Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

VISTAPRINT N.V.,

VISTAPRINT USA, INCORPORATED,

WOODBRIDGE ACQUISITION CORP,

WEBS, INC.

AND

SHAREHOLDER REPRESENTATIVE SERVICES LLC

AS SECURITYHOLDER REPRESENTATIVE

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

THE MERGER

     2   

1.1

 

The Merger

     2   

1.2

 

Effective Time

     2   

1.3

 

Effect of the Merger

     2   

1.4

 

Certificate of Incorporation and Bylaws

     2   

1.5

 

Directors and Officers

     3   

1.6

 

Effect of Merger on the Securities of the Company

     3   

1.7

 

Dissenting Shares

     7   

1.8

 

Mechanics of Exchange

     7   

1.9

 

No Further Ownership Rights

     9   

1.10

 

Lost, Stolen or Destroyed Instruments

     9   

1.11

 

Taking of Necessary Action; Further Action

     10   

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     10   

2.1

 

Organization of the Company and its Subsidiaries

     10   

2.2

 

Company Capital Structure

     10   

2.3

 

Subsidiaries

     12   

2.4

 

Authority

     12   

2.5

 

No Conflict

     13   

2.6

 

Governmental Consents

     13   

2.7

 

Company Financial Statements

     13   

2.8

 

No Undisclosed Liabilities

     14   

2.9

 

No Changes

     14   

2.10

 

Tax Matters

     16   

2.11

 

Restrictions on Business Activities

     19   

2.12

 

Title to Properties; Absence of Liens and Encumbrances; Condition of Equipment

     19   

2.13

 

Intellectual Property

     21   

2.14

 

Contracts

     25   

2.15

 

No Defaults

     27   

2.16

 

Government Contracts

     27   

2.17

 

Interested Person Transactions

     27   

2.18

 

Governmental Authorization

     28   

2.19

 

Litigation

     28   

2.20

 

Accounts Receivable

     28   

2.21

 

Minute Books

     29   

2.22

 

Environmental Matters

     29   

2.23

 

Fees and Expenses

     29   

2.24

 

Employee Benefit Plans and Compensation

     29   

2.25

 

Insurance and Bonds

     33   

2.26

 

Compliance with Laws

     33   

2.27

 

Foreign Corrupt Practices Act

     33   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

2.28

 

Complete Copies of Materials

     34   

2.29

 

Suppliers and Customers

     34   

2.30

 

Privacy

     34   

2.31

 

Company Products and Company Source Code

     35   

2.32

 

Software and Hardware

     35   

2.33

 

Export Control and Economic Sanctions

     35   

2.34

 

Compliance with the Immigration Reform and Control Act

     36   

2.35

 

Representations Complete

     37   

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF PARENT, MIDCO AND SUB

     37   

3.1

 

Organization and Standing

     37   

3.2

 

Authority

     37   

3.3

 

No Conflict

     37   

3.4

 

Consents

     38   

3.5

 

Interim Operations of Sub

     38   

ARTICLE IV

 

CONDUCT PRIOR TO THE EFFECTIVE TIME

     38   

4.1

 

Conduct of Business of the Company and its Subsidiaries

     38   

4.2

 

No Solicitation

     40   

ARTICLE V

 

ADDITIONAL AGREEMENTS

     41   

5.1

 

Stockholder Notice

     41   

5.2

 

Access to Information

     42   

5.3

 

Confidentiality

     43   

5.4

 

Expenses

     43   

5.5

 

Termination of Certain Company Employee Plans

     43   

5.6

 

Public Disclosure

     43   

5.7

 

Consents

     44   

5.8

 

FIRPTA Compliance

     44   

5.9

 

Commercially Reasonable Efforts

     44   

5.10

 

Notification of Certain Matters

     44   

5.11

 

New Employment Arrangements

     44   

5.14

 

Information Technology Security

     45   

5.15

 

Closing Balance Sheet; Spreadsheet

     45   

5.16

 

Consideration Adjustment

     46   

5.17

 

Resignation of Officers and Directors

     48   

5.18

 

Severance Agreement and Release

     48   

5.19

 

Destruction of Confidential Information

     48   

5.20

 

D&O Tail Insurance; Indemnification

     49   

5.21

 

Changes to Company Capital Structure

     49   

5.22

 

Tax Matters

     49   

 

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TABLE OF CONTENTS

(continued)

 

         Page  

ARTICLE VI

 

CONDITIONS TO THE MERGER

     50   

6.1

 

Conditions to the Obligations of Each Party to Effect the Merger

     50   

6.2

 

Additional Conditions to the Obligations of Parent, Midco and Sub

     51   

6.3

 

Additional Conditions to the Obligations of the Company

     53   

ARTICLE VII

 

INDEMNIFICATION AND ESCROW

     54   

7.1

 

Survival of Representations and Warranties

     54   

7.2

 

Indemnification by the Company Securityholders

     55   

7.3

 

Claims for Indemnification

     58   

7.4

 

Escrow Fund

     59   

7.5

 

Securityholder Representative

     60   

ARTICLE VIII

 

TERMINATION, AMENDMENT AND WAIVER

     62   

8.1

 

Termination

     62   

8.2

 

Effect of Termination

     63   

8.3

 

Amendment

     64   

8.4

 

Extension; Waiver

     64   

ARTICLE IX

 

GENERAL PROVISIONS

     64   

9.1

 

Notices

     64   

9.2

 

Interpretation

     66   

9.3

 

Counterparts

     66   

9.4

 

Entire Agreement; Assignment

     66   

9.5

 

Severability

     66   

9.6

 

Other Remedies

     66   

9.7

 

Governing Law; Jurisdiction; Venue

     67   

9.8

 

No Waiver Relating to Claims for Fraud, Intentional Misrepresentation or Willful
Misconduct

     67   

9.9

 

Rules of Construction

     67   

9.10

 

Specific Performance

     67   

9.11

 

Attorneys’ Fees

     67   

9.12

 

WAIVER OF JURY TRIAL

     68   

ARTICLE X

 

DEFINITIONS

     68   

 

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INDEX OF EXHIBITS AND SCHEDULES

 

Exhibit

  

Description

Exhibit A

   Form of Written Consent of Stockholders

Exhibit B

   Form of Joinder, Release and Waiver

Exhibit C

   Form of Certificate of Merger

Exhibit D

   Form of Letter of Transmittal

Exhibit E

   Form of Warrant Termination Agreement

Exhibit F

   Form of Escrow Agreement

Exhibit G

   Form of Welcome Packet Documents

Exhibit H

   Legal Opinion

Exhibit I

   Sample Net Working Capital Amount Calculation

Exhibit J

   Form of Restricted Share Award Agreement

Schedule

  

Description

   Schedule of Exceptions

4.1

   Exceptions to Pre-Closing Covenants

5.11(b)

   Key Employees

6.2(e)

   Mandatory Third-Party Consents

6.2(r)(ii)

   Closing Employees

6.2(x)

   Company Securityholders Executing a Joinder, Release and Waiver

7.2(a)(vi)

   Other Indemnification Matters

 

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THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as
of December 16, 2011 by and among Vistaprint N.V., a company organized under the
laws of the Netherlands (“Parent”), Vistaprint USA, Incorporated, a Delaware
corporation and a directly or indirectly wholly-owned subsidiary of Parent
(“Midco”), Woodbridge Acquisition Corporation, a Delaware corporation and a
directly or indirectly wholly-owned subsidiary of Parent and Midco (such entity,
or any other directly or indirectly wholly owned Parent and Midco subsidiary
that Parent may elect to substitute therefor, “Sub”), Webs, Inc., a Delaware
corporation (such corporation and any predecessor entity thereto, the
“Company”), and Shareholder Representative Services LLC, a Colorado limited
liability company, solely in its capacity as Securityholder Representative (the
“Securityholder Representative”). Certain capitalized terms used but not
otherwise defined herein are defined in Article X of this Agreement.

RECITALS

A. Each of Parent, Midco, Sub and the Company believe it is in the best
interests of each such company and its respective stockholders that Parent
acquire the Company through the statutory merger of Sub with and into the
Company (the “Merger”).

B. Pursuant to the Merger, among other things, (i) all of the issued and
outstanding Company Capital Stock, Vested Options and Company Warrants shall be
terminated and converted into the right to receive the consideration set forth
herein and (ii) all Unvested Options and any other rights to acquire Company
Capital Stock shall be automatically terminated for no consideration.

C. A portion of the consideration payable by Parent in connection with the
Merger shall be withheld and placed in escrow by Parent as security for the
indemnification obligations set forth in this Agreement.

D. The Company, on the one hand, and Parent, Midco and Sub, on the other hand,
desire to make certain representations, warranties, covenants and other
agreements in connection with the Merger.

E. As an inducement to the willingness of Parent, Midco and Sub to enter into
this Agreement (but not pursuant to any prior agreement with the Company, Sub or
Parent), (i) holders of at least ninety percent (90%) of the outstanding shares
of Company Capital Stock voting together as a single class and on an
as-converted basis, and (ii) holders of ninety-two percent (92%) of the
outstanding shares of Company Preferred Stock, voting together as a single class
and on an as-converted basis, have indicated that they expect to deliver,
following the approval and adoption of this Agreement by the board of directors
of the Company and within two (2) hours following the execution and delivery of
this Agreement, (x) their irrevocable approval and adoption of this Agreement,
the Merger and the other transactions contemplated hereby and (y) specified
undertakings, representations, warranties, releases and waivers, pursuant to a
written consent in the form attached hereto as Exhibit A and a joinder, release
and waiver in the form attached hereto as Exhibit B, respectively, signed and
dated as of the date of this Agreement, pursuant to and in accordance with the
applicable provisions of Delaware Law and the Company Charter Documents (such
consents of such Stockholders in the form of Exhibit A and Exhibit B,
collectively, the “Stockholder Consent”).

F. Prior to the execution of this Agreement, each of the Founders shall have
executed an accredited investor questionnaire in a form acceptable to Parent in
which each Founder represents and warrants that such Founder is an “accredited
investor” within the meaning of Rule 501 of the Securities Act.

 

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NOW, THEREFORE, in consideration of the mutual agreements, covenants and other
promises 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 hereby
agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement, and applicable provisions of the General
Corporation Law of the State of Delaware (“Delaware Law”), Sub shall be merged
with and into the Company, the separate corporate existence of Sub shall cease,
and the Company shall continue as the surviving corporation and as a direct
wholly-owned subsidiary of Midco and an indirect wholly-owned subsidiary of
Parent. The surviving corporation after the Merger is sometimes referred to
herein as the “Surviving Corporation.” Parent shall have the right to
substitute, as “Sub” under this Agreement, any newly formed Delaware corporation
that is directly or indirectly a wholly owned Parent subsidiary, in which case
such substitute entity will sign a copy of the signature page of this Agreement
and be deemed a party hereto as the “Sub” without further amendment or signature
of any other party hereto.

1.2 Effective Time. Unless this Agreement is earlier terminated pursuant to
Section 8.1 of this Agreement, the closing of the Merger (the “Closing”) will
take place as promptly as practicable after the execution and delivery of this
Agreement by the parties hereto, but no later than five (5) Business Days
following satisfaction or waiver of the conditions set forth in Article VI of
this Agreement (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions); provided however that in no event shall the Closing occur prior to
December 28, 2011. The date upon which the Closing actually occurs shall be
referred to herein as the “Closing Date”. On the Closing Date, the parties
hereto shall cause the Merger to be consummated by filing a Certificate of
Merger, in substantially the form attached hereto as Exhibit C (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 filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (or
such other time as agreed to in writing by Parent and the Company and specified
in the Certificate of Merger) shall be referred to herein as the “Effective
Time”).

1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall
be as provided in the applicable provisions of Delaware Law. Without limiting
the generality of the foregoing, except as otherwise agreed pursuant to the
terms of this Agreement, at the Effective Time, all the property, rights,
privileges, powers and franchises of the Company and Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of the Company and
Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.4 Certificate of Incorporation and Bylaws.

(a) Subject to Section 5.20, the certificate of incorporation of the Sub as in
effect immediately prior to the Effective Time shall be the certificate of
incorporation of the Surviving Corporation at and as of 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 such 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 Webs, Inc.”

 

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(b) Subject to Section 5.20, immediately following the Effective Time, the board
of directors of the Surviving Corporation shall adopt the bylaws of Sub, as in
effect immediately prior to the Effective Time, to be its bylaws until amended
in accordance with the provisions thereof and applicable Law. Notwithstanding
the foregoing, the name of the Surviving Corporation shall still be Webs, Inc.

1.5 Directors and Officers.

(a) Directors. Unless otherwise determined by Parent prior to the Effective
Time, the directors of 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, the Surviving Corporation’s Charter
Documents until their successors are duly elected and qualified, or until their
earlier resignation or removal.

(b) Officers. Unless otherwise determined by Parent prior to the Effective Time,
the officers of 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.

1.6 Effect of Merger on the Securities of the Company.

(a) Effect on Capital Stock of the Company. At and as of the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company, the
holders of shares of Company Capital Stock or any other Person, upon the terms
and subject to the conditions set forth in this Section 1.6 and throughout this
Agreement, including the escrow provisions set forth in Article VII of this
Agreement:

(i) Cancelation of Treasury Stock and Parent-Owned Stock. Each outstanding share
of Company Capital Stock held by Parent, the Company or any direct or indirect
Subsidiary of Parent or the Company immediately prior to the Effective Time, if
any, shall be cancelled and extinguished without payment of any consideration
with respect thereto.

(ii) Conversion of Company Preferred Stock. Each outstanding share of Company
Preferred Stock (other than any Dissenting Shares and those referred to in
Section 1.6(a)(i) of this Agreement) shall be cancelled and extinguished and be
converted automatically into the right to receive (following the surrender of
the certificate representing such share of Company Preferred Stock in accordance
with Section 1.8) an amount in cash (without interest) equal to: (A) the Series
A Preference Amount; plus (B) the Per Share Purchase Price multiplied by the
number of shares of Company Common Stock issuable upon conversion of such share
of Company Preferred Stock; minus (C) the Capped Participation Spread multiplied
by the number of shares of Company Common Stock issuable upon conversion of such
share of Company Preferred Stock; minus (D) the cash amount with respect to such
share of Company Preferred Stock withheld and contributed to the Escrow Fund
pursuant to the Escrow Allocation Schedule; plus (E) any cash disbursements
required to be made from the Escrow Fund with respect to such share to the
former holder thereof in accordance with the terms of this Agreement and the
Escrow Agreement, as and when such disbursements are required to be made.

(iii) Conversion of Company Common Stock Not Owned By Major Common Holders. Each
outstanding share of Company Common Stock (other than any Dissenting Shares and

 

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those referred to in Section 1.6(a)(i) of this Agreement) owned by any Person
other than a Major Common Holder shall be cancelled and extinguished and be
converted automatically into the right to receive (following the surrender of
the certificate representing such share of Company Common Stock in accordance
with Section 1.8) an amount in cash (without interest) equal to: (A) the Per
Share Purchase Price; minus (B) the cash amount with respect to such share of
Company Common Stock withheld and contributed to the Escrow Fund pursuant to the
Escrow Allocation Schedule; plus (B) any cash disbursements required to be made
from the Escrow Fund with respect to such share to the former holder thereof in
accordance with the terms of this Agreement and the Escrow Agreement, as and
when such disbursements are required to be made.

(iv) Conversion of Company Common Stock Owned By Major Common Holders. Each
outstanding share of Company Common Stock (other than any Dissenting Shares and
those referred to in Section 1.6(a)(i) of this Agreement) held by a Major Common
Holder shall be cancelled and extinguished and be converted automatically into
the right to receive (following the surrender of the certificate representing
such share of Company Common Stock in accordance with Section 1.8): (A) an
amount in cash (without interest) equal to (1) sixty-three percent (63%) of the
Per Share Purchase Price; minus (2) the cash amount with respect to such share
of Company Common Stock withheld and contributed to the Escrow Fund pursuant to
the Escrow Allocation Schedule; plus (3) any cash disbursements required to be
made from the Escrow Fund with respect to such share to the former holder
thereof in accordance with the terms of this Agreement and the Escrow Agreement,
as and when such disbursements are required to be made; plus (B) such number of
shares of Parent Restricted Stock equal to (1) (i) thirty-seven percent (37%) of
the Per Share Purchase Price divided by (ii) the volume weighted average closing
price per share of Parent’s ordinary shares during the last fifteen (15) trading
days during which Parent’s ordinary shares were available for trading on the
NASDAQ immediately up to and including the second such trading day prior to the
Closing Date; minus (2) such number of shares of Parent Restricted Stock
required to be withheld and contributed to the Escrow Fund pursuant to the
Escrow Allocation Schedule; plus (3) such number of shares of Parent Restricted
Stock required to be disbursed from the Escrow Fund with respect to such share
to the former holder thereof in accordance with the terms of this Agreement and
the Escrow Agreement, as and when such disbursements are required to be made.

(b) Treatment of Stock Options, Warrants and Company Bonus Amounts.

(i) Effect on Vested Options. At the Effective Time, each Vested Option shall,
by virtue of the Merger and without the need for any further action on the part
of the holder thereof, on the terms and subject to the conditions set forth in
this Agreement, be cancelled and extinguished and automatically converted into
the right to receive for each share of Company Common Stock subject to such
Vested Option an amount in cash (without interest) equal to: (A) the Per Share
Purchase Price; minus (B) the exercise price per share of Company Common Stock
subject to such Vested Option; minus (C) the cash amount with respect to each
share of Company Common Stock subject to such Vested Option withheld and
contributed to the Escrow Fund pursuant the Escrow Allocation Schedule; plus
(D) any cash disbursements required to be made from the Escrow Fund with respect
to such share to the former holder thereof in accordance with the terms of this
Agreement and the Escrow Agreement, as and when such disbursements are required
to be made; provided, however, that the Surviving Corporation and Parent shall
be entitled to deduct and withhold the amount of withholdings for Taxes required
to be deducted and withheld as a result of the transactions contemplated by this
Section 1.6(b)(i). The Parent shall cause the amount each holder of Vested
Options is entitled to receive for the Vested Options held by such holder to be
paid by the Surviving Corporation through its payroll processor to such holder
as soon as practicable after the Effective Time. The amounts paid to the holders
of Vested Options out of the Escrow Fund, if any, shall be made at the same
times, and under the same conditions, as the amounts

 

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released from the Escrow Fund are paid to holders of Company Capital Stock. The
Company shall take all actions necessary in order to effect the provisions of
this Section 1.6(b)(i), including, without limitation, seeking all necessary
approvals and providing any notice required under the terms of the applicable
stock option plans or agreements.

(ii) Effect on Company Preferred Warrants. At the Effective Time, each Company
Preferred Warrant (to the extent not already exercised) shall, by virtue of the
Merger and without the need for any further action on the part of the holder
thereof, on the terms and subject to the conditions set forth in this Agreement,
be cancelled and extinguished and automatically converted into the right to
receive (following the delivery of a Warrant Termination Agreement in accordance
with Section 1.8) for each share of Company Preferred Stock subject to such
Company Preferred Warrant an amount in cash (without interest) equal to: (A) the
Series A Preference Amount; plus (B) the Per Share Purchase Price multiplied by
the number of shares of Company Common Stock issuable upon conversion of such
share of Company Preferred Stock; minus (C) of the Capped Participation Spread
multiplied by the number of shares of Company Common Stock issuable upon
conversion of such share of Company Preferred Stock; minus (D) the exercise
price per share of Company Preferred Stock subject to such Company Preferred
Warrant; minus (E) the cash amount with respect to each share of Company
Preferred Stock subject to such Company Preferred Warrant withheld and
contributed to the Escrow Fund pursuant to the Escrow Allocation Schedule; plus
(F) any cash disbursements required to be made from the Escrow Fund with respect
to such share to the former holder thereof in accordance with the terms of this
Agreement and the Escrow Agreement, as and when such disbursements are required
to be made. The amounts paid to the holders of Company Preferred Warrants out of
the Escrow Fund, if any, shall be made at the same times, and under the same
conditions, as the amounts released from the Escrow Fund are paid to holders of
Company Preferred Stock. For the avoidance of doubt, if a Company Preferred
Warrant is exercised for its underlying shares of Series A Preferred Stock prior
to the Effective Time, then the holder of such Company Preferred Warrant shall
receive, in respect of each such underlying share, the amount which it is
entitled pursuant to Section 1.6(a)(ii) as a holder of Company Preferred Stock
hereunder.

(iii) Effect on Company Common Warrants. At the Effective Time, each Company
Common Warrant (to the extent not already exercised) shall, by virtue of the
Merger and without the need for any further action on the part of the holder
thereof, on the terms and subject to the conditions set forth in this Agreement,
be cancelled and extinguished and automatically converted into the right to
receive (following the delivery of a Warrant Termination Agreement in accordance
with Section 1.8) for each share of Company Common Stock subject to such Company
Common Warrant an amount in cash (without interest) equal to: (A) the Per Share
Purchase Price; minus (C) the exercise price per share of Company Common Stock
subject to such Company Common Warrant; minus (D) the cash amount with respect
to each share of Company Common Stock subject to such Company Common Warrant
withheld and contributed to the Escrow Fund pursuant to the Escrow Allocation
Schedule; plus (E) any cash disbursements required to be made from the Escrow
Fund with respect to such share to the former holder thereof in accordance with
the terms of this Agreement and the Escrow Agreement, as and when such
disbursements are required to be made. The amounts paid to the holders of
Company Common Warrants out of the Escrow Fund, if any, shall be made at the
same times, and under the same conditions, as the amounts released from the
Escrow Fund are paid to holders of Company Common Stock. For the avoidance of
doubt, if a Company Common Warrant is exercised for its underlying shares of
Company Common Stock prior to the Effective Time, then the holder of such
Company Common Warrant shall receive, in respect of each such underlying share,
the amount which it is entitled pursuant to Section 1.6(a)(iii) or
Section 1.6(a)(iv), as the case may be, as a holder of Company Common Stock
hereunder.

 

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(iv) Termination of Unvested Options. The Company shall provide for the
cancellation and termination of the Unvested Options as of the Effective Time.
Parent shall not assume, convert or substitute any Unvested Options into any
other security or cash. At the Effective Time, all Unvested Options will, by
virtue of the Merger, and without any further action on the part of any holder
thereof, be cancelled and extinguished. The Company shall take all actions
necessary in order to effect the provisions of this Section 1.6(b)(iv),
including, without limitation, seeking all necessary approvals and providing any
notice required under the terms of the applicable stock option plans or
agreements.

