined below), on the terms
and subject to the conditions set forth in this Agreement, the Certificate of
Merger in substantially the form attached hereto as Exhibit A (the “Certificate
of Merger”) and the applicable provisions of Delaware Law, Merger Sub shall
merge with and into the Company, the separate corporate existence of Merger Sub
shall cease and the Company shall continue as the surviving corporation and
shall become a wholly-owned subsidiary of Parent. The Company, as the surviving
corporation after the Merger, is sometimes referred to herein as the “Surviving
Corporation.”
1.2    Closing and Effective Times.
(a)    Unless this Agreement is validly terminated pursuant to Section 8.1, the
Merger shall be consummated at a closing (the “Closing”) on a date that is
within two (2) Business Days following satisfaction or waiver (if permissible
hereunder) of the conditions set forth in Article VI (other than those
conditions that by their nature are to be satisfied at the Closing, but subject
to satisfaction or waiver (if permissible hereunder) of those conditions), at
the offices of Wilson Sonsini Goodrich & Rosati, 650 Page Mill Road, Palo Alto,
California, unless another time or place is mutually agreed upon in writing by
Parent and the Company. The date upon which the Closing actually occurs shall be
referred to herein as the “Closing Date.”

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(b)    Effective Time. On the Closing Date, the parties hereto shall cause the
Merger to be consummated by filing the Certificate of Merger with the Secretary
of State of the State of Delaware in accordance with the applicable provisions
of Delaware Law. The time of the filing and acceptance by the Secretary of State
of the State of Delaware, or such other later time as may be agreed in writing
by Parent, Merger Sub and the Company and specified in the Certificate of
Merger, shall be referred to herein as the “Effective Time.”
1.3    Organizational Documents of the Surviving Corporation and Surviving
Entity.
(a)    Unless otherwise determined by Parent prior to the Effective Time, the
certificate of incorporation of the Surviving Corporation shall be amended and
restated as of the Effective Time to be identical to the certificate of
incorporation of Merger Sub as in effect immediately prior to the Effective
Time, until thereafter amended in accordance with Delaware Law and as provided
in such certificate of incorporation; provided, however, that at the Effective
Time, Article I of the certificate of incorporation of the Surviving Corporation
shall be amended and restated in its entirety to read as follows: “The name of
the corporation is SleepIQ LABS Inc.”
(b)    Unless otherwise determined by Parent prior to the Effective Time, the
bylaws of Merger Sub as in effect immediately prior to the Effective Time shall
be the bylaws of the Surviving Corporation as of the Effective Time until
thereafter amended in accordance with Delaware Law and as provided in the
certificate of incorporation of the Surviving Corporation and such bylaws.
1.4    Directors and Officers of the Surviving Corporation and Surviving Entity.
(a)    Unless otherwise determined by Parent prior to the Effective Time, the
directors of Merger Sub immediately prior to the Effective Time shall be the
directors of the Surviving Corporation immediately after the Effective Time,
each to hold the office of a director of the Surviving Corporation in accordance
with the provisions of Delaware Law and the certificate of incorporation and
bylaws of the Surviving Corporation until his or her successor is duly elected
and qualified.
(b)    Unless otherwise determined by Parent prior to the Effective Time, the
officers of Merger Sub immediately prior to the Effective Time shall be the
officers of the Surviving Corporation immediately after the Effective Time, each
to hold office in accordance with the provisions of the bylaws of the Surviving
Corporation.
1.5    General Effects of the Merger.  At the Effective Time, the effects of the
Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time, except as otherwise agreed to pursuant to the terms of this
Agreement, all of the property, rights, privileges, powers and franchises of the
Company and Merger Sub shall vest in the Surviving Corporation, and all debts,
liabilities and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation.
1.6    Effect of Merger on Capital Stock of Constituent Corporations.
(a)    Merger Sub Capital Stock. At the Effective Time, by virtue of the Merger
and without further action on the part of Parent, Merger Sub, the Company or the
respective stockholders thereof, each share of capital stock of Merger Sub that
is issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and non-assessable
share of Company Common Stock (and the shares of the Company into which the
shares of Merger Sub capital stock are so converted shall be the only shares of
the Company’s capital stock that are issued and

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outstanding immediately after the Effective Time). Each certificate evidencing
ownership of shares of Merger Sub capital stock will evidence ownership of such
shares of Company Common Stock.
(b)    Company Capital Stock.
(i)     Generally. At the Effective Time, by virtue of the Merger and without
any action on the part of Parent, Merger Sub, the Company or the respective
stockholders thereof, each share of Company Capital Stock (excluding
(A) Cancelled Shares, which shall be treated in the manner set forth in Section
1.6(b)(ii), and (B) Dissenting Shares, which shall be treated in the manner set
forth in Section 1.6(b)(iii)) issued and outstanding as of immediately prior to
the Effective Time shall be cancelled and extinguished and shall be converted
automatically into the right to receive, upon the terms set forth in this
Section 1.6(b)(i) and throughout this Agreement (including the escrow provisions
set forth in Article VII of this Agreement) and surrender of the certificate
representing such shares of Company Capital Stock in the manner provided in
Section 1.7, the Per Share Consideration; provided, however, that the aggregate
payment amount payable pursuant to this Section 1.6(b)(i) shall not exceed the
amount of the Total Consideration; provided, further, that (i) 10% of that
portion of the Total Consideration that otherwise would be payable at the
Closing to the Stockholders (other than Parent) pursuant to this Section
1.6(b)(i) shall be withheld at the Closing from the amount of cash payable to
each such Stockholder and deposited into the Escrow Fund pursuant to
Section 1.7(b), which cash shall be distributed to the former holders of such
shares of Company Capital Stock in accordance with, and subject to, the terms
and conditions of this Agreement and the Escrow Agreement, and (ii) $250,000
shall be withheld and placed in the Expense Fund pursuant to Sections 1.7(c) and
7.6. For purposes of calculating the amount of cash payable to each Stockholder
in respect of their shares of Company Capital Stock pursuant to this Section
1.6(b)(i), all shares of Company Capital Stock held by each Stockholder shall be
aggregated on a certificate-by-certificate (or like instrument) basis.
(ii)     Cancellation of Treasury Stock and Parent Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of Parent, Merger
Sub, the Company or the respective stockholders thereof, and notwithstanding any
other provisions of this Agreement to the contrary, each share of Company
Capital Stock held by the Company or any direct or indirect wholly owned
Subsidiary of the Company immediately prior to the Effective Time and each share
of Company Capital Stock held by Parent or its controlled Affiliates (the
“Cancelled Shares”) shall be automatically canceled and extinguished without any
conversion thereof, and no consideration shall be delivered or deliverable in
respect thereof.
(iii)     Dissenting Shares. Notwithstanding any other provisions of this
Agreement to the contrary, any shares of Company Capital Stock outstanding
immediately prior to the Effective Time and with respect to which the holder
thereof has properly demanded appraisal rights in accordance with Section 262 of
Delaware Law and Chapter 13 of the California General Corporation Law (the
“CGCL”), and who has not effectively withdrawn or lost such holder’s appraisal
or dissenters’ rights under Delaware Law or, if applicable, the CGCL
(collectively, the “Dissenting Shares”), shall not be converted into or
represent a right to receive the applicable consideration for Company Capital
Stock set forth in Section 1.6(b)(i), but the holder thereof shall only be
entitled to such rights as are provided by Delaware Law or, if applicable, the
CGCL. Notwithstanding the provisions of this Section 1.6(b)(iii), if any holder
of Dissenting Shares shall effectively withdraw or lose (through failure to
perfect or otherwise) such holder’s appraisal or dissenters’ rights under
Delaware Law or, if applicable, the CGCL, then, as of the later of the Effective
Time and the occurrence of such event, such holder’s shares shall automatically
be converted into and represent only the right to receive, upon surrender of the
certificate representing such shares, upon the terms set forth in this Section
1.6(b)(iii) and throughout this Agreement (including the escrow holdback,
expense fund and indemnification provisions of this Agreement), the
consideration for Company Capital Stock set forth in Section 1.6(b)(i), without
interest

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thereon. The Company shall give Parent (A) prompt notice of any written demand
for appraisal received by the Company pursuant to the applicable provisions of
Delaware Law or, if applicable, the CGCL and (B) the opportunity to participate
in all negotiations and proceedings with respect to such demands. The Company
shall not, except with the prior written consent of Parent, make any payment
with respect to any such demands or offer to settle or settle any such demands.
Any communication to be made by the Company to any Stockholder with respect to
such demands shall be submitted to Parent in advance and shall not be presented
to any Stockholder prior to the Company receiving Parent’s written consent.
(c)    Company Options.
(i)    Company Options.
(A)    Vested Company Options. Effective as of the Effective Time, each Vested
Company Option (or portion thereof) that is outstanding as of immediately prior
to the Effective Time shall be cancelled and the holder thereof shall be
entitled to receive, upon the terms and subject to the conditions set forth in
this Section 1.6(c)(i)(A) and throughout this Agreement and in consideration of
such cancellation, the Per Option Consideration. Promptly following the Closing,
Parent shall pay (or cause to be paid) the Per Option Consideration, less
applicable withholdings, in respect of such Vested Company Options; provided,
however, that 10% of that portion of the cash amount that otherwise would be
payable at the Closing to each Vested Company Optionholder shall be withheld at
the Closing from the amount of cash payable to each such Vested Company
Optionholder and deposited into the Escrow Fund pursuant to Section 1.7(b),
which cash amount will be distributed to the former holders of such Vested
Company Options in accordance with, and subject to, the terms and conditions of
this Agreement and the Escrow Agreement.
(B)    Unvested Company Options Held by Continuing Employees. Effective as of
the Effective Time, each Unvested Company Option (or portion thereof) that is
outstanding as of immediately prior to the Effective Time and held by a
Continuing Employee shall be cancelled without the payment of any consideration
therefor.
(C)    Unvested Company Options Held by Non-Continuing Employees. Effective as
of the Effective Time, each Unvested Company Option (or portion thereof) that is
outstanding as of immediately prior to the Effective Time and held by a
Non-Continuing Employee shall be cancelled without the payment of any
consideration therefor.
1.7    Payment of Merger Consideration for Company Capital Stock.
(a)    Paying Agent. U.S. Bank National Association, or another Person selected
by Parent and reasonably acceptable to the Company, shall serve as the Paying
Agent (the “Paying Agent”) for the Merger.
(b)    Escrow Amount. On the Closing Date, Parent shall transfer or cause to be
transferred to the Escrow Agent an amount of cash equal to the Escrow Amount, to
be held in trust as an escrow fund (the “Escrow Fund”) under the terms of this
Agreement and the Escrow Agreement.
(c)    Expense Fund. On the Closing Date, Parent shall transfer or cause to be
transferred to a segregated client bank account maintained by the Stockholder
Representative an amount of cash equal to the amount of the Expense Fund to be
held and distributed in accordance with the terms of this Agreement.

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(d)    Exchange Procedures. Prior to Closing, the Company shall provide to each
Stockholder a letter of transmittal in the form attached hereto as Exhibit B
(the “Letter of Transmittal”). If a Letter of Transmittal duly completed and
validly executed in accordance with the instructions thereto, and a certificate
representing shares of Company Capital Stock (the “Company Stock Certificates”)
is properly surrendered to Parent or the Paying Agent not later than three (3)
Business Days prior to the Closing Date, then Parent shall cause its transfer
agent to issue to the holder of such Company Stock Certificate that portion of
the Total Consideration issuable in respect thereto pursuant to
Section 1.6(b)(i) as soon as practicable, but in no event later than one (1)
Business Day after the Closing Date, and the Company Stock Certificate so
surrendered shall be cancelled. If a Letter of Transmittal duly completed and
validly executed in accordance with the instructions thereto, and a Company
Stock Certificate is properly surrendered to Parent or the Paying Agent at any
time later than three (3) Business Days prior to the Closing Date, then Parent
shall cause its transfer agent to issue to the holder of such Company Stock
Certificate that portion of the Total Consideration issuable in respect thereto
pursuant to Section 1.6(b)(i) no later than three (3) Business Days following
such surrender, and the Company Stock Certificate so surrendered shall be
cancelled. No portion of the Total Consideration will be paid to the holder of
any unsurrendered Company Stock Certificate with respect to shares of Company
Capital Stock formerly represented thereby until the holder of record of such
Company Stock Certificate shall surrender such Company Stock Certificate and
validly executed Paying Agent documents pursuant hereto.
(e)    Lost, Stolen or Destroyed Certificates.  In the event any Company Stock
Certificate shall have been lost, stolen or destroyed, the Paying Agent or
Parent shall pay, in exchange for such lost, stolen or destroyed certificate,
the portion of the Total Consideration, if any, payable in respect thereto
pursuant to Section 1.6(b) upon the making of an affidavit of that fact by the
holder thereof; provided, however, that Parent may, in its discretion, or as
required by the Paying Agent, and as a condition precedent to the issuance
thereof, require the Stockholder who is the owner of such lost, stolen or
destroyed certificates to provide an indemnification agreement (without the
requirement of posting a bond) in a form and substance acceptable to Parent
against any claim that may be made against Parent, the Surviving Corporation or
the Paying Agent with respect to the certificates alleged to have been lost,
stolen or destroyed.
(f)    No Further Ownership Rights in Company Capital Stock.  The cash paid in
respect of the surrender for exchange of shares of Company Capital Stock in
accordance with the terms of this Agreement shall be deemed to be full
satisfaction of all rights pertaining to such shares of Company Capital Stock,
and there shall be no further registration of transfers on the records of the
Company or the Surviving Corporation of shares of Company Capital Stock which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Company Stock Certificates are presented to the Company or the
Surviving Corporation for any reason, they shall be canceled and exchanged as
provided in this Article I.
(g)    No Liability.  Notwithstanding anything to the contrary in this
Agreement, none of Parent, the Paying Agent, the Surviving Corporation, or any
party hereto shall be liable to a Stockholder for any amount paid to a public
official pursuant to any applicable abandoned property, escheat or similar law.
1.8    Withholding Taxes.  The Company, the Paying Agent, Parent and the
Surviving Corporation, shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement such
amounts as may be required to be deducted or withheld therefrom under any
provision of federal, local or foreign tax law or under any Legal Requirements
or applicable Orders. To the extent such amounts are so deducted or withheld,
such amounts shall be remitted to the appropriate Governmental Entity and
treated for all purposes under this Agreement as having been paid to the Person
to whom such amounts would otherwise have been paid.

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1.9    Taking of Further Action.  If at any time after the Effective Time, any
further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
the Company, or to vest Parent with full right, title and possession to all of
the Company Capital Stock, then each of the Surviving Corporation, Parent and
the officers and directors of each of the Surviving Corporation and Parent are
fully authorized in the name of their respective corporations or otherwise to
take, and will take, all such lawful and necessary action.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to any disclosure set forth in (i) the specific section, subsection or
subclause of the disclosure schedule delivered by the Company to Parent on the
date of this Agreement prior to the execution and delivery of this Agreement
(the “Disclosure Schedule”) that corresponds to the specific section, subsection
or subclause of each representation and warranty set forth in this Article II,
or (ii) any other section, subsection or subclause of the Disclosure Schedule
solely if and to the extent that it is reasonably apparent on the face of such
disclosure that it applies to another section, subsection or subclause of this
Article II, the Company hereby represents and warrants to Parent and Merger Sub
as follows:
2.1    Organization and Good Standing.  (a) The Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Company has the requisite corporate power to own, lease and
operate its assets and properties and to carry on its business as currently
conducted. The Company is duly qualified or licensed to do business and in good
standing as a foreign corporation in each jurisdiction in which the character or
location of its assets or properties (whether owned, leased or licensed) or the
nature of its business make such qualification or license necessary to the
Company’s business as currently conducted. The Company has Made Available true,
correct and complete copies of its certificate of incorporation, as amended to
date (the “Certificate of Incorporation”) and bylaws, as amended to date, each
in full force and effect on the date of this Agreement (collectively, the
“Charter Documents”). Since the date of the Charter Documents Made Available,
the Board of Directors of the Company has not approved or proposed any amendment
to any of the Charter Documents.
(b) Section 2.1(b) of the Disclosure Schedule lists the directors and officers
of the Company and every jurisdiction in which the Company has Employees or
facilities or otherwise conducts its business as of the date of this Agreement.
The operations now being conducted by the Company are not now and have never
been conducted by the Company under any other name. There are no outstanding
powers of attorney executed by or on behalf of the Company.
2.2    Authority and Enforceability. The Company has all requisite power and
authority to enter into this Agreement and any Related Agreements to which it is
a party and, subject to receipt of the Requisite Stockholder Approval, to
consummate the Merger and the other Transactions. The execution and delivery of
this Agreement and any Related Agreements to which the Company is a party and
the consummation of the Merger and the other Transactions have been duly
authorized by all necessary corporate action on the part of the Company
(including the unanimous approval of the Board of Directors of the Company (the
“Requisite Board Approval”)) and no further corporate or other action is
required on the part of the Company to authorize this Agreement and any Related
Agreements to which the Company is a party or to consummate the Merger or any
other Transactions, other than the adoption of this Agreement and approval of
the Merger by the Stockholders of the Company who hold (a) at least a majority
of the voting power of the outstanding shares of Company Capital Stock, voting
together as a single class on an as converted into Company Common Stock basis,
(b) at least a majority of the voting

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power of the Company Common Stock, voting together as a single class, and (c) at
least a majority of the voting power of the outstanding shares of Company
Preferred Stock, voting together as a single class (clauses (a), (b) and (c),
collectively, the “Requisite Stockholder Approval”). The Requisite Stockholder
Approval is the only vote of the Stockholders required under applicable Legal
Requirements, Delaware Law, the CGCL, the Charter Documents and all Contracts to
which the Company is a party to legally adopt this Agreement and approve the
Merger and the other Transactions. The Board of Directors of the Company has
unanimously approved this Agreement, the Merger and the other Transactions, and
recommended to the Stockholders to vote in favor of adoption of this Agreement
and approval of the Merger and the other Transactions (the “Company
Recommendation”). This Agreement and each of the Related Agreements to which the
Company is a party have been duly executed and delivered by the Company and
assuming the due authorization, execution and delivery by the other parties
hereto and thereto, constitute the valid and binding obligations of the Company
enforceable against it in accordance with their respective terms, subject to
(x) Legal Requirements of general application relating to bankruptcy,
insolvency, moratorium, the relief of debtors and enforcement of creditors’
rights in general, and (y) rules of law governing specific performance,
injunctive relief, other equitable remedies and other general principles of
equity (clauses (x) and (y) collectively, the “Enforceability Limitations”).
2.3    Governmental Approvals and Consents.  No consent, notice, waiver,
approval, Order or authorization of, or registration, declaration or filing with
any Governmental Entity, is required by, or with respect to, the Company in
connection with the execution and delivery of this Agreement and any Related
Agreement to which the Company is a party or the consummation of the Merger or
any other Transactions, except for (a) such consents, notices, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws and state “blue sky” laws and
(b) the filing of the Certificates of Merger with the Secretary of State of the
State of Delaware.
2.4    No Conflicts.  The execution and delivery by the Company of this
Agreement and any Related Agreement to which the Company is a party, and the
consummation of the Transactions, will not conflict with or result in any
violation of or default under (with or without notice or lapse of time, or both)
or give rise to a right of termination, cancellation, modification or
acceleration of any obligation or loss of any benefit under (any such event, a
“Conflict”) (a) any provision of the Charter Documents, as amended, (b) any
Contract to which the Company is a party or by which any of its properties or
assets (whether tangible or intangible) are bound or (c) any Legal Requirement
or Order applicable to the Company or any of its properties or assets (whether
tangible or intangible).
2.5    Company Capital Structure.
(a)    The authorized capital stock of the Company consists of 52,500,000 shares
of Company Common Stock, of which 9,376,112 shares are issued and outstanding on
the date of this Agreement; 1,769,220 shares of Company Seed Series A Preferred
Stock, of which 1,769,220 shares are issued and outstanding on the date of this
Agreement; 2,265,906 shares of Company Seed Series B Preferred Stock, of which
2,265,906 shares are issued and outstanding on the date of this Agreement;
5,126,956 shares of Company Seed Series C Preferred Stock, of which 5,126,956
shares are issued and outstanding on the date of this Agreement; 10,551,494
shares of Company Series A Preferred Stock, of which 10,551,494 shares are
issued and outstanding on the date of this Agreement; 10,869,565 shares of
Company Series B Preferred Stock, of which 10,869,565 shares are issued and
outstanding on the date of this Agreement; and 6,802,271 shares of Company
Series C Preferred Stock, of which 2,509,574 shares are issued and outstanding
on the date of this Agreement. As of the date of this Agreement, each share of
Company Preferred Stock is convertible on a one-share-for-one-share basis into
Company Common Stock and will be pursuant to their terms, be entitled to receive
solely the same consideration as shares of Company Common Stock, on an
as-converted basis. All outstanding shares of Company Capital Stock

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are duly authorized, validly issued, fully paid and non-assessable and are not
subject to preemptive rights created by statute, the Charter Documents, or any
agreement to which the Company is a party or by which it is bound.
(b)    All outstanding shares of Company Capital Stock and Company Options have
been issued or repurchased (in the case of shares that were outstanding and
repurchased by the Company or any stockholder of the Company) in compliance with
all applicable Legal Requirements, and were issued, transferred and repurchased
(in the case of shares that were outstanding and repurchased by the Company or
any stockholder of the Company) in accordance with any right of first refusal or
similar right or limitation Known to the Company. No Stockholder has exercised
any right of redemption, if any, provided in the Certificate of Incorporation
with respect to shares of the Company Preferred Stock, and the Company has not
received notice that any Stockholder intends to exercise such rights. There are
no declared or accrued but unpaid dividends with respect to any shares of
Company Capital Stock. Other than the Company Capital Stock set forth in
Sections 2.5(a) and 2.5(c) of this Agreement or the Disclosure Schedule, the
Company has no other capital stock authorized, issued or outstanding as of the
date of this Agreement.
(c)    Except for the Plan, the Company has never adopted, sponsored or
maintained any stock option plan or any other plan or agreement providing for
equity or equity-related compensation to any person (whether payable in shares,
cash or otherwise).  The Company has reserved 4,500,000 shares of Company Common
Stock for issuance to employees and directors of, and consultants to, the
Company upon the issuance of stock or the exercise of options or the granting or
purchase of restricted stock granted under the Plan, of which (i) 1,404,666
shares are issuable, as of the date of this Agreement, upon the exercise of
outstanding, unexercised options granted under the Plan, (ii) 1,035,834 shares
have been issued upon the exercise of options granted under the Plan and remain
outstanding as of the date of this Agreement, and (iii) 2,059,500 shares remain
available for future grant as of the date of this Agreement. Each Company Option
was originally granted with an exercise price that the Board of Directors of the
Company in good faith, based on a reasonable valuation method utilized at the
time of grant, determined to be at least equal to the fair market value of a
share of Company Common Stock on the date of grant.
(d)    Section 2.5(d) of the Disclosure Schedule sets forth for each outstanding
Company Option as of the date of this Agreement, the name of the holder, whether
such holder is an employee of the Company, the number of shares of Company
Capital Stock issuable upon the exercise of such option, the date of grant, the
exercise price, the vesting schedule, including the extent vested to date and
whether such vesting is subject to acceleration as a result of the Transactions
or any other events, and, for any option, whether such option is a nonstatutory
option or qualifies as an incentive stock option as defined in Section 422 of
the Code and whether (and to what extent) any such Company Option is or has ever
been subject to Section 409A.
(e)    No bonds, debentures, notes or other indebtedness of the Company
(i) having the right to vote on any matters on which stockholders may vote (or
which is convertible into, or exchangeable for, securities having such right) or
(ii) the value of which is in any way based upon or derived from capital or
voting stock of the Company, are issued or outstanding as of the date of this
Agreement.
(f)    Except for the Company Options, there are no options, warrants, calls,
rights, convertible securities, commitments or agreements of any character,
written or oral, to which the Company is a party or by which the Company is
bound obligating the Company to issue, deliver, sell, repurchase or redeem, or
cause to be issued, delivered, sold, repurchased or redeemed, any shares of the
capital stock of the Company or obligating the Company to grant, extend,
accelerate the vesting of,

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change the price of, otherwise amend or enter into any such option, warrant,
call, right, commitment or agreement. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or other
equity-compensation rights of the Company (whether payable in shares, cash or
otherwise). Except as contemplated hereby, there are no voting trusts, proxies,
or other agreements or understandings with respect to the voting stock of the
Company to which the Company is a party, and there are no agreements to which
the Company is a party relating to the registration, sale or transfer (including
agreements relating to rights of first refusal, co-sale rights or “drag-along”
rights) of any Company Capital Stock.
2.6    Company Subsidiaries. The Company does not own, directly or indirectly,
shares or interests in any other corporation, limited liability company,
partnership, association, joint venture or other business entity. The Company
has not agreed to, and is not obligated to, make any future investment in or
capital contribution to any Person.
2.7    Company Financial Statements; Internal Financial Controls.
(a)    Section 2.7(a) of the Disclosure Schedule sets forth the Company’s
(i) unaudited balance sheets as of December 31, 2013 and December 31, 2014, and
the related statements of income, cash flow and stockholders’ equity for the
twelve (12) month periods then ended (the “Year-End Financials”), and
(ii) unaudited balance sheet as of June 30, 2015 (the “Balance Sheet Date”), and
the related unaudited statements of income, cash flow and stockholders’ equity
for the six (6) months then ended (the “Interim Financials”). The Year-End
Financials and the Interim Financials (collectively referred to as the
“Financials”) have been prepared in accordance with GAAP consistently applied
throughout the periods indicated and consistent with each other (except that the
Current Balance Sheet (as defined below) and the Interim Financials do not
contain footnotes and other presentation items that may be required by GAAP).
The Financials present fairly in all material respects the Company’s
consolidated financial condition, operating results and cash flows as of the
dates and during the periods indicated therein, subject in the case of the
Interim Financials to normal year-end adjustments, which are not material in
amount in any individual case or in the aggregate. The Company’s unaudited
consolidated balance sheet as of the Balance Sheet Date is referred to
hereinafter as the “Current Balance Sheet.” The Books and Records of the Company
have been, and are being, maintained in accordance with applicable legal and
accounting requirements and the Financials are consistent with such Books and
Records.
(b)    The systems of internal accounting controls maintained by the Company are
sufficient to provide reasonable assurance that transactions are recorded, and
assets are maintained, as necessary to permit preparation of financial
statements in conformity with GAAP.
(c)    The Company (including any Employee thereof) has not identified or been
made aware of (i) any significant deficiency or material weakness in the system
of internal accounting controls utilized by the Company, (ii) any fraud, whether
or not material, that involves the Company’s management or other Employees who
have a role in the preparation of financial statements or the internal
accounting controls utilized by the Company or (iii) any claim or allegation
regarding any of the foregoing.
2.8    No Undisclosed Liabilities.  The Company has no Indebtedness, obligation,
expense, claim, deficiency, guaranty or endorsement of any type, whether
accrued, absolute, contingent, matured, unmatured or other liability (which is
required to be reflected in financial statements prepared in accordance with
GAAP), except for those which (a) have been reflected in the Current Balance
Sheet, (b) have arisen in the ordinary course of business consistent with past
practices since the Balance Sheet

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Date and prior to the date of this Agreement, (c) performance obligations under
Contracts to which the Company is a party; or (d) incurred as a result of the
Transactions.
2.9    No Changes. Since the Balance Sheet Date through the date of this
Agreement, (a) no Company Material Adverse Effect has occurred, and (b) the
Company has not taken any action that would require the consent of Parent under
Section 4.2 if proposed to be taken after the date of this Agreement.
2.10    Tax Matters.
(a)    Tax Returns and Payments. Each return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information filed with or submitted
to, or required to be filed with or submitted to, any Governmental Entity in
connection with the determination, assessment, collection or payment of any Tax
or in connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax, including any
amendment thereof or attachment thereto (each, a “Tax Return”) required to be
filed by or on behalf of the Company with any Governmental Entity with respect
to any taxable period ending on or before the Closing Date or any taxable event
occurring prior to or on the Closing Date (the “Company Returns”): (i) have been
filed on or before the applicable due date (including any extensions of such due
date); and (ii) have been accurately and completely prepared in all material
respects in compliance with all applicable Legal Requirements. All Taxes
required to be paid on or before the Closing Date by the Company have been or
will be timely paid. The Company has delivered or made available to Parent
accurate and complete copies of all Company Returns filed since its
incorporation, other than immaterial information Tax Returns (e.g., Forms W-2
and 1099) unless requested by Parent.
(b)    Reserves for Payment of Taxes. The Financials fully accrue all
liabilities for Taxes with respect to all periods through the dates thereof in
accordance with GAAP. The Company will establish, in the ordinary course of
business and consistent with its past practices, reserves adequate for the
payment of all Taxes for the period from the Balance Sheet Date through the
Closing Date, and the Company will disclose the dollar amount of such reserves
to Parent on or prior to the Closing Date. The Company has not incurred any
liability for Taxes since the Balance Sheet Date outside of the ordinary course
of business.
(c)    Audits; Claims. No Company Return has ever been examined or audited by
any Governmental Entity. The Company has not received from any Governmental
Entity any: (i) written notice indicating an intent to open an audit or other
review; (ii) request for information related to Tax matters; or (iii) notice of
deficiency or proposed Tax adjustment. No extension or waiver of the limitation
period applicable to any Company Returns has been granted by or requested from
the Company. No claim or legal proceeding is pending, or to the Knowledge of the
Company, threatened against the Company in respect of any Tax. There are no
Liens for Taxes upon any of the assets of the Company except Liens for current
Taxes not yet due and payable (and for which there are adequate accruals, in
accordance with GAAP).
(d)    Legal Proceedings; Etc. There are no unsatisfied liabilities for Taxes
with respect to any notice of deficiency or similar document received by the
Company with respect to any Tax (other than liabilities for Taxes asserted under
any such notice of deficiency or similar document which are being contested in
good faith by the Company and with respect to which adequate reserves for
payment have been established).

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(e)    Distributed Stock. The Company has not distributed stock of another
Person, and the Company has not had its stock distributed by another Person, in
a transaction that was purported or intended to be governed in whole or in part
by Section 355 or Section 361 of the Code.
(f)    Adjustment in Taxable Income. The Company is not currently, and the
Company for any period for which a Company Return has not been filed will not
be, required to include any adjustment in taxable income for any taxable period
(or portion thereof) pursuant to Section 481 or 263A of the Code (or any
comparable provision under state, local or foreign Tax laws) as a result of
transactions, events or accounting methods employed prior to the Merger.
(g)    280G. There is (i) no agreement, plan, arrangement or other Contract
covering any Employee that, considered individually or considered collectively
with any other such Contracts, will, or would reasonably be expected to, give
rise directly or indirectly to the payment of any amount that would not be
deductible pursuant to Section 280G or Section 404 of the Code or that would be
characterized as a “parachute payment” within the meaning of Section 280G(b)(1)
of the Code or (ii) agreement, plan, arrangement or other Contract by which the
Company is bound to compensate any Employee for excise taxes paid pursuant to
Section 4999 of the Code.  The Company currently is not, and has never been, a
party to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
(h)    No Other Jurisdictions for Filing Tax Returns. There are no jurisdictions
in which the Company is required to file a Tax Return other than the
jurisdictions in which the Company has filed Tax Returns. The Company is not
subject to net income Tax in any country other than its country of incorporation
or formation by virtue of having a permanent establishment or other place of
business in that country. No claim has ever been made by a Governmental Entity
in a jurisdiction where the Company does not file Tax Returns that the Company
is or may be subject to taxation by that jurisdiction.
(i)    Transfer Pricing. The Company is in compliance in all respects with all
applicable transfer pricing laws, including the execution and maintenance of
contemporaneous documentation substantiating the transfer pricing practice and
methodology. All intercompany agreements have been adequately documented, and
such documents have been duly executed in a timely manner. The prices for any
property or services (or for the use of any property), including interest and
other prices for financial services, provided by or to the Company are
arm’s-length prices for purposes of the relevant transfer pricing laws,
including Treasury Regulations promulgated under Section 482 of the Code.
(j)    Tax Shelters; Listed Transactions; Etc. The Company has not consummated
or participated in, nor is the Company currently participating in, any
transaction which was or is a “tax shelter” transaction as defined in Sections
6662 or 6111 of the Code or the Treasury Regulations promulgated thereunder. The
Company has not ever participated in, nor is currently participating in, a
“Listed Transaction” or a “Reportable Transaction” within the meaning of
Section 6707A(c) of the Code or Treasury Regulation Section 1.6011-4(b), or any
transaction requiring disclosure under a corresponding or similar provision of
state, local, or foreign Legal Requirements. The Company has disclosed on its
Tax Returns any Tax reporting position taken in any Tax Return which could
result in the imposition of penalties under Section 6662 of the Code (or any
comparable provisions of state, local or foreign law).
(k)    Section 83(b). No Person holds shares of Company Common Stock that are
non-transferable and subject to a substantial risk of forfeiture within the
meaning of Section 83 of the Code with respect to which a valid election under
Section 83(b) of the Code has not been made.

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(l)    Withholding. The Company: (i) has complied with all applicable Legal
Requirements relating to the payment, reporting and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441, 1442, 1445 and 1446
of the Code or similar provisions under any foreign Legal Requirement);
(ii) has, within the time and in the manner prescribed by applicable Legal
Requirements, withheld from employee wages or consulting compensation and timely
paid over to the proper Governmental Entities (or is properly holding for such
timely payment) all amounts required to be so withheld and paid over under all
applicable Legal Requirements, including federal and state income and employment
Taxes, Federal Insurance Contribution Act, Medicare, Federal Unemployment Tax
Act, and relevant non-U.S. income and employment Tax withholding Legal
Requirements; and (iii) has timely filed all withholding Tax Returns, for all
periods.
(m)    Change in Accounting Methods; Closing Agreements; Etc. The Company will
not be required to include any item of income in, or exclude any item of
deduction from, taxable income for any taxable period (or portion thereof)
ending after the Effective Time as a result of any: (i) change in method of
accounting made prior to the Effective Time; (ii) closing agreement as described
in Section 7121 (or any corresponding or similar provision of state, local, or
foreign Tax law) executed prior to the Effective Time; (iii) intercompany
transactions or excess loss accounts described in Treasury Regulations under
Section 1502 of the Code (or any similar provision of state, local, or foreign
Tax Legal Requirement); (iv) installment sale or open transaction disposition
made on or prior to the Effective Time; or (v) prepaid amount received on or
prior to the Effective Time.
(n)    Consolidated Groups. The Company has not ever been a member of an
affiliated, combined, consolidated or unifying group (including within the
meaning of Code §1504(a)) filing a consolidated federal income Tax Return (other
than a group, the common parent of which was the Company) and has never been a
party to any joint venture, partnership, or, to the Knowledge of the Company,
other agreement that reasonably could be treated as a partnership or tax
purposes.
(o)    Section 1503. The Company has not incurred a dual consolidated loss
within the meaning of Section 1503 of the Code (or any similar provision of U.S.
(state, local) or non-U.S. Tax Legal Requirement).
(p)    Section 897. The Company: (i) is not and has never been a “United States
real property holding corporation” within the meaning of Section 897(c)(2) of
the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code; and (ii) has not made the election provided under section 897(i) of
the Code.
(q)    Tax Incentives. The Company is in compliance with all terms and
conditions of any Tax exemption, Tax holiday or other Tax reduction agreement or
order (each, a “Tax Incentive”) and the consummation of the transactions
contemplated by this Agreement will not have any adverse effect on the continued
validity and effectiveness of any such Tax Incentive.
(r)    Section 409A.
(i)    Each “nonqualified deferred compensation plan” (as such term is defined
in Section 409A(d)(1) of the Code) subject to Section 409A of the Code (or any
state law equivalent) and the regulations and guidance thereunder
(“Section 409A”) is in operational and documentary compliance with Section 409A.
No nonqualified deferred compensation plan that was originally exempt from
application of Section 409A has been “materially modified” (within the meaning
of IRS Notice 2005-1) at any time since the Company’s incorporation. No
compensation shall be includable in the gross income of any Employee as a result
of the operation of Section 409A with respect to any Company Employee Plan or
other arrangements or agreements which is or has been in effect at any

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time prior to the Effective Time. To the extent required, the Company has
properly reported and/or withheld and remitted on amounts deferred under any
Company nonqualified deferred compensation plan subject to Section 409A. There
is no Contract, agreement, plan or arrangement to which the Company or any of
its ERISA Affiliates is a party, including the provisions of this Agreement,
covering any Employee of the Company, which individually or collectively could
require the Company or any of its Affiliates to pay a Tax gross up payment to,
or otherwise indemnify or reimburse, any Employee for Tax-related payments under
Section 409A. There is no contract, agreement, plan or arrangement to which the
Company is a party, including the provisions of this Agreement, which,
individually or collectively, could give rise to a Parent, Company, Surviving
Corporation, or Subsidiary Tax under Section 409A or that would give rise to an
Employee Tax and/or Parent, Company, Surviving Corporation or Subsidiary
reporting obligations under Section 409A.
(ii)    No Company Option or other stock right (as defined in U.S. Treasury
Department regulation 1.409A-1(l)) (w) has an exercise price that was less than
the fair market value of the underlying equity as of the date such option or
right was granted, (x) has any feature for the deferral of compensation other
than the deferral of recognition of income until the later of exercise or
disposition of such option or rights, (y) has been granted after the Company’s
incorporation, with respect to any class of stock of the Company that is not
“service recipient stock” (within the meaning of applicable regulations under
Section 409A), or (z) has ever been accounted for other than fully in accordance
with GAAP in the Company’s financial statements provided to Parent.
(s)    Tax Attributes. The Company makes no representations or warranties
regarding the amount or availability of any net operating losses of the Company,
or the ability of Parent or any of its Affiliates (including the Surviving
Corporation) to utilize such net operating losses or other Tax attributes after
the Closing.
2.11    Real Property.  The Company does not own any real property, nor has the
Company ever owned any real property. Section 2.11 of the Disclosure Schedule
sets forth a list of all leases, lease guaranties, subleases, agreements for the
leasing, use or occupancy of, or otherwise granting a right in or relating to
the Leased Real Property (collectively, the “Lease Agreements”). The Company
currently occupies all of the Leased Real Property for the operation of its
business. There are no other parties occupying, or with a right to occupy, the
Leased Real Property. The Company does not owe brokerage commissions or finders’
fees with respect to any such Leased Real Property.
2.12    Tangible Property.  As of the date of this Agreement, the Company has
good and valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its tangible properties and assets, real,
personal and mixed, in each case, that is shown on the Current Balance Sheet,
free and clear of any Liens, except Permitted Liens and such imperfections of
title and encumbrances, if any, which do not materially detract from the value
or materially interfere with the present use of the property subject thereto or
affected thereby. The material items of equipment owned or leased by the Company
(i) are adequate for the conduct of the business of the Company as currently
conducted, and (ii) are, in all material respects, in good operating condition,
regularly and properly maintained, subject to normal wear and tear.
2.13    Intellectual Property.
(a)    Company Products. Section 2.13(a) of the Disclosure Schedule accurately
identifies and describes each Company Product. The Company has Made Available to
Parent a complete and accurate bill of materials for each Company Product.

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(b)    Company IP. Section 2.13(b) of the Disclosure Schedule accurately
identifies: (A) each item of Company IP that is Registered IP (“Company
Registered IP”); and (B) the jurisdiction in which such item of Company
Registered IP has been registered or filed and the applicable application,
registration or serial number. With respect to any patentable inventions that
are Company IP, the Company has made a decision, in accordance with reasonable
business practices, to either maintain such invention as a Trade Secret, in
which case the Company has maintained such invention as a Trade Secret, or has
filed a Patent on such invention in a timely manner, and continued to prosecute
and maintain such Patent in accordance with all Legal Requirements, except where
the Company has decided in accordance with reasonable business practices to
cease prosecution or maintenance of or to otherwise abandon such Patent.
(c)    IP Licenses. Section 2.13(c)(i) of the Disclosure Schedule sets forth:
(A) each Contract pursuant to which Company has licensed or is obligated to
license any Company IP or Company Products to a third party (the
“Out-Licenses”), and (B) each Contract pursuant to which a third party has
licensed any Intellectual Property Rights to Company (the “In-Licenses”) other
than (1) Open Source Software, and (2) Shrink-Wrap Code; excluding, for the
purpose of (A) and (B), employee and consultant agreements, and non-disclosure
agreements. Section 2.13(c)(ii) of the Disclosure Schedule sets forth (A) all
Third Party Components (other than Software subject to Open Source Licenses),
(B) the In-License related to such Third Party Component, (C) whether the
license or licenses so granted to the Company are exclusive or nonexclusive, and
(D) each Company Product in which such Third Party Component is incorporated or
for which it is material to the development of or used to deliver, host, provide
or distribute such Company Product.
(d)    Standard Form IP Agreements. The Company has Made Available a true,
correct and complete copy of each Standard Form IP Contract.
(e)    Ownership Free and Clear. The Company owns all right, title and interest
to the Company IP, including, without limitation, all right, title and interest
to sue for infringement of Intellectual Property Rights that are Company IP, or,
with respect to exclusively licensed Company IP, has a valid and enforceable
license thereto, in each case, free and clear of all Liens other than
non-exclusive end user licenses of Intellectual Property Rights granted in the
ordinary course of business. There are no actions, suits, investigations,
claims, or proceedings threatened, pending, or in progress relating in any way
to the Company IP. Without limiting the generality of the foregoing:
(i)    all documents and instruments necessary to perfect the rights of the
Company in the Company Registered IP have been validly executed, delivered,
recorded and filed in a timely manner with the applicable Governmental Entity;
(ii)    each Person who is or was an employee or independent contractor of the
Company and who is or was involved in the creation or development of any
Intellectual Property or Intellectual Property Rights for the Company has signed
a valid and enforceable agreement sufficient to irrevocably assign such
Intellectual Property Rights to the Company, and containing a waiver of moral
rights to the extent not prohibited under applicable Legal Requirements, and
containing confidentiality provisions protecting the Company IP, with each such
agreement substantially in the Company’s Standard Form IP Contract for employees
(a copy of which is attached to Section 2.13(e)-A of the Disclosure Schedule
(the “Employee Proprietary Information Agreement”)) or substantially in the
Company’s Standard Form IP Contract for consultants or independent contractors
(a copy of which is attached to Section 2.13(e)-B of the Disclosure Schedule
(the “Consultant Proprietary Information Agreement”)), as the case may be;

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(iii)        no Employee or former employer of any Employee has any claim, right
or interest to or in any Company IP;
(iv)        neither any employee or independent contractor of the Company is in
breach of any Contract with any former employer or other Person concerning
Intellectual Property Rights or confidentiality;
(v)        no funding, facilities or personnel of any Governmental Entity,
university, or research facility were used to develop or create any Company IP
in a manner such that such Governmental Entity, university or research facility
has any claim, right or interest to or in any Company IP;
(vi    )    the Company has taken reasonable steps to maintain the
confidentiality of all proprietary information held by the Company, or purported
to be held by the Company, as a Trade Secret, as well as any confidential
information or Trade Secrets provided to the Company under an obligation of
confidentiality;
(vii)    the Company has not assigned or otherwise transferred ownership of, or
agreed to assign or otherwise transfer ownership of, any Intellectual Property
Right to any other Person and there are no existing contracts, agreements,
options, commitments, or rights with, to, or in any person to acquire ownership
of any of the Company IP or rights therein;
(viii)    neither Parent nor any of its Affiliates will be subject to any
covenant not to sue or, other than pursuant to an Out-License that is disclosed
and described in Section 2.13(e)(viii) of the Disclosure Schedule, similar
restrictions on its enforcement or enjoyment of the Company IP as a result of
any prior transaction related to the Company IP;
(ix)        the Company is not currently and has never been a member or promoter
of, or a contributor to, any industry standards body or similar organization
that could require or obligate the Company to grant or offer to any other Person
any license or right to any Company IP;
(x)        no third party that has licensed Intellectual Property Rights that
are included in or used for the provision of Company Products or provided any
Intellectual Property that is included in or used for the provision of Company
Products, has retained sole ownership of or has retained exclusive license to
rights under any Intellectual Property Rights in any improvements or derivative
works made solely or jointly by the Company under such license;
(xi)        the Company owns or otherwise has, and after the Closing will
continue to have, all Intellectual Property Rights and Intellectual Property
needed to conduct the business of such entity as currently conducted, except to
the extent any In-Licenses are terminated or permitted to lapse or not renew by
or at the direction of Parent, in accordance with their terms, after the
Closing, provided that the foregoing representations and warranties are made
solely as to the Company’s Knowledge with respect to third-party Patents other
than those Patents licensed pursuant to In-Licenses; and
(xii)    except pursuant to a Contract set forth in Section 2.13(e)(xii) of the
Disclosure Schedule, the Company has no obligations to pay any amounts or to
provide other consideration to any other person (including any Employee of the
Company) in consideration for the Company’s use or practice of any Company IP or
manufacture, use, or distribution of Company Products, as such activities are
currently conducted by or on behalf of the Company.
(f)    Valid and Enforceable.

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(i)    Each item of Company Registered IP is and at all times has been in
compliance with all Legal Requirements, and all filings, payments and other
actions required to be made or taken to maintain such item of Company Registered
IP in full force and effect have been made by the applicable deadline. To the
Knowledge of the Company, there is no reasonable basis for a claim that any
Company Registered IP is invalid or unenforceable, except as disclosed in the
applicable file wrapper therefor. The Company has not received any notice or
information of any kind from any source suggesting that the Company Registered
IP may be invalid, unpatentable (or otherwise not registrable), or
unenforceable, other than official notices from national or regional patent or
trademark offices in the ordinary course of Patent or Trademark prosecution
(“Registered IP Notices”). None of the Company or its respective agents or
representatives have engaged in any conduct, or omitted to perform any necessary
act, the result of which would invalidate any of the Company Registered IP or
hinder its enforcement, including, without limitation, misrepresenting the
Patents within the Company IP to a standard-setting organization, but excluding,
for clarity, where the Company has decided in accordance with reasonable
business practices to cease prosecution or maintenance or to otherwise abandon
Company Registered IP.
(ii)    Patents. (A) All Patents that are Company Registered IP are valid and
enforceable (except with respect to any pending Patents that are not currently
valid and enforceable), and there are no actions, fees or taxes, including the
payment of any registration, maintenance or renewal fees or the filing of any
documents, applications or certificates for the purposes of perfecting,
maintaining or renewing any Patents that are Company Registered IP due within
ninety (90) days after the Closing Date that have not already been paid or
responded to by the Company. (B) No Patent within the Company Registered IP has
been challenged in any way, other than in connection with Registered IP Notices.
There is no threatened or pending litigation, interference, opposition,
reexamination, inter partes, or other proceeding involving such Patents. (C) If
any of the Patents listed in Section 2.13(b) of the Disclosure Schedule are
terminally disclaimed to another Patent, all Patents subject to such terminal
disclaimer are within the Company Registered IP. (D) To the extent “small
entity” fees were paid to the United States Patent and Trademark Office for any
Patent within the Company Registered IP, such reduced fees were then appropriate
because the payor qualified to pay “small entity” fees at the time of such
payment and specifically had not licensed rights in any of the Patents to an
entity that was not a “small entity,” in each case, to the extent then-required
by applicable law in order to claim “small entity” status. (E) To the extent
“small entity” fees were paid to the United States Patent and Trademark Office
for any Patent within the Company IP where the payor did not qualify to pay
“small entity” fees, such “small entity” fees were paid in good faith and such
error was later corrected pursuant to 37 CFR 1.28(c). (F) Notwithstanding
anything to the contrary in this Agreement, all representations made by the
Company in Sections 2.13(f)(i) and 2.13(f)(ii) regarding the Jointly Owned
Patents (as defined in the Disclosure Schedule) are made solely to the Knowledge
of the Company.
(iii)    Trademarks. (A) All Trademarks that are Company IP are valid and
enforceable and are not subject to any maintenance fees or taxes or
registration, maintenance or renewal actions falling due within ninety (90) days
after the Closing Date that have not already been paid or responded to by the
Company. (B) No Trademark within the Company IP has been or is now involved in
any opposition, invalidation or cancellation, and no such action is threatened
with respect to any Trademark within the Company IP. (C) All services, products
and materials bearing or identified by a Trademark within the Company IP, as
applicable, bear the proper registration notice where necessary or required by
law for the ownership, validity, or enforceability of the Trademark. (D) No
Trademark (whether registered or unregistered) or otherwise protected
designation (e.g. worktitle) owned or applied for by the Company, or used by or
on behalf of the Company as a Trademark of the Company, other than those
Trademarks licensed to the Company pursuant to In-Licenses, conflicts or
interferes with any Trademark (whether registered or unregistered) owned, used
or applied for by any other Person. The Company has taken reasonable steps to
properly use and establish and preserve its rights in and to any

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Trademark (whether registered or unregistered) in which the Company has or
purports to have an ownership interest.
(iv)    Copyrights. (A) All of the Copyrights that are Company Registered IP or
that are Company IP and otherwise material to the Company’s business are valid
and enforceable (or, with respect to unregistered copyrights, will be
enforceable to the extent hereafter registered), and are not subject to any
maintenance fees or taxes or registration, maintenance or renewal actions
falling due within ninety (90) days after the date of Closing that have not
already been paid or responded to by the Company. (B) No Copyright owned by the
Company is, to the Knowledge of the Company, infringed or has been challenged or
threatened in any way. (C) All material works released by or on behalf of the
Company encompassed by the Copyrights that are Company IP have been marked with
the proper copyright notice where necessary or required by law for the validity
or enforceability of the Copyright.
(v)    Trade Secrets. (A) All of the Trade Secrets that are Company IP are valid
and enforceable; provided that no representation is made as to enforceability of
confidential business information that is not protectable under applicable trade
secret law by no act or omission of the Company. (B) With respect to all source
code (including algorithms) within the Company IP, the documentation maintained
by the Company relating to such source code (including algorithms) is reasonably
current, materially accurate and reasonably sufficient in detail and content to
identify and explain it and to allow its full and proper use by a reasonably
skilled programmer without reliance on the knowledge or memory of any particular
individual. (C) The Company has taken commercially reasonable precautions to
protect the secrecy, confidentiality and value of its Trade Secrets and the
Company has not disclosed any of its Trade Secrets to any entity other than
pursuant to a confidentiality agreement or other agreement that prohibits the
use and disclosure of the Trade Secret other than for the benefit of the
Company, other than in connection with the filing of a Patent. (D) The Company
has good title to its Trade Secrets. (E) The Company has an absolute right to
use its Trade Secrets as such have been used by or on behalf of the Company,
provided that the foregoing representations and warranties are made solely as to
the Company’s Knowledge with respect to third-party Patents. (F) To the
Knowledge of the Company, the Trade Secrets that are Company IP have not been
used by or appropriated for the benefit of any Person (other than the Company),
or to the detriment of the business of the Company. No Trade Secret within the
Company IP is subject to any adverse claim or has been challenged or threatened
in any way. The Company uses reasonable measures to maintain its proprietary
algorithms as Trade Secrets. Without limiting the foregoing, the Company has not
disclosed, distributed, or licensed any Intellectual Property that (I) contains
or embodies any of its proprietary algorithms or source code to any person or
(II) describes in detail any of its proprietary algorithms to any person (other
than to any individual who is or was, at the time, an employee or consultant of
the Company involved in the development of Company IP, pursuant to an Employee
Proprietary Information Agreement or Consultant Proprietary Information
Agreement).
(g)    Effects of the Merger. Neither the execution, delivery or performance of
this Agreement or any other agreements referred to in this Agreement nor the
consummation of the Merger or any of the other Transactions will, with or
without notice or the lapse of time, result in or give any other Person the
right or option to cause or declare, other than pursuant to any Contract to
which Parent or any of its Affiliates is bound and the Company is not bound:
(i) a loss of, or Lien on, any Company IP or rights thereto; (ii) a breach of
any Contract listed or required to be listed in Section 2.13(c) of the
Disclosure Schedule; (iii) the release, disclosure or delivery of any Company IP
by or to any escrow agent or other Person; (iv) the grant, assignment or
transfer to any other Person of any license or other right or interest under, to
or in any of the Company IP or any Intellectual Property Rights owned by, or
licensed to, Parent or any of its Affiliates; or (v) payment of any royalties or
other license fees with respect to Intellectual Property Rights of any third
party in excess of those payable by the Company in the absence of this Agreement
or the Transactions.