(v) Payment of Company Bonus Amounts. The Parent shall cause the Company Bonus
Amounts minus the cash amount with respect to each Company Bonus Amount withheld
and contributed to the Escrow Fund pursuant the Escrow Allocation Schedule to be
paid by the Surviving Corporation through its payroll processor to Company Bonus
Recipients as soon as practicable after the Effective Time. The amounts paid to
the Company Bonus Recipients out of the Escrow Fund, if any, shall be made at
the same times, and under the same conditions, as the amounts released from the
Escrow Fund are paid to holders of Company Capital Stock. The Company shall take
all actions necessary in order to effect the provisions of this
Section 1.6(b)(v), including, without limitation, seeking all necessary
approvals and providing any notice required under the terms of the applicable
stock option plans or agreements.

(c) Certain Matters. No share of Company Capital Stock (other than Dissenting
Shares), Company Options or Company Warrants shall be deemed to be outstanding
or to have any rights other than those set forth in Section 1.6 of this
Agreement after the Effective Time. The amount of cash, if any, that each
Company Securityholder is entitled to receive at any particular time for the
securities held by such Company Securityholder shall be rounded to the nearest
cent (with $0.005 being rounded upward) and computed after aggregating the cash
amounts payable at such time for all securities held by such Company
Securityholder. No fractional shares of Parent Restricted Stock shall be issued.
In lieu of any fractional share to which a Company Securityholder would
otherwise be entitled, such number of shares shall be rounded to the nearest
whole share after aggregating the Parent Restricted Stock payable at such time
for all securities held by such Company Securityholder. Parent and the Paying
Agent shall be entitled to rely on the Spreadsheet in making distributions to
Stockholders pursuant to Section 1.8(c).

(d) Withholding Taxes. The Company, Parent and the Surviving Corporation shall
be entitled to deduct and withhold from any consideration payable or otherwise
deliverable pursuant to this Agreement to any holder or former holder of Company
Capital Stock, Company Warrants or Vested Options, or in connection with any
Company Bonus Amounts, such amounts as may be required to be deducted or
withheld therefrom under the Code, or any provision of state, local or foreign
Tax Law. To the extent that amounts are so deducted or withheld, such amounts
shall be treated for all purposes of this Agreement as having been paid to the
Persons in respect of whom such deduction and withholding were made. The
applicable information reporting and the timing and amounts subject to income
and employment tax withholdings with respect to payments made to a holder of
outstanding Vested Options, or in connection with any Company Bonus Amounts,
that are contributed to the Escrow Fund shall be based upon the amounts that
such holders actually receives out of the Escrow Fund and the timing of such
holders’ receipt.

(e) Capital Stock of Sub. Each share of common stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
exchanged for one (1) validly issued, fully paid and nonassessable share of
common stock of the Surviving Corporation. Each stock certificate of Sub
evidencing ownership of any such shares of common stock of Sub shall thereafter
evidence ownership of such shares of common stock of the Surviving Corporation.

 

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(f) Adjustments to Per Share Purchase Price. The Per Share Purchase Price and
any other applicable numbers or amounts shall be adjusted to reflect
appropriately the effect of any stock split, reverse stock split, stock dividend
(including any dividend or distribution of securities convertible into Company
Capital Stock), reorganization, recapitalization, reclassification or other like
change with respect to Company Capital Stock occurring or having a record date
on or after the date of this Agreement and prior to the Effective Time.

1.7 Dissenting Shares.

(a) Notwithstanding any other provisions of this Agreement to the contrary, any
shares of Company Capital Stock held by a holder who has demanded and perfected
appraisal rights for such holder’s shares under Delaware Law and who, as of the
Effective Time, has not effectively withdrawn or lost such holder’s appraisal
rights under Delaware Law (“Dissenting Shares”) shall not be converted into or
represent a right to receive the consideration for Company Capital Stock set
forth in Section 1.6(a) of this Agreement (and subject to the provisions of
Article VII of this Agreement), but the holder thereof shall only be entitled to
such rights as are provided by Delaware Law. Parent shall be entitled to retain
any such consideration not paid on account of such Dissenting Shares pending
resolution of the claims of the holders thereof, and the Non-Dissenting
Stockholders shall not be entitled to any portion thereof.

(b) Notwithstanding the provisions of Section 1.7(a) of this Agreement, if any
holder of Dissenting Shares shall effectively withdraw or lose (through failure
to perfect or otherwise) such holder’s appraisal rights under Delaware Law,
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 the consideration for Company Capital Stock, as applicable,
set forth in Section 1.6(a) of this Agreement, without interest thereon, and
subject to the provisions of Section 1.8 and Article VII, upon surrender of the
certificate representing such shares.

(c) The Company shall give Parent (i) prompt notice of any written notice of
intent to demand appraisal under Delaware Law or demand for appraisal under
Delaware Law received by the Company, and (ii) the opportunity to participate in
all negotiations and proceedings with respect to such notices or demands. The
Company shall not, except with the prior written consent of Parent (which shall
not be unreasonably withheld, conditioned or delayed), voluntarily make any
payment with respect to any such notices or demands or offer to settle or settle
any such notices or demands and shall not use an estimate of fair value in an
amount greater than the Per Share Purchase Price in any offer of payment without
Parent’s prior written consent (which shall not be unreasonably withheld,
conditioned or delayed). Notwithstanding the foregoing, to the extent that
Parent or the Company (A) makes any payment or payments 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 (such
amount, unless determined in a final, non-appealable judgment or a court, being
subject to the written approval of the Securityholder Representative, which
approval shall not be unreasonably withheld, conditioned or delayed), or
(B) reasonably incurs any other costs or expenses in the course of addressing
any Dissenting Shares (excluding payments for such shares) or the exercise by
any Stockholder of any appraisal (the payments, costs and expenses referred to
in clauses “(A)” and “(B)” being referred to as “Dissenting Share Payments”),
Parent shall be entitled to recover under the terms of Article VII of this
Agreement the amount of such Dissenting Share Payments.

1.8 Mechanics of Exchange.

(a) Paying Agent. JP Morgan Chase Bank, National Association shall serve as the
paying agent (the “Paying Agent”) for the Merger.

 

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(b) Parent to Provide Cash. As promptly as practicable after the Effective Time,
Parent or any designated Affiliate of Parent shall make available to the Paying
Agent for exchange in accordance with this Article I, cash and shares of Parent
Restricted Stock sufficient to pay the consideration payable to the
Non-Dissenting Stockholders and the holders of Company Warrants in exchange for
their shares of Company Capital Stock and the cancellation of the Company
Warrants pursuant to Sections 1.6(a), 1.6(b)(ii) and 1.6(iii) of this Agreement.
The amount of cash deposited with the Paying Agent and shares of Parent
Restricted Stock made available to the Paying Agent is referred to as the
“Payment Fund.” The Paying Agent will be instructed to invest the funds included
in the Payment Fund in the manner directed by Parent. Any interest or other
income resulting from the investment of such funds shall be the property of, and
will be paid to, Parent or any such designated Affiliate, as applicable.

(c) Exchange Procedures.

(i) Letter of Transmittal; Warrant Termination Agreement. Promptly after the
Effective Time, the Paying Agent shall mail to each record holder of Company
Capital Stock as of immediately prior to the Effective Time a letter of
transmittal in the form attached as Exhibit D and mail to each record holder of
Company Warrants as of immediately prior to the Effective Time a warrant
termination agreement in the form attached as Exhibit E.

(ii) Surrender of Company Stock Certificates. Following the Effective Time, each
Stockholder may surrender the certificate(s) representing such stockholder’s
shares of Company Capital Stock (the “Company Stock Certificates”) to the Paying
Agent for cancellation, together with a duly completed and validly executed
letter of transmittal. Until a Company Stock Certificate so surrendered, each
outstanding Company Stock Certificate will be deemed for all corporate purposes
to evidence only the right to receive the amount of consideration into which
such shares of Company Capital Stock shall be so exchanged. Upon the surrender
of a Company Stock Certificate (or compliance with Section 1.10 of this
Agreement) for cancellation to the Paying Agent, or such other agent or agents
as may be appointed by Parent, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, the
holder of such Company Stock Certificate shall be entitled to receive from the
Paying Agent in exchange therefor, the amount equal to the consideration to
which such holder is then entitled pursuant to Section 1.6(a) of this Agreement,
and the Company Stock Certificate so surrendered shall be cancelled.

(iii) Termination of Company Warrants. Following the Effective Time, each holder
of a Company Warrant may surrender a duly completed and validly executed warrant
termination agreement. Until a Company warrant termination agreement is so
delivered, each outstanding Company Warrant will be deemed for all corporate
purposes to evidence only the right to receive the amount of consideration into
which such Company Warrants shall be so exchanged. Upon the delivery of a
warrant termination agreement to the Paying Agent, or such other agent or agents
as may be appointed by Parent, duly completed and validly executed in accordance
with the instructions thereto, the holder of such Company Warrant shall be
entitled to receive from the Paying Agent in exchange therefor, the amount equal
to the consideration to which such holder is then entitled pursuant to
Section 1.6(b)(ii) or 1.6(b)(iii) of this Agreement, as applicable, and the
Company Warrant shall be terminated.

(d) Transfers of Ownership. From and after the Effective Time, there shall be no
transfers on the stock transfer books of the Company of Company Capital Stock
that was outstanding prior to the Effective Time.

 

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(e) No Liability. Notwithstanding anything to the contrary in this Section 1.8,
none of the Paying Agent, the Surviving Corporation nor any party hereto shall
be liable to a holder of shares of Company Capital Stock, Company Warrants or
any other Person for any amount properly paid to a public official pursuant to
any applicable abandoned property, escheat or similar Law. Any merger
consideration or other amounts remaining unclaimed by Company Securityholders
three (3) years after the Effective Time (or such earlier date immediately prior
to such time as such amounts would otherwise escheat to or become property of
any Governmental Entity) shall, to the extent permitted by applicable Law,
become the property of Parent free and clear of any Liens.

(f) Undistributed Payment Funds. In addition, in the event that any portion of
the Payment Fund shall not have been distributed by the Paying Agent within 180
days following the Effective Time, then the Paying Agent may, but only upon
Parent’s written request, surrender such undistributed consideration to Parent.
If the Payment Fund is returned to Parent, any Company Securityholders who has
not theretofore delivered or surrendered such holder’s Company Stock
Certificate(s) or Company Warrant(s) to the Paying Agent, subject to applicable
Law, shall look as a general creditor only to Parent for payment of such
holder’s entitlement to the consideration payable with respect to the shares of
Company Capital Stock previously represented by such Company Stock Certificates
or Company Warrants and shall be obligated to follow procedures equivalent to
those set forth in Section 1.8(c) of this Agreement.

(g) Payments to Others. If payment of consideration in respect of shares of
Company Capital Stock or Company Warrants converted pursuant to Section 1.6 of
this Agreement is to be made to a Person other than the Person in whose name a
surrendered Company Stock Certificate or Company Warrant is registered, it shall
be a condition to such payment that the Company Stock Certificate or Company
Warrant so surrendered shall be properly endorsed or shall be otherwise in
proper form for transfer and that the Person requesting such payment shall have
paid any transfer and other Taxes required by reason of such payment in a name
other than that of the registered holder of the Company Stock Certificate or
Company Warrant surrendered or shall have established to the satisfaction of
Parent and the Paying Agent that such Tax either has been paid or is not
payable.

1.9 No Further Ownership Rights. The amount of consideration payable for shares
of Company Capital Stock and Company Warrants in accordance with the terms of
this Agreement shall be deemed to be in full satisfaction of all rights
pertaining to such shares of Company Capital Stock and Company Warrants. After
the Effective Time, each Company Stock Certificate or Company Warrant presented
to the Surviving Corporation for any reason shall be cancelled and exchanged as
provided in this Article I. No interest shall accrue or be paid on any
consideration payable upon the surrender of a Company Stock Certificate or
Company Warrant which immediately before the Effective Time represented
outstanding (or immediately exercisable for) shares of Company Capital Stock.

1.10 Lost, Stolen or Destroyed Instruments. In the event any Company Stock
Certificates evidencing shares of Company Capital Stock shall have been lost,
stolen or destroyed, Parent or the Paying Agent may, in its discretion and as a
condition precedent to the payment of any consideration with respect to the
shares of Company Capital Stock previously represented by such Company Stock
Certificates, require the owner of such lost, stolen or destroyed Company Stock
Certificates to provide an appropriate affidavit and to deliver a bond (in such
customary amount, in such customary form and with such surety as Parent or the
Paying Agent may reasonably direct) as indemnity against any claim that may be
made against the Parent, the Paying Agent, the Surviving Corporation or any
affiliated party with respect to such Company Stock Certificate.

 

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1.11 Taking of Necessary Action; 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, then the officers and directors of the Surviving
Corporation are hereby authorized, empowered and directed in the name of and on
behalf of the Company to execute and deliver any and all things and to take such
action as is necessary or desirable to vest or to perfect or confirm title to
such property or rights in the Surviving Corporation, and otherwise to carry out
the purposes and provisions of this Agreement.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

As of the date of this Agreement and as of the Closing Date, the Company hereby
represents and warrants to Parent, Midco and Sub, subject only to such
exceptions as are specifically disclosed in the Schedule of Exceptions (each of
which disclosures, in order to be effective, shall indicate the Section and, if
applicable, the Subsection of this Article II to which it relates, unless and
only to the extent the relevance to other representations and warranties is
reasonably apparent from the actual text of the disclosures without reference to
any underlying document or materials) delivered by the Company to Parent (the
“Schedule of Exceptions”) concurrently with the execution and delivery of this
Agreement as to the matters specified in this Article II:

2.1 Organization of the Company and its Subsidiaries. The Company and each of
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the Laws of the respective jurisdiction of its incorporation. The
Company and each of its Subsidiaries has the corporate power to own its
properties and to carry on its business as currently conducted. The Company and
each of its Subsidiaries is duly qualified or licensed to do business and in
good standing as a foreign corporation (if applicable) in each jurisdiction in
which it conducts business, except in those jurisdictions where the failure to
be so qualified would not have a Company Material Adverse Effect. The Company
has made available to Parent (i) a true and correct copy of its certificate of
incorporation and bylaws (collectively, the “Company Charter Documents”), (ii) a
true and correct copy of the certificate of incorporation and bylaws, or like
organizational documents (collectively, the “Subsidiary Charter Documents”), of
each of its Subsidiaries, and (iii) a true and correct copy of the minutes of
meetings and other actions of the board of directors (or other similar body),
including any committees of the board of directors (or other similar body), and
the stockholders of the Company and each of its Subsidiaries, and each such
instrument reflects all actions of the stockholders, the board of directors and
any committees of the board of directors and is in full force and effect.
Section 2.1 of the Schedule of Exceptions lists the directors and officers of
the Company and each of its Subsidiaries. The operations now being conducted by
the Company and each of its Subsidiaries are not now and have never been
conducted by the Company or any of its Subsidiaries under any other name. The
Company is not in violation of any of the provisions of the Company Charter
Documents, and no Subsidiary is in violation of any of its applicable Subsidiary
Charter Documents.

2.2 Company Capital Structure.

(a) The authorized capital stock of the Company consists of 15,400,000 shares of
Company Common Stock, 6,983,836 shares of which are issued and outstanding as of
the date of this Agreement and owned of record as of the date of this Agreement
by the holders and in the amounts set forth on Schedule 2.2(a)(1), and 4,900,000
shares of Company Preferred Stock, all of which are

 

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designated Series A Convertible Preferred Stock, 4,664,442 of which are issued
and outstanding as of the date of this Agreement and owned of record as of the
date of this Agreement by the holders and in the amounts set forth on
Schedule 2.2(a)(2). All shares of Company Preferred Stock are convertible into
shares of Company Common Stock on a 1:1 basis. All outstanding shares of Company
Capital Stock are duly authorized, validly issued, fully paid and non-assessable
and not subject to preemptive rights created by statute, the Company Charter
Documents, or any Contract to which the Company is a party or by which it is
bound, and have been issued in compliance with applicable federal, state and
foreign Laws. The Company has not repurchased any shares of Company Capital
Stock except in material compliance with all applicable federal, state, foreign
and local Laws, including federal, state and foreign securities Laws, and any
Contracts applicable thereto and the Company will not suffer or incur and
Liability or Loss relating to or arising out of such repurchases. There are no
declared or accrued but unpaid dividends with respect to any shares of Company
Capital Stock other than as part of the Series A Preference Amount. Other than
as disclosed in the Schedules referred to in this Section 2.2(a), the Company
has no capital stock authorized, issued or outstanding. No vesting provisions
applicable to any shares of Company Restricted Stock will accelerate as a result
of the transactions contemplated by this Agreement.

(b) Except for the Plan, neither the Company nor any of its Subsidiaries has
ever adopted or maintained any stock option plan or other plan providing for
equity compensation of any Person. Neither the Company nor any of its
Subsidiaries has granted any options to purchase Company Capital Stock or any
other type of stock award other than pursuant to the Plan. The Company has
reserved 3,121,200 shares of Company Common Stock for issuance to employees and
directors of, and consultants to, the Company under the Plan, (i) 1,813,707
shares of which are issuable, as of the date of this Agreement, upon the
exercise of outstanding, unexercised options granted under the Plan,
(ii) 100,502 shares of which have been issued, as of the date of this Agreement,
upon the exercise of options granted under the Plan, and (iii) none of which has
been issued, as of the date of this Agreement, pursuant to stock restriction
agreements under the Plan. For each outstanding Company Option, share of Company
Restricted Stock or other stock award granted under the Plan or otherwise,
Section 2.2(b)(i) of the Schedule of Exceptions sets forth, as of the date of
this Agreement, the name of the holder of such Company Option or stock award,
the domicile address of such holder, the grant date, the vesting commencement
date (if different from the grant date), the number and type of shares of
Company Capital Stock issuable upon the exercise of such Company Option or stock
award, the exercise price of such Company Option or the value at which such
stock award was granted, the vesting schedule for such Company Option or stock
award, the type of Company Option or stock award (including, in the case of
options, whether an option is intended to qualify as an incentive stock option
as defined in Section 422 of the Code), the extent vested as of the date of this
Agreement and expected to be vested as of the Effective Time (reflecting the
passage of time and any acceleration of vesting for such option or stock award
that would result upon the consummation of the transactions contemplated by this
Agreement and an explanation of any acceleration feature) and special
acceleration of vesting, if any, as disclosed in Section 2.2(b) of the
Schedule of Exceptions. Except as set forth on Section 2.2(b)(ii) of the
Schedule of Exceptions, no vesting provisions applicable to any Company Options
will accelerate as a result of the transactions contemplated by this Agreement.
For each outstanding Company Warrant, Section 2.2(b)(ii) of the Schedule of
Exceptions sets forth, as of the date of this Agreement, the name of the holder
of such Company Warrant, the domicile address of such holder, the grant date,
the number and class of shares of Company Capital Stock subject to such Company
Warrant and the exercise price of such Company Warrant. All such Company
Options, shares of Company Restricted Stock, other stock awards and Company
Warrants have been issued in material compliance with all applicable federal,
state and foreign Laws and all applicable Contracts. The form(s) of agreement
pursuant to which the Company Options have been issued are attached to the
Schedule of Exceptions as Section 2.2(b)(iii).

 

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(c) Except for the Company Options, the Company Warrants, shares of Company
Restricted Stock and other stock awards identified in Section 2.2(b) of the
Schedule of Exceptions and, with respect to the Company Preferred Stock, as set
forth in the Charter, there are no options, warrants, calls, rights,
resolutions, commitments or Contracts of any character, written or oral, to
which the Company or any of its Subsidiaries is a party or by which it is bound,
obligating the Company or any of its Subsidiaries 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, change the price of,
otherwise amend or enter into any such option, warrant, call, right, commitment
or Contract. There are no outstanding or authorized stock appreciation, stock
unit, phantom stock, profit participation or other similar rights with respect
to the Company or any of its Subsidiaries. As a result of the Merger, Parent
will be the sole record and beneficial holder of all issued and outstanding
Company Capital Stock and all rights to acquire or receive any shares of Company
Capital Stock. As of the Effective Time, no former holder of a Company Option
will have any rights with respect to such Company Option other than as
contemplated by Section 1.6(b) of this Agreement. The Company is not a party to,
and to the Knowledge of the Company, there are no other voting trusts, proxies,
or other Contracts or understandings with respect to the voting stock of the
Company.

2.3 Subsidiaries. Except as set forth in Section 2.3 of the Schedule of
Exceptions, the Company does not have, and has never had, any Subsidiaries and
does not otherwise own any shares of capital stock or any interest in, or
control, directly or indirectly, any other corporation, partnership,
association, joint venture or other business entity or have any ongoing
obligation to purchase any shares of capital stock with respect thereto. All of
the outstanding shares of capital stock of, or other equity or voting interests
in, each such Subsidiary have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all Liens, including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests, except for
restrictions imposed by applicable securities Laws. All required capital
contributions to the Subsidiaries have been made and have not been reduced or
impaired. All applicable provisions under applicable Law and the Subsidiary
Charter Documents regarding the increase or the decrease of the share capital of
the Subsidiaries have been duly observed. Any material facts and other documents
required by applicable Law to be filed with the competent commercial register or
other comparable authorities have been completed, duly and timely filed. Neither
the Company nor any of its Subsidiaries have any permanent establishments,
branches, agencies or similar affiliates.

2.4 Authority.

(a) The Company has all requisite corporate power and authority to enter into
this Agreement, subject to the adoption of this Agreement by the Stockholders
under Delaware Law and the Company Charter Documents, and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the Company, and,
subject to the adoption of this Agreement by the Stockholders under Delaware Law
and the Company Charter Documents prior to the Effective Time, no further action
is required on the part of the Company to authorize this Agreement and the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by the other parties hereto, constitutes the valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be subject to the Laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of Law governing specific performance, injunctive relief or other
equitable remedies.

 

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(b) The board of directors of the Company has unanimously (i) adopted the plan
of merger set forth in this Agreement and approved this Agreement, the Merger
and the other transactions contemplated by this Agreement; (ii) declared that
this Agreement, the Merger and the other transactions contemplated by this
Agreement are advisable and in the best interests of the Company and the
Stockholders; and (iii) recommended adoption and approval of this Agreement, the
Merger and the other transactions contemplated by this Agreement to the
Stockholders.

2.5 No Conflict. The execution and delivery by the Company of this Agreement,
and the consummation of the transactions contemplated hereby, subject to the
adoption of this Agreement by the Stockholders under Delaware Law and the
Company Charter Documents prior to the Effective Time, 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, payment of any benefit, or loss
of any benefit (any such event, a “Conflict”) under: (a) any provision of the
Company Charter Documents or the Subsidiary Charter Documents; (b) any written
or oral mortgage, indenture, lease, contract, covenant or other agreement,
arrangement, instrument or commitment, permit, concession, franchise or license
(each a “Contract” and collectively the “Contracts”) to which the Company or any
of its Subsidiaries or any of their properties or assets (whether tangible or
intangible) is a party, bound by or, as the case may be, subject; or (c) any Law
applicable to the Company or any of its Subsidiaries or any of their properties
(whether tangible or intangible) or assets. As a result of the consummation of
the transactions contemplated by this Agreement, neither the Surviving
Corporation nor any of its Subsidiaries will be prohibited from exercising any
of its rights under any Contract, and none of Parent, the Surviving Corporation
or any of their respective Subsidiaries will be required to pay any additional
amounts or consideration other than those amounts or payments, which the Company
or any of its Subsidiaries would otherwise be required to pay pursuant to the
terms of such Contracts had the transactions contemplated by this Agreement not
occurred.