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(h)    No Third Party Infringement of Company IP. To the Knowledge of the
Company, no Person has infringed, misappropriated, or otherwise violated, and no
Person is currently infringing, misappropriating or otherwise violating, any
Company IP. Section 2.13(h) of the Disclosure Schedule accurately identifies
(and the Company has Made Available a true, correct and complete copy of) each
letter or other written or electronic communication or correspondence that has
been sent or otherwise delivered by or to the Company or any of its
representatives regarding any actual, alleged or suspected infringement or
misappropriation of any Company IP. The Company has not: (i) put a third party
on notice of actual or potential infringement of any of the Company IP; (ii)
invited any third party to enter into a license under any of the Company IP;
and/or (iii) initiated any enforcement action with respect to any of the Company
IP.
(i)    Use of Licensed IP. The Company has valid written licenses in respect of
all Licensed IP of sufficient scope to permit the Company to conduct its
businesses without infringing or violating the rights of third parties, provided
that the foregoing representations and warranties are made solely as to the
Company’s Knowledge with respect to third-party Patents other than those Patents
licensed to the Company pursuant to written licenses, and all such licenses will
survive the Closing and continue in full force and effect thereafter, so as to
preserve all rights of, and benefits to, the Company under such licenses from
and after the Closing (except to the extent any such licenses are terminated or
permitted to lapse or not renew by or at the direction of Parent, in accordance
with their terms, after the Closing). To the Knowledge of the Company, no claim
or proceeding relating to the ownership of Licensed IP is pending or has been
threatened, except for any such claim or proceeding that, if adversely
determined, would not adversely affect (A) the use or exploitation of such
Licensed IP or (B) the distribution, hosting, provision, delivery or sale of any
Company Product.
(j)    No Infringement of Third Party IP Rights. The Company is not infringing,
misappropriating or otherwise violating, and has never infringed,
misappropriated or otherwise violated, any Intellectual Property Right of any
other Person, and the conduct of the business of the Company when conducted in
substantially the same manner after the date of this Agreement by the Company
and after the Closing Date, by the Company, will not infringe, misappropriate or
otherwise violate any Intellectual Property Right (or any right to privacy or
publicity) of any other Person, or constitute unfair competition or trade
practices under any Legal Requirement, provided that the foregoing
representations and warranties are made solely as to the Company’s Knowledge
with respect to third-party Patents; provided, further, that the foregoing
representations and warranties do not extend to infringement or misappropriation
occurring after the Closing Date that would not have occurred but for a change
made by or at the direction of Parent to the Company Products or the conduct of
the business of the Company, after the Closing Date. Without limiting the
generality of the foregoing: (i)  no infringement, misappropriation or similar
claim or legal proceeding is pending or has been threatened against the Company
or, to the Knowledge of the Company, against any other Person who may be
entitled to be indemnified, defended, held harmless or reimbursed by the Company
with respect to such claim or legal proceeding; (ii) the Company has not
received any notice or other communication (in writing or otherwise) (A)
relating to any actual, alleged or suspected infringement, misappropriation or
violation of any Intellectual Property Right of another Person, (B) inviting the
Company to license any Intellectual Property Rights of another Person, or (C)
claiming that the Company Product or the operation of the business of the
Company constitutes unfair competition or trade practices under any Legal
Requirements; and (iii)  the Company is not bound by any Contract to indemnify,
defend, hold harmless or reimburse any other Person with respect to any
infringement, misappropriation or violation of any Intellectual Property Right
(other than pursuant to (I) the Standard Form of IP Contracts or (II) any
industry-standard indemnification provision, not pertaining to the Company
Products or any Intellectual Property Rights therein, in any license for
Shrink-Wrap Code). Notwithstanding anything to the contrary in this Agreement,
Section 2.13 contains the only representations or warranties made by the Company
with respect to the infringement, misappropriation, or violation by the Company
of Intellectual Property Rights of any other Person.

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(k)    Company IP Contracts. None of the Company IP Contracts expressly requires
the Company to return or refund any amounts paid to it (other than any prepaid,
unused amounts), or grant any credit to any third party, or pay any liquidated
damages or penalties in the event of any breach of any warranty or any failure
of the Company to perform under such Company IP Contract.
(l)    Bugs. None of the currently commercially available or used Company
Software: (i) contains any bug, defect or error that materially and adversely
affects the use, functionality or performance of such Company Software or any
product or system containing or used in conjunction with such Company Software;
or (ii) fails to materially comply with any applicable warranty or other
contractual commitment of the Company relating to the use, functionality or
performance of such Company Software or any product or system containing or used
in conjunction with such Company Software. The Company has Made Available a
true, correct and complete list of all known priority 1, priority 2 and major
bugs, defects and errors in each currently commercially available or used
version and component of the Company Software.
(m)    No Harmful Code. None of the Company Software contains any “back door,”
“drop dead device,” “time bomb,” “Trojan horse,” “virus,” or “worm” (as such
terms are commonly understood in the software industry) or any other code
designed or intended to have, any of the following functions: (i) disrupting,
disabling, harming or otherwise materially impeding in any manner the operation
of, or providing unauthorized access to, a computer system or network or other
device on which such code is stored or installed; or (ii) damaging or destroying
any data or file without the user’s consent (collectively, “Harmful Code”).
(n)    Security Measures. The Company has taken reasonable steps and implemented
reasonable procedures designed to ensure that the information technology systems
used in connection with the operation of the Company are free from any Harmful
Code. The Company has reasonable disaster recovery and security plans,
procedures and facilities for the business of the Company, and has taken
reasonable steps to safeguard the information technology systems utilized in the
operation of the business of the Company as such is currently conducted. To the
Knowledge of the Company, there have been no material unauthorized intrusions or
breaches of the security of such information technology systems.
(o)    No Spyware or Malware. None of the Company Software is designed to
collect Personal Data stored on the computer system or device without the
knowledge and consent of the owner or authorized user of a computer system or
device. None of the Company Software performs or is designed to perform the
following functions, without the knowledge and consent of the owner or
authorized user of a computer system or device: (i) interfere with the owner’s
or an authorized user’s control of the computer system or device; (ii) change or
interfere with settings, preferences or commands already installed or stored on
the computer system or device; (iii) change or interfere with data that is
stored, accessed or accessible on any computer system or device in a manner that
obstructs, interrupts or interferes with lawful access to or use of that data by
the owner or an authorized user of the computer system or device; (iv) cause the
computer system or device to communicate with another computer system or device;
or (v) install a computer program that may be activated by a Person other than
the owner or an authorized user of the computer system or device.
(p)    Use of Open Source Code.
(i)    Section 2.13(p)(i) of the Disclosure Schedule accurately identifies and
describes: (A) each item of Company Software that is subject (in whole or in
part) to the GNU General Public License, the Affero General Public License, the
GNU Lesser General Public License, the Eclipse Public License, the Common Public
License, the Mozilla Public License, the MIT License, the BSD

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License, the Apache License, the Eclipse Public License, any other license
identified as an open source license by the Open Source Initiative
(www.opensource.org), or any other license requiring disclosure, licensing or
distribution of source code as a condition of distribution or use (collectively,
“Open Source Software”); (B) the applicable license governing the use of such
Open Source Software (an “Open Source License”); (C) the manner in which such
Open Source Software was incorporated into, linked with, or distributed with any
Company Product; and (D) whether (and, if so, how) the Open Source Software was
modified and/or distributed by the Company.
(ii)    The Company has not used, modified, or distributed any Open Source
Software in a manner that: (A) could or does require (or could or does condition
the use or distribution of such Software on) the disclosure, licensing or
distribution of any source code for any Company IP or any portion of any Company
Product other than such Open Source Software; (B) could or does require the
licensing or disclosure of any Company IP, or any portion of any Company Product
other than such Open Source Software, for the purpose of making derivative
works; (C) could or does otherwise impose any limitation, restriction or
condition on the right or ability of the Company to use or distribute any
Company IP, including restrictions on the consideration to be charged for the
distribution of any Company Product; (D) creates obligations for the Company
with respect to Company IP or grants to any third party any rights or immunities
under Company IP; (E) requires the Company to indemnify or defend claims of any
sort asserted against third parties relating to the Open Source Software; or (F)
imposes any other limitation, restriction or condition on the right of the
Company to use or distribute any Company Product, other than requirements of
attribution, copyright notices or warranty disclaimers. The Company has complied
with all of the applicable terms and conditions of each applicable Open Source
License, including all applicable requirements pertaining to attribution and
copyright notices. The Company has not made any Company Product that is Software
available as Open Source Software.
(q)    No License of Source Code. No source code for any Company IP has been
licensed to any escrow agent or other Person, including under any Open Source
License. No source code for any Company IP has been delivered or made available
to any escrow agent or other Person, other than to any individual who is or was,
at the time, an employee or consultant of the Company involved in the
development of Company IP, pursuant to an Employee Proprietary Information
Agreement or Consultant Proprietary Information Agreement. The Company has no
duty or obligation (whether present, contingent or otherwise) to deliver,
license or make available the source code for any Company Software to any escrow
agent or other Person. No event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or could reasonably
be expected to, result in the (i) delivery or disclosure of any source code for
any Company Software to any other Person (other than to any individual who is or
was, at the time, an employee or consultant of the Company involved in the
development of Company IP, pursuant to an Employee Proprietary Information
Agreement or Consultant Proprietary Information Agreement) or (ii) license of
any source code for any Company Software to any other Person.
2.14    Privacy Matters.
(a)    Personal Data. Privacy Policies. Section 2.14(a)(i) of the Disclosure
Schedule identifies each distinct electronic or other database containing (in
whole or in part) Personal Data or Company Product Data maintained by or for the
Company at any time, the types of Personal Data or Company Product Data, to the
Knowledge of the Company, in each such database, and the means by which such
Personal Data and Company Product Data were collected. Section 2.14(a)(ii) of
the Disclosure Schedule identifies each publicly-available privacy policy that
is a Company Privacy Policy in effect at any time since the inception of the
Company and identifies the period of time during which such Company Privacy
Policy was or has been in effect. Copies of all Company Privacy Policies have
been Made Available.

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(b)    Privacy Compliance. The Company, the Company Products and all third
parties who have performed services for the Company and have had access to
Personal Data or Company Product Data in connection with the performance of such
services comply, and have at all times complied, with all applicable Company
Privacy Policies and all applicable Privacy Legal Requirements. The execution,
delivery and performance of this Agreement, the consummation of the Transactions
by the Company, and the continued direct or indirect possession or control, as
applicable, by the Company of all Company Product Data and Personal Data, in the
Company’s direct or indirect possession or control, will not result in a breach
or violation of any Privacy Legal Requirement (provided, however, that this
representation is made solely to the Knowledge of the Company with respect to
any Personal Data uploaded to the Company Products by Parent). The Company has
full rights, without obtaining any new consent, continue to directly or
indirectly possess or control, as applicable, all Company Product Data and
Personal Data, to the Knowledge of the Company, in the Company’s direct or
indirect possession or control without materially violating any Company Privacy
Policy or Privacy Legal Requirement (provided, however, that this representation
is made solely to the Knowledge of the Company with respect to any Personal Data
uploaded to the Company Products by Parent). There is not and has not been any
written complaint to, or any audit, proceeding, investigation (formal or
informal) or claim against, the Company or any of its customers (in the case of
customers, to the extent relating to the Company Products or the practices of
the Company) by any private party (other than with respect to investigations),
data protection authority, the Federal Trade Commission, any state attorney
general or similar state official or any other Governmental Entity with respect
to the collection, use, storage, hosting, disclosure, transmission, transfer,
disposal, retention, interception, or other processing of, or security of, any
Personal Data or Company Product Data.
(c)    Data Protection Practices. With respect to the Company Products
(including their underlying systems, networks and technology) and all Personal
Data and Company Product Data collected, stored, used, or maintained by or for
the Company, the Company has taken all steps reasonably necessary (including
implementing and monitoring compliance with adequate measures with respect to
technical and physical security) to ensure that the Company Products and such
Personal Data and Company Product Data are protected against unauthorized
access, use, modification, disclosure or other misuse, and no unauthorized
access to or unauthorized use, modification, disclosure, or other misuse of such
Company Products, Personal Data or Company Product Data has occurred. The
Company maintains a written information security program covering the Company,
the Company Products, and their respective networks and systems that includes
appropriate controls that have been regularly tested and reviewed.
2.15    Material Contracts.
(a)    Section 2.15(a) of the Disclosure Schedule identifies, in each subpart
that corresponds to the subsection listed below, any Contract in effect as of
the date of this Agreement, (x) to which the Company is a party, or (y)  under
which the Company has any right or interest (the Contracts described below,
whether or not set forth in Section 2.15(a) of the Disclosure Schedule, being
referred to herein as the “Material Contracts”):
(i)    that is with (A) a Top Customer or (B) with a Top Supplier;
(ii)    pursuant to which the Company has been appointed a partner, reseller or
distributor;
(iii)    pursuant to which the Company has appointed another party as a partner,
reseller, or distributor;

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(iv)        pursuant to which the Company is bound to or has committed to
provide any Company Product to any third party on a most favored pricing basis
or similar term, is otherwise bound by any “most favored nations” terms and
conditions or grants any right of first refusal, right of first offer, right or
first negation or other similar right;
(v)        pursuant to which the Company is bound to, or has committed to
provide or license, any Company Product, Intellectual Property, Intellectual
Property Rights or other rights to any third party on an exclusive basis or to
acquire or license any product, service, Intellectual Property, Intellectual
Property Rights or other rights on an exclusive basis from a third party;
(vi)        imposing any material restriction on the right or ability of the
Company (or that would purport to limit the freedom of Parent or any of its
Affiliates): (A) to engage in any business practices that are currently
conducted by the Company, (B) to compete with any other Person or to engage in
any line of business, market or geographic area, or to sell, license,
manufacture or otherwise distribute any of its technology or products, or from
providing services, to customers or potential customers or any class of
customers, in any geographic area, during any period of time, or in any segment
of the market; (C) to solicit the employment of, or hire, any potential
employees, consultants or independent contractors; (D) to acquire any product,
property or other asset (tangible or intangible), or any services, from any
other Person, to sell any product or other asset to or perform any services for
any other Person or to transact business or deal in any other manner with any
other Person; or (E) to develop or distribute any technology, other than
pursuant to any industry-standard inbound license restriction included in any
In-License, Open Source License or license for Shrink-Wrap Code;
(vii)    set forth or required to be set forth in Sections 2.13(c)(i) or
2.13(c)(ii) of the Disclosure Schedule;
(viii)    that is a collectively bargained agreement or similar Contract,
including any Contract with any union, works council, personnel delegates or
similar labor entity, or specifically authorized employees;
(ix)        (A) any employment, contractor or consulting agreement, contract
with any current Employee; (B) any agreement, contract or commitment to grant
any severance or termination pay (in cash or otherwise) to any current Employee;
or (C) any agreement, contract or commitment that guarantees any current
Employee compensation beyond Employee’s base compensation;
(x)        that is with insurance companies covering healthcare, disability and
pension plans in force in the Company or under which the Company has any
liability, together with any existing documents supporting these plans within
the Company, including internal information notices;
(xi)        that is a Lease Agreement;
(xii)    relating to capital expenditures and involving future payments in
excess of $25,000 individually or $100,000 in the aggregate;
(xiii)    relating to the settlement of any Action;
(xiv)    relating to the ownership of, or investment in, any business or
enterprise of another Person (including investments in joint ventures and
minority equity investments);

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(xv)    relating to any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other Contracts or instruments relating to
Indebtedness or extension of credit or the creation of any Lien with respect to
any asset of the Company;
(xvi)    involving or incorporating any guaranty, pledge, performance or
completion bond, indemnity or surety arrangement, other than any
industry-standard indemnification provision included in any license for
Shrink-Wrap Code;
(xvii)    creating or relating to any partnership or joint venture or any
sharing of revenues, profits, losses, costs or liabilities, including any
Contract involving the payment of royalties or other amounts calculated based
upon the revenue or income of the Company;
(xviii)    relating to the purchase or sale of any product or other asset by or
to, or the performance of any services by or for, any Interested Party;
(xix)    relating to the research, development (other than any Employee
Proprietary Information Agreement or Consultant Proprietary Information
Agreement), distribution, supply, manufacturing, marketing, promotion or
co-promotion of any Company Product.
(xx)    that is a business associate agreement as defined by HIPAA;
(xxi)    constituting or relating to any (A) prime contract, subcontract, letter
contract, purchase order or delivery order executed or submitted to or on behalf
of any Governmental Entity or any prime contractor or higher-tier subcontractor,
or under which any Governmental Entity or any such prime contractor or
subcontractor otherwise has or may acquire any right or interest, or
(B) quotation, bid or proposal submitted to any Governmental Entity or any
proposed prime contractor or higher-tier subcontractor of any Governmental
Entity;
(xxii)    that has a term of more than sixty (60) days and that may not be
terminated by the Company (without penalty or any post-termination support,
maintenance, engineering or similar obligations) within sixty (60) days after
the delivery of a termination notice by the Company; and
(xxiii)    that contemplates or involves: (A) the payment or delivery of cash or
other consideration in an amount or having a value in excess of $100,000 in the
aggregate; or (B) the performance of services having a value in excess of
$100,000 in the aggregate.
(b)    The Company has Made Available true, correct and complete copies of all
written Material Contracts, including all amendments thereto. Section 2.15(b) of
the Disclosure Schedule provides an accurate description of the terms of each
Material Contract that is not in written form as of the date of this Agreement.
Each Material Contract is valid and in full force and effect and is enforceable
against the Company and by the Company in accordance with its terms, subject to
the Enforceability Limitations. The Company has not, in any material respect,
violated or breached, or committed any default under, any Material Contract,
and, to the Knowledge of the Company, no other Person has, in any material
respect, violated or breached, or committed any default under, any such Material
Contract. To the Knowledge of the Company, no event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse of time)
will, or would reasonably be expected to: (i) result in a violation or breach of
any of the provisions of any Material Contract; (ii) give any Person the right
to declare a default or exercise any remedy under any Material Contract;
(iii) give any Person the right to accelerate the maturity or performance of any
Material Contract; or (iv) give any Person the right to cancel, terminate or
modify any Material Contract. The Company has not received any notice regarding
any

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actual or possible violation or breach of, or default under, any Material
Contract. No Person has threatened to terminate or refuse to perform its
obligations under any Material Contract (regardless of whether such Person has
the right to do so under such Contract).
2.16    Employee Benefit Plans.
(a)    Schedule. Section 2.16(a)(i) of the Disclosure Schedule contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement, including any specific Employee Agreement providing ex-gratia
severance or post-termination payments and/or benefits and any specific Employee
Agreement providing any specific obligations in case of change of control of the
Company. No Person, other than an employee who is not listed on
Section 2.16(a)(ii) of the Disclosure Schedule, is or was a member or former
member of any Company Employee Plan. Neither the Company nor any ERISA Affiliate
has made any plan or commitment to establish any new Company Employee Plan or
Employee Agreement, to modify any Company Employee Plan or Employee Agreement
(except to the extent required by law or to conform any such Company Employee
Plan or Employee Agreement to the requirements of any applicable law, in each
case as previously disclosed to Parent in writing, or as required by this
Agreement), or to enter into any Company Employee Plan or Employee Agreement.
Section 2.16(a)(iii) of the Disclosure Schedule sets forth a table including the
name, hiring date, title, supervisor, annual salary or base wages, commissions,
bonus (target, maximum and any amounts paid for the current year),
classification pursuant to the applicable industry-wide collective bargaining
agreement (if any), organization of working time, overtime hours and accrued but
unpaid vacation or paid time off (PTO) balances of each current employee of the
Company as of the date of this Agreement, including with respect to any
Employees on a leave of absence, the date the leave commenced, the reason for
the leave and the expected date of return to work of such Employee. To the
Knowledge of the Company, no employee listed on Section 2.16(a)(iii) of the
Disclosure Schedule intends to terminate his or her employment for any reason,
other than in accordance with any employment arrangements as may be provided for
in this Agreement. Section 2.16(a)(iv) of the Disclosure Schedule contains an
accurate and complete list of all Persons that have a consulting or independent
contractor relationship with the Company.
(b)    Documents. The Company has Made Available (i) correct and complete copies
of all documents embodying each Company Employee Plan and each Employee
Agreement including all amendments thereto and all related trust documents and
all related management and/or monitoring and/or information documents and/or
records required by Legal Requirements, (ii) the three (3) most recent annual
reports (Form Series 5500 and all schedules and financial statements attached
thereto), if any, required under ERISA or the Code in connection with each
Company Employee Plan, (iii) if the Company Employee Plan is funded, the most
recent annual and periodic accounting of Company Employee Plan assets, (iv) the
most recent summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Company
Employee Plan, (v) all written agreements and contracts currently in force
relating to each Company Employee Plan, including administrative service
agreements and group or other insurance contracts, (vi) all communications
within the past three (3) years to any Employee or Employees relating to any
Company Employee Plan and any proposed Company Employee Plan, in each case,
relating to any amendments, terminations, establishments, increases or decreases
in compensation benefits, acceleration of payments or vesting schedules or other
events which would result in any liability to the Company, (vii) all
correspondence and/or notifications within the past three (3) years to or from
any governmental agency or administrative service relating to any Company
Employee Plan, (viii) all current model COBRA forms and related notices,
(ix) all policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Company Employee Plan, (x) all discrimination tests for
each Company Employee Plan for the three (3) most recent plan years, and
(xi) the most recent IRS determination, opinion, notification or advisory
letters issued with respect to each Company Employee Plan that is a
tax-qualified retirement plan. There

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is no fact, condition, or circumstance since the date the documents were
provided in accordance with this paragraph (b), which would materially affect
the information contained therein and, in particular, and without limiting the
generality of the foregoing, no promises or commitments have been made to amend
any Company Employee Plan or Employee Agreement or to provide increased or
improved benefits thereunder or accelerate vesting or funding thereunder. No
verbal promises or representations have been made to any Employees to increase
their compensation or to continue their employment for any specific duration.
(c)    Bonus Plan Compliance. The Company is in compliance with all of its
bonus, commission and other compensation plans and has paid any and all amounts
required to be paid under such plans, including any and all bonuses and
commissions (or pro rata portion thereof) that may have accrued or been earned
through the calendar quarter preceding the Closing Date, and is not liable for
any payments, taxes or penalties for failure to comply with any of the terms or
conditions of such plans or the laws governing such plans.
(d)    No Pension Plan. Neither the Company nor any ERISA Affiliate has ever
maintained, established, sponsored, participated in, contributed to, or has any
liability with respect to any Pension Plan subject to Part 3 of Subtitle B of
Title I of ERISA, Title IV of ERISA or Section 412 of the Code.
(e)    No Self-Insured Plan. Neither the Company nor any ERISA Affiliate has
ever maintained, established, sponsored, participated in, contributed to or has
any liability with respect to any self-insured health and welfare plan that
provides benefits to employees (including any such plan pursuant to which a
stop-loss policy or contract applies).
(f)    Multiemployer and Multiple-Employer Plan, Funded Welfare Plans and MEWAs.
At no time has the Company or any ERISA Affiliate contributed to or been
obligated to contribute to any multiemployer plan (as defined in Section 3(37)
of ERISA). Neither the Company nor any ERISA Affiliate has at any time ever
maintained, established, sponsored, participated in or contributed to any
multiple employer plan or to any plan described in Section 413 of the Code, a
“funded welfare plan” within the meaning of Section 419 of the Code, or a
Multiple Employer Welfare Arrangement, as defined under Section 3(40)(A) of
ERISA (without regard to Section 514(b)(6)(B) of ERISA).
(g)    Employer Shared Responsibility. The Company is not an “applicable large
employer” (as defined in Section 4980H of the Code).
(h)    No International Employee Plans. Neither the Company or ERISA Affiliate
currently has, nor has it ever had, the obligation to maintain, establish,
sponsor, participate in or contribute to any International Employee Plan.
(i)    No Post-Employment Obligations. No Company Employee Plan or Employee
Agreement provides, or reflects or represents any liability to provide,
post-termination or retiree or post-employment life insurance, health or other
employee welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable Legal Requirements, and the Company has
not ever represented, promised or contracted (whether in oral or written form)
to any Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with life
insurance, health or other employee welfare benefits, except to the extent
required by statute or other applicable Legal Requirements. Section 2.16(i) of
the Disclosure Schedule accurately: (i) identifies each former Employee who is
receiving or is scheduled to receive (or whose spouse or other dependent is
receiving or is scheduled to receive) any compensation or benefits (whether

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from the Company or otherwise) relating to such former Employee’s service with
the Company; and (ii) briefly describes such benefits.
(j)    Effect of Merger. Neither the execution and delivery of this Agreement
nor the consummation of the Merger or the other Transactions (alone or in
connection with additional or subsequent events) or any termination of
employment or service in connection therewith will (i) result in any payment or
benefit (including severance, golden parachute, bonus or otherwise) becoming due
to any Employee, (ii) result in any forgiveness of Indebtedness, (iii) increase
any payments or benefits otherwise payable or to be provided by the Company or
(iv) result in the acceleration of the time of payment or vesting of any such
payments or benefits except as required under Section 411(d)(3) of the Code.
2.17    Employment Matters.
(a)    Compliance with Employment Laws. The Company is in material compliance
with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment, worker classification, tax withholding, social security
contributions withholding, prohibited discrimination, working time, employee
representation, equal employment, fair employment practices, meal and rest
periods, immigration status, employee safety and health, wages (including
overtime wages), compensation and hours of work, and in each case, with respect
to Employees: (i) 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, (ii) is not liable for any arrears of wages, severance
pay or any Taxes or social security contributions or any penalty for failure to
comply with any of the foregoing, and (iii) is not liable for any payment to any
trust or other fund governed by or maintained by or on behalf of any
Governmental Entity, 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). There are no material actions, suits, claims or administrative
matters pending, threatened or reasonably anticipated against the Company or any
of its Employees relating to any Employee, Employee Agreement or Company
Employee Plan. There are no pending or threatened or reasonably anticipated
claims or actions against the Company or any Company trustee under any worker’s
compensation policy or long-term disability policy. The Company is not party to
a conciliation agreement, consent decree or other agreement or order with any
federal, state, or local agency or Governmental Entity with respect to
employment practices. The services provided by each of the Company’s and its
ERISA Affiliates’ Employees are terminable at the will of the Company and its
ERISA Affiliates and any such termination would result in no liability to the
Company or any ERISA Affiliate (other than ordinary administration expenses or
with respect to benefits, other than bonuses, commissions or amounts under other
compensation plans, that were previously earned, vested or accrued under Company
Employee Plans prior to the Effective Time). Section 2.17(a) of the Disclosure
Schedule lists all liabilities of the Company to any Employee, that would result
from the termination by the Company or Parent of such Employee’s employment or
provision of services, other than those disclosed in Section 2.16(d). Neither
the Company nor any ERISA Affiliate has direct or indirect liability with
respect to any misclassification of any person as an independent contractor,
intern and/or temporary worker rather than as an employee, with respect to any
employee leased from another employer or with respect to any employee currently
or formerly classified as exempt from overtime wages.
(b)    Labor. No strike, labor dispute, slowdown, concerted refusal to work
overtime, or work stoppage or labor strike against the Company is pending, or to
the Knowledge of the Company, threatened, or reasonably anticipated. The Company
has no Knowledge of any activities or proceedings of any labor union to organize
any Employees. There are no Actions, labor disputes or grievances pending or
threatened or reasonably anticipated relating to any labor matters involving any
Employee, including charges of unfair labor practices. The Company has not
engaged in any unfair labor practices

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within the meaning of the National Labor Relations Act or similar Legal
Requirement. The Company is not presently, nor has it been in the past, a party
to, or bound by, any collective bargaining agreement, works council, union or
similar contract with respect to Employees and no such agreement is being
negotiated by the Company.
(c)    No Interference or Conflict. To the Knowledge of the Company, no
stockholder, director, officer, Employee or consultant of the Company is
obligated under any contract or agreement, subject to any judgment, decree, or
order of any court or administrative agency that would interfere with such
person’s efforts to carry out his/her functions to promote the interests of the
Company or that would interfere with the Company’s business. Neither the
execution nor delivery of this Agreement, nor the carrying on of the Company’s
business as presently conducted by the Company nor any activity of such
officers, directors, Employees or consultants in connection with the carrying on
of the Company’s business as presently conducted by the Company will, to the
Knowledge of the Company, conflict with or result in a breach of the terms,
conditions, or provisions of, or constitute a default under, any contract or
agreement under which any of such officers, directors, Employees, or consultants
is bound.
2.18    Governmental Authorizations.  Each notification, consent, license,
permit, grant or other authorization, including those from Governmental
Entities, (a) pursuant to which the Company currently operates or holds any
interest in any of its properties, or (b) which is required for the operation of
the Company’s business as currently conducted or the holding of any such
interest (collectively, “Company Authorizations”) has been issued or granted to
the Company, as the case may be, except as is not material in any case or in the
aggregate. The Company Authorizations are in full force and effect and
constitute all Company Authorizations required to permit the Company to operate
or conduct its businesses or hold any interest in its properties or assets, in
each case in all material respects, and none of the Company Authorizations is
subject to any term, provision, condition or limitation which may adversely
change or terminate such Company Authorizations by virtue of the completion of
the Merger. The Company has been and is in compliance with the terms and
conditions of the Company Authorizations.
2.19    Litigation.  There is no Action of any nature pending, or to the
Knowledge of the Company, threatened, against the Company, its properties or
assets (tangible or intangible) or any of its officers or directors (in their
capacities as such). To the Knowledge of the Company, no Governmental Entity has
at any time challenged or questioned the legal right of the Company to conduct
its operations as presently conducted or previously conducted. There is no
Action of any nature pending or, to the Knowledge of the Company, overtly
threatened, against any Person who has a contractual right or a right pursuant
to applicable Legal Requirements to indemnification from the Company related to
facts and circumstances existing prior to the Effective Time.
2.20    Insurance.  Section 2.20 of the Disclosure Schedule lists all insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company or any
ERISA Affiliate, including the type of coverage, the carrier, the amount of
coverage, the term and the annual premiums of such policies. There is no claim
by the Company or any ERISA Affiliate pending under any of such policies or
bonds as to which coverage has been questioned, denied or disputed or that the
Company or any ERISA Affiliate has a reason to believe will be denied or
disputed by the underwriters of such policies or bonds. In addition, there is no
pending claim of which its total value (inclusive of defense expenses) would
reasonably be expected to exceed the policy limits. All premiums due and payable
under all such policies and bonds have been paid, (or if installment payments
are due, will be paid if incurred prior to the Closing Date) and the Company and
its ERISA Affiliates are otherwise in material compliance with the terms of such
policies and bonds (or other policies and bonds providing substantially similar
insurance coverage). Such policies and bonds (or other

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policies and bonds providing substantially similar coverage) are in full force
and effect. The Company does not have any Knowledge of threatened termination
of, or premium increase with respect to, any of such policies. Neither the
Company nor any Affiliate has ever maintained, established, sponsored,
participated in or contributed to any self-insurance plan.
2.21    Compliance with Legal Requirements.
(a)    General. Except as is not material in any case or in the aggregate, the
Company has complied with all Legal Requirements and is not in violation of any
Legal Requirement. The Company has not received any notices of suspected,
potential or actual violation with respect to, any Legal Requirement.
(b)    Export Control Laws. The Company has at all times conducted its export
and re-export transactions in accordance with (x) all applicable U.S. export and
re-export control Legal Requirements, including the Export Administration
Regulations maintained by the U.S. Department of Commerce, trade and economic
sanctions maintained by the Treasury Department’s Office of Foreign Assets
Control, and the International Traffic in Arms Regulations maintained by the
Department of State and (y) all other applicable import/export controls in other
countries in which the Company conducts business. Without limiting the
foregoing, (i) the Company has obtained all material export and import licenses,
license exceptions and other consents, notices, waivers, approvals, Orders,
authorizations, registrations, declarations and filings with any Governmental
Entity required for (A) the export, import and re-export of products, services,
software and technologies and (B) releases of technologies and software to
foreign nationals located in the United States and abroad (“Export Approvals”);
(ii) the Company is in compliance in all material respects with the terms of all
applicable Export Approvals; (iii) there are no pending or, to the Company’s
Knowledge, overtly threatened claims against the Company with respect to such
Export Approvals or export or re-export transactions; (iv) no Export Approvals
for the transfer of export licenses to Parent or the Surviving Corporation are
required, or if required, such Export Approvals can be obtained expeditiously
without material cost; and (v) Section 2.21(b) of the Disclosure Schedule sets
forth the true, correct and complete export control classifications applicable
to the Company’s products, services, software and technologies.
(c)    Anticorruption Laws. Neither the Company nor any director, officer,
employee, distributor, reseller, consultant, agent or other third party acting
on behalf of the Company, has provided, attempted to provide, or authorized the
provision of anything of value (including but not limited to payments, meals,
entertainment, travel expenses or accommodations, or gifts), directly or
indirectly, to any person, including a “foreign official”, as defined by the
Foreign Corrupt Practices Act (“FCPA”), which includes employees or officials
working for state-owned or controlled entities, a foreign political party or
candidate, any individual employed by or working on behalf of a public
international organization, or any other person, for the purpose of (i)
obtaining or retaining business; (ii) influencing any act or decision of a
foreign government official in their official capacity; (iii) inducing a foreign
government official to do or omit to do any act in violation of their lawful
duties; (iv) directing business to another; or (v) securing any advantage in
violation of the FCPA or United Kingdom Bribery Act of 2010 (“UKBA”) or any
applicable local, domestic, or international anticorruption laws. Neither the
Company, nor any director, officer, employee or agents has used any corporate
funds to maintain any off-the-books funds or engage in any off-the-books
transactions nor has any of the before stated parties falsified any Company
documents. The Company has not made any provisions to any person (including
foreign government officials) that would constitute an improper rebate,
commercial bribe, influence payment, extortion, kickback, or other improper
payment in violation of the FCPA, UKBA, or any other applicable anticorruption
law. The Company maintain sufficient internal controls and compliance programs
to detect and prevent violations of anticorruption laws (including the FCPA and
UKBA), ensure its Books and Records are accurately maintained, and track any
payments made to third parties and

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foreign government officials. The Company has not conducted any internal or
government-initiated investigation, or made a voluntary, directed, or
involuntary disclosure to any governmental body or similar agency with respect
to any alleged act or omission arising under or relating to any noncompliance
with any anticorruption law, including the FCPA and UKBA. Upon request, the
Company agrees to provide Parent with anticorruption law certifications and
agree to permit access to its Books and Records.
(d)    Environmental Laws. The Company has not released any amount of any
Hazardous Material. No Hazardous Materials are present in, on or under any
property, including the land and the improvements, ground water and surface
water thereof, that the Company has at any time owned, operated, occupied or
leased. The Company has not transported, stored, used, manufactured, disposed
of, released or exposed its employees or others to Hazardous Materials in
violation of any Legal Requirement, nor has the Company disposed of,
transported, sold, or manufactured any product containing a Hazardous Material
(any or all of the foregoing being collectively referred to herein as “Hazardous
Materials Activities”) in violation of any rule, regulation, treaty or statute
promulgated by any Governmental Entity to prohibit, regulate or control
Hazardous Materials or any Hazardous Materials Activity.
(e)    Healthcare Laws. To its Knowledge, the Company is in compliance in all
material respects with all healthcare laws applicable to the operation of its
business as currently conducted, including (i) any and all federal, state and
local fraud and abuse laws, including, without limitation, the federal
Anti-Kickback Statute (42 U.S.C. § 1320a-7(b)), the civil False Claims Act (31
U.S.C. § 3729 et seq.) and the regulations promulgated pursuant to such
statutes, and (ii) requirements of law relating to the billing or submission of
claims, collection of accounts receivable, underwriting the cost of, or
provision of management or administrative services in connection with the
Company Products, in each case to the extent applicable to the Company.
2.22    FDA Compliance.
(a)    As to each product subject to the FDCA and the regulations of the FDA
promulgated thereunder or any comparable foreign laws, rules and regulations
(such laws and regulations, “Medical Regulations”) that has been developed,
manufactured, tested, distributed and/or marketed by or on behalf of the Company
or any of its Subsidiaries (each such product, a “Medical Device”), each such
Medical Device has been developed, manufactured, tested, distributed and
marketed in compliance in all material respects with all applicable requirements
under the Medical Regulations, including those relating to registration and
listing, good manufacturing practice requirements, quality systems regulations,
labeling, advertising, record keeping and filing of required reports and
security. Each Medical Device in commercial distribution is a Class I device
under 21 U.S.C.360c(a)(1)(A), and applicable rules and regulations thereunder.
(b)    The Company has not received any notice or written communication with
respect to the Company’s business from any Governmental Entity regarding, and,
there are no facts or circumstances that are likely to give rise to, (i) any
material violation of applicable Legal Requirements or material adverse change
in any Permit, or any failure to materially comply with any applicable Legal
Requirement or any term or requirement of any Permits or (ii) any revocation,
withdrawal, suspension, cancellation, limitation, termination or modification of
any Permits. No Permit will be terminated or impaired, or will become
terminable, in whole or in part, as a result of the consummation of the
transactions contemplated by this Agreement.
(c)    There is no actual or, to the knowledge of the Company, threatened
material action or investigation in respect of the Company’s business by the FDA
or any other Governmental Entity which has jurisdiction over the operations,
properties, products or processes of the Company, or, to

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the knowledge of the Company, by any third parties acting on their behalf. The
Company has no knowledge that any Governmental Entity is considering such action
or of any facts or circumstances that are likely to give rise to any such action
or investigation.
(d)    During the three (3) year period ending on the Closing Date, the Company
has not had any product or manufacturing site subject to a Governmental Entity
(including FDA) shutdown or import or export prohibition, nor received any FDA
Form 483 or other Governmental Entity notice of inspectional observations,
“warning letters,” “untitled letters” or, to the knowledge of the Company,
requests or requirements to make changes to the operations of the Company’s
business or the Company Products that if not complied with would reasonably be
expected to materially affect the operations of the Company’s business, or
similar correspondence or written notice from the FDA or other Governmental
Entity in respect of the Company’s business and alleging or asserting
noncompliance with any applicable Legal Requirements, Permits or such requests
or requirements of a Governmental Entity, and, to the knowledge of the Company,
neither the FDA nor any Governmental Entity is considering such action. No
medical device or other safety report with respect to the Company or the Company
Products has been reported by the Company, and to the knowledge of the Company,
no medical device or other safety report is under investigation by any
Governmental Entity with respect to the Company Products or Company’s business.
(e)    The manufacture of Company Products by, or on behalf of, the Company is
being conducted in compliance in all material respects with all applicable Legal
Requirements including the FDA’s Quality System Regulation at 21 C.F.R. Part 820
for products sold in the United States. The Company, and, to the knowledge of
the Company, any third party assembler, sterilizer or manufacturer of Company
Products, is in material compliance with all applicable Legal Requirements and
certifications currently held by the Company governing quality systems and
manufacturing processes and registration and listing requirements governing
those third parties’ activities, including those set forth in 21 C.F.R. Part 807
and 21 C.F.R. Part 820.
2.23    Interested Party Transactions. No officer, director or, to the Knowledge
of the Company, any other stockholder of the Company (nor any immediate family
member of any of such Persons, or any trust, partnership or corporation in which
any of such Persons has or has had an interest) (each, an “Interested Party”),
has, directly or indirectly, (i) any interest in any Person which furnished or
sold, or furnishes or sells, services, products, technology or Intellectual
Property Rights that the Company furnishes or sells, or proposes to furnish or
sell, or (ii) any interest in any Person that purchases from or sells or
furnishes to the Company, any goods or services, or (iii) any interest in, or is
a party to, any Contract to which the Company is a party (other than in such
Interested Party’s capacity as an officer, director, employee, consultant or
securityholder of the Company); provided, however, that ownership of no more
than one percent (1%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed to be an “interest in any Person” for purposes
of this Section 2.23.
2.24    Books and Records.  The minute books of the Company have been Made
Available, are complete in all material respects and up-to-date, and have been
maintained in accordance with reasonably sound and prudent business practice.
The minutes of the Company contain true, correct and complete, in all material
respects, records of all actions taken, by the respective stockholders and the
Board of Directors of the Company (and any committees thereof) since the time of
incorporation of the Company, as the case may be. The Company has Made Available
its business records, financial books and records, personnel records, ledgers,
sales accounting records, tax records and related work papers and other books
and records (collectively, the “Books and Records”). At the Closing, the minute
books and other Books and Records will be in the possession of the Company.

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2.25    Third Party Expenses.  The Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders’ fees or agents’
commissions, fees related to investment banking or similar advisory services or
any similar charges in connection with the Agreement or any transaction
contemplated hereby, nor will Parent, the Surviving Corporation or the Surviving
Corporation incur, directly or indirectly, any such liability based on
arrangements made by or on behalf of the Company. Section 2.25 of the Disclosure
Schedule sets forth the principal terms and conditions of any agreement, written
or oral, with respect to such fees.
2.26    Top Customers and Top Suppliers. 
(a)    Section 2.26(a) of the Disclosure Schedule contains a true and correct
list of the top five (5) currently active distributors, licensees or other
customers of Company Products by revenues generated in connection with such
customers for the calendar year ending December 31, 2014 and the six months
ended June 30, 2015 (each such customer, a “Top Customer”). The Company has not
received written notice that any Top Customer (i) intends to cancel, or
otherwise materially and adversely modify its relationship with the Company
(whether related to payment, price or otherwise) on account of the transactions
contemplated by this Agreement or otherwise, or (ii) has filed for bankruptcy or
is subject to insolvency administration or is otherwise unable to purchase goods
or services from the Company materially consistent with past custom and
practice.
(b)    Section 2.26(b) of the Disclosure Schedule contains a true and correct
list of the top five (5) currently active suppliers of the Company, whether of
products, services, Intellectual Property Rights or otherwise, by dollar volume
of sales and purchases, respectively, for the calendar year ending December 31,
2014 and the six months ended June 30, 2015 (each such supplier, a “Top
Supplier”). The Company has not received written notice that any Top Supplier
(i) intends to cancel, or otherwise materially and adversely modify its
relationship with the Company (whether related to payment, price or otherwise)
on account of the transactions contemplated by this Agreement or otherwise, or
(ii) has filed for bankruptcy or is subject to insolvency administration or is
otherwise unable to supply goods or services to the Company materially
consistent with past custom and practice.
2.27    Representations Complete. As of the date of this Agreement, none of the
representations or warranties made by the Company (as modified by the Disclosure
Schedule) in this Agreement contains any untrue statement of a material fact, or
omits to state any material fact necessary in order to make the statements
contained herein, in the light of the circumstances under which made, not
misleading.
2.28    Disclaimer of Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE
II, NEITHER THE COMPANY NOR ANY INDEMNIFYING PARTY MAKES AND HAS NOT MADE ANY
REPRESENTATIONS OR WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, RELATING TO THE
COMPANY OR THE COMPANY’S BUSINESSES, INCLUDING ANY REPRESENTATIONS OR WARRANTIES
AS TO THE FUTURE REVENUES OR PROFITABILITY OF THE COMPANY’S BUSINESS OR AS TO
THE MERCHANTABILITY, NON-INFRINGEMENT OR FITNESS FOR A PARTICULAR PURPOSE OF ANY
OF THE ASSETS OF THE COMPANY OR REPRESENTATIONS OR WARRANTIES ARISING BY STATUTE
OR OTHERWISE IN LAW FROM A COURSE OF DEALING OR USAGE OF TRADE. ALL SUCH OTHER
REPRESENTATIONS AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY THE COMPANY
AND THE INDEMNIFYING PARTIES.

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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Each of Parent and Merger Sub hereby represents and warrants to the Company as
follows:
3.1    Organization and Standing. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Minnesota. Merger Sub is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware. Parent owns beneficially and of record all outstanding capital
stock of Merger Sub, free and clear of any Liens, and no other Person holds any
capital stock of Merger Sub nor has any rights to acquire any interest in Merger
Sub.
3.2    Authority and Enforceability.  Each of Parent and Merger Sub has all
requisite corporate power and authority to enter into this Agreement and any
Related Agreements to which it is a party and to consummate the Merger and the
other Transactions. The execution and delivery by each of Parent and Merger Sub
of this Agreement and any Related Agreements to which it is a party and the
consummation of the Merger and the other Transactions have been duly authorized
by all necessary corporate and other action on the part of Parent and Merger
Sub. This Agreement and any Related Agreements to which Parent and/or Merger Sub
is a party have been duly executed and delivered by Parent and Merger Sub and
constitute the valid and binding obligations of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with their terms,
subject to the Enforceability Limitations.
3.3    Governmental Approvals and Consents.  No consent, waiver, approval, order
or authorization of, or registration, declaration or filing with, any
Governmental Entity is required by or with respect to Parent or Merger Sub in
connection with the execution and delivery of this Agreement and any Related
Agreements to which Parent or Merger Sub is a party or the consummation of the
Merger and the other Transactions, except for (a) such consents, waivers,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable securities laws and state “blue sky” laws,
(b) the filing of the Certificates of Merger with the Secretary of State of the
State of Delaware, and (c) such other consents, waivers, approvals, orders,
authorizations, registrations, declarations and filings which, if not obtained
or made, would not materially impair Parent’s ability to consummate the Merger.
3.4    Cash Resources. Parent has sufficient cash resources available to pay the
Total Consideration pursuant to this Agreement.