2.6 Governmental Consents. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with any court, administrative agency
or commission or other federal, state, county, local or foreign governmental
authority, instrumentality, agency or commission (each, a “Governmental
Entity”), is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except for the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware.

2.7 Company Financial Statements.

(a) Section 2.7(a) of the Schedule of Exceptions sets forth (i) the Company’s
audited consolidated balance sheet as of December 31, 2010, and the related
audited consolidated statements of income, cash flows and stockholders’ equity
for the twelve month period then ended, and (ii) the Company’s unaudited
consolidated balance sheet as of October 31, 2011, and the related unaudited
consolidated statements of income, cash flows and stockholders’ equity for the
ten month period then ended and (all of the foregoing financial statements of
the Company and any footnotes thereto are hereinafter collectively referred to
as the “Financial Statements”). The Financial Statements have been prepared in
accordance with GAAP on a basis consistent throughout the periods indicated and
consistent with each other (except that the unaudited Financial Statements do
not contain footnotes thereto). The Financial Statements present fairly the
Company’s (including any consolidated Subsidiaries) financial condition,
operating results and cash flows as of the dates, and for the periods, indicated
therein. The Company maintains a standard system of accounting established and
administered in accordance with GAAP. The Company’s unaudited balance sheet as
of October 31, 2011 is referred to hereinafter as the “Current Balance Sheet.”

 

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(b) The Company and each Subsidiary of the Company maintains a system of
internal accounting controls and procedures that are sufficient to provide
reasonable assurance that (i) transactions are executed with management’s
authorization, (ii) transactions are recorded as necessary to permit preparation
of financial statements in accordance with GAAP and to maintain accountability
for assets, (iii) access to assets is permitted only in accordance with
management’s authorization, and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences. Neither the Company (including any
Company Personnel) nor its independent accountants has identified or been made
aware of (A) any significant deficiency or material weakness in the system of
internal accounting controls utilized by the Company or any of its Subsidiaries,
(B) any fraud, whether or not material, that involves the management of the
Company or any of its Subsidiaries or any Company Personnel who have a role in
the preparation of financial statements or the internal accounting controls
utilized by the Company or any of its Subsidiaries or (C) any claim or
allegation regarding any of the foregoing.

(c) Section 2.7(c) of the Schedule of Exceptions sets forth a complete and
accurate list of all Indebtedness of the Company and its Subsidiaries and
Third-Party Expenses incurred by the Company or any of its Subsidiaries as of
the date of this Agreement.

2.8 No Undisclosed Liabilities. Neither the Company nor any of its Subsidiaries
has any Liability (whether or not required to be reflected in financial
statements in accordance with GAAP), except Liabilities which (a) have been
reflected in the Current Balance Sheet (to the extent of such reflection) or
disclosed in Section 2.7(c) of the Schedule of Exceptions, (b) have arisen in
the ordinary course of business consistent with past practices since the date of
the Current Balance Sheet, (c) are executory obligations arising in the ordinary
course of business under Contracts to which the Company or any of its
Subsidiaries is a party that are expressly set forth in the text of such
Contracts (and not as a result of the breach of any such Contract or otherwise),
(d) are Third-Party Expenses incurred by the Company and its Subsidiaries after
the date of this Agreement, or (e) are Liabilities that, if such Liabilities
existed on the date of this Agreement, would be required to be disclosed in any
of Section 2.1 through Section 2.7 and Section 2.9 through Section 2.35 of the
Schedule of Exceptions in order to avoid a breach of the corresponding
representations and warranties of the Company.

2.9 No Changes. Since the date of the Current Balance Sheet and except as
otherwise not prohibited by Section 4.1 of this Agreement, there has or have not
occurred or arisen any:

(a) Company Material Adverse Effect;

(b) amendments or changes to the Company Charter Documents or the Subsidiary
Charter Documents;

(c) capital expenditure or commitment by the Company or any of its Subsidiaries
exceeding $25,000 individually or $50,000 in the aggregate;

(d) payment, discharge or satisfaction, in any amount in excess of $25,000 in
any one case, or $50,000 in the aggregate, of any claim or Liability, other than
payment, discharge or satisfaction of claims, liabilities and obligations in the
ordinary course of business or of liabilities reflected or reserved against in
the Current Balance Sheet;

 

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(e) destruction of, damage to, or loss of any assets (whether tangible or
intangible) of the Company or any of its Subsidiaries with a book value in
excess of $25,000 in any one case or $50,000 in the aggregate, whether or not
covered by insurance;

(f) labor disputes or claim of wrongful discharge or other unlawful labor
practice or action with respect to the Company or any of its Subsidiaries;

(g) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by the Company or any of its
Subsidiaries other than as required by GAAP;

(h) change by the Company or any of its Subsidiaries in any material election in
respect of Taxes, adoption or change by the Company or any of its Subsidiaries
of any accounting method which would materially alter the historic treatment of
an item on a Tax Return, Contract or settlement by the Company or any of its
Subsidiaries of any claim or assessment in respect of Taxes, or extension or
waiver by the Company or any of its Subsidiaries of the limitation period
applicable to any claim or assessment in respect of Taxes;

(i) revaluation by the Company of any of its or its Subsidiaries’ assets
(whether tangible or intangible);

(j) declaration, setting aside or payment of a dividend or other distribution
(whether in cash, stock or property) in respect of any Company Capital Stock or
any stock or securities of its Subsidiaries, or any split, combination or
reclassification in respect of any shares of Company Capital Stock or any stock
or securities in its Subsidiaries, or any issuance or authorization of any
issuance of any other securities in respect of, in lieu of or in substitution
for shares of Company Capital Stock or any stock or securities in its
Subsidiaries, or any direct or indirect repurchase, redemption or other
acquisition by the Company of any shares of Company Capital Stock or any stock
or securities in its Subsidiaries (or options, warrants or other rights
convertible into, exercisable or exchangeable therefor), except in accordance
with the Contracts evidencing Company Options and Company Restricted Stock;

(k) increase in the base salary or other compensation payable or to become
payable by the Company or any of its Subsidiaries to any Company Personnel, or
the declaration, payment, commitment or obligation of any kind for the payment
by the Company or any of its Subsidiaries of a severance payment, termination
payment, bonus or other additional salary or compensation to any such Person;

(l) sale, lease, license or other disposition of any of the material assets
(whether tangible or intangible) or material properties of the Company or any of
its Subsidiaries taken as a whole, including the sale of any accounts receivable
of the Company or any of its Subsidiaries, or any creation of any security
interest in any such material assets or material properties;

(m) outstanding loan by the Company or any of its Subsidiaries to any Person,
incurring by the Company or any of its Subsidiaries of any Indebtedness in an
amount in excess of $25,000, guaranteeing by the Company or any of its
Subsidiaries of any Indebtedness in an amount in excess of $25,000, issuance or
sale of any debt securities of the Company or any of its Subsidiaries or
guaranteeing of any debt securities of others, except for advances to Company
Personnel for travel and business expenses in the ordinary course of business;

 

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(n) granting of any waiver or release by the Company or any of its Subsidiaries
of any right or claim material to the Company and its Subsidiaries taken as a
whole, including any write-off or other compromise of any account receivable of
the Company or any of its Subsidiaries;

(o) commencement, settlement, notice or, to the Knowledge of the Company,
threat, of any lawsuit or proceeding or other investigation against the Company
or any of its Subsidiaries;

(p) notice of any claim or potential claim of ownership by any Person other than
the Company or any of its Subsidiaries of Owned Intellectual Property owned,
developed or created by the Company or any of its Subsidiaries, or of any claim
or potential claim of infringement or misappropriation by the Company or any of
its Subsidiaries of any other Person’s Intellectual Property;

(q) issuance or sale, or contract to issue or sell, by the Company or any of its
Subsidiaries of any shares of Company Capital Stock or any stock or securities
in its Subsidiaries or securities convertible into, or exercisable or
exchangeable for, shares of Company Capital Stock or any stock or securities in
its Subsidiaries, or any securities, warrants, options or rights to purchase any
of the foregoing, except for issuances of Company Capital Stock or any stock or
securities in its Subsidiaries upon the exercise thereof;

(r) (i) sale or license by the Company or any of its Subsidiaries of any Company
Intellectual Property, (ii) purchase or license by the Company or any of its
Subsidiaries of any Intellectual Property, (iii) Contract by the Company or any
of its Subsidiaries with respect to the development of any Intellectual Property
with a third-party outside of the ordinary course of business, or (iv) material
change in pricing or royalties set or charged by the Company or any of its
Subsidiaries to their customers or licensees or in pricing or royalties set or
charged by Persons who have licensed Intellectual Property to the Company or any
of its Subsidiaries, except in the case of clause (i) or (ii), with respect to
non-exclusive end user licenses of object code in the ordinary course of
business;

(s) Contract or material modification to any Contract pursuant to which any
other party was granted marketing, distribution, development or similar rights
of any type or scope with respect to any products or technology of the Company
or any of its Subsidiaries; or

(t) agreement by the Company or any of its Subsidiaries, or any officer or
employee on behalf of the Company or any of its Subsidiaries, to do any of the
things described in the preceding clauses (a) through (s) of this Section 2.9.

2.10 Tax Matters.

(a) Tax Returns and Audits.

(i) The Company and each of its Subsidiaries has prepared and timely filed all
federal, state, local and foreign returns, statements, estimates, information
statements, documents, forms and reports in respect of Taxes (“Returns”)
required to be filed by it, and such Returns are true and correct in all
material respects and have been completed in accordance with applicable Law.

(ii) The Company and each of its Subsidiaries has paid all Taxes it is required
to pay and has withheld with respect to Company Personnel, stockholders,
creditors and other Persons (and timely paid over to the appropriate Tax
authority) all Taxes required to be withheld.

(iii) Neither the Company nor any of its Subsidiaries has been delinquent in the
payment of any Tax, nor is there any Tax deficiency outstanding, assessed or
proposed against the Company or any of its Subsidiaries, nor has the Company or
any of its Subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.

 

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(iv) The Company and its Subsidiaries have disclosed on their federal income Tax
Returns all positions that could give rise to a substantial understatement
penalty under Section 6662 of the Code.

(v) No audit or other examination of any Return of the Company or any of its
Subsidiaries is presently in progress, nor has the Company or any of its
Subsidiaries been notified by any Tax authority (orally or in writing, formally
or informally) of any threat or plan to request such an audit or other
examination.

(vi) Neither the Company nor any of its Subsidiaries has any liabilities for
unpaid federal, state, local or foreign Taxes which have not been accrued or
reserved on the Current Balance Sheet, whether asserted or unasserted,
contingent or otherwise, and neither the Company nor any of its Subsidiaries has
incurred any Liability for Taxes since the date of the Current Balance Sheet
other than in the ordinary course of business. The Company has no Liability for
Taxes for any period or portion of a period prior to the Closing Date that has
not been included in the calculation of Working Capital Adjustment Amount.

(vii) The Company has made available to Parent copies of all Returns for the
Company and each of its Subsidiaries filed for all taxable periods beginning
after December 31, 2006, together with all related workpapers and analysis
created by or on behalf of the Company or any of its Subsidiaries.

(viii) There are (and, immediately following the Effective Time, there will
be) no liens, pledges, charges, claims, restrictions on transfer, mortgages,
security interests or other encumbrances of any sort (collectively, “Liens”) on
the assets of the Company or any of its Subsidiaries relating to or attributable
to Taxes other than customary Liens for Taxes not yet due and payable.

(ix) Neither the Company nor any of its Subsidiaries has (A) ever been a member
of an affiliated group (within the meaning of Section 1504(a) of the
Code) filing a consolidated federal income Tax Return (other than a group the
common parent of which was the Company), (B) ever been a party to any Tax
sharing, indemnification or allocation agreement, except for (i) commercially
reasonable agreements providing for the allocation or payment of real property
Taxes attributable to real property leased or occupied by the Company or any
Company Subsidiary and (ii) commercially reasonable agreements for the
allocation or payment of personal property Taxes, sales or use Taxes or value
added Taxes with respect to personal property leased, used, owned or sold in the
ordinary course of business consistent with past practice (C) any Liability for
the Taxes of any Person (other than Company or any of its Subsidiaries) under
Treasury Regulation Section 1.1502-6 (or any similar provision of state, local
or foreign Law), as a transferee or successor, by Contract or otherwise, or
(D) ever been a party to any joint venture, partnership or other arrangement
that could be treated as a partnership for Tax purposes.

(x) Neither the Company nor any of its Subsidiaries has been, at any time, a
“United States Real Property Holding Corporation” within the meaning of
Section 897(c)(2) of the Code.

(xi) There are no Tax rulings, requests for rulings, or “closing agreements” (as
described in Section 7121 of the Code or any corresponding provision of state,
local or foreign Tax Law) relating to the Company or any of its Subsidiaries
which could affect the Company’s or any Company Subsidiary’s Liability for Taxes
for any period after the Closing Date. Neither the Company

 

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nor any Subsidiary will be required to include any item of income in, or exclude
any item of deduction from, taxable income for any Tax period (or portion
thereof) ending after the Closing as a result of any: (i) adjustment pursuant to
Section 481 of the Code (or any corresponding provision of state, local or
foreign Tax Law); (ii) installment sale or open transaction disposition made on
or prior to the Closing; (iii) prepaid amount received on or prior to the
Closing; (iv) intercompany transaction or any excess loss account described in
Treasury Regulations under Section 1502 of the Code; (v) election with respect
to income from the discharge of indebtedness under Section 108(i) of the Code;
or (vi) any similar election, action or agreement that would have the effect of
deferring Liability for Taxes of the Company or any of its Subsidiaries from any
period ending on or before the Closing Date to any period ending after the
Closing Date.

(xii) Neither the Company nor any of its Subsidiaries has participated in an
international boycott within the meaning of Section 999 of the Code.

(xiii) With respect to any stock or other property transferred in connection
with the performance of services for the Company or any of its Subsidiaries, a
valid 83(b) election in accordance with the requirements of the Code has been
made.

(xiv) Neither the Company nor any of its Subsidiaries has constituted either a
“distributing corporation” or a “controlled corporation” in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code.

(xv) Neither the Company nor any of its Subsidiaries has engaged in a
“reportable transaction” within the meaning of Treasury Regulations
Section 1.6011-4(b).

(xvi) Each of the Company and its Subsidiaries is and has at all times been
resident for Tax purposes in its place of incorporation or formation and is not
and has not at any time been treated as a resident in any other jurisdiction for
any Tax purpose. Neither the Company nor any of its Subsidiaries is subject to
Tax in any jurisdiction other than its place of incorporation or formation.

(xvii) The Company has provided to Parent all analyses, whether formal or
informal, prepared by or on behalf of the Company in respect of the application
of Section 382 of the Code to the net operating loss carry forwards of the
Company.

(xviii) Neither the Company nor any of its Subsidiaries has been a party to any
cost sharing agreement subject to the provisions of Treasury Regulations
Section 1.482-7A or 1.482-7T, and the Company and its Subsidiaries have
documentation (which was in existence as of the time an affected Tax Return was
filed) meeting the requirement of Section 6662(e)(3)(B) of the Code with respect
to all material transactions with related parties subject to the provisions of
Section 482 of the Code.

(xix) No foreign Subsidiary of the Company (i) has invested in “United States
Property” within the meaning of Section 956 of the Code; (ii) is a “passive
foreign investment company” within the meaning of Section 1297 of the Code; or
(iii) is a foreign corporation that is expected to have a material amount of
“subpart F income” as defined in Section 952 of the Code during a taxable year
of such Subsidiary that includes but does not end on the Closing Date or any
subsequent year. The Company and each of its Subsidiaries has filed all reports
and has created and retained all records required under Section 6038 and 6038A
of the Code.

(xx) Notwithstanding anything herein to the contrary, the Company
Securityholders shall not indemnify or be responsible for Parent’s ability to
utilize or otherwise benefit from in the period after the Closing Date, any
particular Tax attribute of the Company or any of its Subsidiaries, including
without limitation, the Tax basis of assets, net operating losses, capital
losses, Tax credits and other similar items of the Company or any of its
Subsidiaries.

 

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(b) Executive Compensation Tax.

(i) There is no Contract, plan or arrangement to which the Company or any of its
Subsidiaries is a party, including the provisions of this Agreement which,
individually or collectively, (A) could give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G or 404 of the Code, or
(B) could require Parent or any Subsidiary or Affiliate of Parent to gross up a
payment to any Company Personnel for Tax related payments or cause a penalty
under Sections 280G or 4999 of the Code.

(ii) Except as set forth in Section 2.10(b) of the Schedule of Exceptions, the
Company is not party to any Contract that is a “nonqualified deferred
compensation plan” subject to Section 409A of the Code and the regulations and
other guidance promulgated thereunder. The Company is not a party to, or
otherwise obligated under, any Contract that provides for a gross up of any Tax
imposed by Section 409A of the Code. Each such nonqualified deferred
compensation plan has been operated in material compliance with Section 409A of
the Code. No Company Option or other right to acquire Company Common Stock or
other equity of the Company (A) has an exercise price that has ever been less
than the fair market value of the underlying equity as of the date such option
or right was granted, (B) 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 (within the meaning of Section 409A of the
Code), (C) has been granted after December 31, 2004, 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 of the Code) or (D) has
failed to be properly accounted for in accordance with GAAP in the Financial
Statements.

2.11 Restrictions on Business Activities. There is no Contract (non-competition
agreement or otherwise), commitment, judgment, injunction, order or decree to
which the Company or any of its Subsidiaries is a party or otherwise binding
upon the Company or any of its Subsidiaries, which has or may reasonably be
expected to have the effect of prohibiting or impairing any present business
practice of the Company or any of its Subsidiaries, any acquisition of property
(tangible or intangible) by the Company or any of its Subsidiaries, the conduct
of business by the Company or any of its Subsidiaries, or otherwise limiting the
freedom of the Company or any of its Subsidiaries to engage in any line of
business or to compete with any Person. Without limiting the generality of the
foregoing, neither the Company nor any of its Subsidiaries has entered into any
Contract under which the Company or any of its Subsidiaries is restricted from
selling, licensing or otherwise distributing any of its technology or products
or from providing services to customers or potential customers in any geographic
area, during any period of time or in any segment of the market.

2.12 Title to Properties; Absence of Liens and Encumbrances; Condition of
Equipment.

(a) Neither the Company nor any of its Subsidiaries owns any real property, nor
has the Company or any of its Subsidiaries ever owned any real property.
Section 2.12(a) of the Schedule of Exceptions sets forth a list of all real
property currently leased by the Company or any of its Subsidiaries or otherwise
used or occupied by the Company or any of its Subsidiaries for the operation of
the Company’s or its Subsidiaries’ businesses (the “Leased Real Property”),
together with the name of the

 

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lessor, the date of the lease and each amendment thereto. All Lease Agreements
are in full force and effect, are valid and binding agreements of the Company
and, to the Company’s Knowledge, any other party thereto, in accordance with
their respective terms, and there is not, under any of such leases, any existing
default or event of default (or event which with notice or lapse of time, or
both, would constitute a default) by the Company or any of its Subsidiaries or,
to the Knowledge of the Company, by any other party thereto.

(b) The Company has made available to Parent true, correct and complete copies
of all leases, lease guaranties, subleases, Contracts for the leasing, use or
occupancy of, or otherwise granting a material right in the Leased Real
Property, including all amendments, terminations and modifications thereof (the
“Lease Agreements”); and there are no other Lease Agreements affecting the real
property or to which the Company or any of its Subsidiaries is bound, other than
those identified in Section 2.12(a) of the Schedule of Exceptions. Neither the
Company nor any of its Subsidiaries has received any written notice of a
default, alleged failure to perform, or any offset or counterclaim with respect
to any Lease Agreement, which has not been fully remedied and withdrawn. The
consummation of the transactions contemplated by this Agreement will not affect
the enforceability against any Person of any such Lease Agreement or the rights
of the Company, any of its Subsidiaries or the Surviving Corporation to the
continued use and possession of the Leased Real Property for the conduct of
business as presently conducted.

(c) The Leased Real Property and any improvements thereon are: (i) in good
operating condition and repair, reasonable wear and tear excepted, and otherwise
suitable for the conduct of the business as presently conducted; (ii) to the
Knowledge of the Company, structurally sufficient and free from structural,
physical and mechanical defects; and (iii) to the Knowledge of the Company,
maintained in a manner consistent with standards generally followed with respect
to similar properties.

(d) The Company and each of its Subsidiaries 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, used or held for
use in its business, free and clear of any judgments or Liens, except (i) as
reflected in the Current Balance Sheet, (ii) Liens securing debt that is
reflected on the Current Balance Sheet, (iii) Liens for Taxes, assessments and
similar charges which are not yet due and payable, or are being contested in
good faith and have been disclosed in Section 2.12(d) of the Schedule of
Exceptions, and (iv) such imperfections of title and encumbrances, if any, that
do not materially detract from the value or materially interfere with the
present use of the property subject thereto or affected thereby (collectively,
“Permitted Liens”).

(e) Section 2.12(e) of the Schedule of Exceptions lists all items of equipment
(the “Equipment”) with a book value in excess of $10,000 and owned or leased by
the Company or any of its Subsidiaries, and such Equipment is (i) adequate for
the conduct of the business of the Company and each of its Subsidiaries as
currently conducted, and (ii) in good operating condition, regularly and
properly maintained, subject to normal wear and tear.

(f) The Company and its Subsidiaries have either (i) sole and exclusive
ownership, free and clear of any judgments or Liens, or (ii) the valid right to
use unrestricted by Contract or applicable Law, all customer lists, customer
contact information, customer correspondence and customer licensing and
purchasing histories relating to their current and former customers (the
“Customer Information”). No Person other than the Company and its Subsidiaries
possesses any licenses, Liens, claims or rights with respect to the use of the
Customer Information owned by the Company or any of its Subsidiaries.

 

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(g) All improvements on the Leased Real Property (i) substantially conform to
all applicable Laws, including zoning and building ordinances and health and
safety ordinances, and such Leased Real Property is zoned for the various
purposes for which the Leased Real Property and improvements thereon are
presently being used, and (ii) are adequate and sufficient for the operation of
the business of the Company and its Subsidiaries as currently conducted. Neither
the Company nor any of its Subsidiaries has received written notice from any
Governmental Entity or lessor requiring material work to be done or material
improvements to be made upon any of the Leased Real Property and to the
Knowledge of the Company no such work or improvements has been or will be
requested by any Person.