ARTICLE IV
CONDUCT OF COMPANY BUSINESS
DURING PENDENCY OF TRANSACTION
4.1    Affirmative Obligations of the Company.  During the period from the date
of this Agreement and continuing until the earlier of the valid termination of
this Agreement pursuant to Section 8.1 or the Effective Time, except as required
or permitted by this Agreement or to the extent that Parent shall otherwise
consent in writing (which consent will not be unreasonably conditioned, withheld
or delayed), the Company shall conduct its business in the usual, regular and
ordinary course and in substantially the same manner as heretofore conducted,
pay all Taxes of the Company when due (subject to any applicable review and
consent rights that Parent may have under Section 4.2(p)), pay or perform all
other obligations of the Company when due, pay all accounts payable timely and
without delay, and, to the extent consistent with such business, use its
commercially reasonable efforts to preserve intact the present business
organizations of the Company, keep available the services of the present
officers and

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Employees of the Company, preserve the assets (including intangible assets) and
properties of the Company and preserve the relationships of the Company with
customers, suppliers, distributors, licensors, licensees and others having
business dealings with them, all with the goal of preserving unimpaired the
goodwill and ongoing businesses of the Company at the Effective Time.
4.2    Forbearance of the Company.  In furtherance and not in limitation of
Section 4.1, during the period from the date of this Agreement and continuing
until the earlier of the valid termination of this Agreement pursuant to Section
8.1 or the Effective Time, except as permitted or expressly contemplated by this
Agreement, except as expressly set forth in Section 4.2 of the Disclosure
Schedule or to the extent that Parent shall otherwise consent in writing (which
consent will not be unreasonably conditioned, withheld or delayed), the Company
shall not:
(a)    cause or permit any modifications, amendments or changes to the Charter
Documents;
(b)    declare, set aside, or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any Company
Capital Stock, or split, combine or reclassify any Company Capital Stock or
issue or authorize the issuance of any other securities in respect of, in lieu
of or in substitution for shares of Company Capital Stock, or directly or
indirectly repurchase, redeem or otherwise acquire any shares of Company Capital
Stock (or options, warrants or other rights convertible into, exercisable or
exchangeable for Company Common Stock), except at their original purchase price
from employees or consultants to the Company in connection with the termination
of services to the Company;
(c)    issue, grant, deliver or sell or authorize or propose the issuance,
grant, delivery or sale of, or purchase or propose the purchase of, any Company
Capital Stock or equity-based awards (whether payable in cash, stock or
otherwise) or any securities convertible into, exercisable or exchangeable for,
or subscriptions, rights, warrants or options to acquire, or other agreements or
commitments of any character obligating any of them to issue or purchase any
such shares or other convertible securities, except for the issuance of Company
Capital Stock pursuant to the exercise of Company Options outstanding as of the
date of this Agreement in accordance with their terms as in effect on the date
of this Agreement;
(d)    form, or enter into any commitment to form, a subsidiary, or acquire, or
enter into any commitment to acquire, an interest in any corporation,
association, joint venture, partnership or other business entity or division
thereof;
(e)    make or agree to make any capital expenditure or commitment exceeding
$10,000 individually or $50,000 in the aggregate;
(f)    acquire or agree to acquire or dispose or agree to dispose of any assets
of the Company or any business enterprise or division thereof outside the
ordinary course of the business of the Company, and consistent with past
practice;
(g)    modify or remove any Company Privacy Policy, or publish or make available
any new Company Privacy Policy;
(h)    enter into any agreement, contract or commitment for the (i) sale, lease,
license or transfer of any Company IP or any agreement, contract or commitment
or modification or amendment to any agreement with respect to Company IP with
any Person, or (ii) purchase or license of any

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Intellectual Property or Intellectual Property Rights or execution, modification
or amendment of any agreement with respect to the Intellectual Property or
Intellectual Property Rights of any Person;
(i)    propose or adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other reorganization
of the Company;
(j)    incur any Indebtedness (other than the obligation to reimburse employees
for travel and business expenses or indebtedness incurred in connection with the
purchase of goods and services, each in the ordinary course of the Company’s
business consistent with past practices), issue or sell any debt securities,
create a Lien over any asset of the Company or amend the terms of any
outstanding loan agreement;
(k)    assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person;
(l)    make any loan to any Person (except for accounts receivable incurred in
the outside the ordinary course of the business of the Company and advances to
employees for reasonable business travel and expenses in the ordinary course of
business consistent with past practice);
(m)    commence or settle any Action or threat of any Action by or against the
Company or relating to any of its businesses, properties or assets;
(n)    pay, discharge, release, waive or satisfy any claims, rights or
liabilities, other than the payment, discharge or satisfaction in the ordinary
course of business of liabilities reflected on the Current Balance Sheet or
incurred in the ordinary course of business after the Balance Sheet Date;
(o)    adopt or change accounting methods or practices (including any change in
depreciation or amortization policies or rates or any change to practices that
would impact the methodology for recognizing revenue) other than as required by
GAAP;
(p)    make or change any material election in respect of Taxes, adopt or change
any accounting method in respect of Taxes, enter into any agreement in respect
of Taxes, settle any claim or assessment in respect of Taxes, consent to any
extension or waiver of the limitation period applicable to any claim or
assessment in respect of Taxes, make or request any Tax ruling, enter into any
Tax sharing or similar agreement or arrangement, enter into any transactions,
other than in the ordinary course of business, giving rise to deferred gain or
loss, amend any Tax Return unless a copy of such Tax Return has been submitted
to Parent for review a reasonable period of time prior to filing;
(q)    other than with respect to the Transaction Bonuses, any other Third Party
Expense or any Non-Continuing Employees Severance Amounts in accordance with
this Agreement, adopt, amend or terminate, or start a termination process of,
any Company Employee Plan or any Employee Agreement, including any
indemnification agreement, enter into or amend any Employee Agreement or
otherwise hire or engage any Person as an Employee;
(r)    other than with respect to the Transaction Bonuses, any other Third Party
Expense or any Non-Continuing Employees Severance Amounts in accordance with
this Agreement, increase or make any other change that would result in increased
cost to the Company to the salary, wage rate, incentive compensation
opportunity, employment status, title or other compensation (including equity
based compensation) payable or to become payable by the Company to any Employee;

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(s)    other than with respect to the Transaction Bonuses, any other Third Party
Expense or any Non-Continuing Employees Severance Amounts in accordance with
this Agreement, make any declaration, payment, commitment or obligation of any
kind for the payment (whether in cash, equity or otherwise) of a severance
payment or other change in control payment, termination payment, bonus, special
remuneration or other additional salary or compensation (including equity based
compensation) to any Employee, except payments made pursuant to written
agreements existing on the date of this Agreement and disclosed in
Section 4.2(s) of the Disclosure Schedule;
(t)    hire employees at the executive level or higher or, other than in the
ordinary course of business consistent with past practice, any other employees;
(u)    other than pursuant to Section 5.9(b), terminate any employees of the
Company or otherwise cause any employees of the Company to resign, in each case
other than (x) in the ordinary course of business consistent with past practice
or (y) for cause or poor performance (documented in accordance with the
Company’s past practices);
(v)    take any action to accelerate the vesting or payment of, or otherwise
modify the terms of any of the outstanding Company Options or accelerate the
vesting or payment of, any other compensation to any Employee;
(w)    cancel, amend (other than in connection with the addition of customers
and suppliers to such insurance policies from time to time in the ordinary
course of business consistent with past practices) or fail to renew (on
substantially similar terms) any insurance policy of the Company;
(x)     (i) terminate, amend, waive, or modify in any material manner relative
to such Contract or the Company’s businesses or operations, or violate, the
terms of any Material Contract or (ii) enter into any Contract other than in the
ordinary course of business consistent with past practice;
(y)    except as required by applicable Legal Requirements, convene any regular
or special meeting (or any adjournment or postponement thereof) of the
Stockholders other than the Company Shareholder Meeting;
(z)    accelerate the collection of any accounts receivable or delay the payment
of any accounts payable, other than outside the ordinary course of business
consistent with past practices; or
(aa)    take, commit, or agree in writing or otherwise to take, any of the
actions described in the foregoing clauses of this Section 4.2, or any other
action that would (i) prevent the Company from performing, or cause the Company
not to perform, its covenants or agreements hereunder or (ii) cause or result in
any of its representations and warranties set forth herein being untrue or
incorrect.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1    Non-Solicitation of Competing Acquisition Proposals.
(a)    Non-Solicitation of Competing Acquisition Proposals. Commencing on the
date of this Agreement and continuing at all times until the earlier to occur of
the Effective Time and the valid termination of this Agreement pursuant to the
provisions of Section 8.1, the Company shall not, through any of its directors,
officers or other employees, stockholders, Affiliates, representatives, or other
agents including its financial, legal or accounting advisors (together,
“Representatives”), directly or indirectly (i) solicit, initiate, seek,
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proposal or offer from, (ii) furnish any non-public information regarding the
Company (other than in connection with the sale of products and services in the
ordinary course of business consistent with past practice or license of
Intellectual Property in connection therewith) to, (iii) participate in any
discussions or negotiations with, in each case any corporation, limited
liability company, general or limited partnership, business trust,
unincorporated association or other entity, person or group of any of the
foregoing (other than Parent and its Representatives acting in their capacities
as such) (each, a “Third Party”) regarding (A) any acquisition of all or any
part of the Company (including by way of any merger or consolidation with or
involving the Company) or any acquisition, issuance, grant, sale or transfer of
any of the securities, business, properties or assets of the Company (other than
the sale of products and services in the ordinary course of business consistent
with past practice or license of Intellectual Property in connection therewith),
(B) any joint venture or other strategic investment in or involving the Company
(other than a commercial or strategic relationship in the ordinary course of
business), including any new financing, investment round or recapitalization of
the Company, (C) the employment of all or substantially all of the Employees or
(D) any other similar transaction involving the Company that is not in the
ordinary course of business (each, an “Alternative Transaction”); or (iv) enter
into any Contract, whether binding or non-binding, with any Third Party
providing for an Alternative Transaction (including a letter of intent or
exclusivity agreement).
(b)    Notice of Competing Acquisition Proposals. In the event that the Company
or any of its Representatives shall receive, prior to the Effective Time or the
termination of this Agreement in accordance with Section 8.1, any inquiry offer,
proposal or indication of interest regarding a potential Alternative
Transaction, or any request for disclosure of information or access of the type
referenced in clause (b)(ii) above, the Company or such Affiliate or
Representative shall immediately notify Parent thereof, which notice shall
include the identity of the party making any such inquiry, offer, proposal,
indication of interest or request, and the specific terms of such inquiry,
offer, proposal, indication or request, as the case may be (including a copy of
any written material and electronic communications received from such third
party), and such other information related thereto as Parent may reasonably
request.
(c)    Actions of Representatives. The parties hereto understand and agree that
any violation of the restrictions set forth above by any Representative of the
Company shall be deemed to be a breach of this Agreement by the Company.
(d)    Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that the provisions of this Article V were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed by the parties hereto that Parent shall be entitled to an
immediate injunction or injunctions, without the necessity of proving the
inadequacy of money damages as a remedy and without the necessity of posting any
bond or other security, to prevent breaches of the provisions of this Article V
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which Parent may be entitled at law or in
equity.
5.2    Stockholder Approval.
(a)    Requisite Stockholder Approval. Immediately following the execution of
this Agreement, the Company shall solicit written consent from all of its
Stockholders in the form attached hereto as Exhibit C (the “Stockholder Written
Consent”). The Company shall promptly deliver to Parent a copy of each executed
Stockholder Written Consent upon receipt thereof from any Stockholder pursuant
to such solicitation. It is anticipated that, promptly after the execution of
this Agreement, the Company will receive Stockholder Written Consents from
Stockholders pursuant to the preceding solicitation that are sufficient to fully
and irrevocably deliver the Requisite Stockholder Approval.

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Promptly upon obtaining the Requisite Stockholder Approval, the Company shall
prepare and, as soon as reasonably practicable, send to all Company Stockholders
on the record date for the Stockholder Written Consents who did not execute a
Stockholder Written Consent the notices required pursuant to Delaware Law. Such
materials submitted to the Company Stockholders in connection with such
Stockholder Written Consents shall be subject to review and comment by Parent
and shall include an information statement regarding the Company, the terms of
this Agreement and the Merger and the unanimous recommendation of the Company’s
Board of Directors that the Company Stockholders not exercise their dissenters’
or appraisal rights under Delaware Law or the CGCL in connection with the Merger
(the “Information Statement”). Each party agrees that information supplied by
such party for inclusion in the Information Statement will not, on the date the
Information Statement is first sent or furnished to the Company Stockholders,
contain any statement which, at such time, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made therein, in light of the circumstances under which they
are made, not false or misleading. The parties shall update, amend and
supplement the Information Statement from time to time as may be required by
applicable Legal Requirements. The Board of Directors of the Company shall not
alter, modify, change or revoke the Company Recommendation.
(b)    Joinder Agreements. Immediately following the execution of this
Agreement, the Company shall use commercially reasonable efforts to cause
Stockholders and Vested Company Optionholders (other than Parent) to execute and
deliver to Parent Joinder Agreements, in the form attached hereto as Exhibit D.
(c)    280G Approvals. The Company shall submit to the Stockholders for approval
(in a form and manner reasonably satisfactory to Parent), by such number of
Stockholders as is required by the terms of Section 280G(b)(5)(B) of the Code,
any payments and/or benefits that the Company determines may separately or in
the aggregate, constitute “parachute payments” (within the meaning of
Section 280G of the Code and the regulations promulgated thereunder), such that
such payments and benefits shall not be deemed to be “parachute payments” under
Section 280G of the Code. Prior to the Closing, the Company shall deliver to
Parent evidence satisfactory to Parent that a Stockholder vote was solicited in
conformance with Section 280G and the regulations promulgated thereunder and
that (i) the requisite Stockholder approval was obtained with respect to any
payments and/or benefits that were subject to the Stockholder vote (the “280G
Approval”), or (ii) that the 280G Approval was not obtained and as a
consequence, that such “parachute payments” shall not be made or provided,
pursuant to the 280G Waivers, which were executed by the affected individuals on
the date of this Agreement.
5.3    Governmental Approvals.
(a)    Subject to the terms of Section 5.3(b), each of the Company and Parent
shall promptly execute and file, or join in the execution and filing of, any
application, notification or other document that may be necessary in order to
obtain the authorization, approval or consent of any Governmental Entity that
may be reasonably required to consummate, or that Parent may reasonably request
in connection with the consummation of, the Merger and other Transactions as
promptly as possible after the execution of this Agreement. Each of the Company
and Parent shall use its commercially reasonable best efforts to obtain all such
authorizations, approvals and consents. To the extent permitted by applicable
Legal Requirements, each of the Company and Parent shall promptly inform the
other of any material communication between the Company or Parent (as
applicable) and any Governmental Entity regarding the Merger and the other
Transactions. If the Company or Parent or any Affiliate thereof shall receive
any formal or informal request for supplemental information or documentary
material from any Governmental Entity with respect to the Merger or any other
transaction contemplated by this Agreement, then the Company or Parent (as
applicable) shall make, or cause to be made, as soon as reasonably practicable,
a response in compliance with such request. Each of the

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Company and Parent shall direct, in its sole discretion, the making of such
response, but shall consider in good faith the views of the other.
(b)    Notwithstanding anything in this Section 5.3 or in Section 5.4, Parent
shall not be required to agree to (i) any license, sale or other disposition or
holding separate (through establishment of a trust or otherwise) of any shares
of capital stock or of any business, assets or properties of Parent, its
Subsidiaries or Affiliates or of the Company, (ii) the imposition of any
limitation on the ability of Parent, its Subsidiaries or Affiliates or the
Company to conduct their respective businesses or own any capital stock or
assets or to acquire, hold or exercise full rights of ownership of their
respective businesses and, in the case of Parent, the businesses of the Company,
or (iii) the imposition of any impediment on Parent, its Subsidiaries or
Affiliates or the Company under any Legal Requirement governing competition,
monopolies or restrictive trade practices (any such action described in (i),
(ii) or (iii), an “Action of Divestiture”). Nothing set forth in this Agreement
shall require Parent to litigate with any Governmental Entity.
(c)    Parent shall, in consultation with the Company and subject to
Section 5.3(b), determine strategy, lead all proceedings and coordinate all
activities with respect to seeking any actions, consents, approvals or waivers
of any Governmental Entity as contemplated hereby, and the Company will take
such actions as reasonably requested by Parent in connection with obtaining such
consents, approvals or waivers. Notwithstanding Parent’s rights to lead all
proceedings as provided in the prior sentence, Parent shall not require the
Company to, and the Company shall not be required to, take any action with
respect to any applicable antitrust or anti-competition Legal Requirement which
would bind the Company irrespective of whether the Merger occurs.
5.4    General Efforts to Close.  Subject to the terms and conditions provided
in this Agreement, each of the parties hereto (other than the Stockholder
Representative) shall use reasonable best efforts to take promptly, or cause to
be taken promptly, all actions, and to do promptly, or cause to be done
promptly, all things necessary, proper or advisable under applicable Legal
Requirements to consummate and make effective the Merger and the other
Transactions as promptly as practicable, including by using reasonable best
efforts to take all action necessary to satisfy all of the conditions to the
obligations of the other party or parties hereto to effect the Merger set forth
in Article VI, to obtain all necessary waivers, consents, approvals, including
an Action of Divestiture, and other documents required to be delivered hereunder
and to effect all necessary registrations and filings and to remove any
injunctions or other impediments or delays, legal or otherwise, in each case in
order to consummate and make effective the Merger and the other Transactions for
the purpose of securing to the parties hereto the benefits contemplated by this
Agreement. 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 necessary or desirable for effecting completely the
consummation of the Merger and the other Transactions.
5.5    Access to Information.  During the period from the date of this Agreement
and continuing until the earlier of the valid termination of this Agreement
pursuant to Section 8.1 or the Effective Time, the Company shall afford Parent
and its Representatives reasonable access to (i) all of the properties, Books
and Records and Contracts of the Company, including all Company IP, (ii) all
other information concerning the business, properties and personnel (subject to
restrictions imposed by applicable law) of the Company as Parent may reasonably
request, and (iii) all Employees of the Company as identified by Parent. The
Company agrees to provide to Parent and its accountants, counsel and other
Representatives copies of internal financial statements (including Tax Returns
and supporting documentation) promptly upon request. No information or knowledge
obtained in any investigation pursuant to this Section 5.5 or otherwise shall
affect or be deemed to modify, amend or supplement any representation or
warranty set forth herein or in the Disclosure Schedule or the conditions to the

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obligations of the parties to consummate the Merger in accordance with the terms
and provisions of this Agreement, restrict, impair or otherwise affect any
Indemnified Parties’ right to indemnification hereunder or otherwise prevent or
cure any misrepresentations, breach of warranty or breach of covenant.
5.6    Notification of Certain Matters.  The Company shall give prompt notice to
Parent of: (a) the occurrence or non-occurrence of any event, the occurrence or
non-occurrence of which would cause any representation or warranty of the
Company set forth in this Agreement to be untrue or inaccurate at or prior to
the Effective Time and that would cause any condition set forth in Article VI
not to be met, and (b) any failure of the Company to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder that would cause any condition set forth in Article VI not to be met;
provided, however, that the delivery of any notice pursuant to this Section 5.6
shall not (i) limit or otherwise affect any remedies available to the party
receiving such notice, or (ii) constitute an acknowledgment or admission of a
breach of this Agreement; and provided, further that the failure to deliver a
notice pursuant to this Section 5.6 shall not be considered in determining
whether the condition set forth in Section 6.2(a) or Section 6.2(b) has been
satisfied.
5.7    Indemnification of Directors and Officers(a)    . If the Merger is
consummated, then until the sixth (6th) anniversary of the Closing Date, Parent
will cause the Surviving Corporation to fulfill and honor in all respects the
obligations of the Company to its present and former directors and officers (the
“Company Indemnified Parties”) pursuant to indemnification agreements with the
Company in effect on the Closing Date and pursuant to the Company’s
organizational documents, in each case, in effect as of the date of this
Agreement, with respect to claims arising out of acts or omissions occurring at
or prior to the Effective Time which are asserted after the Effective Time. Any
claims for indemnification made under this Section 5.7(a) on or prior to the
sixth (6th) anniversary of the Effective Time shall survive such anniversary
until the final resolution thereof.
(b)    Prior to Closing Date, the Company shall have purchased and fully paid,
at its own expense, premium for directors and officers (D&O), which by its terms
shall survive the Closing and shall provide runoff coverage for not less than
six (6) years following the Closing Date, having limits, terms and conditions no
less favorable in all material respects than the terms of the D&O liability
insurance policies currently maintained by the Company (the “Tail Policy”). Such
insurance shall be bound not later than the Closing Date. The Company shall
complete reasonable applications and provide reasonable and customary
representations and warranties to applicable insurance carriers for the purpose
of obtaining such insurance.
(c)    This Section 5.7 shall survive the consummation of the Merger, is
intended to benefit each Company Indemnified Party, shall be binding on all
successors and assigns of the Surviving Corporation and Parent, and shall be
enforceable by the Company Indemnified Parties, who are express third party
beneficiaries of this Section 5.7; provided, however, that recourse shall first
be against the Tail Policy until it is exhausted before recovery against Parent
or the Surviving Corporation shall take place.
(d)    Notwithstanding anything to the contrary herein, the obligations under
this Section 5.7 shall not be terminated or modified in a manner as to adversely
affect any Company Indemnified Party without the consent of such affected
Company Indemnified Party.
(e)    In the event that following the Effective Time, Parent, the Surviving
Corporation or any of their respective heirs, successors or assigns (i)
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
(ii) transfers or conveys all or substantially all of its properties and assets
to any Person or (iii) commences a dissolution, liquidation, assignment for the
benefit of creditors or similar action, then, and in each such case, to the
extent necessary, proper provision shall be made so that the heirs, successors
and assigns of

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Parent or the Surviving Corporation, as the case may be, shall assume the
obligations set forth in this Section 5.7.
5.8    Contracts.
(a)    The Company shall use commercially reasonable efforts to obtain all
necessary consents, waivers and approvals of any third parties to any Contract
(including all of the Contracts set forth in Section 2.4 of the Disclosure
Schedule) as are required thereunder in connection with the Merger in order for
such Contract to remain in full force and effect following the Merger. Such
consents, modifications, waivers and approvals shall be in a form acceptable to
Parent. In the event the Merger does not close for any reason, neither Parent
nor Merger Sub shall have any liability to the Company, the Stockholders or any
other Person for any costs, claims, liabilities or damages resulting from the
Company seeking to obtain such consents, modifications, waivers and approvals.
(b)    The Company shall terminate all Contracts listed on Schedule 5.8(b) and
shall have sent all required notices under such Contracts on or prior to the
Closing, such that each such Contract listed on Schedule 5.8(b) shall be of no
further force or effect following the Closing, in each case, without any
remaining liability of any kind to the Company, its Subsidiaries or Parent as a
result of or in connection with such termination or such Contract.
5.9    Employee Matters.
(a)    Termination of Employee Plans. Unless instructed otherwise by Parent,
effective as of no later than the day immediately preceding the Closing Date,
the Company shall terminate any and all Company Employee Plans intended to
include group severance pay or benefits and any Code Section 401(k) arrangement
(each, a “401(k) Plan”) (unless Parent provides written notice to the Company
that such 401(k) plans shall not be terminated). The Company shall provide
Parent with evidence that any such 401(k) Plan has been terminated pursuant to
resolutions of the board of directors (or similar body) of the Company or its
ERISA Affiliates, as the case may be. The form and substance of such resolutions
shall be subject to review and approval of Parent. The Company also shall take
such other actions in furtherance of terminating any such Company Employee Plan
as Parent may require.
(b)    Termination of Company Employment Arrangements. Prior to the Closing
Date, Parent shall extend offers of employment to all employees of the Company
to become Continuing Employees (the “Offered Employees”). Prior to the Closing,
the Company shall terminate the employment of each Non-Continuing Employee,
effective as of no later than immediately prior to the Closing, and the Company
shall provide separation and release agreements and pay all severance, accrued
vacation or other benefits (including but not limited to any acceleration of
vesting) to such Non-Continuing Employees prior to the Closing (such amounts
“Non-Continuing Employees Severance Amounts”).
(c)    No Employment Commitment or Plan Amendments. No provision of this
Agreement is intended, or shall be interpreted, to provide or create any third
party beneficiary rights or any other rights of any kind or nature whatsoever in
any stockholder, Employee, or any other Person, including any rights of
employment for any specified period and/or any employee benefits, in favor of
any union, association, Continuing Employee, Key Employee, Employee, consultant,
contractor or any other Person, other than the parties hereto and their
respective successors and permitted assigns, and all provisions of this
Agreement will be personal solely among the parties to this Agreement. In
addition, no

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provision of this Agreement is intended, or shall be interpreted, to amend any
term or condition of the Plan or any other employee related plan, program or
policy of Parent, any subsidiary of Parent, or the Company.
(d)    Key Employees and Continuing Employees.
(i)    Subsequent to the Closing and for one (1) year thereafter, Parent shall
ensure that all compensation and benefits awarded by Parent or an Affiliate
thereof to each of the Key Employees pursuant to the Key Employee Offer Letters
and the other Continuing Employees pursuant to the Continuing Employee Offer
Letters (which Key Employee Offer Letters and Continuing Employee Offer Letters
shall set forth the terms of an incentive program to be adopted and funded by
Parent) are at least as generous as the compensation and benefits provided by
the Company to such Key Employees and other Continuing Employees immediately
following the Closing.
(ii)    In the event that less than 80% of the Key Employees shall have executed
and delivered their Key Employee Offer Letters contemporaneously with the
execution of this Agreement, Parent and the Company shall use commercially
reasonable efforts to obtain executed and delivered Key Employee Offer Letters
from the remaining Key Employees such that 80% of such Key Employees have
executed and delivered such Key Employee Offer Letters.
(e)    Transaction Bonuses. At the Closing, the Company shall pay the
Transaction Bonuses to the individuals and in the respective amounts set forth
on Schedule A-3.
5.10    Third Party Expenses.
(a)    Except as otherwise expressly set forth herein, each party shall be
responsible for its own expenses and costs that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement and the
Related Agreements; provided, however, that all Third Party Expenses that are
incurred by the Company prior to or as of the Closing and that remain unpaid as
of the Closing shall be deducted from the Total Consideration payable hereunder
in respect of the outstanding shares of Company Capital Stock pursuant to the
adjustments contemplated by the definition of Total Consideration.
(b)    At least three (3) Business Days prior to the Closing, the Company shall
have provided Parent with a statement, in a form reasonably satisfactory to
Parent, setting forth all paid and unpaid Third Party Expenses incurred by or on
behalf of the Company as of the Closing Date, or anticipated to be incurred or
payable by or on behalf of the Company after the Closing (the “Statement of
Expenses”). The Company shall take all necessary action to ensure that Third
Party Expenses shall not be incurred by the Company after the Closing Date
without the express prior written consent of Parent.
5.11    Closing Date Balance Sheet.  Not less than three (3) Business Days prior
to the Closing, the Company shall deliver to Parent an estimated consolidated
balance sheet and income statement of the Company as of the Closing Date (the
“Closing Date Balance Sheet”), that has been prepared in accordance with GAAP
consistently applied on a basis consistent with the Financials.