2.13 Intellectual Property.

(a) Section 2.13(a) of the Schedule of Exceptions contains, a complete and
accurate list and description of all products and services marketed,
distributed, provided, licensed, or sold by the Company or any of its
Subsidiaries at any time up through the date of this Agreement (such products
and services together with the Site Builder Product, the “Company Products”).

(b) Section 2.13(b) of the Schedule of Exceptions contains a complete and
accurate list of the following Owned Company Intellectual Property: (i) all
registered Trademarks and material unregistered Trademarks; (ii) all Patents and
(iii) all registered Copyrights and applications therefor, in each case listing,
as applicable, (A) the name of the applicant/registrant and current owner,
(B) the jurisdiction where the application/registration is located, (C) the
application or registration number, and (D) any other Person that has an
ownership interest in such item of Owned Company Intellectual Property. All
filings, payments, and other actions required to be taken to maintain each item
of Owned Company Intellectual Property in full force and effect and has been
taken by the applicable deadline. All of the Owned Company Intellectual Property
is valid, enforceable and subsisting. All documents and certificates in
connection with Owned Company Intellectual Property have been executed and filed
with the relevant patent, copyright, trademark or other authorities or
Governmental Entities in the United States or elsewhere in the world, as the
case may be, as required for the purposes of perfecting, prosecuting and
maintaining in full force and effect Owned Company Intellectual Property. Except
as set forth on Section 2.13(b) of the Schedule of Exceptions, there are no
actions that must be taken by the Company or any of its Subsidiaries within 90
days of the date of this Agreement, including the payment of any registration,
maintenance or renewal fees or the filing of any responses to Governmental
Entity office actions, documents, applications or certificates for the purposes
of obtaining, maintaining, perfecting or preserving or renewing any Owned
Company Intellectual Property.

(c) Section 2.13(c) of the Schedule of Exceptions contains a complete and
accurate list of the Domain Name registrations of the Company and its
Subsidiaries. Section 2.13(c) of the Schedule of Exceptions identifies, for each
Domain Name registration, the named owner, and the registrar or equivalent
Person with whom that Domain Name is registered. The Company’s use and
registration of its Domain Name registrations does not infringe any
third-party’s Intellectual Property Rights. In the case in which the Company or
any of its Subsidiaries has acquired ownership of a Domain Name registration
from another party, the Company or such Subsidiary has made or procured a
transfer of the Domain Name in accordance with the procedure of the registrar.

(d) For each item of Owned Company Intellectual Property, the Company or one of
its Subsidiaries has obtained a valid and enforceable assignment sufficient to
transfer all rights, title, and interests in and to all such Intellectual
Property, and Intellectual Property Rights therein, to the Company and the
Company or such Subsidiary and has, in the case of a Patent, Trademark or
registered Copyright, timely recorded or had timely recorded each such
assignment with the United States Patent and Trademark Office, the United States
Copyright Office, or their respective equivalents in each applicable
jurisdiction, in each case in accordance with applicable Laws.

 

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(e) Section 2.13(e)(1) of the Schedule of Exceptions contains a complete and
accurate list of all Contracts (such agreements, the “Company Inbound
Intellectual Property Agreements”) under which the Company or any of its
Subsidiaries is licensed or otherwise uses or has the right to use any Licensed
Company Intellectual Property, and such list also identifies all Intellectual
Property and Intellectual Property Rights licensed under such Contracts. Other
than non-exclusive, outbound, binary code, internal-use “shrink-wrap” licenses
granted to end-user customers in the ordinary course of business under the forms
set forth in Section 2.13(e)(3) of the Schedule of Exceptions,
Section 2.13(e)(2) of the Schedule of Exceptions contains a complete and
accurate list of all Contracts (such agreements, the “Company Outbound
Intellectual Property Agreements”) under which any Person has been granted any
license under, or has otherwise received or acquired any right (whether or not
currently exercisable) or interest in any of the Company Intellectual Property,
in each case specifying the parties to the Contract. The Company Inbound
Intellectual Property Agreements and Company Outbound Intellectual Property
Agreements are collectively referred to herein as the “Company Intellectual
Property Agreements.” Neither the Company nor any of its Subsidiaries is a party
to or bound by, and no Company Intellectual Property is subject to, any Contract
containing any provision that in any way limits or restricts the right or
ability of the Company or any of its Subsidiaries to use, exploit, assert or
enforce Company Intellectual Property anywhere in the world, including any
exclusive license, preferential pricing agreements or most favored customer
provisions. Except as set forth in Section 2.13(e)(4) of the Schedule of
Exceptions, neither the Company nor any of its Subsidiaries has granted any
licenses to use any Company Source Code (whether present, contingent, or
otherwise), and neither the Company nor any of its Subsidiaries has any duty or
obligation (whether present, contingent, or otherwise) to deliver, make
available or license any Company Source Code to any escrow agent or other
Person. Except as set forth in Section 2.13(e)(5) there are no pending disputes
regarding the scope of any Company Intellectual Property Agreements, performance
under any Company Intellectual Property Agreements, or with respect to payments
made or received under any Company Intellectual Property Agreements.

(f) The Company Intellectual Property is sufficient for the conduct of the
business of the Company and its Subsidiaries as it is currently conducted and as
it is currently planned by the Company and its Subsidiaries to be conducted.
Without limiting the foregoing, the Company or its Subsidiaries have the right
to use all Company Intellectual Property (including Company Source Code,
software development tools, library functions, and compilers) that the Company
or its Subsidiaries (i) use to create, modify, compile, market or support any
Company Product, or (ii) use to provide any services provided by the Company and
its Subsidiaries.

(g) The Company and its Subsidiaries exclusively own all right, title and
interest in the Owned Company Intellectual Property and Company Source Code,
free and clear of all Liens (other than the licenses granted under the Company
Outbound Intellectual Property Agreements identified in Section 2.13(e)(2) of
the Schedule of Exceptions and licenses granted to end-user customers in the
ordinary course of business under the forms set forth in Section 2.13(e)(3) of
the Schedule of Exceptions). All Owned Company Intellectual Property and Company
Source Code was written and created solely by either (i) employees of the
Company or its Subsidiaries acting within the scope of their employment and done
so as work for hire, or (ii) by third parties who have validly and irrevocably
assigned all of their rights therein to the Company, and no third-party owns or
has any claim, right or interest (whether or not currently exercisable) in or to
any of the Owned Company Intellectual Property or Company Source Code. No
Company Personnel owns or has any claim, right, interest or license (whether or
not currently exercisable) in or to any Company Intellectual Property or Company
Source Code.

 

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(h) The Company and each of its Subsidiaries has taken all reasonable and
appropriate steps to protect and preserve the confidentiality of all materials
and information, including but not limited to Company Source Code that the
Company or its Subsidiaries holds, or purports to hold, as a Trade Secret, and
to the Knowledge of the Company, there have not occurred any unauthorized uses,
disclosures, misappropriations, or infringements of any such Trade Secrets by
any person. All use and disclosure by the Company or any of its Subsidiaries of
Trade Secrets owned by another person have been pursuant to the terms of a
written agreement with such person or was otherwise lawful. Without limiting the
foregoing, the Company and its Subsidiaries have a valid and enforceable
confidentiality and assignment agreement, substantially in the Company’s
standard form previously made available to Parent and identified in
Section 2.13(h) of the Schedule of Exceptions, in place with each employee and
contractor who has ever created Company Intellectual Property. The Company and
its Subsidiaries have enforced such agreements and their rights in the
Intellectual Property that they hold, or purport to hold, as a Trade Secret.

(i) None of the Company or any of its Subsidiaries, or any of the Company
Products, or the operation of the Company’s or its Subsidiaries’ business has
infringed upon or misappropriated, or is infringing or misappropriating, in any
respect the Intellectual Property Rights of any other Person. To the Knowledge
of the Company, no Person or any of such Person’s products or services or other
operation of such Person’s business has infringed upon or misappropriated any
Owned Company Intellectual Property, and no Person or any of such Person’s
products or services or other operation of such Person’s business is infringing
upon or misappropriating any Owned Company Intellectual Property. Neither the
Company nor any of its Subsidiaries is bound by any Contract to indemnify,
defend, hold harmless or reimburse any other Person with respect to, or has
otherwise assumed or agreed to discharge or otherwise take responsibility for,
any existing or potential claim of infringement, violation, or misappropriation
of any Intellectual Property Rights, except for the express infringement
indemnities included in the forms set forth on Section 2.13(e)(3) of the
Schedule of Exceptions.

(j) There is no suit, claim, action, investigation or proceeding made, conducted
or brought by a third-party that has been served with respect to, filed, or, to
the Knowledge of the Company, threatened with respect to, and the Company and
its Subsidiaries have not been notified in writing of, any alleged infringement
or other violation or alleged misappropriation, by the Company or any of its
Subsidiaries, any Company Product or other operation of the Company’s or its
Subsidiaries’ business of the Intellectual Property Rights of any Person, nor,
to the Knowledge of the Company, is there any basis for any of the foregoing. To
the Knowledge of the Company, there is no pending or threatened claim, action or
proceeding challenging the scope, validity or enforceability of, or contesting
the Company’s or any of its Subsidiaries’ rights with respect to, any of the
Owned Company Intellectual Property or Company Source Code. Neither the Company
nor any of its Subsidiaries has received any written opinion of counsel
regarding: (i) any allegation of infringement, (ii) the application of any
Patent to the Company Products, or (iii) the operation of the Company’s and its
Subsidiaries’ business with respect to the foregoing. The Company and its
Subsidiaries are not subject to any order of any Governmental Entity that
restricts or impairs the use, transfer or licensing of any Owned Company
Intellectual Property or Company Source Code. To the Knowledge of the Company,
there is no basis for a claim that any of the Company Owned Intellectual
Property is invalid or unenforceable as a result of patent or copyright misuse
or on any other grounds.

(k) None of the execution, delivery or performance of this Agreement or the
consummation of any of the transactions contemplated hereby (including the
Merger) will result in (i) the Company or any of its Subsidiaries granting,
assigning or transferring to any Person any rights or licenses to any Company
Intellectual Property or any Intellectual Property Rights therein, or the
release, disclosure

 

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or required delivery to any Person of any Company Intellectual Property,
(ii) any breach of, or the right of termination or cancellation under, any
Company Intellectual Property Agreement, (iii) the imposition of any Lien or
license on, or the loss of, any Owned Company Intellectual Property or Company
Source Code, or (iv) after the Merger, Parent or any of its Subsidiaries being
required, under the terms of any Contract to which the Company or any of its
Subsidiaries is a party or is bound, to grant, assign or transfer to any Person
any rights or licenses to any Intellectual Property or Intellectual Property
Rights, to impose any restrictions not otherwise applicable to the Company
absent the transactions contemplated by this Agreement, or to pay any royalties
or other amounts in excess of those that would have, in any event, been payable
by the Company or any of its Subsidiaries had the transactions contemplated by
this Agreement not occurred.

(l) Section 2.13(l) of the Schedule of Exceptions contains a complete and
accurate list of all software that is distributed as “open source software” or
under a similar licensing or distribution model (including the GNU General
Public License) (“Open Source Materials”) used by the Company or any of its
Subsidiaries in connection with their respective business or incorporated in or
used in connection with any Company Product or Company Source Code, including a
description of the manner in which such Open Source Materials are used,
including whether the Open Source Materials were modified and whether such Open
Source Materials were distributed by the Company or any of its Subsidiaries.
Except as expressly set forth in Section 2.13(l) of the Schedule of Exceptions,
neither the Company nor any of its Subsidiaries has (i) incorporated Open Source
Materials into, or combined Open Source Materials with, any Company Product or
any Company Source Code, (ii) distributed Open Source Materials in conjunction
with any Company Product, or (iii) used, incorporated or distributed Open Source
Materials that require or could require, or condition or could condition, the
use or distribution of such Open Source Materials on, the Company’s or any
Subsidiaries’ granting to any Person any right or immunity with respect to any
Company Intellectual Property (including any requirement or condition that other
software incorporated into, derived from, or distributed with such Open Source
Materials be (A) disclosed or distributed in source code form, (B) licensed for
the purpose of making derivative works, or (C) redistributable at no charge).
The Company and its Subsidiaries are in material compliance with all license
terms and conditions with respect to any Open Source Materials (i) incorporated
into or combined with any Company Product or Company Source Code, or
(ii) distributed or downloaded in conjunction with any Company Product or
Company Source Code. The Company has not used any Open Source Materials in such
a way as to require the licensing of any Company Intellectual Property pursuant
to the terms of an open source license.

(m) None of the Company Source Code or Trade Secrets of the Company or any of
its Subsidiaries have been published or disclosed, except to the employees of
the Company and its Subsidiaries or to other Persons with contractual
obligations to keep the Company Source Code or Trade Secrets (as applicable)
confidential. No condition has occurred or circumstance exists that would be
sufficient to entitle the beneficiary under any escrow arrangement under which
the Company or any of its Subsidiaries has deposited any Company Source Code for
any Company Product or Trade Secret to require release of such Company Source
Code. Section 2.13(m) of the Schedule of Exceptions identifies each Contract
pursuant to which the Company or any of its Subsidiaries has deposited, or is or
may be required to deposit, with an escrow agent or any other Person, any
Company Source Code. The consummation of the transactions contemplated hereby
(including the Merger) will not constitute a condition sufficient to entitle the
beneficiary under any escrow arrangement under which the Company or any of its
Subsidiaries has deposited any Company Source Code for any Company Product or
Trade Secret to require release of such Company Source Code or Trade Secret.

(n) No funding, facilities, or personnel of any Governmental Entity or
university, college, other educational institution or research center or funding
from any other third parties was used

 

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directly or indirectly in the development of any Owned Company Intellectual
Property. To the Knowledge of the Company, no Company Personnel who was involved
in, or who contributed to, the creation or development of any Owned Company
Intellectual Property, has performed services for any Government Entity,
university, college or other educational institution or research center with
respect to technology or inventions that have been or may be incorporated into a
Company Product or related Company Intellectual Property during a period of time
during which such Company Personnel was also performing services for the Company
or any of its Subsidiaries.

(o) Neither the Company nor any of its Subsidiaries is or ever was a member or
promoter of, or a contributor to, any industry standards body or similar
organization that could require or obligate the Company or any of its
Subsidiaries to disclose, or to grant or to offer a license or right to, any
Owned Company Intellectual Property, and neither Company nor any of its
Subsidiaries has any commitment to any standards body or similar organization to
grant or offer a license or right to any Owned Company Intellectual Property to
any Person. The Company Products are not required to be compliant with any
standards promulgated or administered by, or with any operating systems offered
by, any Person.

2.14 Contracts. As of the date of this Agreement, neither the Company nor any of
its Subsidiaries is a party to, nor are they bound by:

(a) (i) any employment or consulting Contract with an employee or individual
consultant or salesperson, or consulting or sales Contract with a firm or other
organization to provide services to the Company or any of its Subsidiaries other
than the Company or any of its Subsidiaries standard form of employee offer
letter, which is attached in Section 2.14(a) of the Schedule of Exceptions,
(ii) any Contract to grant any severance or termination pay (in cash or
otherwise) to any employee, individual consultant or any contractor, or
(iii) any consulting or sales Contract with a firm or other organization;

(b) any Contract or plan, including any stock option plan, stock appreciation
rights plan, phantom stock plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated by this
Agreement, or the value of any of the benefits of which will be calculated on
the basis of any of the transactions contemplated by this Agreement;

(c) any fidelity or surety bond or completion bond or any Contract providing for
indemnification by or of the Company (other than as disclosed pursuant to
Section 2.25 of the Schedule of Exceptions);

(d) any lease of personal property having a value in excess of $25,000
individually or $50,000 in the aggregate;

(e) any Contract relating to capital expenditures and involving future payments
in excess of $25,000 individually or $50,000 in the aggregate;

(f) any Contract relating to the disposition or acquisition of assets or any
interest in any business enterprise outside the ordinary course of the Company’s
or any of its Subsidiaries’ businesses (including any Liability related to or
arising out of any acquisition or other business combination such as any
earn-out, performance, bonus or other contingent payment arrangement or arising
out of any related indemnification provisions);

 

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(g) any mortgage, indenture, guarantee, loan or credit agreement, security
agreement or other Contract relating to the borrowing of money or extension of
credit, any currency exchange, commodities or other hedging arrangement, or a
leasing transaction of a type required to be capitalized in accordance with
GAAP;

(h) any purchase order or Contract for the purchase of materials involving in
excess of $25,000 individually or $50,000 in the aggregate;

(i) any dealer, distribution, joint marketing or development Contract;

(j) any agency/sales representative, original equipment manufacturer, value
added reseller, joint sales, joint marketing, affiliate, remarketer, independent
software vendor, commission, or other Contract for use or distribution of the
Company’s or any of its Subsidiaries’ products, technology or services that the
Company or any of its Subsidiaries does not have the right to terminate without
penalty within thirty (30) days notice;

(k) any license agreement granting an enterprise-wide license to another Person;

(l) any Contract permitting the other party thereto to convert a term license
into a perpetual license;

(m) any Contract with payment terms of greater than 90 days, other than for
maintenance or service;

(n) any Government Contract or other Contract that is subject to government cost
accounting;

(o) any Contract containing penalties for any violation of service level
requirements or failure to achieve specified performance levels or under which
the Company has any obligations to create or maintain interoperability or
compatibility of any of the Company’s technology, products or services with any
technology, products or services of any other Person;

(p) any Contract containing a most-favored nations provision or any similar
provision requiring that a third-party be offered terms or concessions at least
as favorable as those offered to one or more other parties;

(q) any Contract relating to the sale, issuance, grant, exercise, award,
purchase, repurchase or redemption of any shares of its capital stock or other
securities or any options, warrants or other rights to purchase or otherwise
acquire any such shares of capital stock, other securities or options, warrants
or other rights therefor, except for those Contracts conforming to the standard
agreement under the Company Option Plan;

(r) any Contract under which the Company’s entering into this Agreement or the
consummation of the Merger or the transactions contemplated thereby shall give
rise to, or trigger the application of, any additional rights of any third-party
or any additional obligations of the Company or any Company Subsidiary that
would come into effect upon the consummation of the Merger; or

(s) any other Contract that involves (i) $25,000 individually or $50,000 in the
aggregate or more and is not cancelable without penalty within thirty (30) days,
(ii) minimum purchase commitments by the Company or any of its Subsidiaries,
(iii) ongoing service or support obligations and that are not cancelable without
penalty or refund within thirty (30) days, or (iv) the development or delivery
of any customer-specified product enhancements or upgrades.

 

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Neither the Company nor any of its Subsidiaries has any cash or other
obligations to any Person under or with respect to a Contract in connection with
returns, rebates, co-marketing arrangements, service level agreements,
most-favored nations undertakings, price protection mechanisms or warranties.

2.15 No Defaults. The Company and each of its Subsidiaries is in material
compliance with and has not materially breached, violated or defaulted under, or
received notice that it has materially breached, violated or defaulted under,
any of the terms or conditions of any Contract to which it is a party or by
which it is bound, nor is the Company aware of any event that has occurred or
circumstance or condition that exists that would or would reasonably be expected
to constitute such a material breach, violation or default with the lapse of
time, giving of notice or both. Each Contract of the type described in, or
required to be disclosed under, Sections 2.13 or 2.14 of this Agreement (each, a
“Specified Contract”) is in full force and effect, and neither the Company nor
any of its Subsidiaries is in material default thereunder, nor to the Knowledge
of the Company is any other party to any such Contract in material default
thereunder. Except as set forth in Section 2.15 of the Schedule of Exceptions,
the consummation of the transactions contemplated by this Agreement will neither
violate nor result in the breach, modification, cancellation, termination or
suspension (with the lapse of time, giving of notice or both) of any Specified
Contract. Except as set forth in Section 2.15 of the Schedule of Exceptions,
transactions contemplated by this Agreement will not require the consent of any
party to such Contracts. Following the Closing Date, the Surviving Corporation
will be permitted to exercise all of the Company’s rights under the Specified
Contracts to the same extent the Company would have been able to had the
transactions contemplated by this Agreement not occurred and without being
required to pay any additional amounts or consideration other than fees,
royalties or payments which the Company would otherwise be required to pay had
such transactions contemplated hereby not occurred.

2.16 Government Contracts. The Company and each of its Subsidiaries is in
material compliance with all terms and conditions of each Contract with any
branch, division, agency or entity that is part of the United States or any
state or local government (“Government Contracts”) and the Company and each of
its Subsidiaries has maintained sufficient records, which records have been made
available to Parent, to demonstrate compliance with such Contract terms and
conditions. All material representations and certifications executed,
acknowledged or set forth in or pertaining to such Government Contracts were
current, accurate and complete as of their effective date and the Company and
each of its Subsidiaries has complied in all material respects with all such
representations and certifications. The Company and its Subsidiaries possess all
necessary security clearances for the execution of their obligations under any
Government Contract. The Company and its Subsidiaries have the proper procedures
to conduct business of a classified nature up to the level of any current
Company security clearances. The Company and its Subsidiaries are in compliance
in all material respects with applicable agency security requirements, as
appropriate, and have in place proper procedures, practices and records to
maintain security clearances necessary to perform their current Government
Contracts.

2.17 Interested Person Transactions.

(a) No officer or director of the Company or any of its Subsidiaries or, to the
Knowledge of the Company, holder of more than five percent (5%) of the
outstanding shares of Company Capital Stock (nor to the Knowledge of the
Company. any ancestor, sibling, descendant or spouse of any of such Persons, or
any trust, partnership, corporation or other Person in which any of such Persons
has or

 

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has had an interest), (an “Interested Person”), has or has had, directly or
indirectly, (i) an economic interest in any entity which furnished or sold, or
furnishes or sells, services, products or technology that the Company or its
Subsidiaries furnishes or sells, or proposes to furnish or sell, or (ii) any
economic interest in any entity that purchases from or sells or furnishes to the
Company or its Subsidiaries, any services, products or technology, or (iii) a
beneficial interest in any Contract to which the Company or its Subsidiaries is
a party, except in the case of clause (iii) in any such Person’s capacity as an
officer, director or stockholder of the Company or its Subsidiaries; provided,
however, that ownership of no more than five percent (5%) of the outstanding
voting stock of a private corporation, or one percent (1%) of the outstanding
voting stock of a publicly traded corporation, shall not be deemed to be an
“interest in any entity” for purposes of this Section 2.17.

(b) All transactions pursuant to which any officer, director or stockholder of
the Company or any of its Subsidiaries or any Interested Person has purchased
any services, products or technology from, or sold or furnished any services,
products or technology to, the Company or any of its Subsidiaries, have been on
an arms’ length basis on terms no less favorable to the Company or such
Subsidiary than would be available from an unaffiliated party.

(c) To the Knowledge of the Company, there are no Contracts with regard to
contribution or indemnification between or among any of the Stockholders.

2.18 Governmental Authorization. Each material consent, license, permit, grant
or other authorization from any Governmental Entity (i) pursuant to which the
Company and each of its Subsidiaries currently operates or holds any interest in
any of its properties, or (ii) which is required for the operation of the
Company’s or any of its Subsidiaries’ business as currently conducted has been
issued or granted to the Company or such Subsidiary and is in full force and
effect and is not and will not be adversely affected by the transactions
contemplated hereby.

2.19 Litigation. There is no action, suit, claim or proceeding of any nature
pending or, to the Knowledge of the Company, threatened or reasonably
anticipated against or involving the Company, any of its Subsidiaries, any of
their properties (tangible or intangible) or any of their officers or directors
in their respective capacities as such, nor, to the Knowledge of the Company, is
there any basis for any of the foregoing. There is no investigation, inquiry or
other proceeding pending or, to the Knowledge of the Company, threatened or
reasonably anticipated against or involving the Company, any of its
Subsidiaries, any of their properties (tangible or intangible) or any of their
officers or directors in their respective capacities as such by or before any
Governmental Entity, nor, to the Knowledge of the Company, is there any basis
for any of the foregoing. No Governmental Entity has provided the Company or any
of its Subsidiaries with written notice challenging or questioning the legal
right of the Company or any of its Subsidiaries to conduct its operations as
conducted at that time or as presently conducted.

2.20 Accounts Receivable.

(a) The Company has made available to Parent a list of all accounts receivable
of the Company and its Subsidiaries as of the date of the Current Balance Sheet,
together with the respective range of days elapsed since each invoice as of the
date of the Current Balance Sheet.

(b) All of the Company’s and its Subsidiaries’ accounts receivable arose from
bona fide transactions in the ordinary course of business and are carried at
values determined in accordance with GAAP on a basis consistent with the basis
on which the Financial Statements were prepared, less any reserves for doubtful
accounts set forth on the Current Balance Sheet. No Person has any Lien (other
than Permitted Liens) on any of the Company’s or its Subsidiaries’ accounts
receivable, and no request or agreement for deduction or discount has been made
with respect to any of the Company’s or its Subsidiaries’ accounts receivable.

 

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2.21 Minute Books. The minutes of the proceedings of meetings and written
actions of the board of directors (or similar body) and Stockholders of the
Company and each of its Subsidiaries made available to Parent are the only
minutes of the Company and its Subsidiaries as of the date of this Agreement and
contain accurate summaries of all meetings and actions by written consent of the
board of directors (or similar body) (or committees thereof) of the Company and
its Subsidiaries and of all meetings and actions by written consent of the
stockholders of the Company and its Subsidiaries, since the time of
incorporation of the Company or such Subsidiary.

2.22 Environmental Matters. Each of the Company and its Subsidiaries is not in
violation of any applicable statute, law, or regulation relating to the
environment or occupational health and safety, and to the Knowledge of the
Company, no material expenditures are or will be required in order to comply
with any such existing statute, law or regulation.

2.23 Fees and Expenses. Neither the Company nor any of its Subsidiaries has
incurred, nor will any of them incur, directly or indirectly, any Liability for
investment banking fees or for brokerage or finders’ fees or agents’ commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.

2.24 Employee Benefit Plans and Compensation.

(a) Schedule. Section 2.24(a)(i)(1) of the Schedule of Exceptions contains an
accurate and complete list of each Company Employee Plan and each Employee
Agreement (whether or not under a Company Employee Plan). Neither the Company
nor any of its Subsidiaries or ERISA Affiliates has made any plan or commitment
to establish, adopt or enter into any new Company Employee Plan or Employee
Agreement, or to modify any Company Employee Plan or Employee Agreement (except
to the extent required by Law) in a manner that may result in additional
Liability to the Company or its Subsidiaries. Section 2.24(a)(ii)(2) of the
Schedule of Exceptions sets forth a table listing the name and salary of each
exempt employee and/or consultant of the Company and/or each of its
Subsidiaries.

(b) Documents. The Company has made available to Parent (i) correct and complete
copies of all documents embodying each Company Employee Plan and each Employee
Agreement, including all amendments, summary plan descriptions, and trust
documents, (ii) the three (3) most recent annual reports (Form Series 5500 and
all schedules and financial statements attached thereto), if any, required under
ERISA for any Company Employee Plan, (iii) if any Company Employee Plan is
funded, the most recent annual and periodic accounting of such Company Employee
Plan’s assets, (iv) all material written Contracts relating to each Company
Employee Plan, including administrative service agreements, trust agreements and
group insurance contracts, (v) all material communications relating to any
established or proposed Company Employee Plan that relates to any material
amendments, terminations, increases or decreases in benefits, acceleration of
payments or vesting schedules or other events that would result in any Liability
to the Company or any of its Subsidiaries or ERISA Affiliates, (vi) all material
correspondence to or from any Governmental Entity relating to any Company
Employee Plan, (vii) all policies pertaining to fiduciary liability insurance
covering the fiduciaries for each Company Employee Plan, (viii) discrimination
test results for each Company Employee Plan for the three (3) most recent plan
years, (ix) the most recent IRS determination letter (or opinion letter in the
case of a prototype plan) issued with respect to each Company Employee Plan, and
(x) visa and work permit information with respect to current Company Personnel.
With respect to any International Plan, the Company has

 

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made available to Parent correct and complete copies of, to the extent
applicable, (i) copies of such International Plan, including all amendments,
supplements and modifications to such International Plan, (ii) the most recent
annual report or similar compliance documents required to be filed with any
Governmental Entity with respect to such International Plan, and (iii) any
document with respect to such International Plan comparable to the IRS
determination letter referenced above.

(c) Employee Plan Compliance. Each Company Employee Plan has been established
and maintained in accordance with its terms and in material compliance with all
applicable Laws. The Company and each of its Subsidiaries and ERISA Affiliates
has performed all material obligations required to be performed by them under
each Company Employee Plan. Each Company Employee Plan intended to be qualified
under Section 401(a) of the Code has timely obtained a favorable determination
letter from the IRS or is entitled to rely on an opinion letter issued to the
Plan’s prototype sponsor, and nothing has occurred since the date of that
determination letter that could reasonably be expected to cause any such Company
Employee Plan to fail to qualify under Section 401(a) of the Code. No
“prohibited transaction,” within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to any Company Employee Plan. There are no
actions, suits or claims pending or, to the Knowledge of the Company, threatened
or reasonably anticipated (other than routine claims for benefits) against any
Company Employee Plan or against the assets of any Company Employee Plan. Each
Company Employee Plan that is not an Employee Agreement can be amended,
terminated or otherwise discontinued prior to the Effective Time in accordance
with its terms, without Liability to Parent, the Company, any Subsidiary of the
Company or any ERISA Affiliate (other than ordinary administration expenses).
There are no audits, inquiries or proceedings pending or to the Knowledge of the
Company or any of its Subsidiaries or ERISA Affiliates, threatened by the IRS,
United States Department of Labor or any other Governmental Entity with respect
to any Company Employee Plan. The Company and its Subsidiaries and ERISA
Affiliates are not subject to any penalty or Tax with respect to any Company
Employee Plan under Section 502(i) of ERISA or Sections 4975 through 4980 of the
Code, nor is any employee or former employee of the Company subject to penalty
under Section 409A of the Code. The Company and each of its Subsidiaries and
ERISA Affiliates has timely made all contributions and other payments required
by and due under the terms of each Company Employee Plan. Where applicable, each
International Plan has been approved by the relevant Governmental Entity so as
to enable the Company and/or its Subsidiaries or ERISA Affiliates to enjoy the
most favorable taxation status possible, and the Company is not aware of any
basis on which such approval may cease to apply.

(d) No Pension Plans or Welfare Plans. The Company, its Subsidiaries and ERISA
Affiliates have not ever maintained, established, sponsored, participated in, or
contributed to, and do not otherwise have any Liability with respect to or under
any (i) employee benefit plan subject to Section 412 of the Code or Title IV of
ERISA (ii) “multiemployer plan” within the meaning of Section (3)(37) of ERISA,
(iii) “multiple employer plans” for purposes of ERISA, (iv) a “funded welfare
plan” within the meaning of Section 419 of the Code, or (v) an International
Plan that is a defined benefit pension plan. No Company Employee Plan provides
health or disability benefits that are not fully insured through an insurance
contract other than the provision of benefits under Section 125 of the Code. No
International Plan has any unfunded liabilities that, as of the Effective Time,
will not be offset by insurance or fully accrued.

(e) No Post-Employment Obligations. No Company Employee Plan provides, or
reflects or represents any Liability to provide, post-termination or retiree
life insurance, health or other retiree employee welfare benefits to any Person
for any reason, except as may be required by COBRA or other applicable statute,
and neither the Company nor any of its Subsidiaries or ERISA Affiliates has any
current representation, promise or contract (whether in oral or written
form) with any Company Personnel

 

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(either individually or to Company Personnel as a group) or any other Person
that such Company Personnel or other Person would be provided with
post-termination or retiree life insurance, health or other employee welfare
benefit, except to the extent required by statute other than the provision of
severance pay or benefits pursuant to Employee Agreements set forth on
Section 2.24(e) of the Schedule of Exceptions.

(f) COBRA; FMLA; HIPAA. The Company, each of its Subsidiaries and ERISA
Affiliates has, prior to the Effective Time, complied in all material respects
with the health care continuation requirements of COBRA, Family Medical Leave
Act of 1993, HIPAA, the Women’s Health and Cancer Rights Act of 1998, the
Newborns’ and Mothers’ Health Protection Act of 1996 and any similar provisions
of state or foreign Law applicable to Company Personnel. Neither the Company nor
any of its Subsidiaries or ERISA Affiliates has any material unsatisfied
obligations to any Company Personnel or qualified beneficiaries pursuant to
COBRA, HIPAA or any state or foreign Law governing health care coverage or
extension.

(g) Effect of Transaction. The execution of this Agreement and the consummation
of the transactions contemplated hereby will not (either alone or upon the
occurrence of any additional or subsequent events reasonably anticipated to
occur at the time of this Agreement) constitute an event under any Company
Employee Plan, Employee Agreement, trust or loan that will or may result in
(i) any payment (whether of severance pay or otherwise), acceleration,
forgiveness of Indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits, (ii) the payment of any amount that may be deemed a
“parachute payment” under Section 280G of the Code with respect to any Company
Personnel (a “Section 280G Payment”), or (iii) a penalty Tax under Section 409A
of the Code with respect to any Company Personnel.

(h) Employment Matters. Section 2.24(h) of the Schedule of Exceptions contains a
complete and accurate list of all of the Company Personnel who performed
services for the Company over the twelve (12) months preceding the date of this
Agreement describing for each such Person the position, whether classified as
exempt or non-exempt for wage and hour purposes, date of hire, date of
termination (if applicable), business location, annual base salary, whether paid
on a salary, hourly or commission basis and the actual rates of compensation,
average scheduled hours per week, bonus potential, status (i.e., active or
inactive and if inactive, the type of leave and estimated duration) and the
total amount of bonus, severance and other amounts to be paid to such Person at
the Closing or otherwise in connection with the transactions contemplated
hereby. The Company and each of its Subsidiaries and ERISA Affiliates: (i) has
at all times complied with all applicable foreign, federal, state and local
Laws, collective agreements, works agreements, rules and practices respecting
employment, employment practices, terms and conditions of employment and wages
and hours, including orders and awards relevant to terms and conditions of
service, health and safety, labor leasing, use of fixed-term contracts, supply
of temporary staff, social security filings and payments, secondment and
expiration rules, applicable requirements in respect of staff representation and
paid vacations, in each case, with respect to Company Personnel, (ii) has
withheld and reported all amounts required by Law or Contract to be withheld and
reported with respect to wages, salaries and other payments to Company
Personnel, (iii) is not liable for any arrears of wages, taxes or penalties for
failure to comply with any of the foregoing, (iv) 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 Company Personnel (other than
routine payments to be made in the normal course of business and consistent with
past practice), (v) there are no, and within the last three (3) years there have
been no formal or informal grievances, complaints or charges with respect to
employment or labor matters (including, without limitation, allegations of
employment discrimination, retaliation or unfair labor practices) pending or
threatened against the Company in any judicial, regulatory or administrative

 

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forum, under any private dispute resolution procedure or internally; (vi) none
of the employment policies or practices of the Company are currently being
audited or investigated, or to the Knowledge of the Company, subject to imminent
audit or investigation by any Governmental Entity; (vii) the Company is not, and
within the last three (3) years the Company has not been, subject to any order,
decree, injunction or judgment by any Governmental Entity or private settlement
contract in respect of any labor or employment matters; and (viii) all Employees
are employed at-will. There are no pending or, to the Knowledge of the Company,
threatened or reasonably anticipated claims or actions against the Company or
any of its Subsidiaries or ERISA Affiliates under any worker’s compensation
policy or long-term disability policy. Neither the Company nor any of its
Subsidiaries or ERISA Affiliates has or reasonably anticipates any direct or
indirect Liability of the Company or any of its Subsidiaries with respect to any
misclassification of any Person as an independent contractor rather than as an
employee or as an exempt employee rather than a non-exempt employee, or with
respect to any employee leased from another employer. As of the date of this
Agreement, no representative of the Company has made any representation, promise
or guarantee, express or implied, to any Employee or other Company Personnel
regarding (i) whether the Person shall be retained after the Merger, or (ii) to
terms and conditions on which the Person would be retained after the Merger. To
the Knowledge of the Company, the Company is not aware of any Continuing
Employee who intends to terminate his employment with the Company after the
Closing.

(i) Labor. No work stoppage, slowdown or labor strike against the Company or any
of its Subsidiaries is pending or, to the Knowledge of the Company, threatened
or reasonably anticipated. The Company does not know of any activities or
proceedings of any labor union to organize any Company Personnel. Neither the
Company nor any of its Subsidiaries has engaged in any unfair labor practices
within the meaning of the National Labor Relations Act or other applicable
similar Laws. The Company and each of its Subsidiaries presently is not, nor has
it been in the past, a party to, or bound by, any collective bargaining
agreement or union contract with respect to Company Personnel, and no collective
bargaining agreement is being negotiated by the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries are or have been a
party to any redundancy agreements (including social plans or job protection
plans). No event has occurred, and no condition or circumstance exists, that
would reasonably be expected to give rise to or provide a basis for the
commencement of any strike, slowdown, work stoppage, lockout, job action, labor
dispute or union organizing activity or any similar activity or dispute. The
Company is not subject to any affirmative action obligations under any law,
including without limitation, Executive Order 11246, and is not a government
contractor or subcontractor for purposes of any law with respect to the terms
and conditions of employment, including without limitation, the Service
Contracts Act or prevailing wage laws.

(j) No Interference or Conflict. To the Knowledge of the Company, no Company
Personnel is obligated under any Contract or subject to any judgment, decree or
order of any court or administrative agency that would interfere with such
Person’s efforts to promote the interests of the Company or any of its
Subsidiaries, or that would, in the case of any Employee or officer, interfere
with the Company’s or any of its Subsidiaries’ businesses as presently
conducted, or that would, in the case of any director, interfere in the
discharge of such director’s fiduciary duties. Neither the execution nor
delivery of this Agreement, nor the carrying on of the Company’s or any of its
Subsidiaries’ businesses as presently conducted, nor any activity of such
Company Personnel in connection with the carrying on of the Company’s or any of
its Subsidiaries’ businesses as presently conducted, 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 under which any of
such Company Personnel is now bound.

(k) Certain Compensation Arrangements. There are no variable compensation plans
or practices (including bonus plans or practices) with respect to Company
Personnel. Neither the

 

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Company nor any of its Subsidiaries has made any promises or other undertakings,
oral or in writing, to any Company Personnel or any third-party with respect to
any such variable compensation plans or practices. The Company and each of its
Subsidiaries have paid in full all wages, salary, severance payments,
termination payments, bonuses or other compensation payable to any Company
Personnel, except to the extent accrued in full on the Current Balance Sheet
with respect to current Employees of the Company and its Subsidiaries in
compliance with Law.

2.25 Insurance and Bonds. Section 2.25 of the Schedule of Exceptions lists all
insurance policies and bonds (whether denominated as bid, litigation,
performance, fidelity, AD&D, or otherwise) covering the assets, business,
equipment, properties, operations, employees, officers and directors (in their
respective capacities as such) of the Company or its Subsidiaries. There is no
claim by the Company or any of its Subsidiaries or Affiliates pending under any
of such policies or bonds as of the date of this Agreement. All claims that the
Company reasonably believes are insurable as of the date of this Agreement have
been properly tendered to the appropriate insurance carrier in compliance with
any applicable insurance policy notice provisions. All premiums due and payable
under all such policies and bonds have been paid, and the Company and its
Subsidiaries and Affiliates are otherwise in material compliance with the terms
of such policies and bonds (or other policies and bonds providing substantially
similar insurance coverage). All such insurance policies are valid and binding
in accordance with their terms, except to the extent such enforceability may be
limited by the effect of any applicable bankruptcy, reorganization, insolvency,
moratorium or similar Law affecting creditors’ rights generally and general
principles of equity or public policy (regardless of whether such enforceability
is considered in a proceeding in equity or at law), and are in full force and
effect. To the Knowledge of the Company, there is no threat of termination of,
or premium increase with respect to, any of such policies. The bonds listed in
such Section 2.25 of the Schedule of Exceptions satisfy all requirements for
such bonds set forth in (A) any Law applicable to the Company or any of its
Subsidiaries or its respective businesses and (B) any Contract of the Company or
any of its Subsidiaries or by which any of them is bound.

2.26 Compliance with Laws. Other than with respect to laws referenced in the
Section 2.6 (Governmental Consents), 2.10 (Tax Matters), 2.13 (Intellectual
Property), 2.16 (Government Contracts), 2.18 (Governmental Authorizations), 2.22
(Environmental Matters), 2.24 (Employment Benefit Plans and Compensation), 2.27
(Foreign Corrupt Practices Act), 2.30 (Privacy), 2.33 (Export Control Law) and
2.34 (Compliance with Immigration Reform and Control Act), which Sections shall
govern the Company’s representations and warranties as to compliance with laws
that are the subject matter of such Sections, (i) the Company and each of its
Subsidiaries has complied in all material respects with, is not in violation of,
and has not received any notices of violation with respect to, foreign, federal,
state or local Laws, (ii) event has occurred, and no condition or circumstance
exists, that will or would reasonably be expected to (with or without notice or
lapse of time) constitute or result in a material violation by the Company or
any of its Subsidiaries of, or a failure on the part of the Company or any of
its Subsidiaries to comply with, any applicable Law and (iii) each of the
Company Products does materially comply with and has materially complied with
all applicable Laws of each jurisdiction in which such Company Product is or has
been sold directly or indirectly by or on behalf of the Company or any of its
Subsidiaries.

2.27 Foreign Corrupt Practices Act. Neither the Company nor any of its
predecessors or current or former Subsidiaries (including any of their
respective employees, officers or directors) has taken or failed to take any
action which would cause it to be in violation of the Foreign Corrupt Practices
Act of 1977, as amended (the “FCPA”), or any rules or regulations thereunder if
such Law, rules and regulations were applicable thereto. Neither the Company nor
any of its Subsidiaries (including any of their respective employees, officers
or directors) or

 

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any third-party acting on behalf of the Company or any of its Subsidiaries, has
offered, paid, promised to pay, or authorized, or will offer, pay, promise to
pay, or authorize, directly or indirectly, the giving of money or anything of
value to any Official, or to any other Person while knowing or being aware of a
high probability that all or a portion of such money or thing of value will be
offered, given or promised, directly or indirectly, to any Official, for the
purpose of: (a) influencing any act or decision of such Official in his, her or
its official capacity, including a decision to fail to perform his, her or its
official duties or functions; or (b) inducing such Official to use his, her or
its influence with any Governmental Entity to affect or influence any act or
decision of such Governmental Entity, or to obtain an improper advantage in
order to assist the Company, any of its Subsidiaries or any third-party in
obtaining or retaining business for or with, or directing business to, Company
or any of its Subsidiaries. For purposes of this Agreement, an “Official” shall
include any appointed or elected official, any government employee, any
political party, party official, or candidate for political office, or any
officer, director or employee of any Governmental Entity. The Company and each
of its Subsidiaries have in place adequate controls and systems to ensure
compliance with applicable Laws pertaining to anticorruption, including the
FCPA, in each of the jurisdictions in which the Company or any of its
Subsidiaries currently does or in the past has done business, either directly or
indirectly. Neither the Company nor any of its Subsidiaries is aware of any
event, fact or circumstance that has occurred or exists that is reasonably
likely to result in a finding of noncompliance with any applicable
anticorruption Law. Neither the Company nor any of its Subsidiaries (nor, to the
Knowledge of the Company, any of their respective directors, executives,
representatives, agents or employees) (i) has used or is using any corporate
funds for any illegal contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) has used or is using any corporate
funds for any direct or indirect unlawful payments to any foreign or domestic
governmental officials or employees or any other person, (iii) has violated or
is violating any provision of the FCPA, (iv) has established or maintained, or
is maintaining, any unlawful fund of corporate monies or other properties or
(v) has made any bribe, unlawful rebate, payoff, influence payment, kickback or
other unlawful payment of any nature.

2.28 Complete Copies of Materials. The Company has delivered or made available
true and complete copies of each document that is referenced in the Schedule of
Exceptions or any schedule to this Agreement.

2.29 Suppliers and Customers. No material licensor, vendor, supplier, licensee
or customer of the Company or any of its Subsidiaries has cancelled or otherwise
modified its relationship with the Company or any of its Subsidiaries in a
manner adverse to the Company and its Subsidiaries, taken as a whole, and (i) no
such Person has communicated (orally or in writing) to the officers, directors
or other senior managers of the Company or any of its Subsidiaries any intention
to do so, and (ii) to the Knowledge of the Company, the consummation of the
transactions contemplated hereby will not adversely affect any of such
relationships.