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5.12 Spreadsheet.  Not less than three (3) Business Days prior to the Closing,
the Company shall deliver to Parent a spreadsheet setting forth the following
information, in form and substance reasonably satisfactory to Parent and
accompanied by documentation reasonably satisfactory to Parent in support of the
calculation of the information set forth therein, certified as true, correct and
complete as of the Closing Date by the Chief Executive Officer and Chief
Financial Officer of the Company (the “Spreadsheet” and the related certificate,
the “Spreadsheet Certificate”):
(a)    calculation of the Total Consideration and all components thereof,
including Closing Cash, the Aggregate Strike Price Amount, Closing Indebtedness
and Third Party Expenses;
(b)    calculation of the applicable Per Share Consideration for each class or
series of Company Capital Stock;
(c)    with respect to each Stockholder: (i) the name of such holder, and, if
available, the e-mail address of such holder, (ii) whether such holder is a
current or former employee of the Company, (iii) the number, class and series of
shares of Company Capital Stock held by such holder and the respective
certificate numbers, (iv) the date of acquisition of such shares, (v) the
initial purchase price of any such shares that constitute a “covered security”
within the meaning of Treasury Regulations Section 1.6045-1(a)(15), (vi) whether
any Taxes are to be withheld in accordance with Section 1.8 from the
consideration that such holder is entitled to receive pursuant to
Section 1.6(b)(i), (vii) the Pro Rata Portion of such holder, (viii) the amount
of cash to be deposited into the Escrow Fund and the Expense Fund on behalf of
such holder pursuant to this Agreement, and (ix) such other additional
information which Parent may reasonably request; and
(d)    with respect to each Company Option: (i) the name of the holder thereof,
and, if available, the e-mail address of such holder, (ii) whether such holder
is an employee, consultant, director or officer of the Company, (iii) the grant
date and expiration date thereof, (iv) whether such Company Option was granted
pursuant to the Plan, (v) the extent to which such Company Option is vested as
of immediately prior to the Effective Time (taking into account any Company
Option (or portion thereof) that, as a result of the Merger will accelerate in
full and no longer be subject to any further vesting, right of repurchase, risk
of forfeiture or other such conditions), (vi) the exercise price per share and
the number, class and series of shares of Company Capital Stock underlying such
Company Option immediately prior to the Closing, (vii) whether such holder is a
Continuing Employee or a Non-Continuing Employee (it being understood that such
information may be updated at any time prior to the Closing), (viii) the
exercise price per share of such Company Option following the Closing in
accordance with Section 1.6(c), (ix) the cash consideration that such holder is
entitled to receive in accordance with Section 1.6(c), and (x) such other
information which Parent may reasonably request.
5.13    Tax Matters.
(a)    Preparation and Filing of Tax Returns. Parent shall timely prepare and
file, or shall cause to be prepared and filed, all Company Returns with respect
to any taxable year or period that ends on or before the Closing Date and any
taxable year or period beginning before and ending after the Closing Date that
are due after the Closing Date. Parent shall prepare such Company Returns
consistently with the past practices of the Company, except as otherwise
required by applicable Legal Requirements, and shall provide the Stockholder
Representative the right to review any Company Returns that reflect a material
amount of Tax for which the Indemnifying Parties could reasonably be expected to
be liable for no later than twenty (20) days prior to the due date for filing
such Company Returns.
(b)    Cooperation on Tax Matters. Parent, its Affiliates and the Stockholder
Representative shall cooperate fully, as and to the extent reasonably requested
by any of them, in

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connection with the filing of Company Returns, any Tax audits, Tax proceedings
or other Tax-related claims. Such cooperation shall include, upon the other
party’s request, providing records and information that are reasonably relevant
to any such matters, making employees available on a mutually convenient basis
during normal business hours to provide additional information, and explaining
any materials provided pursuant to this Section 5.13(d). Parent and its
Affiliates shall not destroy or dispose of any Tax workpapers, schedules or
other materials and documents supporting Company Returns until the seventh (7th)
anniversary of the Closing Date, without the prior written consent of
Stockholder Representative.
(c)    Tax Contests. Parent and its Affiliates agree to give prompt written
notice to the Stockholder Representative of the receipt of any written notice by
Parent or any of its Affiliates Company which involves the assertion of any Tax
matter for which the Stockholders may be liable for indemnification under this
Agreement (a “Contest”). Parent shall be entitled to control the defense of such
Contest, provided that the Stockholder Representative shall be permitted to
participate at the expense of the Indemnifying Parties in such defense, and
provided, further, if Parent settles such Contest without the prior consent of
the Stockholder Representative, such consent not to be unreasonably withheld,
such settlement shall not be determinative of the amount of indemnifiable
Losses. To the extent the terms of this Section 5.13(c) conflict with any other
provision of this Agreement, this Section 5.13(c) shall control.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1    Conditions to Obligations of Each Party.  The respective obligations of
Parent, Merger Sub and the Company to effect the Merger shall be subject to the
satisfaction, at or prior to the Effective Time, of the following conditions
(any of which may be waived only with the written mutual consent of Parent,
Merger Sub and the Company):
(a)    Board and Stockholder Approval. The Requisite Board Approval and the
Requisite Stockholder Approval shall have been obtained.
(b)    Regulatory Approvals. All approvals of Governmental Entities required to
be obtained prior to the Effective Time in connection with the Merger and the
other Transactions shall have been obtained.
(c)    No Legal Impediments. No Legal Requirement (whether temporary,
preliminary or permanent) shall be in effect which has the effect of making the
Merger or any other Transactions illegal or otherwise prohibiting or preventing
consummation of the Merger or any other Transactions.
6.2    Additional Conditions to the Obligations of Parent and Merger Sub.  The
obligations of Parent and Merger Sub to effect the Merger shall be subject to
the satisfaction at or prior to the Effective Time of each of the following
additional conditions (any of which may be waived, in writing, exclusively by
Parent and Merger Sub):
(a)    Representations and Warranties. The representations and warranties of the
Company that are not qualified by materiality shall have been true and correct
in all material respects on the date they were made and shall be true and
correct in all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date (other than the
representations and warranties of the Company made only as of a specified date,
which shall be true and correct in all material respects as of such date). The
representations and warranties of the Company that are qualified by materiality
shall have been true and correct in all respects on the date they were made

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and shall be true and correct in all respects on and as of the Closing Date as
though such representations and warranties were made on and as of such date
(other than any such representations and warranties of the Company made only as
of a specified date, which shall be true and correct in all respects as of such
date).
(b)    Covenants. The Company 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 the Company prior to the Closing.
(c)    No Material Adverse Effect. Since the Balance Sheet Date, there shall not
have occurred and be continuing a Company Material Adverse Effect.
(d)    No Litigation. There shall be no Action instituted by a Governmental
Entity pending or overtly threatened against Parent or any of its Affiliates, or
against the Company or any of its Affiliates seeking to restrain, enjoin,
prevent, prohibit or make illegal the consummation of the Merger.
(e)    Joinder Agreements. Stockholders and Vested Company Optionholders holding
70% of the aggregate shares of Company Capital Stock outstanding immediately
prior to the Effective Time on an as converted to Company Common Stock basis,
including all shares of Company Common Stock issuable upon exercise of all
Vested Company Options, but excluding for all purposes all shares of Company
Capital Stock help by Parent as of immediately prior to the Effective Time,
shall have executed and delivered to Parent Joinder Agreements, in the form
attached hereto as Exhibit D (the “Joinder Agreements”), and all such Joinder
Agreements shall be in full force and effect.
(f)    Escrow Agreement. The Stockholder Representative shall have executed and
delivered the Escrow Agreement in a form reasonably acceptable to the parties
thereto.
(g)    New Employment Arrangements.
(i)    Each of the Non-Competition and Non-Solicitation Agreements executed
concurrently with this Agreement by the Founders shall be in full force and
effect shall not have been revoked, rescinded or otherwise repudiated by the
Founders.
(ii)    Each of the Non-Solicitation Agreements executed concurrently with this
Agreement by the individuals listed on Schedule A-2 shall be in full force and
effect shall not have been revoked, rescinded or otherwise repudiated by the
individuals listed on Schedule A-2.
(iii) At least eighty percent (80%) of the Key Employees shall have executed and
delivered their Key Employee Offer Letters prior to or concurrently with the
execution of this Agreement, which Key Employee Offer Letters shall be in full
force and effect and shall not have been revoked, rescinded or otherwise
repudiated by such Key Employees, and no more than twenty percent (20%) of the
Key Employees shall have shall terminated his or her employment with the Company
or expressed an intention or interest in terminating his or her employment with
the Company at or prior to the Closing, or with the Surviving Corporation or
Parent immediately following the Closing.
(h)    Officer’s Certificate. Parent shall have received a certificate from the
Company (the “Officer’s Certificate”), validly executed by the Chief Executive
Officer of the Company for and on the Company’s behalf, to the effect that, as
of the Closing the conditions set forth in Sections 6.2(a), 6.2(b) and 6.2(c)
have been satisfied.

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(i)    FIRPTA Certificate. Parent shall have received a copy of a statement,
prepared in accordance with the requirements of Treasury Regulations Section
1.897-2(g) and Treasury Regulations Section 1.1445-2(c)(3), certifying that the
Company is not a U.S. real property holding corporation within the meaning of
Code Section 897(c)(2), validly executed by a duly authorized officer of the
Company.
(j)    Documentary Deliverables. The Company shall have delivered to the Parent
the Spreadsheet and the Spreadsheet Certificate in compliance with Section 5.12,
the Closing Date Balance Sheet and the Statement of Expenses.
6.3    Additional Conditions to Obligations of the Company.  The obligations of
the Company to effect the Merger shall be subject to the satisfaction at or
prior to the Effective Time of the following additional conditions (any of which
may be waived, in writing, exclusively by the Company):
(a)    Representations and Warranties. The representations and warranties of
Parent that are not qualified by materiality shall have been true and correct in
all material respects on the date they were made and shall be true and correct
in all material respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date (other than the
representations and warranties of Parent made only as of a specified date, which
shall be true and correct in all material respects as of such date). The
representations and warranties of Parent that are qualified by materiality shall
have been true and correct in all respects on the date they were made and shall
be true and correct in all respects on and as of the Closing Date as though such
representations and warranties were made on and as of such date (other than any
such representations and warranties of Parent made only as of a specified date,
which shall be true and correct in all respects as of such date).
(b)    Covenants. Parent and Merger Sub 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 them prior to the Closing.
ARTICLE VII
POST-CLOSING INDEMNIFICATION
7.1    Survival of Representations and Warranties.  The representations and
warranties of the Company set forth in this Agreement or in the Officer’s
Certificate shall survive until 11:59 p.m. California time on the date that is
twelve (12) months following the Closing Date (the date of expiration of such
period, the “Expiration Date”); provided, however, (i) the representations and
warranties of the Company as set forth in Section 2.1(a) (Organization and Good
Standing), Section 2.2 (Authority and Enforceability), Section 2.5 (Company
Capital Structure) and the Spreadsheet Certificate (collectively, the
“Fundamental Representations”), and Section 2.10 (Tax Matters) (together with
the Fundamental Representations, the “Special Representations”) shall survive
until the expiration of all applicable statutes of limitations in respect of the
matters addressed by such representations and warranties (including all periods
of extension, whether automatic or permissive), and (ii) the representations and
warranties of the Company set forth in Section 2.13 (Intellectual Property) (the
“IP Representations”) shall survive for a period of twenty-four (24) months from
the Closing; and provided, further, that all representations and warranties of
the Company shall survive beyond the Expiration Date or other survival periods
specified above with respect to any inaccuracy therein or breach thereof if a
claim is made hereunder prior to the expiration of the survival period for such
representation and warranty, in which case such representation and warranty
shall survive as to such claim until such claim has been finally resolved. The
representations and warranties of Parent and Merger Sub set forth in Article III
of this Agreement, the Related Agreements or in any certificate or other
instrument delivered pursuant to this Agreement shall terminate at the Closing.
For the avoidance of doubt, it is the intention of the parties

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hereto that the foregoing respective survival periods and termination dates
supersede any applicable statutes of limitations that would otherwise apply to
such representations and warranties.
7.2    Indemnification.
(a)    From and after and by virtue of the Merger, subject to the terms of this
Article VII, the Stockholders (with the exception of Parent) and the Vested
Company Optionholders (each, an “Indemnifying Party” and collectively, the
“Indemnifying Parties”) agree to severally (based on such Indemnifying Party’s
Pro Rata Portion), but not jointly, indemnify and hold harmless Parent and its
officers, directors, affiliates and employees, including the Surviving
Corporation (each, an “Indemnified Party” and collectively, the “Indemnified
Parties”), from and against all claims, losses, liabilities, damages, costs,
interest, awards, judgments, penalties and expenses, including reasonable
attorneys’ and consultants’ fees and expenses and including any such reasonable
expenses incurred in connection with investigating, defending against or
settling any of the foregoing (hereinafter individually a “Loss” and
collectively “Losses”) paid, incurred, suffered or sustained by the Indemnified
Parties, or any of them (including the Surviving Corporation) (regardless of
whether or not such Losses relate to any third party claims), directly or
indirectly, resulting from, arising out of, or relating to any of the following:
(i)    any breach of or inaccuracy in, as of the date of this Agreement or as of
the Effective Time, a representation or warranty of the Company set forth in
this Agreement or the Officer’s Certificate, without giving effect to any update
of or modification to the Disclosure Schedule made or purported to have been
made on or after the date of this Agreement;
(ii)    any failure by the Company to perform or comply with any of its
covenants or agreements set forth in this Agreement;
(iii) any payment in respect of any Dissenting Shares in excess of the
consideration that otherwise would have been payable in respect of such shares
in accordance with this Agreement; and
(iv)    any inaccuracy or omission in the Spreadsheet, including any amounts set
forth therein that are paid to a Person in excess of the amounts that such
Person is entitled to receive pursuant to the terms of this Agreement and any
amounts that a Person was entitled to receive pursuant to the terms of this
Agreement that were omitted from the Spreadsheet, including any failure to
properly calculate Closing Cash, Closing Indebtedness, Third Party Expenses, the
Per Share Consideration, the Per Option Consideration or the Total
Consideration.
(b)    The Indemnifying Parties (including any officer or director of the
Company) shall not have any right of contribution, indemnification or right of
advancement from the Surviving Corporation or Parent with respect to any Loss
claimed by an Indemnified Party.
(c)    Any payments made to an Indemnified Party pursuant to any indemnification
obligations under this Article VII will be treated as adjustments to the Total
Consideration for Tax purposes and such agreed treatment will govern for
purposes of this Agreement, unless otherwise required by applicable Legal
Requirements.
(d)    The indemnification rights set forth in this Article VII shall be the
sole and exclusive remedy of the Indemnified Parties from and after the
Effective Time for any claims relating to this Agreement or any matters relating
to the transactions contemplated herein; provided, however, that nothing in this
Agreement shall limit any Person’s rights or obligations under any other
agreement entered into in connection with this Agreement, including claims of
any inaccuracy in or breach of any

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representation, warranty or covenant in this Agreement; provided, however, that
(i) this Section 7.2(d) shall not be deemed a waiver by any party of any right
to specific performance or injunctive relief and (ii) nothing in this Agreement
shall limit the liability of an Indemnifying Party (and this Article VII shall
not be the sole and exclusive remedy in respect of such Indemnifying Party) in
connection with claims based on fraud committed by such Indemnifying Party
regardless of the capacity in which such Indemnifying Party committed such
fraud.
(e)    Nothing in this Agreement shall limit the right of Parent or any other
Indemnified Party to pursue remedies under any Related Agreement against the
parties thereto.
(f)    Parent and Merger Sub each hereby acknowledges and agrees that, except to
the extent set forth in Article II, neither the Company nor any Indemnifying
Party has made any representations or warranties with respect to the Company or
its business and neither Parent nor Merger Sub has relied or will rely upon any
information, representation or warranty, except those representations and
warranties set forth in Article II hereof in executing, delivering and
performing this Agreement and the transactions contemplated hereby.
7.3    Limitations on Indemnification.
(a)    Threshold. Subject to Section 9.10(d), the Indemnified Parties, as a
group, may not recover any Losses pursuant to an indemnification claim under
Section 7.2 unless and until the Indemnified Parties, as a group, shall have
paid, incurred, suffered or sustained at least $500,000 in Losses in the
aggregate (the “Threshold Amount”), in which case the Indemnified Parties shall
be entitled to recover all such Losses, including such amounts as comprised any
portion of such Threshold Amount.
(b)    Recovery from Escrow Fund.
(i)    Subject to Section 9.10(d) and except in the case of claims for breaches
of or inaccuracies in the Special Representations or the IP Representations, and
indemnification claims under Section 7.2(a)(iii) and 7.2(a)(iv), until the
Expiration Date, the Indemnified Parties’ sole and exclusive source of recovery
for indemnification claims under this Agreement shall be recourse against the
Escrow Fund.
(ii) Subject to Section 9.10(d), the Indemnified Parties’ first source of
recovery for indemnification claims under this Agreement shall be recourse
against the Escrow Fund, but if the Escrow Fund is insufficient to satisfy the
Indemnifying Parties’ Pro Rata Portion of any Loss for which an Indemnified
Party is entitled to indemnification under this Article VII, subject to the
limitation of this Article VII, the Indemnified Parties shall be entitled to
recover the Indemnifying Parties’ Pro Rata Portion of such Losses in respect of
such indemnification claims directly from the Indemnifying Parties (the
Indemnifying Parties’ Pro Rata Portion of any Loss for which indemnification is
not satisfied by the Escrow Fund is referred to as an “Excess Loss”).
(c)    Subject to Section 9.10(d), the maximum amount that the Indemnified
Parties may recover for indemnification claims from any Indemnifying Party under
Section 7.2(a)(i) for breaches of or inaccuracies in the IP Representations
shall be limited to a dollar amount equal to 20% of the aggregate amount of cash
actually received by such Indemnifying Party pursuant to Section 1.6(b)(i) and
Section 1.6(c)(i)(A) in respect of the shares of Company Capital Stock and
Company Options owned by such Indemnifying Party as of immediately prior to the
Effective Time.

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(d)    Subject to Section 9.10(d), the maximum amount that the Indemnified
Parties may recover for any indemnification claims from any Indemnifying Party
under this Agreement shall not exceed such Indemnifying Party’s Pro Rata Portion
of the Losses in respect of such indemnification claim.
(e)    Subject to Section 9.10(d), the maximum amount that the Indemnified
Parties may recover for indemnification claims under this Agreement shall be
limited to a dollar amount equal to the aggregate amount of cash actually
received by such Indemnifying Party pursuant to Section 1.6(b)(i) and Section
1.6(c)(i)(A) in respect of the shares of Company Capital Stock and Company
Options owned by such Indemnifying Party as of immediately prior to the
Effective Time.
(f)    Subject to Section 9.10(d), in the case of any indemnification claim
under Sections 7.2(a) that is not limited to the recovery of funds from the
Escrow Fund pursuant to Section 7.3(b), subject to the limitations set forth in
this Article VII, the Indemnified Parties shall be entitled to bring
indemnification claims against any or all of the Indemnifying Parties for each
such Indemnifying Party’s Pro Rata Portion of the Excess Losses, and each
Indemnifying Party shall be liable only for its, his or her Pro Rata Portion of
the Excess Losses in respect of such indemnification claim.
(g)    The rights of the Indemnified Parties to indemnification, compensation or
reimbursement, payment of Losses or any other remedy under this Agreement shall
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy of or compliance with, any representation, warranty,
covenant or agreement made by the Company or any other matter. The waiver of any
condition based on the accuracy of any such representation or warranty, or on
the performance of or compliance with any such covenant or agreement, will not
affect the right to indemnification, compensation or reimbursement, payment of
Losses, or any other remedy based on any such representation, warranty, covenant
or agreement. No Indemnified Party shall be required to show reliance on any
representation, warranty, certificate or other agreement in order for such
Indemnified Party to be entitled to indemnification, compensation or
reimbursement pursuant to Section 7.2(a).
(h)    If an Indemnified Party’s claim under this Article VII may be brought
under different subsections of Section 7.2(a), then such Indemnified Party shall
have the right to bring such claim under any applicable section it chooses in
accordance with this Article VII. For the avoidance of doubt, if and solely to
the extent the amount of any Loss is recovered by an Indemnified Party, the same
amount of such Loss may not be recovered again by such Indemnified Party.
(i)    Notwithstanding anything in this Agreement to the contrary: (i) all
Losses shall be calculated after giving effect to any proceeds that have been
recovered by Parent or any of its Affiliates (including the Surviving
Corporation) from a third party or under any policy of insurance after deducting
from such proceeds any increase in the future in any insurance premium due to
such claim, provided that Parent and the Surviving Corporation shall only be
required to use commercially reasonable efforts to obtain such payments or to
obtain or maintain any such insurance policies; and (ii) no Indemnifying Party
will have any liability for any Loss that: (A) is otherwise accurately accounted
for in the calculation of any of the components of the Total Consideration; or
(B) represents or constitutes punitive or exemplary damages (except, in each
case, to the extent that a third party has obtained a final and nonappealable
judgment therefor).
(j)    Any indemnification hereunder for Losses with respect to a breach of the
representations in Section 2.10, other than with respect to a breach of any
representation or warranty set

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forth in Sections 2.10(e), (f), (g), (j), (k), (m), (n) and (r), shall be
limited to Taxes arising in or attributable to a Pre-Closing Tax Period.
(k)    For purpose of this Article VII only, solely when determining the amount
of Losses suffered (but not whether a breach, inaccuracy or failure has
occurred) by an Indemnified Party as a result of any breach or inaccuracy of a
representation or warranty or any failure by the Company to perform or comply
with any covenant or agreement applicable to it that is qualified or limited in
scope as to materiality, Material Adverse Effect or Knowledge, such
representation, warranty, covenant or agreement shall be deemed to be made
without such qualification or limitation.
7.4    Indemnification Claim Procedures.
(a)    Subject to the limitations set forth in Section 7.1, if an Indemnified
Party wishes to make an indemnification claim under this Article VII, such
Indemnified Party shall deliver a written notice (an “Indemnification Claim
Notice”) to the Stockholder Representative (with a copy to the Escrow Agent) (or
in the event an Indemnified Party elects to pursue such indemnification claim
directly against an Indemnifying Party, to such Indemnifying Party directly)
(i) stating that an Indemnified Party has paid, incurred, suffered or sustained,
or reasonably anticipates that it may pay, incur, suffer or sustain Losses, and
(ii) specifying in reasonable detail the individual items of such Losses, the
date each such item was paid, incurred, suffered or sustained, or the basis for
such anticipated liability, and, if applicable, the nature of the
misrepresentation, breach of warranty or covenant to which such item is related.
Parent may update an Indemnification Claim Notice from time to time to reflect
any new information discovered with respect to the claim set forth in such
Indemnification Claim Notice.
(b)    If the Stockholder Representative on behalf of the Indemnifying Parties
(or the Indemnifying Party in the event that indemnification is being sought
hereunder directly from such Indemnifying Party) shall not object in writing
within the 30-day period after receipt of an Indemnification Claim Notice by
delivery of a written notice of objection containing a reasonably detailed
description of the facts and circumstances supporting an objection to the
applicable indemnification claim (an “Indemnification Claim Objection Notice”),
such failure to so object shall be an irrevocable acknowledgment by the
Stockholder Representative on behalf of the Indemnifying Parties (or the
applicable Indemnifying Party) that the Indemnified Party is entitled to the
full amount of the claim for Losses set forth in such Indemnification Claim
Notice. In such event, the Escrow Agent shall promptly release from the Escrow
Fund cash equal to the Losses set forth in such Indemnification Claim Notice.
(c)    In the event that the Stockholder Representative (or in the event that
indemnification is being sought hereunder directly from an Indemnifying Party,
such Indemnifying Party) shall deliver an Indemnification Claim Objection Notice
in accordance with Section 7.4(b) within thirty (30) days after delivery of such
Indemnification Claim Notice, the Stockholder Representative (or such objecting
Indemnifying Party) and Parent shall attempt in good faith to agree upon the
rights of the respective parties with respect to each of such claims. If the
Stockholder Representative (or such objecting Indemnifying Party) and Parent
should so agree, a memorandum setting forth such agreement shall be prepared and
signed by both parties and, in the case of an indemnification claim to be
recovered from the Escrow Fund, shall be furnished to the Escrow Agent. The
Escrow Agent shall be entitled to rely on any such memorandum and make
distributions from the Escrow Fund in accordance with the terms thereof. In such
event, the Escrow Agent shall promptly release from the Escrow Fund an amount of
cash equal to the Losses set forth in such Indemnification Claim Notice. Should
the amount held in the Escrow Fund, if any, be insufficient to satisfy in whole
the amount owed to an Indemnified Party in accordance with such memorandum and
this Agreement, then subject to the limitations in this Article VII, each
Indemnifying Party shall, within ten (10) Business Days following the date of
such