2.30 Privacy. The Company has made available to Parent correct and complete
copies of all written policies maintained by the Company or any of its
Subsidiaries since their respective dates of formation with respect to privacy
and personal data protection relating to their respective employees, customers,
suppliers, service providers or any other third parties (“Company Privacy
Policies”). The Company and each of its Subsidiaries has complied in all
material respects with, is not in violation of, and has not received any notices
of violation with respect to, any applicable Laws, Contracts, Company Privacy
Policies or any other commitments, obligations or representations, concerning
privacy and personal data protection relating to their employees, customers,
suppliers, service providers or any other third parties from or about whom the
Company or any of its Subsidiaries has obtained personal data (“Company Privacy
Obligations”). The Company and its Subsidiaries have full right and authority to
transfer to Parent all personal data in the possession of the

 

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Company or any of its Subsidiaries, including any such data relating to users of
the Company’s website. Except as set forth in Section 2.30 of the Schedule of
Exceptions, the consummation of the transactions contemplated by this Agreement
will not violate any Company Privacy Obligation, nor require the Company or any
of its Subsidiaries to provide any notice to, or seek any consent from, any
employee, customer, supplier, service provider or other third-party under any
Company Privacy Policy. To the Knowledge of the Company, no Company Privacy
Obligation will impose any restrictions upon Parent’s ability to use, possess,
disclose or transfer such personal data in the manner the Company and its
Subsidiaries have used, possessed, disclosed or transferred such or similar
personal data prior to Closing. Neither the Company nor any of its Subsidiaries
has any notice of any claims that the Company or any of its Subsidiaries have
violated Company Privacy Obligations and no governmental agency is investigating
to determine whether the Company or any of its Subsidiaries has violated any
Company Privacy Obligations. Neither the Company nor any of its Subsidiaries are
aware of any breaches of any Company Privacy Obligations of any of the Company’s
or Subsidiaries’ customers that arise from or are related to any act or omission
of the Company or any of its Subsidiaries.

2.31 Company Products and Company Source Code. To the Knowledge of the Company,
there are no design or other defects or errors in the Company Products that
permit unauthorized access to computers, systems, databases or networks of users
through those Company Products. The Company and its Subsidiaries have
implemented and maintain procedures consistent with standard industry practices
to ensure that the Company Products are free from viruses, disabling codes,
other malicious code or any other code designed or intended to have, or capable
of performing, any of the following functions: (i) disrupting, disabling,
harming, or otherwise impeding in any manner the operation of, or providing
unauthorized access to computers, systems, or networks of users, or
(ii) damaging or destroying any data or file without the user’s consent, and the
Company Products are free from such code.

2.32 Software and Hardware. The Company and its Subsidiaries have used
commercially reasonable efforts consistent with standard industry practices to
fully resolve any defects, errors, or bugs in the software or hardware used in
their business or incorporated into any Company Product that have not been fully
resolved, including any error or omission in the processing of any data or in
the analysis of any database. The Company has made available to Parent a
complete and accurate list of all known defects, errors and bugs in each version
of the Company Products as of the date of this Agreement.

2.33 Export Controls and Economic Sanctions.

(a) The Company, its predecessors, and its current and former Subsidiaries have
at all times been in compliance with all applicable trade laws, including import
and export control laws, trade embargoes, and anti-boycott laws, and, except as
specifically authorized by a Governmental Contract, license exception, or other
permit or applicable authorization of a Governmental Entity, or except as set
forth as an exception on Section 2.33 of the Schedule of Exceptions, have not:

(i) exported, reexported, transferred, or brokered the sale of any goods,
services, technology, or technical data to any destination to which, or
individual for whom, a license or other authorization is required under the U.S.
Export Administration Regulations (the “EAR,” 15 C.F.R. § 730 et seq.), the
International Traffic in Arms Regulations (the “ITAR,” 22 C.F.R. § 120 et seq.),
or the U.S. economic sanctions administered by the Office of Foreign Assets
Control (“OFAC,” 31 C.F.R. Part 500 et seq.);

 

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(ii) exported, reexported, or transferred any goods, services, technology, or
technical data to, on behalf of, or for the benefit of any person or entity
(A) designated as a Specially Designated National by OFAC, or (B) on the Denied
Persons, Entity, or Unverified Lists of the Bureau of Industry and Security, or
(C) on the Debarred List of the Directorate of Defense Trade Controls (if
applicable);

(iii) exported any goods, services, technology, or technical data that have been
or will be used for any purposes associated with nuclear activities, missiles,
chemical or biological weapons, or terrorist activities, or that have been or
will be used, transshipped or diverted contrary to applicable U.S. trade
controls;

(iv) exported, reexported, transferred, or imported any goods, services,
technology, or technical data to or from Cuba, Iran, Libya, North Korea, Syria,
Sudan, or any other country, during a time at which such country and/or its
government was subject to U.S. trade embargoes under OFAC regulations, the EAR,
or any other applicable statute or Executive Order;

(v) manufactured any defense article as defined in the ITAR, including within
the United States and without regard to whether such defense article was
subsequently exported, without being registered and in good standing with the
Directorate of Defense Trade Controls, U.S. Department of State;

(vi) imported any goods except in full compliance with the import and Customs
laws of the United States, including but not limited to Title 19 of the United
States Code, Title 19 of the Code of Federal Regulations, and all other
regulations administered or enforced by the Bureau of Customs and Border
Protection; or

(vii) violated the antiboycott prohibitions, or failed to comply with the
reporting requirements, of the EAR (15 C.F.R. § 760) and the Tax Reform Act of
1976 (26 U.S.C. § 999).

(b) The Company and its Subsidiaries have in place adequate controls to ensure
compliance with any applicable Laws pertaining the export and import of goods,
services, and technology, including without limitation the EAR, the ITAR, the
U.S. economic sanctions administered by OFAC, and the import and Customs laws.
Neither the Company, its predecessors, nor any of its Subsidiaries has undergone
or is undergoing, any audit, review, inspection, investigation, survey or
examination by a Governmental Entity relating to export, import, or other
trade-related activity. To the Knowledge of the Company, there are no threatened
claims, nor presently existing facts or circumstances that would constitute a
reasonable basis for any future claims, with respect to exports, imports, or
other trade-related activity by the Company, its predecessors, or its current or
former Subsidiaries.

(c) No authorization from any Governmental Entity for the transfer to Parent of
any Governmental Contract material to the Company’s business is required, or
such authorization can be obtained expeditiously without material cost.

2.34 Compliance with the Immigration Reform and Control Act. The Company and
each of its Subsidiaries is in compliance with and have not violated the terms
and provisions of applicable Laws relating to immigration, including the
Immigration Reform and Control Act of 1986, and all related regulations
promulgated thereunder (collectively, the “Immigration Laws”). Neither the
Company nor any of its Subsidiaries has been the subject of any inspection or
investigation relating to its compliance with or violation of the Immigration
Laws. With respect to any employee of the Company or any of its

 

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Subsidiaries for whom compliance with the Immigration Laws is required, the
Company and each of its Subsidiaries will deliver to Parent, promptly after the
date of this Agreement, such employee’s Form I-9 (Employment Eligibility
Verification Form) and all other records, documents or other papers which are
retained with the Form I-9 by the Company and its Subsidiaries pursuant to the
Immigration Laws.

2.35 Representations Complete. None of the representations or warranties made by
the Company (as modified by the Schedule of Exceptions) in this Agreement
contains any untrue statement of a material fact, or to the Knowledge of the
Company omits to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT, MIDCO AND SUB.

As of the date of this Agreement and as of the Closing Date Parent, Midco and
Sub hereby represent and warrant to the Company:

3.1 Organization and Standing. Parent is a company duly organized, validly
existing and in good standing under the laws of the Netherlands. Midco and Sub
are each corporations duly organized, validly existing and in good standing
under Delaware Law. Each of Parent, Midco and Sub has the corporate power to own
its properties and to carry on its business as currently being conducted. Each
of Parent, Midco and Sub is duly qualified or licensed to do business and in
good standing as a foreign corporation in each jurisdiction in which it conducts
business, except in those jurisdictions where the failure to be so qualified
would not have a Parent Material Adverse Effect.

3.2 Authority. Each of Parent, Midco and Sub has all requisite corporate power
and authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Parent, Midco and Sub, and no
further action is required on the part of Parent, Midco or Sub to authorize this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Parent, Midco and Sub and constitutes the valid and
binding obligations of Parent, Midco and Sub, enforceable against Parent, Midco
and Sub in accordance with its terms, except as such enforceability may be
subject to the Laws of general application relating to bankruptcy, insolvency
and the relief of debtors and rules of Law governing specific performance,
injunctive relief or other equitable remedies.

3.3 No Conflict. The execution and delivery of this Agreement by Parent, Midco
and Sub does not, and the consummation of the transactions contemplated hereby
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 Conflict under
(i) any provision of the certificate of incorporation and bylaws of Parent,
Midco or Sub, (ii) any Contract to which Parent, Midco or Sub or any of their
respective properties or assets (whether tangible or intangible) is a party,
bound by or, as the case may be, subject or (iii) any Law applicable to Parent,
Midco or Sub or their respective properties or assets (whether tangible or
intangible), except in each case where such Conflict would not be reasonably
expected to have a Parent Material Adverse Effect or will not have a material
adverse affect on the legality, validity or enforceability of this Agreement.

 

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3.4 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, Midco or Sub in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby, except for the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware.

3.5 Interim Operations of Sub. Sub is wholly-owned by Parent, was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement,
has engaged in no other business activities and has conducted its operations
only as contemplated by this Agreement.

ARTICLE IV

CONDUCT PRIOR TO THE EFFECTIVE TIME

4.1 Conduct of Business of the Company and its Subsidiaries. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, the Company agrees to use
commercially reasonable efforts to operate the business of the Company and each
of its Subsidiaries in the usual, regular and ordinary course in substantially
the same manner as heretofore conducted, except as expressly contemplated by
this Agreement or otherwise consented to by Parent in writing (which consent
shall not be unreasonably withheld, delayed or conditioned). In addition,
without limiting the generality of the foregoing, except as expressly set forth
in Section 4.1 of the Schedule of Exceptions, the Company shall not, and the
Company shall ensure that none of its Subsidiaries shall, without the prior
written consent of Parent (which consent shall not be unreasonably withheld,
delayed or conditioned):

(a) make any expenditures or enter into any commitment or transaction not in the
ordinary course of business consistent with past practice that exceeds $25,000
individually or $50,000 in the aggregate;

(b) (i) sell, license or otherwise assign or convey to any Person any rights to
any Company Intellectual Property or enter into any Contract with respect to any
of the foregoing with any Person (other than the sale of certain Patents on the
terms identified on Schedule 4.1), (ii) buy or license any Intellectual Property
or enter into any Contract with respect to the Intellectual Property of any
Person (other than the sale of certain Patents on the terms identified on
Schedule 4.1), (iii) enter into any Contract with respect to the development of
any Intellectual Property with a third-party except in the ordinary course of
business, or (iv) materially change pricing or royalties charged by the Company
to its existing customers or licensees, or the pricing or royalties set or
charged by Persons who have licensed Intellectual Property to the Company or any
of its Subsidiaries, except in the case of clauses (i) and (ii), with respect to
non-exclusive end user licenses of object code in the ordinary course of
business;

(c) enter into or materially amend any Contract pursuant to which any other
party is granted marketing, distribution, development or similar rights of any
type or scope with respect to any products, technology or services of the
Company or any of its Subsidiaries;

(d) enter into any other Contract that would have been required to have been
disclosed on Section 2.14 of the Schedule of Exceptions had such Contract been
entered into prior to the date of this Agreement;

 

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(e) amend or otherwise modify (or agree to do so) any material Contract required
to be set forth or described in the Schedule of Exceptions (or that would have
been required to be set forth or described in the Schedule of Exceptions if it
had existed prior to the date of this Agreement);

(f) commence or settle any litigation, action, suit or proceeding other than
(i) for the routine collection of bills, (ii) in such cases where it in good
faith determines that failure to commence an action, suit or proceeding would
result in the material impairment of a valuable aspect of its business;
(provided that the Company shall consult with Parent prior to the commencing of
such action, suit or proceeding) and (iii) to enforce its rights under this
Agreement;

(g) declare, set aside, or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any shares of capital stock
of the Company or any of its Subsidiaries;

(h) 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 repurchase, redeem or
otherwise acquire, directly or indirectly, any shares of Company Capital Stock
(or options, warrants or other rights exercisable therefor) except in accordance
with this Agreement and the agreements evidencing Company Options, Company
Warrants and shares of Company Restricted Stock outstanding as of the date of
this Agreement;

(i) issue, grant, deliver or sell or authorize or propose the issuance, grant,
delivery or sale of, or purchase or propose the purchase of, any shares of
capital stock of the Company or any of its Subsidiaries or any securities
convertible into such shares, or subscriptions, rights, warrants or options to
acquire, or other Contracts or commitments of any character obligating it to
issue or purchase any such shares or other convertible securities, other than
(i) issuances of Company Capital Stock pursuant to exercises of Company Options
currently outstanding, (ii) issuance of Company Capital Stock pursuant to
exercises of Company Warrants currently outstanding and (iii) the repurchase by
the Company of shares of Company Restricted Stock or Company Capital Stock
issued upon exercise of a Company Option upon the termination of employment or
other relationship triggering a right of repurchase by the Company or of
forfeiture pursuant to the agreement relating to such Company Restricted Stock
or Company Option;

(j) cause or permit any amendments to any Charter Documents or any
organizational documents of any of the Company Subsidiaries, including without
limitation certificates of incorporation, certificates of formation, articles of
organization, bylaws and other documents of the like (other than to amend its
Certificate of Incorporation solely to (i) waive any notice or similar
requirements triggered by the Merger and/or (ii) provide that, notwithstanding
anything to the contrary in the Company’s Certificate of Incorporation, the
Merger consideration will be distributed as set forth in this Agreement and the
indemnity and escrow obligations will be as set forth in the Merger Agreement);

(k) (i) acquire or agree to acquire by merging or consolidating with, or by
purchasing any assets or equity securities of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof, or (ii) otherwise acquire or agree to acquire
any assets other than in the ordinary course of business consistent with past
practice;

(l) sell, lease, license or otherwise dispose of any of its properties or
assets, including the sale of any accounts receivable of the Company or any of
its Subsidiaries, other than (i) the sale or license of Company Products in the
ordinary course of business consistent with past practice or (ii) the sale of
certain Patents on the terms identified on Schedule 4.1;

 

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(m) incur any Indebtedness, guarantee any Indebtedness, issue or sell any debt
securities or guarantee any debt securities of others;

(n) grant any loans to others or purchase debt securities of others or amend the
terms of any outstanding loan or similar agreement other than the advance of
reasonable business expenses incurred in the ordinary course of business
consistent with past practices;

(o) grant any severance or termination pay (in cash or otherwise) to any Company
Personnel, including any officer, except pursuant to a Contract disclosed in
Section 2.14 of the Schedule of Exceptions and except as required by
Section 5.18 of this Agreement;

(p) except as required by Section 5.5 of this Agreement or as otherwise set
forth on Schedule 4.1(p), adopt, amend or modify any Company Employee Plan
(including any underlying Contracts), enter into, materially amend or modify any
employment contract or equity award agreement, pay or agree to pay any bonus or
special remuneration (including payment of Taxes or Tax gross up) to any Company
Personnel or other service provider, or increase the salaries, wage rates, or
other compensation of Company Personnel;

(q) except as required by GAAP, revalue any of its assets (whether tangible or
intangible), including writing down the value of inventory or writing off notes
or accounts receivable, other than in the ordinary course of business consistent
with past practice;

(r) pay, discharge or satisfy, in an amount in excess of $25,000 in any one
case, or $50,000 in the aggregate, any claim, Indebtedness or other Liability,
other than in the ordinary course of business consistent with past practice
other than the repayment of Indebtedness identified on Schedule 4.1;

(s) make or change any material election in respect of Taxes, adopt or change
any accounting method, amend any Tax Return, enter into any closing agreement,
settle any claim or assessment in respect of Taxes, or consent to any extension
or waiver of the limitation period applicable to any claim or assessment in
respect of Taxes;

(t) enter into joint venture, strategic alliance or joint marketing or any
similar arrangement or Contract;

(u) take any action to accelerate the vesting schedule of any of the outstanding
Company Options or shares of Company Restricted Stock other than the
acceleration of the vesting of certain Company Options as set forth on Schedule
4.1;

(v) hire or terminate any Company Personnel (other than the termination of any
Company Personnel for cause), or encourage any Company Personnel to resign from
the Company or any of its Subsidiaries; or

(w) take, or agree in writing or otherwise to take, any of the actions described
in Sections 4.1(a) through 4.1(v).

4.2 No Solicitation. Until the earlier of (a) the Effective Time or (b) the date
of termination of this Agreement pursuant to the provisions of Section 8.1
hereof, the Company shall not, nor shall the Company permit, encourage,
authorize or direct, as applicable, any of its officers, directors, employees,
agents, representatives or controlled Affiliates (any of such Persons a
“Representative”) (or knowingly encourage, authorize or direct any Stockholder
who is

 

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not a Representative), to, directly or indirectly, take any of the following
actions with any party other than Parent and its designees (“Acquisition
Activities”): (i) solicit, encourage, initiate or participate in any inquiry,
negotiations or discussions, or enter into any Contract, in each case with
respect to any offer or proposal to acquire or license all, substantially all,
or a significant portion of the Company’s or its Subsidiaries’ businesses,
assets, technologies or properties, or any amount of capital stock or other
securities of the Company or any of its Subsidiaries (whether or not
outstanding), whether by merger, purchase of assets, equity purchase (including
convertible securities), license, tender offer or otherwise (including any
option or right with respect to any of the foregoing), or enter into any
Contract providing for, or effect any such transaction; (ii) disclose any
information not customarily disclosed in the ordinary course of business to any
Person concerning the Company’s or any of its Subsidiaries’ businesses, assets,
technologies or properties, or afford to any Person access to its properties,
technologies, books or records or other information, not customarily afforded
such access in the ordinary course of business; (iii) assist or cooperate with
any Person to make any proposal to (x) purchase all or any part of the capital
stock or other securities, or all, substantially all or a significant portion of
the businesses, assets, technologies or properties, of the Company or any of its
Subsidiaries, other than inventory of products of the Company and any of its
Subsidiaries in the ordinary course of business, or (y) license all or any
material portion of the Company’s or its Subsidiaries’ assets or technologies
other than non-exclusive licenses entered into in the ordinary course of
business; or (iv) enter into any Contract with any Person providing for the
acquisition of the Company or any of its Subsidiaries, whether by merger,
purchase of all, substantially all or a significant portion of the businesses,
assets, technologies or properties, license, tender offer or otherwise. In the
event that the Company or any of its Subsidiaries or Affiliates shall receive or
become aware of, prior to the Effective Time or the termination of this
Agreement in accordance with Section 8.1 of this Agreement, any offer, proposal
or request, directly or indirectly, of the type referenced in clause (i),
(iii) or (iv) above, or any request for disclosure or access as referenced in
clause (ii) above, the Company shall immediately (A) suspend any discussions
with such offeror or party with regard to such offers, proposals or requests
(including any of the foregoing undertaken by Representatives), and (B) notify
Parent thereof, including information as to the identity of the offeror or the
party making any such offers, proposals or requests, the specific terms of such
offers, proposals or requests and copies of any written offers, proposals or
requests, as the case may be, and such other information related thereto as
Parent may reasonably request. The Company shall be deemed to have breached the
terms of this Section 4.2 if any Representative or Subsidiary shall take any
action, whether in his or its capacity as such or in any other capacity, that is
prohibited by this Section 4.2 or that would be a breach of this Section 4.2 if
taken by the Company directly. The parties hereto agree that irreparable damage
would occur in the event that the provisions of this Section 4.2 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
injunction or injunctions to prevent breaches of the provisions of this
Section 4.2 and to enforce specifically the terms and provisions hereof 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.

ARTICLE V

ADDITIONAL AGREEMENTS

5.1 Stockholder Notice.

(a) Within two (2) hours following the execution of this Agreement, the Company
shall deliver to Parent the duly and validly executed Stockholder Consent.

 

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(b) The Company shall promptly, but in no event later than five (5) Business
Days after the date of this Agreement:

(i) deliver notice to each stockholder who failed to execute the Stockholder
Consent of action taken pursuant to the Stockholder Consent and the availability
of appraisal rights, pursuant to and in accordance with the applicable
provisions of Delaware Law and the Company Charter Documents (the “Stockholder
Notice”); and

(ii) submit to the Stockholders for approval (in a 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 with
respect to which the affected individuals have executed waivers of those
payments or benefits and that may separately or in the aggregate, constitute
Section 280G Payments (which determination shall be made by the Company and
shall be subject to review and reasonable approval by Parent, which approval
shall not be unreasonably withheld, conditioned or delayed), such that such
payments and benefits shall not be deemed to be Section 280G Payments if
approved by the requisite Stockholders, and, prior to the Closing, the Company
shall deliver to Parent evidence reasonably satisfactory to Parent that (A) a
stockholder vote was solicited and adequate disclosure was provided to all
Stockholders in conformance with Section 280G and the regulations promulgated
thereunder and the requisite stockholder approval was obtained with respect to
any Section 280G Payments that were subject to the stockholder vote, or (B) that
the 280G Stockholder approval was not obtained and, as a consequence, that such
payments and/or benefits shall not be made or provided to the extent they would
cause any amounts to constitute Section 280G Payments, pursuant to the waivers
of those payments and/or benefits, which were executed by the affected
individuals prior to the stockholder vote.

(c) The Company shall promptly, but in no event later than five (5) Business
Days after the date of this Agreement, provide such notice to the holders of
Company Options as reasonably required by the terms of the Plan, Company Warrant
or other applicable agreement in connection with the Merger, including any such
notice as may be required to cause each Company Option and Company Warrant (to
the extent not exercised or converted) to terminate as of the Effective Time.

(d) Each of the Stockholder Notice, any materials to be submitted to the
Stockholders in connection with the solicitation of their approval of any
Section 280G Payment or any of the other matters set forth in Section 5.1(b) of
this Agreement and any of the materials to be submitted to the holders of
Company Options pursuant to Section 5.1(c) of this Agreement (collectively, the
“Soliciting Materials”) shall be pursuant to and in accordance with all
applicable provisions of Delaware Law, the Company Charter Documents and the
terms of the Plan, Company Warrant or other applicable agreement, as
appropriate. The Soliciting Materials shall be subject to prior review and
reasonable approval by Parent (which approval shall not be unreasonably
withheld, conditioned or delayed). Anything to the contrary contained herein
notwithstanding, the Company shall not include in the Soliciting Materials any
information with respect to Parent or its Affiliates or associates, the form and
content of which shall not have been consented to in writing by Parent prior to
such inclusion.

(e) The board of directors of the Company shall not revoke or modify its
unanimous approval of this Agreement, the Merger the other transactions
contemplated by this Agreement and any Section 280G Payment, including its
unanimous recommendation in favor of this Agreement, the Merger, the other
transactions contemplated by this Agreement and any Section 280G Payment.

5.2 Access to Information. The Company shall afford Parent and its accountants,
counsel and other representatives, reasonable access during the period from the
date hereof and prior to the Effective Time to (i) all of the Company’s and its
Subsidiaries’

 

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properties, books, Contracts, commitments and records, including the Company’s
and its Subsidiaries’ source code, (ii) other information concerning the
business, properties and personnel (subject to restrictions imposed by
applicable Law) of the Company and its Subsidiaries as Parent may reasonably
request, and (iii) all Company Personnel identified by Parent; provided,
however, that the Company may restrict the foregoing access to the extent that
in its good faith judgment (after consultation with outside legal counsel) any
applicable Law or agreement with a third party requires the Company to restrict
or prohibit access to any such properties or information, (iii) in exercising
access rights under this Section 5.2, Parent shall not be permitted to interfere
unreasonably and Parent shall ensure that none of its Representatives interferes
unreasonably with the conduct of the business of Company. 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. Parent may make inquiries of Persons
having business relationships with the Company or its Subsidiaries (including
suppliers, licensors and customers) and the Company shall cause each of its
Subsidiaries to help facilitate (and shall cooperate fully with Parent in
connection with) such inquiries. Without limiting the generality of any of the
foregoing, the Company shall provide Parent with reasonable access to all
information relating to, and cooperate with Parent in its due diligence
investigation regarding, the FCPA and other anti-corruption matters. No
information or knowledge obtained in any investigation pursuant to this
Section 5.2 shall affect or be deemed to modify any representation or warranty
contained herein, any conditions to the obligations of the parties to consummate
the Merger in accordance with the terms and provisions of this Agreement or any
rights or remedies of the parties hereunder.

5.3 Confidentiality. Each of the parties hereto hereby agrees that this
Agreement, the exhibits and schedules hereto, and any information obtained in
any investigation pursuant to Section 5.2 of this Agreement, or pursuant to the
negotiation and execution of this Agreement or the effectuation of the
transactions contemplated hereby, shall be governed by the terms of the Mutual
Confidentiality Agreement dated as of February 1, 2011 (the “Confidential
Disclosure Agreement”), between the Company and Parent.

5.4 Expenses. Whether or not the Merger is consummated, all fees and expenses
incurred in connection with the Merger, including all legal, accounting,
investment banking, financial advisory, consulting and all other fees and
expenses of third parties (“Third-Party Expenses”) incurred by a party in
connection with the negotiation and effectuation of the terms and conditions of
this Agreement and the transactions contemplated hereby, shall be the obligation
of the respective party incurring such fees and expenses. Any Third-Party
Expenses incurred by the Company or any of its Subsidiaries not paid prior to
the Closing or included in the calculation of the Adjusted Purchase Price may,
at the discretion of Parent, be paid out of the Escrow Fund and, if so paid,
shall be deemed authorized by the Securityholder Representative for purposes of
Article VII. Prior to the Closing, the Company shall pay all Third-Party
Expenses that it has incurred.

5.5 Termination of Certain Company Employee Plans. Effective no later than the
day immediately preceding the Closing Date, the Company shall terminate if
requested by Parent, any Company Employee Plan intended to include a Code
Section 401(k) arrangement (each such plan, a “Company 401(k) Plan”). The
Company shall provide Parent with evidence that all Company 401(k) Plans have
been terminated (effective no later than the day immediately preceding the
Closing Date) and shall take such other actions in furtherance of terminating
any Company 401(k) Plans as Parent may reasonably require.

5.6 Public Disclosure. The Company shall not, and the Company shall ensure that
none of its Subsidiaries shall, issue or make any statement or communication to
any third-party (other than to its respective agents) regarding the terms or
subject matter of this Agreement or the transactions contemplated hereby,
including, if applicable, the termination of this Agreement and the reasons
therefor, without the prior written consent of Parent.

 

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5.7 Consents. The Company shall, and shall cause its Subsidiaries to, use
commercially reasonable efforts to obtain the consents, waivers and approvals,
and to timely provide the notices, under any of the Contracts to which it is a
party that are required by such Contracts and deemed appropriate or necessary by
Parent in connection with the Merger, including all consents, waivers, approvals
and notices set forth in the Schedule of Exceptions, so as to preserve all
rights of, and benefits to, the Company thereunder from and after the Effective
Time.

5.8 FIRPTA Compliance. On the Closing Date, the Company shall deliver to Parent
a properly executed statement in a form reasonably acceptable to Parent for
purposes of satisfying Parent’s obligations under, and in form and substance as
required under, Section 1445 of the Code and Treasury Regulation
Section 1.1445-2(c)(3) (a “FIRPTA Compliance Certificate”).

5.9 Commercially Reasonable Efforts. Each of Parent, Midco, Sub and the Company
shall use commercially reasonable 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 Laws to consummate and
make effective the transactions contemplated hereby.

5.10 Notification of Certain Matters. Each party hereto shall give prompt notice
to the other party hereto (either Parent or the Company, as appropriate) of:
(a) the occurrence or non-occurrence of any event which is reasonably likely to
cause any representation or warranty of such party contained in this Agreement
to be untrue or inaccurate at or prior to the Effective Time in a manner that
would, if not cured, cause the failure of the condition set forth in
Section 6.2(a) or Section 6.3(a), as applicable and (b) any failure of such
party to comply with or satisfy any covenant, condition or agreement to be
complied with or satisfied by it hereunder in a manner that would, if not cured,
cause the failure of the condition set forth in Section 6.2(a) or
Section 6.3(a), as applicable; provided, however, that the delivery of any
notice pursuant to this Section 5.10 shall not (i) limit or otherwise affect any
rights of or remedies available to the party receiving such notice, or
(ii) constitute an acknowledgment or admission of a breach of this Agreement. No
disclosure pursuant to this Section 5.10, however, shall be deemed to amend or
supplement the Schedule of Exceptions or prevent or cure any misrepresentations,
breach of warranty or breach of covenant.

5.11 New Employment Arrangements.

(a) Parent, in its sole discretion, may offer “at will” employment by Parent or
a Subsidiary of Parent (including the Surviving Corporation or its
Subsidiaries) to selected individuals who were Employees of the Company or its
Subsidiaries immediately prior to the Closing Date. Such “at-will” employment
arrangements (each, an “Offer Letter”) will state the terms and conditions,
including the salary of such Employee, which will be determined by Parent, and
supersede any prior employment agreements and other arrangements with such
employee in effect prior to the Closing Date (other than any proprietary rights,
confidentiality, non-competition and assignment of inventions agreements). Each
employee of the Company or its Subsidiaries who (x) executes and delivers his or
her acceptance of an (i) Offer Letter in the United States, (ii) the Parent’s
Invention and Non-Disclosure Agreement, (iii) the Parent’s Non-Competition and
Non-Solicitation Agreement, (iv) Parent’s Code of Business Conduct and Ethics,
(v) Parent’s External Communications Policy, (vi) Parent’s Social Media Policy,
and the (vii) Parent’s Insider Trading Policy (the documents and agreements in
(i) through (vii)

 

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shall be collectively referred to as the “Welcome Packet Documents”) within the
reasonable deadline set by the Offer Letter and becomes an employee of Parent or
a Subsidiary of Parent (including the Surviving Corporation or its
Subsidiaries) or (y) continues as an employee of Parent or a Subsidiary of
Parent (including the Surviving Corporation or its Subsidiaries) as required by
Law outside the United States shall be referred to herein as a “Continuing
Employee.” Notwithstanding anything in this Agreement to the contrary, no
Continuing Employee, and no other Company Employee or Company Personnel, shall
be deemed to be a third-party beneficiary of this Agreement and nothing in this
Agreement shall purport to amend or modify the terms of any employee benefit
plans of Parent or its Subsidiaries or provide any Continuing Employee, Company
Employee or Company Personnel with any right to employment or continued
employment for any specified period of any nature or kind.

(b) At least one (1) Business Day prior to Closing, the Company shall deliver to
Parent validly executed Welcome Packet Documents in substantially the form
attached hereto as Exhibit G each individual listed on Schedule 5.11(b) (the
“Key Employees”) and all other Continuing Employees which shall be effective as
of the Effective Time.

5.12 [Intentionally Omitted]

5.13 [Intentionally Omitted]

5.14 Information Technology Security. Prior to the Closing, the Company will
promptly notify Parent of any material security incident relating to its
information technology systems, including, any incidents involving loss or
potential loss of Intellectual Property or personally identifiable information.
The Company shall cooperate and work with Parent to (i) mitigate any identified
network, operating system, and application security vulnerabilities, (ii) apply
and validate security patches, (iii) deploy and validate security tools, and
(iv) migrate non-supported versions of operating systems to supported versions
with patches.

5.15 Closing Balance Sheet; Spreadsheet. The Company shall prepare, and deliver
to Parent at least three (3) Business Days prior to the Closing Date, (x) an
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
the Effective Time (the “Closing Balance Sheet”), in form and substance
reasonably acceptable to Parent, prepared in accordance with GAAP on a basis
consistent with the basis on which the Financial Statements were prepared,
together with documentation, reasonably satisfactory to Parent, in support of
the amounts set forth in the Closing Balance Sheet; and (y) a spreadsheet in
form and substance reasonably acceptable to the Paying Agent and Parent, which
spreadsheet shall be certified by the Chief Executive Officer of the Company as
true, complete, correct and in accordance with this Agreement and the Company
Charter Documents as of the Closing, and which separately lists (the spreadsheet
containing the information set forth, and otherwise in form and substance as
referred to, in this Section 5.15 being referred to as the “Spreadsheet”):

(a) the Closing Indebtedness Amount, itemized and detailed to Parent’s
reasonable satisfaction, together with all necessary wire transfer information
for each Person to whom the Closing Indebtedness Amount is owed;

(b) all unpaid Third-Party Expenses incurred by the Company and its
Subsidiaries, itemized and detailed to Parent’s reasonable satisfaction,
together with all necessary wire transfer information for each Person to whom
such Third-Party Expenses are owed;

(c) each of: (i) the Closing Indebtedness Amount, (ii) the Net Working Capital
Amount; (iii) the Working Capital Adjustment Amount, (iv) the Cash and Cash
Equivalents, (v)

 

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the Cash Adjustment Amount, (vi) the Adjusted Purchase Price, (vii) the Total
Fully Diluted Shares, (viii) the Per Share Purchase Price, (ix) the Escrow
Allocation Schedule, (x) the aggregate amount of Third-Party Expenses incurred
by the Company and its Subsidiaries; and (xi) the aggregate amount of unpaid
Third-Party Expenses incurred by the Company and its Subsidiaries;

(d) with respect to each holder of Company Capital Stock, Vested Options and
Company Warrants as of immediately prior to the Effective Time (after giving
effect to the exercise of Vested Options and Company Warrants at or prior to the
Effective Time): (i) the name and address of such holder; (ii) the number, class
and series of shares of Company Capital Stock held by such holder immediately
prior to the Effective Time (broken out on a certificate by certificate basis,
including the respective certificate numbers); (iii) the number of shares of
Restricted Company Stock held by such holder immediately prior to the Effective
Time, and the vesting schedule of each such share of Restricted Company Stock;
(iv) the amount of cash payable to each holder pursuant to Section 1.6 of this
Agreement; (v) the amount of cash to be contributed to the Escrow Fund on behalf
of each holder pursuant to Section 7.4 of this Agreement; and (vii) whether such
holder is subject to withholding;

(e) with respect to the Company Bonus Amounts, (i) the amount of cash payable to
each participant; (ii) the amount of cash to be contributed to the Escrow Fund
on behalf of each participant; and (vii) whether each such participant is
subject to withholding.

5.16 Consideration Adjustment.

(a) Not later than 5:00 p.m. local time at Parent’s corporate headquarters on
the seventy-fifth (75th) calendar day following the Closing Date, Parent shall
deliver to the Securityholder Representative a statement (the “Parent
Statement”), certified as true and correct by a representative of Parent,
setting forth in reasonable detail and accompanied by reasonably detailed
back-up documentation, as of the Closing Date, each of (i) the Net Working
Capital Amount, the (ii) the calculation of the Working Capital Adjustment
Amount (the “Proposed Final WC Adjustment Amount”), (iii) the amount, if any, by
which the Working Capital Adjustment Amount determined by the Company as of the
Closing Date differs from the Proposed Final WC Adjustment Amount, (iv) the Cash
and Cash Equivalents, (v) the calculation of the Cash Adjustment Amount (the
“Proposed Final Cash Adjustment Amount”) and (vi) the amount, if any, by which
the Cash Adjustment Amount determined by the Company as of the Closing Date
differs from the Proposed Final Cash Adjustment Amount. Upon reasonable request
and with reasonable advance notice, Parent will provide the Securityholder
Representative and its accountants reasonable access (including electronic
access, to the extent available) to the relevant historical financial records of
the Surviving Corporation and reasonable access to the individuals responsible
for preparing the Parent Statement throughout the periods during which the
Parent Statement is being evaluated by the Securityholder Representative. If the
Securityholder Representative disagrees with the determination of the Parent
Statement, the Securityholder Representative shall notify Parent of such
disagreement by 5:00 p.m. local time at Parent’s corporate headquarters on the
thirtieth (30th) calendar day following delivery of the Parent Statement, which
written notice shall set forth any such disagreement in reasonable detail
(“Disagreement Notice”). If the Securityholder Representative fails to deliver a
Disagreement Notice by such time, the Securityholder Representative and the
Company Securityholders shall be deemed to have accepted the Parent Statement as
delivered by Parent, the Proposed Final WC Adjustment Amount shall become the
Final WC Adjustment Amount and the Proposed Final Cash Adjustment Amount shall
become the Final Cash Adjustment Amount. Matters included in the calculations in
the Parent Statement to which the Securityholder Representative does not object
in the Disagreement Notice shall be deemed accepted by the Securityholder
Representative and the Company Securityholders and shall not be subject to
further dispute or review by the Securityholder Representative or any Company
Securityholders;

 

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provided that the Proposed Final WC Adjustment Amount and the Proposed Final
Cash Adjustment Amount shall not be deemed accepted if a Disagreement Notice is
delivered with respect to such calculation. Parent and the Securityholder
Representative shall negotiate in good faith to resolve any such disagreement,
and any resolution agreed to in writing by Parent and the Securityholder
Representative shall be final and binding upon Parent, the Securityholder
Representative and all the Company Securityholders. If the Proposed Final WC
Adjustment Amount has not previously become the Final WC Adjustment Amount, and
Parent and the Securityholder Representative agree in writing to the calculation
of the Working Capital Adjustment Amount, then such agreed upon calculation
shall become the Final WC Adjustment Amount. If the Proposed Final Cash
Adjustment Amount has not previously become the Final Cash Adjustment Amount,
and Parent and the Securityholder Representative agree in writing to the
calculation of the Cash Adjustment Amount, then such agreed upon calculation
shall become the Final Cash Adjustment Amount. The date of any express or deemed
acceptance of the Parent Statement (including the Final WC Adjustment Amount and
the Final Cash Adjustment Amount) or the final resolution of all disputes in
regard thereto pursuant to this Section 5.16 shall be the “Determination Date.”

(b) If Parent and the Securityholder Representative are unable to resolve any
disagreement as contemplated by this Section 5.16 by 5:00 p.m. local time at
Parent’s corporate headquarters on the thirtieth (30th) calendar day following
delivery by the Securityholder Representative of a Disagreement Notice, Parent
and the Securityholder Representative shall jointly select a mutually acceptable
third-party firm with expertise in accounting matters, the retention of which
will not give rise to present or potential future auditor independence problems
for Parent or any of its affiliates, as determined by the reasonable discretion
of Parent, to resolve such disagreement (the firm so selected shall be referred
to herein as the “Accounting Arbitrator”). The parties shall instruct the
Accounting Arbitrator to consider only those items and amounts set forth in the
Parent Statement as to which the Securityholder Representative has disagreed
pursuant to a Disagreement Notice and Parent and the Securityholder
Representative have not resolved their disagreement, and the resolution of such
disagreement shall be (i) made in accordance with GAAP consistently applied on a
basis consistent with the Company’s past practices (to the extent that such past
practices were in accordance with GAAP) and (ii) with respect to any specific
disagreement, no greater than the higher amount calculated by Parent or the
Securityholder Representative, as the case may be, and no lower than the lower
amount calculated by Parent or the Securityholder Representative as the case may
be. Parent and the Securityholder Representative shall use commercially
reasonable efforts to cause the Accounting Arbitrator to deliver to Parent and
the Securityholder Representative, as promptly as practicable, a written report
setting forth the resolution of any such disagreement determined in accordance
with the terms of this Agreement, including a calculation of the Working Capital
Adjustment Amount as of the Closing Date and the Cash Adjustment Amount as of
the Closing Date. Such report shall be final and binding upon the parties and
the calculation of the Working Capital Adjustment Amount and the Cash Adjustment
Amount provided by the Accounting Arbitrator shall become the Final WC
Adjustment Amount and Final Cash Adjustment Amount, respectively. The fees,
expenses and costs of the Accounting Arbitrator shall be borne by the party
whose positions on the issues submitted to the Accounting Arbitrator varies the
greatest amount from the amounts as finally determined by the Accounting
Arbitrator, in the aggregate, hereunder with respect to such issues. If it is
determined that such fees, expenses and costs are owned by the Company
Securityholders, then such fees, expenses and costs shall be deemed, for all
purposes of this Agreement, to be additional Third-Party Expenses incurred by
the Company and its Subsidiaries.

(c) Payment of Adjustment Amount.

(i) If the Post-Closing Purchase Price Adjustment is less than the Working
Capital Escrow Portion of the Escrow Fund but greater than zero (0), then Parent
and the Securityholder Representative shall issue joint instructions to the
Escrow Agent to (A) transfer to Parent the amount of

 

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the Post-Closing Purchase Price Adjustment and (B) transfer to the Paying Agent
from the Working Capital Escrow Portion of the Escrow Fund an amount in cash
equal to the difference between the Post-Closing Purchase Price Adjustment and
the Working Capital Escrow Portion of the Escrow Fund, and Parent shall cause
the Paying Agent to distribute such cash to the Company Securityholders based on
their respective Pro Rata Share.

(ii) If the Post-Closing Purchase Price Adjustment is greater than the Working
Capital Escrow Portion of the Escrow Fund (such amount, a “Working Capital
Escrow Portion Shortfall”), then Parent and the Securityholder Representative
shall issue joint instructions to the Escrow Agent to (A) transfer to Parent an
amount in cash equal to the Working Capital Escrow Portion of the Escrow Fund
and (B) transfer to Parent an amount in cash equal to the Working Capital Escrow
Portion Shortfall.

(iii) If the Post-Closing Purchase Price Adjustment is equal to zero (0), then
Parent and the Securityholder Representative shall issue joint instructions to
the Escrow Agent to transfer to the Paying Agent the Working Capital Escrow
Portion of the Escrow Fund and Parent shall cause the Paying Agent to distribute
the Working Capital Escrow Portion of the Escrow Fund to the Company
Securityholders based on their respective Pro Rata Share.

(iv) Any amounts payable under Sections 5.16(c)(i), 5.16(c)(ii), or 5.16(c)(iii)
shall be paid no later than fifteen (15) Business Days after the Determination
Date.

(v) Amounts paid under this Section 5.16(c) shall be treated as an adjustment to
the purchase price for Tax purposes.

5.17 Resignation of Officers and Directors. The Company shall cooperate with
Parent to effect the replacement of all the officers and directors of the
Company and each of its Subsidiaries with directors and officers appointed by
Parent, to the extent possible under local laws, as of the Effective Time. The
Company shall obtain the written resignations of all officers and directors of
the Company and each of its Subsidiaries effective as of the date of their
effective replacement by officers and directors appointed by Parent.

5.18 Severance Agreement and Release. Prior to the Closing Date, the Company and
its Subsidiaries shall terminate the employment of those Employees who are not
Continuing Employees; provided, however, that any Employee who either rejects an
Offer Letter or fails to timely accept an Offer Letter shall be deemed to have
resigned their employment from the Company and its Subsidiaries effective upon
the date upon which such Offer Letter was to be accepted. The Company and its
Subsidiaries shall use commercially reasonable efforts to obtain from such
Employees a severance agreement and release dated the date of such employee’s
termination of employment with the Company or such Subsidiary in form and
substance reasonably satisfactory to Parent (which shall include a general
release of any claims in favor of Parent and related persons and entities and
shall include, without limitation, a release with respect to any claim arising
out of the termination of such Employee’s Unvested Options) (a “Severance
Agreement and Release”); provided, however, that the Company and its
Subsidiaries shall not pay any severance to any Employee who is terminated and
does not sign a Severance Agreement and Release (except as may otherwise be
required by Law or by the express terms of agreements identified in the
Schedule of Exceptions as containing severance arrangements).

5.19 Destruction of Confidential Information. No later than two (2) Business
Days after the date of this Agreement, the

 

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Company shall distribute a written notice, in form and substance acceptable to
Parent, to all third parties who received confidential information relating to
the Company and its Subsidiaries in connection with discussions about any
potential Acquisition Activity instructing such parties to: (a) promptly return
to the Company or destroy all copies of written confidential information
relating to the Company and its Subsidiaries (including any confidential
information stored on a computer, word processor or similar device) furnished to
such third parties by or on behalf of the Company or any of its Subsidiaries in
their possession or custody or in the possession or custody of their respective
representatives, officers, directors, and employees; and (b) confirm in writing
that all such confidential information has been either returned or destroyed.
Upon receipt of all such confirmations, the Company shall provide notice to
Parent that all such confirmations have been received.

5.20 D&O Tail Insurance; Indemnification. Prior to the Closing, the Company
shall purchase an extended reporting period endorsement under the Company’s
existing directors’ and officers’ liability insurance coverage (the “D&O Tail
Policy”) for the Company’s directors and officers in a form mutually acceptable
to the Company and Parent, which shall provide such directors and officers with
coverage for six years following the Effective Time of not less than the
existing coverage under, and have other terms not materially less favorable to,
the insured persons than the directors’ and officers’ liability insurance
coverage presently maintained by the Company. For a period of six (6) years
after the Effective Time, the Surviving Corporation shall not amend, terminate
or repeal any provision in the Surviving Corporation’s Charter Documents
relating to the exculpation or indemnification of former officers and directors
of the Company (unless required by applicable Law) in a manner that would
adversely affect the rights thereunder of individuals who, at or prior to the
Effective Time, were officers or directors of the Company, unless such
amendment, termination or repeal is required by applicable Law after the
Effective Time, it being the intent of the parties hereto that the officers and
directors of the Company prior to the Closing shall continue to be entitled to
such exculpation and indemnification to the fullest extent permitted under
applicable Law. For the avoidance of doubt, nothing in this Section 5.20 shall
prevent the Surviving Corporation from combining with any other entity
(including Parent), or the taking of any other action by Parent or the Surviving
Corporation that may result in the amendment, repeal or modification of the
Surviving Corporation’s Charter Documents, or any provision thereof relating to
the exculpation or indemnification of former officers and directors, as long as
Parent provides, or causes the Surviving Corporation to provide, the officers
and directors of the Company prior to the Closing with rights that in the
reasonable good faith judgment of Parent are no less favorable than the rights
afforded, as of the Effective Time, to such individuals in the Surviving
Corporation’s Charter Documents.