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memorandum, pay to the Indemnified Party such Indemnifying Party’s Pro Rata
Portion of such shortfall in cash.
(d)    If no such agreement can be reached after good faith negotiation and
prior to thirty (30) days after delivery of an Indemnification Claim Objection
Notice, either Parent or the Stockholder Representative (or the objecting
Indemnifying Party) shall be settled by arbitration conducted in accordance with
the provisions of Section 9.15.
7.5    Third Party Claims.
(a)    If a claim, action, suit or proceeding by a Person who is not a party or
an Affiliate thereof (a “Third Party Claim”) is made against any Indemnified
Party, and if such Indemnified Party intends to seek indemnity with respect
thereto under this Article VII, such Indemnified Party shall promptly notify the
Stockholder Representative of such claims; provided that the failure to so
notify the Stockholder Representative shall not relieve the Indemnifying Parties
of its obligations hereunder, except to the extent that the Indemnifying Parties
is materially prejudiced thereby. Such notice shall identify specifically the
basis under which indemnification is sought under this Agreement and enclose
true and correct copies of any written document furnished to the Indemnified
Party by the Person that instituted the Third Party Claim. The Indemnified Party
shall assume the defense of such Third Party Claim with counsel of reputable
standing and the Indemnified Party’s reasonable fees and expenses (including
reasonable fees and expenses of counsel) in connection with such defense will be
borne by the Indemnifying Parties subject to the limitations in this
Article VII; provided that the Stockholder Representative shall be entitled to
consult with the Indemnified Party in such settlement or defense. The
Indemnified Party shall have the right to pay or settle any Third Party Claim,
provided that the Indemnified Party shall consult with the Stockholder
Representative prior to making any such payment or settlement; provided,
further, that any such payment or settlement shall not be determinative of the
existence, or amount, of any Losses recoverable by the Indemnified Parties from
the Indemnifying Parties under this Agreement. If the Indemnified Party fails to
assume the defense of any such Third Party Claim in accordance with the
foregoing, then the Stockholder Representative shall have the right to assume
the defense thereof upon written notice to the Indemnified Party. If the
Stockholder Representative shall have assumed the defense of any Third Party
Claim, the Stockholder Representative shall not, except with the consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed), enter into any settlement that does not include as an unconditional
term thereof the giving by the Person(s) asserting such Third Party Claim to all
Indemnified Parties of an unconditional release from all liability with respect
to such Third Party Claim or consent to entry of any judgment.
(b)    All of the parties shall reasonably cooperate in the defense or
prosecution of any Third Party Claim in respect of which indemnity may be sought
hereunder and each of Parent and the Surviving Corporation (or a duly authorized
representative of such party) shall furnish such records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
and appeals, as may be reasonably requested in connection therewith.
7.6    Stockholder Representative.
(a)    By virtue of the execution and delivery of a Joinder Agreement, and the
adoption of this Agreement and approval of the Merger by the Stockholders, each
of the Indemnifying Parties shall be deemed to have agreed to appoint
Shareholder Representative Services LLC as its agent and attorney-in-fact, as
the Stockholder Representative for and on behalf of the Indemnifying Parties for
all purposes in connection with this Agreement and the agreements ancillary
hereto, including without limitation to give and receive notices and
communications in respect of indemnification claims under this Agreement to be

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recovered against the Escrow Fund, to authorize payment to any Indemnified Party
from the Escrow Fund in satisfaction of any indemnification claims hereunder by
any Indemnified Party, to object to such payments, to agree to, negotiate, enter
into settlements and compromises of, and demand arbitration and comply with
orders of courts and awards of arbitrators with respect to any such
indemnification claims, to assert, negotiate, enter into settlements and
compromises of, and demand arbitration and comply with orders of courts and
awards of arbitrators with respect to, any such indemnification claim by any
Indemnified Party hereunder against any Indemnifying Party or by any such
Indemnifying Party against any Indemnified Party or any dispute between any
Indemnified Party and any such Indemnifying Party, in each case relating to this
Agreement or the Transactions, and to take all other actions that are either
(i) necessary or appropriate in the judgment of the Stockholder Representative
for the accomplishment of the foregoing or (ii) specifically mandated or
permitted by the terms of this Agreement. Notwithstanding anything contained in
this Agreement to the contrary, the Stockholder Representative shall not have
the authority to enter into any settlement or compromise or otherwise agree to
any claims to the extent that such claim involves Excess Loss (the “Authority
Limitation”). Such agency may be changed by the Stockholders from time to time
upon not less than 30 days prior written notice to Parent; provided, however,
that the Stockholder Representative may not be removed unless holders of a
majority in interest of the Escrow Fund agree to such removal and to the
identity of the substituted agent. Notwithstanding the foregoing, in the event
of a resignation of the Stockholder Representative or other vacancy in the
position of Stockholder Representative, such vacancy may be filled by the
holders of a majority in interest of the Escrow Fund. No bond shall be required
of the Stockholder Representative. After the Closing, notices or communications
to or from the Stockholder Representative shall constitute notice to or from the
Indemnifying Parties.
(b)    The Stockholder Representative shall not be liable for any act done or
omitted hereunder as Stockholder Representative while acting in good faith and
without gross negligence or willful misconduct. The Indemnifying Parties on
whose behalf the Escrow Amount was contributed to the Escrow Fund shall
indemnify the Stockholder Representative and hold the Stockholder Representative
harmless against any and all losses, liabilities, damages, claims, penalties,
fines, forfeitures, actions, fees, costs and expenses arising out of or in
connection with the acceptance or administration of the Stockholder
Representative’s duties hereunder, including the reasonable fees and expenses of
any legal counsel retained by the Stockholder Representative and any amounts
required to be paid by the Stockholder Representative to the Escrow Agent
pursuant to the Escrow Agreement (“Stockholder Representative Expenses”). If not
paid directly to the Stockholder Representative by the Indemnifying Parties, any
such Stockholder Representative Expenses may be recovered by the Stockholder
Representative from (i) first, the funds in the Expense Fund and (ii) then, to
the extent the funds in the Expense Fund are insufficient, the amounts in the
Escrow Fund at such time as remaining amounts would otherwise be distributable
to the Indemnifying Parties. For the avoidance of doubt, while this Section
7.6(b) allows the Stockholder Representative to be paid from the Expense Fund
and the Escrow Fund following the Expiration Date and the resolution of all
indemnification claims made under this Agreement and the satisfaction of all
such indemnification claims, this Section 7.6(b) shall not limit the obligation
of any Indemnifying Party to promptly pay such Stockholder Representative
Expenses as they are incurred. In no event will the Stockholder Representative
be required to advance its own funds on behalf of the Indemnifying Parties or
otherwise. The Indemnifying Parties acknowledge and agree that the foregoing
indemnities will survive the resignation or removal of the Stockholder
Representative or the termination of this Agreement. A decision, act, consent or
instruction of the Stockholder Representative, including an amendment, extension
or waiver of this Agreement pursuant to Section 9.2 or Section 9.3, shall
constitute a decision of the Indemnifying Parties and shall be final, conclusive
and binding upon the Indemnifying Parties; and the Escrow Agent and Parent may
rely upon any such decision, act, consent or instruction of the Stockholder
Representative as being the decision, act, consent or instruction of the
Indemnifying Parties. The Escrow Agent and Parent are hereby relieved from any
liability to any person

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for any acts done by them in accordance with such decision, act, consent or
instruction of the Stockholder Representative.
(c)    Upon the Closing, Parent shall wire to a segregated client bank account
maintained by the Stockholder Representative, an amount equal to US$250,000 (the
“Expense Fund”), and each Indemnifying Party shall be deemed to have contributed
his Pro Rata Portion of the Expense Fund. The Stockholder Representative shall
hold the Expense Fund in accordance with this Agreement on behalf of the
Indemnifying Parties as a fund which will be used for the purposes of paying
directly, or reimbursing the Stockholder Representative for, any third party
expenses pursuant to this Agreement. The Indemnifying Parties shall not receive
any interest or earnings on the Expense Fund and irrevocably transfer and assign
to the Stockholder Representative any ownership right that they may otherwise
have had in any such interest or earnings. The Stockholder Representative will
not be liable for any loss of principal of the Expense Fund other than as a
result of its gross negligence, willful misconduct or bad faith. The Stockholder
Representative will hold these funds separate from its corporate funds, will not
use these funds for its operating expenses or any other corporate purposes and
will not voluntarily make these funds available to its creditors in the event of
bankruptcy. Contemporaneously with or as soon as practicable following the
release in full of the Escrow Fund, the Stockholder Representative shall deliver
the balance of the Expense Fund to the Paying Agent for further distribution to
the Indemnifying Parties in accordance with their respective Pro Rata Portions.
For tax purposes, the Expense Fund will be treated as having been received and
voluntarily set aside by the Indemnifying Parties at the time of Closing.
(d)    The Escrow Fund shall be held and disposed of in accordance with the
terms and conditions of this Agreement and the Escrow Agreement, in a form
reasonably acceptable to the parties thereto (the “Escrow Agreement”), and shall
be entered into at the Effective Time, by and among Parent, the Stockholder
Representative and the Escrow Agent. The Escrow Fund shall be deemed deducted on
a pro rata basis from the consideration each of the Stockholders would otherwise
have been entitled to receive as part of the consideration for their shares of
Company Capital Stock at the Effective Time pursuant to Section 1.6(b)(i), and,
subject to the provisions of this Agreement and the Escrow Agreement. The Escrow
Fund shall be held in trust and shall not be subject to any Lien, attachment,
trustee process or any other judicial process of any creditor of any party.
Approval of this Agreement and the Merger by the Stockholders shall constitute
approval of the Escrow Agreement and of all of the arrangements relating
thereto, including without limitation the placement of the Escrow Fund in
escrow, and the approval of the appointment of the Stockholder Representative.
ARTICLE VIII
PRE-CLOSING TERMINATION OF AGREEMENT
8.1    Termination.  Except as provided in Section 8.2, this Agreement may be
terminated and the Merger abandoned at any time prior to the Closing:
(a)    by mutual agreement of the Company and Parent;
(b)    by Parent if the Requisite Stockholder Approval shall not have been
obtained by the Company and delivered to Parent within one (1) day after the
execution and delivery of this Agreement by Parent and the Company;
(c)    by Parent or the Company if the Closing Date shall not have occurred by
September 30, 2015 (the “End Date”); provided, however, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to any
party whose action or failure to act has been a principal cause of or resulted
in the failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement;

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(d)    by Parent or the Company if any Legal Requirement shall be in effect
which has the effect of making the Merger illegal or otherwise prohibits
prevents consummation of the Merger, provided that in the case of any such Legal
Requirement that is an Order, such Order has become final and non-appealable;
(e)    by Parent if there has been a breach of or inaccuracy in any
representation, warranty, covenant or agreement of the Company set forth in this
Agreement such that the conditions set forth in Sections 6.2(a) and 6.2(b) would
not be satisfied as of the time of such breach or inaccuracy and such breach or
inaccuracy has not been cured within ten (10) calendar days after written notice
thereof to the Company; provided, however, that no cure period shall be required
(i) for a breach or inaccuracy which by its nature cannot be cured or (ii) if
any of the conditions to Closing in Article VI for the benefit of Parent are
incapable of being satisfied on or before the End Date; or
(f)    by the Company if there has been a breach of or inaccuracy in any
representation, warranty, covenant or agreement of Parent set forth in this
Agreement such that the conditions set forth in Sections 6.3(a) and 6.3(b) would
not be satisfied as of the time of such breach or inaccuracy and such breach or
inaccuracy has not been cured within ten (10) calendar days after written notice
thereof to Parent; provided, however, that no cure period shall be required
(i) for a breach or inaccuracy which by its nature cannot be cured or (ii) if
any of the conditions to Closing in Article VI for the benefit of the Company
are incapable of being satisfied on or before the End Date.
8.2    Effect of Termination. In the event of termination of this Agreement as
provided in Section 8.1, this Agreement shall forthwith become void and there
shall be no liability or obligation on the part of Parent, Merger Sub or the
Company, or their respective officers, directors or stockholders, if applicable;
provided, however, that each party hereto and each Person shall remain liable
for any willful and intentional breaches of this Agreement; and provided
further, however, that, the provisions of Section 5.10 (Third Party Expenses),
Article IX (General Provisions) and this Section 8.2 shall remain in full force
and effect and survive any termination of this Agreement pursuant to the terms
of this Article VIII.
ARTICLE IX
GENERAL PROVISIONS
9.1    Certain Interpretations.  When a reference is made in this Agreement to
an Annex, Exhibit or Schedule, such reference shall be to an Annex, Schedule or
Exhibit to this Agreement unless otherwise indicated. When a reference is made
in this Agreement to an Article or a Section, such reference shall be to an
Article or a Section of this Agreement unless otherwise indicated. The words
“include,” “includes” and “including” when used herein shall be deemed in each
case to be followed by the words “without limitation.” All references in this
Agreement to “$” or dollars shall mean U.S. denominated dollars. The parties
hereto agree that they have been represented by counsel during the negotiation
and execution of this Agreement and, therefore, 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.
9.2    Amendment.  This Agreement may be amended by the parties hereto at any
time by execution of an instrument in writing signed on behalf of the party
against whom enforcement is sought. For purposes of this Section 9.2, the
Indemnifying Parties are deemed to have agreed that any amendment of this
Agreement signed by the Stockholder Representative shall be binding upon and
effective against the Indemnifying Parties whether or not they have signed such
amendment; provided, however that after this Agreement is approved by
Stockholders representing the Requisite Stockholder Approval, this Agreement may
only be amended with the written consent of Stockholders representing the
Requisite

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Stockholder Approval if such amendment: (x) changes any material term of this
Agreement adversely with respect to the Stockholders; or (y) would otherwise
require Stockholder approval under applicable Legal Requirements.
Notwithstanding the foregoing, Section 5.7 may not be amended without the prior
written consent of the Company Indemnified Parties.
9.3    Waiver.  At any time prior to the Closing, Parent, on the one hand, and
the Company and the Stockholder Representative, on the other hand, may, to the
extent permitted under any applicable Legal Requirements, (a) extend the time
for the performance of any of the obligations of the other party hereto,
(b) waive any inaccuracies in the representations and warranties made to such
party set forth herein or in any document delivered pursuant hereto, and
(c) waive compliance with any of the covenants, agreements or conditions for the
benefit of such party set forth 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. For purposes of this
Section 9.3, the Stockholders are deemed to have agreed that any extension or
waiver signed by the Stockholder Representative shall be binding upon and
effective against all Stockholders whether or not they have signed such
extension or waiver.
9.4    Assignment.  This Agreement shall not be assigned by operation of law or
otherwise, except that Parent may assign its rights and delegate its obligations
hereunder to its Affiliates as long as Parent remains ultimately liable for all
of Parent’s obligations hereunder.
9.5    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 or, if specifically
provided for elsewhere in this Agreement, by email); provided, however, that
notices sent by mail will not be deemed given until received:
(a)    if to Parent or Merger Sub, to:
        
Select Comfort Corporation
9800 59th Avenue North
Minneapolis, MN 55442
Attention: Mark Kimball
Facsimile No.: (763) 694-3335
Telephone No.: (763) 551-7070
Email: mark.kimball@selectcomfort.com
        
with a copy (which shall not constitute notice) to:

Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attention: David J. Segre and Michael E. Coke
Facsimile No.: (650) 493-6811
(b)    if to the Company (prior to the Closing), to:        
BAM Labs, Inc.
111 West Saint John St., Suite 1200
San Jose, CA 95113
Attention: Chief Executive Officer

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with a copy (which shall not constitute notice) to:
    
Goodwin Procter LLP
135 Commonwealth Drive
Menlo Park, CA 94025
Attention: Craig Schmitz        
(c)    if to the Stockholder Representative, to:
        
Shareholder Representative Services LLC
1614 15th Street, Suite 200
Denver, CO 80202
Attention: Managing Director
Facsimile No.: (303) 623-0294
Telephone No.: (303) 648-4085
Email: deals@srsacquiom.com
9.6    Confidentiality.  Each of the parties hereto (other than the Stockholder
Representative) hereby agrees that the information obtained in any investigation
pursuant to Section 5.5 or any information obtained pursuant to the notice
requirements of Section 5.6, or otherwise pursuant to the negotiation and
execution of this Agreement or the effectuation of the Transactions, shall be
governed by the terms of the Confidentiality Agreement dated as of June 29,
2015, between the Company and Parent.
9.7    Public Disclosure.  Except as required by Legal Requirements, neither the
Company nor any of its Representatives shall issue any statement or
communication to any third party (other than its agents that are bound by
confidentiality restrictions) regarding the subject matter of this Agreement or
the Transactions, including, if applicable, the termination of this Agreement
and the reasons therefor, without the consent of Parent. If the Company is
required by any Legal Requirement to make any such statement or communication,
then the Company shall provide Parent with an opportunity to review and comment
on both the legal requirement to make such statement or communication and the
content thereof.
9.8    Entire Agreement.  This Agreement, Annex A hereto, the Exhibits and
Schedules hereto, the Disclosure Schedule, the Related Agreements, and the
documents and instruments and other agreements among the parties hereto
referenced herein constitute the entire agreement among the parties hereto with
respect to the subject matter of this Agreement and supersede all prior
agreements and understandings both written and oral, among the parties with
respect to the subject matter of this Agreement, and are not intended to confer
upon any other person any rights or remedies hereunder.
9.9    No Third Party Beneficiaries.  Nothing in this Agreement is intended to,
or shall be construed to, confer upon any other person any rights or remedies
hereunder, except for the Indemnified Parties under Article VII and the Company
Indemnified Parties, who are express third party beneficiaries of Section 5.7.
9.10    Specific Performance and Other Remedies.
(a)    The parties to this Agreement agree that, in the event of any breach or
threatened breach by the other party or parties hereto of any covenant,
obligation or other agreement set forth in this Agreement, (i) each party shall
be entitled, without any proof of actual damages (and in addition to any other
remedy that may be available to it), to a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other agreement and an injunction preventing or
restraining such breach or threatened breach, and (ii) no party hereto shall be

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required to provide or post any bond or other security or collateral in
connection with any such decree, order or injunction or in connection with any
related action or legal proceeding.
(b)    Any and all remedies herein expressly conferred herein upon a party
hereto shall be deemed to be cumulative with, and not exclusive of, any other
remedy conferred hereby, or by law or in equity upon such party, and the
exercise by a party hereto of any one remedy will not preclude the exercise of
any other remedy.
(c)    The liability of any Person under Article VII will be in addition to, and
not exclusive of, any other liability that such Person may have at law or in
equity based on such Person’s fraudulent acts or omissions.
(d)    Notwithstanding anything to the contrary set forth in this Agreement,
none of the provisions set forth in this Agreement, including the provisions set
forth in ýArticle VII or Section 2.28, shall be deemed a waiver by any party to
this Agreement of any right or remedy which such party may have at law or in
equity against any other Person for such Person’s fraudulent acts or omissions
with respect to such Person’s representations and warranties in this Agreement,
nor will any such provisions limit, or be deemed to limit (i) the amounts of
recovery sought or awarded in any such claim for fraud, (ii) the time period
during which a claim for fraud may be brought or (iii) the recourse which any
such party may seek against such Person who committed such fraudulent act or
omission with respect to a claim for fraud; provided, however, that no
Indemnifying Party would be liable for Losses in excess of such Indemnifying
Party’s Pro Rata Portion of the amount of Losses in respect of such claim or of
the aggregate amount of cash actually received by such Indemnifying Party
pursuant to Section 1.6(b)(i) and Section 1.6(c)(i)(A) in respect of the shares
of Company Capital Stock and Company Options owned by such Indemnifying Party as
of immediately prior to the Effective Time, in each case, for any action arising
out of fraudulent acts or omissions committed by any Person other than such
Indemnifying Party.
9.11    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.
9.12    Governing Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws thereof.
9.13    Costs and Expenses.  The parties agree that each party hereto (and in
the case of the Stockholder Representative, the Indemnifying Parties as provided
in this Agreement) shall pay its own costs and expenses (including counsel fees)
incurred in connection with the Transactions.
9.14    Exclusive Jurisdiction.  Subject to Section 7.4(d) and Section 9.15,
each of the parties hereto irrevocably consents to the exclusive jurisdiction
and venue of the Courts of Santa Clara County in the State of California in
connection with any matter based upon or arising out of this Agreement, the
Merger and the other Transactions or any other matters contemplated herein (or,
only if the Courts of Santa Clara County in the State of California declines to
accept jurisdiction over a particular matter, any federal court within Santa
Clara County in the State of California). Subject to Section 7.4(d) and Section
9.15, each party agrees not to commence any legal proceedings related hereto
except in such Courts of Santa Clara County in the State of California (or, only
if the Courts of Santa Clara County in the State of

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California declines to accept jurisdiction over a particular matter, in any
federal court within Santa Clara County in the State of California). By
execution and delivery of this Agreement, subject to Section 7.4(d) and Section
9.15, each party hereto and the Indemnifying Parties irrevocably and
unconditionally submits to the exclusive jurisdiction of such courts and to the
appellate courts therefrom solely for the purposes of disputes arising under the
this Agreement and not as a general submission to such jurisdiction or with
respect to any other dispute, matter or claim whatsoever. The parties hereto and
the Indemnifying Parties irrevocably consent to the service of process out of
any of the aforementioned courts in any such action or proceeding by the
delivery of copies thereof by overnight courier to the address for such party to
which notices are deliverable hereunder. Nothing herein shall affect the right
to serve process in any other manner permitted by applicable law.
9.15    Resolution of Conflicts; Arbitration.  Any claim or dispute arising out
of or related to this Agreement, or the interpretation, making, performance,
breach or termination thereof, shall be finally settled by binding arbitration
in the County of Santa Clara, California in accordance with the then current
Commercial Arbitration Rules of the American Arbitration Association and
judgment upon the award rendered may be entered in any court having jurisdiction
thereof. The arbitrator(s) shall have the authority to grant any equitable and
legal remedies that would be available in any judicial proceeding instituted to
resolve a dispute.
(a)    Selection of Arbitrators. Such arbitration shall be conducted by a single
arbitrator chosen by mutual agreement of (i) if the Closing has not occurred,
Parent and the Company and (ii) if the Closing has occurred, Parent and the
Stockholder Representative. Alternatively, at the request of either party before
the commencement of arbitration, the arbitration shall be conducted by three
independent arbitrators, none of whom shall have any competitive interests with
Parent, the Company, the Stockholder Representative or an Indemnifying Party.
Parent and Stockholder Representative shall each select one arbitrator. The two
arbitrators so selected shall select a third arbitrator.
(b)    Discovery. In any arbitration under this Section 9.15, each party shall
be limited to calling a total of three witnesses both for purposes of deposition
and the arbitration hearing. Subject to the foregoing limitation on the number
of witnesses, 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 for discovery abuses,
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.
(c)    Decision. The decision of the arbitrator or a majority of the three
arbitrators, as the case may be, as to any claim or dispute (including the
validity and amount of any indemnification claim set forth in an Indemnification
Claim Notice) 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 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, including any distributions out of the Escrow
Fund, as applicable.
(d)    Other Relief. The parties to the arbitration may apply to a court of
competent jurisdiction for a temporary restraining order, preliminary injunction
or other interim or conservatory

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relief, as necessary, without breach of this arbitration provision and without
abridgement of the powers of the arbitrator(s).
(e)    Costs and Expenses. The parties agree that each party (and in the case of
the Stockholder Representative, the Indemnifying Parties as provided in this
Agreement) shall pay its own costs and expenses (including counsel fees) of any
such arbitration, and each party waives its right to seek an order compelling
the other party to pay its portion of its costs and expenses (including counsel
fees) for any arbitration.
9.16    USA Patriot Act Compliance.  To help the government fight the funding of
terrorism and money laundering activities, federal law requires all financial
institutions to obtain, verify and record information that identifies each
person who opens an account. For a non-individual person such as a business
entity, a charity, a trust or other legal entity the Escrow Agent will ask for
documentation to verify its formation and existence as a legal entity. The
Escrow Agent may also ask to see financial statements, licenses, identification
and authorization documents from individuals claiming authority to represent the
entity or other relevant documentation. The parties each agree to provide all
such information and documentation as to themselves as requested by Escrow Agent
to ensure compliance with federal law.
9.17    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. The exchange of a fully executed
Agreement (in counterparts or otherwise) by electronic transmission in .PDF
format or by facsimile shall be sufficient to bind the parties to the terms and
conditions of this Agreement.
[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Parent, Merger Sub, the Company and the Stockholder
Representative have caused this Agreement to be executed as of the date first
written above.
SELECT COMFORT CORPORATION

By: /s/ Shelly R. Ibach    
Name: Shelly R. Ibach
Title: Chief Executive Officer

SCC SUBSIDIARY CORP.

By: /s/ Mark Kimball        Name: Mark Kimball
Title: President

BAM LABS, INC.

By: /s/ Richard Rifredi        Name: Richard Rifredi
Title: Chief Executive Officer

SHAREHOLDER REPRESENTATIVE
SERVICES LLC,
solely in its capacity as the Stockholder
Representative

By: /s/ W. Paul Koenig
Name: W. Paul Koenig
Title: Managing Director

AGREEMENT AND PLAN OF MERGER

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ANNEX A

CERTAIN DEFINED TERMS
“280G Waivers” shall mean the 280G Waivers executed and delivered by certain
Company employees prior to Closing substantially in the form attached hereto as
Exhibit E.
“Action” shall mean any action, suit, claim, complaint, litigation,
investigation, audit, proceeding, arbitration or other similar dispute.
“Affiliate” of any Person shall mean another Person that directly or indirectly
through one of more intermediaries controls, is controlled by or is under common
control with, such first Person.
“Aggregate Strike Price Amount” shall mean an amount equal to the aggregate
exercise prices of all Vested Company Options outstanding and unexercised, and
that are “in-the-money” relative to the Per Share Consideration payable in
respect of shares of the Company’s Common Stock pursuant to Section 1.6(b)(i) of
this Agreement, that were granted prior to August 4, 2015.
“Business Day” shall mean each day that is not a Saturday, Sunday or other day
on which banking institutions located in Minneapolis, Minnesota are authorized
or obligated by law or executive order to close.
“Closing Cash” shall mean the sum of: (a) the amount (expressed in United States
dollars) of all cash and cash equivalents (including, without limitation,
marketable securities and short term investments) of the Company as of
immediately prior to the Effective Time; plus (b) the aggregate amount of all
accounts receivable set forth on Schedule A-4 by Parent to the Company under the
Parent Agreement pursuant to invoices submitted by the Company at any time prior
to or on the Closing Date, in each case which cash and cash equivalents and
accounts receivable remain the property of the Company after the Closing.
“Closing Indebtedness” shall mean the aggregate amount of all outstanding
Indebtedness (including principal and accrued and unpaid interest) of the
Company as of immediately prior to the Effective Time, including any
termination, pre-payment or balloon or similar penalties or premiums that are
paid or become payable as a result of the full repayment and retirement of such
Indebtedness immediately following the Effective Time.
“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended.
“Code” shall mean the Internal Revenue Code of 1986, as amended.
“Company Capital Stock” shall mean the Company Common Stock, the Company
Preferred Stock and any other shares of capital stock, if any, of the Company,
taken together.
“Company Common Stock” shall mean shares of common stock, par value $0.00001 per
share, of the Company.
“Company Employee Plan” shall mean any plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
change of control, termination pay, deferred compensation, performance awards,
equity or equity-related awards, welfare benefits, health benefits or

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medical insurance, retirement benefits, fringe benefits or other employee
benefits or remuneration of any kind, whether written, unwritten or otherwise,
funded or unfunded, including each “employee benefit plan,” within the meaning
of Section 3(3) of ERISA which is maintained, contributed to or required to be
contributed to by the Company or any ERISA Affiliate for the benefit of any
Employee, and with respect to which the Company or any ERISA Affiliate has or
may have any liability or obligation, including any International Employee Plan.
“Company IP” shall mean any and all Intellectual Property Rights and
Intellectual Property that are owned by or exclusively licensed by, or purported
to be owned by or exclusively licensed by, the Company.
“Company IP Contracts” shall mean the Out-Licenses and the In-Licenses.
“Company Material Adverse Effect” shall mean any change, event, violation,
inaccuracy, circumstance or effect (any such item, an “Effect”), individually or
when taken together with all other Effects that have occurred prior to the date
of determination of the occurrence of the Company Material Adverse Effect, that
is or is reasonably likely to (i) materially impede the authority of the Company
to consummate the Transactions in accordance with the terms of this Agreement
and Legal Requirements, or (ii) be materially adverse to the business, assets
(including intangible assets), liabilities, capitalization, financial condition
or results of operations of the Company taken as a whole, provided, however,
that in no event shall any Effect resulting from any of the following, either
alone or in combination, be taken into account in determining whether there has
been a Company Material Adverse Effect under clause (ii): (a) any change in the
economic conditions of the United States or global economy or capital or
financial markets generally that does not materially disproportionately affect
the Company, taken as a whole, (b) any change in economic conditions generally
affecting industries in which the Company conducts business, (c) any change in
Legal Requirements, (d) any change in GAAP, (e) the failure of the Company to
meet any financial forecast, projection, estimate, prediction or models (but not
the underlying cause of such failure) or (f) any Effect primarily resulting from
the announcement or pendency of the Merger, unless, in the case of clauses (a)
through (d), such Effect disproportionately affects the Company relative to
other companies in the Company’s industry.
“Company Options” shall mean all issued and outstanding options to purchase or
otherwise acquire Company Common Stock (whether or not vested) held by any
Person.
“Company Preferred Stock” shall mean the Company Seed Series A Preferred Stock,
the Company Series A Preferred Stock, the Company Seed Series B Preferred Stock,
the Company Series B Preferred Stock, the Company Seed Series C Preferred Stock,
and the Company Series C Preferred Stock, taken together.
“Company Privacy Policy” shall mean each external or internal, past or present
privacy policy or privacy- or security-related representation, obligation, or
promise of the Company, including any such policy or representation, obligation,
or promise relating to: (i) the privacy of users of any Company Product or any
website or service operated by or on behalf of the Company; or (ii) the
collection, use, storage, hosting, disclosure, transmission, transfer, disposal,
retention, interception, or other processing of, or security of, any Personal
Data.
“Company Product” shall mean each product (including Software, website, mobile
or tablet applications, and databases) or service developed, marketed,
distributed, made available, imported, or licensed or sold by or for the Company
at any time since its inception, including, without limitation, the products
currently known as SleepIQ® technology sold by Parent and the BAM Labs Smart Bed

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Technology® Solution and other medical solutions, and any improvements or
modifications thereto currently under development by or for the Company, in the
form such under-development improvements and modifications exist as of the date
of this Agreement.
“Company Product Data” shall mean (A) all data and content uploaded or otherwise
provided by or for customers of the Company to, or stored by the customers of
the Company on, the Company Products; (B) all data and content created,
compiled, inferred, derived, or otherwise collected or obtained by or for the
Company Products or by or for the Company in its provision of the Company
Products or operation of the business of the Company; and (C) data and content
compiled, inferred, or derived directly or indirectly from any of the data and
content described in subclauses (A) and (B) above.
“Company Seed Series A Preferred Stock” shall mean the Seed Series A Preferred
Stock, par value $0.00001 per share, of the Company.
“Company Seed Series B Preferred Stock” shall mean the Seed Series B Preferred
Stock, par value $0.00001 per share, of the Company.
“Company Seed Series C Preferred Stock” shall mean the Seed Series C Preferred
Stock, par value $0.00001 per share, of the Company.
“Company Series A Preferred Stock” shall mean the Series A Preferred Stock, par
value $0.00001 per share, of the Company.
“Company Series B Preferred Stock” shall mean the Series B Preferred Stock, par
value $0.00001 per share, of the Company.
“Company Series C Preferred Stock” shall mean the Series C Preferred Stock, par
value $0.00001 per share, of the Company.
“Company Software” shall mean any Software (including Company IP and Licensed
IP), that is embedded in, material to the development of, or used in the
delivery, hosting or distribution of, any Company Products, including any such
Software that is used to collect, transfer, transmit, store, host, or otherwise
process Personal Data.
“Continuing Employee” shall mean an Employee who is employed or retained as a
consultant by the Company as of the Closing Date and continues his or her
employment or consulting arrangement with Parent or one of its Subsidiaries on
the day following the Closing Date (including, for the avoidance of doubt, any
employee who is on maternity leave, short-term disability leave, long-term
disability leave, military leave or another approved leave of absence as of the
Closing Date).
“Continuing Employee Offer Letter” shall mean an offer letter from Parent or an
Affiliate thereof to a Continuing Employee.
“Contract” shall mean any contract, mortgage, indenture, lease, license,
covenant, plan, insurance policy or other agreement, instrument, arrangement,
understanding or commitment, Permit, concession, franchise or license.
“Delaware Law” shall mean the General Corporation Law of the State of Delaware.

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“Employee” shall mean any current or former employee, consultant, independent
contractor or director of the Company or any ERISA Affiliate.
“Employee Agreement” shall mean each management, employment, severance,
separation, settlement, consulting, contractor, relocation, change of control,
retention, bonus, repatriation, expatriation, loan, visa, work permit or other
agreement, or contract (including, any offer letter or any agreement providing
for acceleration of Company Options or any other agreement providing for
compensation or benefits) between the Company or any ERISA Affiliate, as
applicable, and any Employee with respect to which the Company or any ERISA
Affiliate has or may have any liability or obligation.
“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.
“ERISA Affiliate” shall mean any other Person under common control with the
Company or that, together with the Company, could be deemed a “single employer”
within the meaning of Section 4001(b)(1) of ERISA or within the meaning of
Section 414(b), (c), (m) or (o) of the Code, and the regulations issued
thereunder.
“Escrow Agent” shall mean the escrow agent designated under the Escrow Agreement
or another institution acceptable to Parent and the Stockholder Representative,
and any successor escrow agent appointed pursuant to the Escrow Agreement.
“Escrow Agreement” shall mean the Escrow Agreement executed and delivered
concurrently herewith and attached hereto as Exhibit F.
“Escrow Amount” shall mean an amount in cash equal to 10% of the aggregate
amount of cash payable to the Indemnifying Parties pursuant to Section 1.6(b)(i)
and Section 1.6(c)(i)(A) in respect of the shares of Company Capital Stock and
Company Options owned by the Indemnifying Parties as of immediately prior to the
Effective Time.
“Expense Fund” shall have the meaning set forth in Section 7.6(c).
“Expiration Date” shall have the meaning set forth in Section 7.1.
“Founder” shall mean each of Rich Rifredi and Steve Young.
“GAAP” shall mean United States generally accepted accounting principles
consistently applied.
“Governmental Entity” shall mean any court, administrative agency or commission
or other federal, state, county, local or other foreign governmental authority,
instrumentality, agency or commission.
“Hazardous Material” shall mean any substance that has been designated by any
Governmental Entity or by applicable Legal Requirement to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the environment,
including PCBs, asbestos, petroleum, and urea-formaldehyde and all substances
listed as hazardous substances pursuant to the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, or defined as a
hazardous waste pursuant to the United States Resource Conservation and Recovery
Act of 1976, as amended, and the regulations promulgated pursuant to said laws.

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“HIPAA” shall mean the Health Insurance Portability and Accountability Act of
1996, as amended.
“Indebtedness” of any Person shall mean, without duplication: (i) all
liabilities of such Person for borrowed money, whether secured or unsecured, all
obligations evidenced by bonds, debentures, notes or similar instruments, and
all liabilities in respect of mandatorily redeemable or purchasable share
capital or securities convertible into share capital; (ii) all liabilities of
such Person constituting capital leases under GAAP; (iv) all liabilities of such
Person evidenced by any letter of credit or similar credit transaction entered
into for the purpose of securing any lease deposit; (v) all liabilities of such
Person for the reimbursement of any obligor on any letter of credit, banker’s
acceptance or similar credit transaction securing obligations of a type
described in clauses (i) or (ii) above to the extent of the obligation secured;
and (v) all guarantees by such Person of any liabilities of a third party of a
nature similar to the types of liabilities described in clauses (i), (ii) or
(iii) above, to the extent of the obligation guaranteed.
“Intellectual Property” shall mean algorithms, APIs, databases, data
collections, diagrams, formulae, inventions (whether or not patentable),
know-how, logos, designs, marks (including brand names, product names, logos,
and slogans), methods, network configurations and architectures, processes,
proprietary information, protocols, schematics, specifications, Software,
subroutines, techniques, user interfaces, URLs, web sites, works of authorship
(including written, audio and visual materials) and other forms of technology
(whether or not embodied in any tangible form and including all tangible
embodiments of the foregoing).
“Intellectual Property Rights” shall mean all rights of the following types,
which may exist or be created under the laws of any jurisdiction in the world
whether registered or unregistered: (i) rights associated with works of
authorship, including exclusive exploitation rights, copyrights, copyright
registrations and applications therefor, and moral rights (“Copyrights”);
(ii) rights in trademarks, business names, trade names, logos, common law
trademarks and service marks and trademark and service mark registrations, and
related goodwill and applications therefor (“Trademarks”); (iii) trade secret
rights and all other rights in confidential business or technical information
(“Trade Secrets”); (iv) patent, invention disclosures, industrial design
property rights, and applications therefor (including patents issuing on such
applications), together with all continuations, continuations-in-part, reissues,
renewals, reexaminations, provisionals, divisionals, substitutions, extensions
or revisions thereof, any foreign counterparts or equivalents of any of the
foregoing and any other patents, applications or extensions that claim priority
to or through any of the foregoing (“Patents”); (v) domain names, uniform
resource locators, other names and locators associated with the Internet, and
applications or registrations therefor (“Domain Names”); (vi) all rights in
databases and data collections; (vii) other proprietary rights in Intellectual
Property; and (viii) any similar or equivalent rights to any of the foregoing.
“International Employee Plan” shall mean each Company Employee Plan or Employee
Agreement that has been adopted or maintained by the Company or any ERISA
Affiliate, whether formally or informally, or with respect to which the Company
or any ERISA Affiliate will or may have any liability, with respect to Employees
who perform services outside the United States.
“IRS” shall mean the United States Internal Revenue Service.
“Key Employee Offer Letter” shall mean an offer letter from Parent or an
Affiliate thereof to each Founder and certain Key Employees listed on Schedule
A-1.
“Key Employees” shall mean those Company Employees who will receive an offer of
employment from Parent or a Subsidiary of Parent and who are listed on
Schedule A-1.

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“Knowledge” or “Known” shall mean, with respect to the Company, the actual
knowledge of the Founders, the members of the Company’s board of directors and
Carl Hewitt and Adam Schader.
“Leased Real Property” shall mean all real property leased, subleased or
licensed by or from the Company or otherwise used or occupied by the Company as
of the date of this Agreement.
“Legal Requirement” shall mean any applicable U.S. or non-U.S. federal, state,
local or other constitution, law, statute, ordinance, rule, regulation,
published administrative position, policy or principle of common law, or any
Order, in any case issued, enacted, adopted, promulgated, implemented or
otherwise put into legal effect by or under the authority of any Governmental
Entity.
“Licensed IP” shall mean (a) all Intellectual Property Rights and Intellectual
Property incorporated into, material to the development of, or used in the
delivery, hosting or distribution of, the Company Products; and (b) all other
Intellectual Property Rights and Intellectual Property used or held for use in
the conduct of the business of the Company, in each case that are not owned by,
or purported to be owned by, the Company.
“Lien” shall mean any lien, pledge, charge, claim, mortgage, security interest
or other encumbrance of any kind or character whatsoever.
“Made Available” shall mean that the Company has posted such materials to the
virtual data room hosted by Box, Inc. and made available to Parent and its
representatives during the negotiation of this Agreement, but only if so posted
and made available on or prior to the date that is one (1) Business Day prior to
the date of this Agreement.
“Non-Competition and Non-Solicitation Agreements” shall mean the Non-Competition
and Non-Solicitation Agreements executed and delivered by the Founders in
substantially the form attached hereto as Exhibit G.
“Non-Solicitation Agreements” shall mean the Non-Solicitation Agreements
executed and delivered by the individuals on Schedule A-2 in substantially the
form attached hereto as Exhibit H.
“Non-Continuing Employees” shall mean all Employees other than Continuing
Employees, including all Offered Employees who decline to accept Parent’s offer
of employment made in accordance with Section 5.9(b) and any other employee of
the Company who are not extended an offer of employment by Parent prior to the
Closing Date.
“Order” shall mean any order, judgment, injunction, ruling, edict, or other
decree, whether temporary, preliminary or permanent, enacted, issued,
promulgated, enforced or entered by any Governmental Entity or duly appointed
arbitrator or panel of arbitrators.
“Parent Agreement” shall mean that certain License and Distribution Agreement,
dated November 2, 2012, between the Company and Parent.
“Paying Agent” shall have the meaning set forth in Section 1.7(a).
“Pension Plan” shall mean each Company Employee Plan that is an “employee
pension benefit plan,” within the meaning of Section 3(2) of ERISA.

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“Permits” shall mean all permits, licenses, easements, variances, exemptions,
consents, certificates, authorizations, registrations, orders and other
approvals from, or pursuant to laws enforced by, Governmental Entities that are
material to the operation of the business of the Company and its Subsidiaries
taken as a whole as currently conducted.
“Permitted Liens” shall mean (i) Liens for Taxes that are (A) not yet due and
payable as of the Closing Date or (B) being contested in good faith through
appropriate proceedings (and for which adequate accruals or reserves have been
established on the Current Balance Sheet in accordance with GAAP), (ii)
mechanics’, carriers’, workmen’s, repairmen’s or other statutory liens or
encumbrances arising or incurred in the ordinary course of business which liens
are not material in the aggregate, (iv) pledges or deposits to secure obligation
under workers’ compensation laws or similar legislation or to secure public or
statutory obligations, (v) non-exclusive licenses of Intellectual Property
Rights granted in the ordinary course of business, and (vi) purchase money Liens
arising in the ordinary course of business.
“Per Option Consideration” shall mean an amount in cash, without interest, equal
to (x) the excess of the Per Share Consideration in respect of Company Common
Stock over the per share exercise price of such Vested Company Option,
multiplied by (y) the aggregate number of shares of Company Common Stock subject
to such Vested Company Option.
“Per Share Consideration” shall mean with respect to each class or series of
Company Capital Stock the applicable amount of cash (without interest) for such
class or series of Company Capital Stock calculated as set forth in Article V,
Section 3 of the Eighth Amended and Restated Certificate of Incorporation of the
Company, which amounts shall be calculated pursuant to the formulas utilized in
the Spreadsheet.
“Person” shall mean an individual or entity, including a partnership, a limited
liability company, a corporation, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization, or a Governmental Entity
(or any department, agency, or political subdivision thereof).
“Personal Data” shall mean: (i) a natural person’s name, street address,
telephone number, e-mail address, photograph, social security number or tax
identification number, driver’s license number, passport number, credit card
number, bank information, biometric identifier, or customer or account number,
device or machine identifier, IP address or any other piece of information, that
alone or in combination with other information directly or indirectly collected,
held, or otherwise processed by or for the Company allows the identification or
location of, or contact with, a natural person or a particular computing system
or device and (ii) any information associated, directly or indirectly, with any
of the foregoing.
“Plan” shall mean the Company’s 2006 Stock Plan, as amended.
“Pre-Closing Taxes” shall mean (A) any Taxes of the Company attributable to any
taxable period or portion thereof that ends on or prior to the Closing Date
(“Pre-Closing Tax Period”), excluding, for the avoidance of doubt, all
Transaction Payroll Taxes (it being understood that, in the case of Taxes based
upon income, sales, proceeds, profits, receipts, wages, compensation or similar
items, the Taxes attributable to a Pre-Closing Tax Period ending on the Closing
Date shall be determined on the basis of a closing of the books as of the close
of business on the Closing Date, provided that exemptions, allowances or
deductions that are calculated on an annual basis (including depreciation and
amortization deductions other than with respect to property placed into service
after the Closing) shall be allocated on a per diem basis and the amount of any
other Taxes of the Company attributable to such Tax period shall equal the
amount of such Tax for the entire taxable period multiplied by a fraction, the
numerator of

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which is the number of days in the taxable period up to and including the
Closing Date, and the denominator of which is the total number of days in the
taxable period), (B) any Taxes as a result of the Company being (or ceasing to
be) on or prior to the Closing Date (1) a member of an affiliated or combined
group pursuant to Treasury Regulations Section 1.1502-6 or any similar provision
of state, local or foreign law prior to the Closing Date or (2) a transferee or
successor by contract or otherwise, which relate to an event occurring on or
before the Closing Date, (C) any Taxes imposed on the Company as a result of an
express or implied obligation arising on or prior to Closing Date to indemnify
or otherwise assume or succeed to the Taxes of any other Person, or (D) any
transfer or other Taxes arising directly (or indirectly) as a result of the
Transactions; provided, however, Pre-Closing Taxes shall not include any Taxes
attributable to actions by Parent or its Affiliates on the Closing Date or after
the Closing outside the ordinary course of business or any election by Parent or
its Affiliates under Section 338 of the Code with respect to the Company.
“Privacy Legal Requirement” shall mean a (i) Legal Requirement, (ii) applicable
rule of a self-regulatory organization or published industry best practice or
other standard (including the PCI Data Security Standard, to the extent
applicable) to which the Company has declared its adherence, or (iii)
contractual requirement by which the Company is or has been bound, as it may in
each case be or have been amended from time to time, pertinent to (a) privacy or
restrictions or obligations related to the collection, use, disclosure,
transfer, transmission, storage, hosting, disposal, retention, interception or
other processing of, or the security of, Personal Data or (b) consumer
communications or consumer protection.
“Pro Rata Portion” shall mean with respect to each Stockholder or Vested Company
Optionholder other than Parent, an amount equal to the quotient obtained by
dividing (x) the aggregate amount of cash actually received by such Stockholder
or Vested Company Optionholder pursuant to Section 1.6(b)(i) and Section
1.6(c)(i)(A) in respect of the shares of Company Capital Stock and Company
Options owned by such Stockholder or Vested Company Optionholder as of
immediately prior to the Effective Time, by (y) the aggregate amount of cash
payable to all Stockholders other than Parent and Vested Company Optionholders
pursuant to Section 1.6(b)(i) and Section 1.6(c)(i)(A), respectively, in respect
of Company Capital Stock and Company Options, respectively, outstanding as of
immediately prior to the Effective Time.
“Registered IP” shall mean all Intellectual Property Rights that are registered,
filed, or issued under the authority of, with or by any Governmental Entity,
including all patents, registered copyrights, and registered trademarks,
business names and Domain Names, and all applications for any of the foregoing.
“Related Agreements” shall mean the Escrow Agreement, the Joinder Agreements,
the Non-Competition and Non-Solicitation Agreements, the 280G Waivers and all
other agreements and certificates entered into by the Company or any of the
Stockholders in connection with the Transactions.
“Shrink-Wrap Code” shall mean generally commercially available, off-the-shelf
Software where available for a cost of not more than $10,000 for a perpetual
license or subscription for a single user or work station (or $2,500 for an
annual license or subscription for a single user or work station).
“Software” shall mean computer software, programs and databases in any form,
including source code, executable or object code, operating systems and
specifications, data, databases, database management code, firmware, utilities,
graphical user interfaces, menus, images, icons, forms and software engines, and
all related documentation, developer notes, comments and annotations.

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“Standard Form IP Contract” shall mean each standard form of Company IP Contract
used by the Company at any time, including each standard form of the following
types of agreements, to the extent the Company actually utilizes such a standard
form in the conduct of its business: (i) license and/or service agreement;
(ii) development agreement; (iii) distributor, reseller or affiliate agreement;
(iv) employee agreement containing any assignment or license of Intellectual
Property or Intellectual Property Rights or any confidentiality provision;
(v) professional services, outsourced development, consulting, or independent
contractor agreement containing any assignment or license of Intellectual
Property or Intellectual Property Rights or any confidentiality provision; and
(vi) confidentiality or nondisclosure agreement.
“Stockholder” shall mean any holder of any Company Capital Stock as of
immediately prior to the Effective Time.
“Subsidiary” shall mean, with respect to any Person, any corporation, limited
liability company, partnership, association, joint venture or other business
entity of which such Person owns, directly or indirectly, more than fifty
percent (50%) of the stock or other equity interest entitled to vote on the
election of the members of the board of directors or similar governing body.
“Tax” shall mean (i) any income, alternative or add-on minimum tax, gross
income, estimated, gross receipts, sales, use, ad valorem, value added,
transfer, franchise, capital stock, profits, license, registration, withholding,
payroll, social security (or equivalent), employment, unemployment, disability,
escheat, excise, severance, stamp, occupation, premium, property (real, tangible
or intangible), environmental or windfall profit tax, custom duty or other tax,
together with any interest or any penalty, addition to tax or additional amount
(whether disputed or not) imposed by any Governmental Entity responsible for the
imposition of any such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in clause (i) of this sentence as a
result of being a member of an affiliated, consolidated, combined, unitary,
aggregate or similar group for any taxable period, and (iii) any liability for
the payment of any amounts of the type described in clause (i) or (ii) of this
sentence as a result of being a transferee of or successor to any Person or as a
result of any express or implied obligation to assume such Taxes or to indemnify
any other Person (but excluding any such obligations arising pursuant to
customary terms in commercial Contracts entered into in the ordinary course of
business, the principal purpose of which is unrelated to Taxes), including by
operation of law.
“Third Party Components” shall mean, with respect to any Company Product,
Intellectual Property that is not exclusively owned by the Company and is
embedded in, incorporated into, distributed with, material to the development
of, or used in the hosting, or distribution of, such Company Product.
“Third Party Expenses” shall mean, without duplication, all fees and expenses
incurred by or on behalf of the Company in connection with this Agreement, the
Merger and the other Transactions, including (i) all legal, accounting,
financial advisory, consulting, finders and all other fees and expenses of third
parties incurred by the Company in connection with the negotiation and
effectuation of the terms and conditions of this Agreement, all other
agreements, instruments and other documents referenced herein or contemplated
hereby, the Merger and the other Transactions, (ii)  any bonus, severance,
change-in-control payments or similar payment obligations of the Company that
become due or payable solely as a result of the Closing, excluding, in each
case: (A) the Transaction Bonuses; (B) all Non-Continuing Employee Severance
Amounts; (C) any payments payable in connection with Key Employee Offer Letters
and the Continuing Employee Offer Letters; or (E) that result from actions taken
by Parent and excluding any acceleration of the vesting of any Company Option or
other equity award, and (iii) any Transaction Payroll Taxes.

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“Total Consideration” shall mean an amount equal to US$70,000,000, plus (i) the
Aggregate Strike Price Amount and (ii) the Closing Cash, less (iii) Closing
Indebtedness, (iv) Third Party Expenses (whether or not paid prior to the
Effective Time), (v) the Transaction Bonuses and (vi) the aggregate amount of
the Per Share Consideration that, but for the provisions of Section 1.6(b)(ii),
would otherwise be payable in respect of the shares of Company Capital Stock
held by Parent or its controlled Affiliates pursuant to the formulas utilized in
the Spreadsheet, in each case, without duplication.
“Transaction Bonuses” shall mean the amounts of cash to be paid at the Closing
to certain employees of the Company as set forth on Schedule A-3.
“Transaction Payroll Taxes” shall mean all employer portion payroll or
employment Taxes incurred in connection with any bonuses, option cashouts or
other compensatory payments paid prior to, at or immediately after the Closing
in connection with the Transactions, whether payable by Parent, the Company or
their respective Affiliates.
“Unvested Company Option” shall mean a Company Option (or portion thereof) that
is outstanding and unvested as of immediately prior to the Effective Time and is
not a Vested Company Option.
“Vested Company Option” shall mean any Company Option (or portion thereof) that
is outstanding and vested as of immediately prior to the Effective Time, after
taking into account any Company Option (or portion thereof) that, as a result of
the Merger will accelerate in full and no longer be subject to any further
vesting, right of repurchase, risk of forfeiture or other such conditions.
“Vested Company Optionholder” shall mean any holder of a Vested Company Option
immediately prior to the Effective Time.

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