5.21 Changes to Company Capital Structure. The Company shall notify Parent in
writing promptly upon becoming aware of any changes arising after the date of
this Agreement in the holders of Company Capital Stock, the number and class or
series of shares of Company Capital Stock held by any such holder, and any
change in the domicile addresses of any such holder.

5.22 Tax Matters.

(a) Parent shall prepare, or cause to be prepared, and file, or cause to be
filed, on a timely basis, and on a basis reasonably consistent with past
practice, all Tax Returns with respect to the Company for taxable periods (or
portions thereof) ending on or prior to the Closing Date and required to be
filed thereafter (the “Prior Period Returns”), provided that Parent shall not be
required to take a position on a Tax Return that is not permitted by law or that
would require a reserve to be recorded on a financial statement of the Company.
Parent shall provide a draft copy of such Prior Period Returns to the
Securityholder Representative for its review at least twenty (20) Business Days
prior to the due date

 

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thereof. The Securityholder Representative shall provide its comments to Parent
at least ten (10) Business Days prior to the due date of such returns and Parent
shall make all changes to such Prior Period Returns reasonably requested by the
Securityholder Representative if such changes (i) are reasonably consistent with
past practice or (ii) do not adversely affect Parent.

(b) All transfer, documentary, sales, use, stamp, registration and all other
Taxes, fees and duties, if any, incurred in connection with the transactions
contemplated by this Agreement, and all expenses associated therewith, will be
borne and paid 50% by Parent and 50% by the Company Securityholders. Parent will
prepare and file all necessary Tax Returns and other documentation with respect
to all such transfer, documentary, sales, use, stamp, registration and other
Taxes and fees, and, if required by applicable Law, the other parties will join
in the execution of any such Tax Returns and other documentation.

(c) For purposes of this Agreement, (i) in the case of any gross receipts,
income, sales, use, payroll, withholding, or similar Taxes that are payable with
respect to a period that includes but does not end on the Closing Date (a
“Straddle Period”), the portion of such Taxes allocable to the period ending on
the Closing Date shall be determined on the basis of a deemed closing at the end
of the Closing Date of the books and records of the Company; and (ii) in the
case of any Taxes other than those described in clause (i) that are payable with
respect to a Straddle Period, the portion of such Taxes allocable to the period
ending on the Closing Date shall be equal to the product of (A) all such Taxes
and (B) the percentage, expressed as a fraction, the numerator of which is the
number of days in the portion of such period ending on and including the Closing
Date, and the denominator of which is the number of days in the entire Straddle
Period.

ARTICLE VI

CONDITIONS TO THE MERGER

6.1 Conditions to the Obligations of Each Party to Effect the Merger. The
respective obligations of the Company, Parent, Midco and Sub to effect the
Merger shall be subject to the satisfaction, at or prior to the Closing, of the
following conditions (it being understood that by proceeding with the Closing,
the Company, Parent, Midco and Sub will be deemed to have waived any of such
conditions that remain unsatisfied):

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

(b) Stockholder Consent. The Stockholder Consent shall have been obtained and
shall not have been withdrawn, rescinded or revoked.

(c) Escrow Agreement. The Escrow Agent shall have executed and delivered to
Parent, the Securityholder Representative, the Escrow Agreement, or another
mutually-agreeable escrow arrangement shall have been established by the
parties.

 

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6.2 Additional Conditions to the Obligations of Parent, Midco and Sub. The
obligation of Parent, Midco and Sub to effect the Merger also shall be subject
to the satisfaction at or prior to the Closing of each of the following
conditions, any of which may be waived, in writing, exclusively by Parent (it
being understood that by proceeding with the Closing, Parent, Midco and Sub will
be deemed to have waived any of such conditions that remain unsatisfied):

(a) Representations, Warranties and Covenants. (i) The representations and
warranties of the Company contained in this Agreement (A) shall have been true
and correct on and as of the date of this Agreement and (B) shall be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if made on and as of the Closing Date (except for those
representations and warranties which address matters only as of a particular
date, which shall have been true and correct in all material respects as of such
particular date) (it being understood that, for purposes of determining the
accuracy of representations and warranties on and as of the Closing Date, all
“Material Adverse Effect” qualifications and other qualifications based on the
word “material” or similar phrases limiting the scope of such representations
and warranties shall be disregarded; and (ii) the Company shall have performed
and complied in all respects with all covenants and obligations under this
Agreement required to be performed and complied with by the Company prior to the
Closing.

(b) Governmental Approvals. All filings with and approvals of any Governmental
Entity required to be made or obtained by the Company in connection with the
Merger and the other transactions contemplated by this Agreement shall have been
made or obtained and shall be in full force and effect.

(c) No Orders. No temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction or other
legal restraint or prohibition (i) prohibiting Parent’s ownership or operation
of any portion of the business of the Company or any of its Subsidiaries, or
(ii) compelling Parent, Midco, Sub or the Company to dispose of or hold separate
all or any material portion of the business or assets of Parent, the Company or
any of their respective Subsidiaries or Affiliates as a result of the Merger; or
(iii) imposing any other antitrust restraint as a result of the Merger, shall be
in effect (including as a condition to any Governmental approval referred to in
Section 6.2(b) hereof), nor shall any action, suit, claim or proceeding brought
by an administrative agency or commission or other Governmental Entity seeking
any of the foregoing be threatened or pending.

(d) Governmental Litigation. There shall be no action, suit, claim or proceeding
of any nature pending by a U.S. federal or state Governmental Entity, against
Parent, Midco, Sub or the Company, their respective Subsidiaries or properties
or any of their respective officers or directors, that (i) is likely to result
in a judgment in favor of such Governmental Entity and that challenges or seeks
to restrain or prohibit the consummation of the Merger or (ii) relates to the
Merger and seeks to obtain from Parent any damages or other relief that, if
awarded, would have a Parent Material Adverse Effect.

(e) Mandatory Third-Party Consents. The Company and its Subsidiaries shall have
obtained all necessary consents to assignment, waivers and approvals, and timely
provided all notifications, with respect to the transactions contemplated by
this Agreement under those Contracts listed on Schedule 6.2(e).

(f) [Intentionally Omitted]

(g) [Intentionally Omitted]

(h) Resignation of Officers and Directors. Parent shall have received a written
resignation from each of the officers and directors of the Company and each of
its Subsidiaries effective as of the Closing.

 

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(i) Legal Opinion. Parent shall have received a legal opinion from outside legal
counsel to the Company, substantially in the form attached hereto as Exhibit H.

(j) No Material Adverse Effect. There shall not have occurred any Company
Material Adverse Effect that has not been cured.

(k) Termination of 401(k) Plans and Severance Plans. All applicable Company
401(k) Plans and Severance Plans shall have been terminated in accordance with
Section 5.5, and Parent shall have received from the Company evidence
satisfactory to Parent to that effect.

(l) Certificate of the Company. Parent shall have received a certificate,
validly executed by the Chief Executive Officer of the Company for and on its
behalf, to the effect that, as of the Closing, (i) the condition to the
obligations of Parent, Midco and Sub set forth in Section 6.2 of this Agreement
has been duly satisfied.

(m) Certificate of Secretary of Company. Parent shall have received a
certificate, validly executed by the Secretary of the Company, certifying as to
(i) the terms and effectiveness of the Company Charter Documents, (ii) the valid
adoption of resolutions of the board of directors of the Company (whereby the
Merger and the other transactions contemplated by this Agreement were
unanimously approved by the Board of Directors of the Company), (iii) the
Stockholder Consent by the Stockholders and the approval or disapproval of any
Section 280G Payments, and (iv) the incumbency of the executive officers of the
Company.

(n) Certificate of Good Standing. Parent shall have received a certificate of
good standing for the Company and each of its Subsidiaries from each
jurisdiction in which such entity is formed or is required to be qualified as a
foreign corporation, dated within twenty (20) Business Days prior to the Closing
Date.

(o) FIRPTA Certificate. Parent shall have received the FIRPTA Compliance
Certificate, validly executed by a duly authorized officer of the Company under
penalty of perjury.

(p) Spreadsheet. Parent shall have received the Spreadsheet at least three
(3) Business Days prior to the Closing Date, which shall have been certified as
true, complete, correct and in accordance with this Agreement and the Company
Charter Documents as of the Closing by the Chief Executive Officer of the
Company.

(q) Key Employee Offer Letters. Each of the Key Employees shall have executed
and delivered to Parent the Welcome Packet Documents.

(r) New Employment Arrangements. The following employees of the Company and its
Subsidiaries shall be Closing Employees:

(i) one hundred percent (100%) of the Key Employees; and

(ii) at least eighty percent (80%) of the employees of the Company or its
Subsidiaries listed on Schedule 6.2(r)(ii) who have received the Welcome Packet
Documents.

(s) Terminated Employees. The Company and its Subsidiaries shall have terminated
the employment of those Employees who are not Continuing Employees, effective at
least one day prior to the Closing.

 

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(t) Escrow Agreement. The Securityholder Representative shall have executed and
delivered to Parent the Escrow Agreement, and the Escrow Agreement shall be in
full force and effect.

(u) Unanimous Board Approval. The board of directors of the Company shall have
unanimously approved the Merger and the other transactions contemplated by this
Agreement.

(v) Payoff Letters. The Company shall have provided to Parent Payoff Letters, in
form and substance reasonably satisfactory to Parent, from each party that is
owed Third-Party Expenses incurred by the Company or any of its Subsidiaries and
Indebtedness, including, without limitation, a Payoff Letter evidencing the
repayment of all amounts outstanding under that certain Loan and Security
Agreement, by and between the Company and Comerica Bank, dated as of February 8,
2008, as amended, and evidencing the termination of such agreement.

(w) Letter of Credit. The Company shall have delivered to Comerica Bank cash
sufficient to collateralize that certain Bank of America Merchant Services
Letter of Credit with Comerica Bank.

(x) Joinder, Release and Waiver. Each of the Company Securityholders listed on
Schedule 6.2(x) shall have duly executed and delivered to Parent a joinder,
release and waiver in the form attached hereto as Exhibit B to the extent such
Persons have not executed the Stockholder Consent.

(y) D&O Tail Policy. The Company shall have purchased the D&O Tail Policy in
accordance with Section 5.20 of this Agreement and provided Parent with evidence
reasonably satisfactory to Parent to that effect.

(z) Certificate of Merger. The Company shall have duly executed and delivered
the Certificate of Merger to Parent.

(aa) Restricted Share Award Agreement. Each of the Major Common Holders shall
have executed their applicable Restricted Share Award Agreement and the power of
attorney attached as an exhibit thereto.

6.3 Additional Conditions to the Obligations of the Company. The obligation of
the Company to effect the Merger also shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by the Company (it being understood that by
proceeding with the Closing, the Company will be deemed to have waived any of
such conditions that remain unsatisfied):

(a) Representations and Warranties. The representations and warranties of
Parent, Midco and Sub contained in this Agreement (i) shall have been true and
correct on and as of the date of this Agreement, (ii) shall be true and correct
in all material respects on and as of the Closing Date as if made on and as of
the Closing Date (except for those representations and warranties which address
matters only as of a particular date, which shall have been true and correct in
all material respects as of such particular date) (it being understood that, for
purposes of determining the accuracy of such representations and warranties on
and as of the Closing Date, all “Material Adverse Effect” qualifications and
other qualifications based on the word “material” or similar phrases limiting
the scope of such representations and warranties shall be disregarded) and
(iii) Parent, Midco and Sub shall have performed and complied in all respects
with all covenants and obligations under this Agreement required to be performed
and complied with by Parent, Midco or Sub prior to the Closing.

 

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(b) Certificate of Parent. The Company shall have received a certificate,
validly executed on behalf of Parent by a duly authorized officer of Parent to
the effect that, as of the Closing, the conditions to the obligations of the
Company set forth in Section 6.3(a) have been satisfied.

(c) Governmental Litigation. There shall be no action, suit, claim or proceeding
of any nature commenced, pending, or overtly threatened by a U.S. federal or
state Governmental Entity, against Parent, Midco, Sub or the Company, their
respective Subsidiaries or properties or any of their respective officers or
directors, that (i) is likely to result in a judgment in favor of such
Governmental Entity and that challenges or seeks to restrain or prohibit the
consummation of the Merger or (ii) relates to the Merger and seeks to obtain
from Company any damages or other relief that, if awarded, would have a Company
Material Adverse Effect.

ARTICLE VII

INDEMNIFICATION AND ESCROW

7.1 Survival of Representations and Warranties.

(a) By the Company. The representations and warranties of the Company contained
in this Agreement, or in any certificate or instrument delivered pursuant to
this Agreement, shall survive for a period of one (1) year following the Closing
Date (the day after such one (1) year anniversary of the Closing Date, the
“Survival Date”); provided, however, that (i) the Indefinite
Representations shall survive indefinitely, (ii) the Statute of Limitations
Representations shall survive until ninety (90) days after the expiration of the
applicable statute of limitations and (ii) the Intellectual Property
Representations shall survive for a period of two (2) years following the
Closing Date. Notwithstanding the foregoing, if an indemnification claim is
properly asserted in writing pursuant to Section 7.3 prior to the applicable
expiration date (as provided in this Section 7.1(a)) of a representation or
warranty that is the basis for such claim, then such representation or warranty
shall survive beyond such expiration date until, but only for the purpose of,
the resolution of such claim. It is the express intent of the parties that, if
the applicable survival period for an item as contemplated by this
Section 7.1(a) is shorter than the statute of limitations that would otherwise
have been applicable to such item, then, by contract, the applicable statute of
limitations with respect to such item shall be reduced to the shortened survival
period contemplated hereby. The parties further acknowledge that the time
periods set forth in this Section 7.1(a) for the assertion of claims under this
Agreement are the result of arms’-length negotiation among the parties and that
they intend for the time periods to be enforced as agreed by the parties.

(b) By Parent and Sub. The representations and warranties of Parent and Sub
contained in this Agreement, or in any certificate or other instrument delivered
pursuant to this Agreement, shall terminate at the Closing.

(c) Fraud; Intentional Misrepresentation; Willful Breach. Notwithstanding
anything to the contrary contained in Section 7.1(a) of this Agreement, the
limitations set forth in Section 7.1(a) of this Agreement shall not apply in the
event of any fraud, intentional misrepresentation or willful breach (whether on
the part of any Company Securityholder against whom liability is being asserted,
on the part of the Company or any of its Subsidiaries or on the part of any
Representative of the Company or any of its Subsidiaries). Notwithstanding
anything to the contrary contained in Section 7.1(b) of this Agreement, the
limitations set forth in Section 7.1(b) of this Agreement shall not apply in the
event of any fraud, intentional misrepresentation or willful breach (whether on
the part of Parent or Sub, or on the part of any Representative of Parent or
Sub).

 

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(d) Schedule of Exceptions. For purposes of this Agreement, each statement or
other item of information set forth in the Schedule of Exceptions shall be
deemed to be a representation and warranty made by the Company in this
Agreement.

7.2 Indemnification by the Company Securityholders.

(a) Indemnification. Subject to the terms and conditions of this Article VII,
from and after the Closing, the Company Securityholders shall severally and not
jointly (based on such Company Securityholder’s Pro Rata Share of each Loss)
indemnify Parent and its officers, directors and Affiliates, including the
Surviving Corporation (each, an “Indemnified Party” and collectively, the
“Indemnified Parties”) for Losses incurred by such Indemnified Parties, or any
of them (including the Surviving Corporation), as a result of:

(i) any breach of or inaccuracy in a representation or warranty of the Company
contained in this Agreement as of the date of this Agreement or as of the
Closing Date as if made on and as of the Closing Date (except for those
representations and warranties which address matters only as of a particular
date, which representations and warranties shall be made only as of such
particular date), or in any certificate or other instruments delivered pursuant
to this Agreement;

(ii) any failure by the Company to perform or comply with any covenant contained
in this Agreement prior to the Effective Time;

(iii) regardless of any disclosure made or information contained in the Schedule
of Exceptions, any inaccuracy in any information set forth in the Spreadsheet
(including any failure to properly calculate any of the amounts set forth
therein) or breach of or inaccuracy in any representation, warranty or
certification regarding the Spreadsheet contained in the certificate delivered
to Parent pursuant to this Agreement;

(iv) any Dissenting Share Payments;

(v) any Working Capital Escrow Portion Shortfall;

(vi) any amounts reasonably incurred by an Indemnified Party in the defense of a
Third-Party Claim that, if adversely determined, would give rise to a right of
recovery for Losses, regardless of the outcome of such Third Party Claim; or

(vii) any Taxes (A) imposed on the Company or any of its Subsidiaries for any
Tax period (or portion thereof) ending on or before the Closing Date (determined
in the manner set forth in Section 5.22(c)), except to the extent such Taxes
were taken into account in the Net Working Capital Amount, and (B) together with
applicable reasonable expenses, for which the Company Securityholders are
responsible pursuant to Section 5.22(b).

(b) Exclusive Remedy.

(i) This Article VII shall constitute the exclusive remedy for recovery of
Losses by the Indemnified Parties as a result of breaches of representations and
warranties or covenants by the Company contained in this Agreement, or in any
certificate or other instrument delivered pursuant to this Agreement. Recovery
against the Indemnity Escrow Amount of the Escrow Fund shall be the Indemnified
Parties’ sole and exclusive remedy for any claim for indemnification under or
pursuant to Section 7.2(a) of this Agreement, except for (A) any claims for
indemnification under or pursuant to

 

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clauses (ii) through 7.2(a)(v), clause 7.2(a)(vi) (to the extent such claims
relate to Intellectual Property Representations), and clause 7.2(a)(vii) of
Section 7.2(a) of this Agreement, inclusive; (B) any claims for indemnification
arising from any breach of or inaccuracy in a Special Representation; or (C) any
claims for indemnification arising from any breach of or inaccuracy in the
Intellectual Property Representations; provided, however, that to the extent
that Parent or any other Indemnified Party is entitled to receive any
indemnification for the matters described in clause (A), clause (B) or clause
(C) of this sentence, Parent or such other Indemnified Party shall be required
to first exhaust the Indemnity Escrow Amount of the Escrow Fund as their sole
source of recovery prior to pursuing any other remedies or sources of recovery,
to the extent available under this Agreement. Notwithstanding anything herein to
the contrary, nothing herein shall limit the rights or remedies of Parent or any
other Indemnified Party against the Company or a Company Securityholder (A) with
respect to fraud, intentional misrepresentation or willful breach by the Company
or such Company Securityholder, as applicable or (B) with respect to specific
performance, injunctive and other equitable relief.

(ii) The parties acknowledge that (A) except as expressly provided in Article II
of this Agreement, the Company, the Company Securityholders or any director,
officer, employee, affiliate or advisor of the Company has not made and is not
making any representations or warranties whatsoever regarding the subject matter
of this Agreement, express or implied, and (B) except as expressly provided in
Article II of this Agreement, Parent is not relying and has not relied on, any
representations or warranties whatsoever regarding the subject matter of this
Agreement.

(iii) The parties acknowledge that (A) except as expressly provided in Article
III of this Agreement, Parent, Midco, Sub or any director, officer, employee,
affiliate or advisor of the Parent, Midco or Sub has not made and is not making
any representations or warranties whatsoever regarding the subject matter of
this Agreement, express or implied, and (B) except as expressly provided in
Article III of this Agreement, the Company is not relying and has not relied on,
any representations or warranties whatsoever regarding the subject matter of
this Agreement.

(c) Limitations of Liability.

(i) The maximum amount that the Indemnified Parties may recover from each
Company Securityholder for claims for indemnification under or pursuant to
clauses (i) of Section 7.2(a) (other than claims for indemnification arising
from any breach of or inaccuracy in a Special Representation or the Intellectual
Property Representations) and (vi) of Section 7.2(a) (other than Losses related
to Intellectual Property Representations) shall be limited to such Company
Securityholder’s Pro Rata Share of the Indemnity Escrow Amount of the Escrow
Fund and the sole source of such recovery shall be the Indemnity Escrow Amount
of the Escrow Fund. The maximum amount that the Indemnified Parties may recover
from each Company Securityholder for (A) claims for indemnification under or
pursuant to clauses (ii) through (v), and clause (vii) of Section 7.2(a) of this
Agreement, inclusive; or (B) any claims for indemnification arising from any
breach of or inaccuracy in a Special Representation shall be limited to such
Company Securityholder’s Pro Rata Share of the Adjusted Purchase Price
(including any amounts withheld and deposited into the Escrow Fund on such
Company Securityholder’s behalf). The maximum amount that the Indemnified
Parties may recover from each Company Securityholder for (A) claims for
indemnification related to Intellectual Property Representations under or
pursuant to clause (vi) of Section 7.2(a) of this Agreement; or (B) any claims
for indemnification arising from any breach of or inaccuracy in the Intellectual
Property Representations shall be limited to such Company Securityholder’s Pro
Rata Share of the Intellectual Property Indemnification Amount.

(ii) The Indemnified Parties shall not be entitled to any indemnification
payment pursuant to Section 7.2(a)(i) or Section 7.2(a)(vi) of this Agreement
(other than claims for

 

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indemnification arising from any breach of or inaccuracy in a Special
Representation or the Intellectual Property Representations), until such time as
the total amount of all Losses incurred by the Indemnified Parties from the
matters described in Section 7.2(a)(i) or Section 7.2(a)(vi) (other than claims
for indemnification arising from any breach of or inaccuracy in a Special
Representation or the Intellectual Property Representations) exceeds $150,000 in
the aggregate (the “Threshold Amount”); provided that at such time as the
cumulative amount of such Losses exceeds the Threshold Amount, the Indemnified
Parties, subject to the limitations set forth herein, shall be entitled to be
indemnified against the entire amount of such Losses, and not merely the portion
of such Losses exceeding the Threshold Amount.

(d) Losses; Knowledge; No Right of Contribution. For all purposes of and under
this Agreement, “Loss” shall mean: (i) any loss, claim, Tax, demand, damage,
lost profits, Liability, judgment, fine, penalty, fee, cost or expense
(including reasonable attorneys’, consultants’ and experts’ fees and expenses)
or consequential or incidental damages or punitive damages (in connection with
claims brought by a third party) (ii) any and all reasonable fees and costs of
enforcing an Indemnified Party’s rights under this Agreement, and (iii) any and
all reasonable fees and costs defending any Third-Party Claims. There shall be
no right of contribution from the Surviving Corporation, Parent or any of their
respective Subsidiaries with respect to any Loss claimed by an Indemnified
Party; provided, however, that for purposes of computing the amount of any
Losses incurred by an Indemnified Party, the amount of Losses shall be
(i) reduced by any insurance proceeds received from any third parties by the
Indemnified Parties with respect to the claim for which indemnification is
sought (net of any deductible amounts, and reduced by any related increase in
premiums) and (ii) reduced by any amounts, when and as, actually recovered from
any third parties, by way of indemnification or otherwise, with respect to the
claim for which indemnification is sought, net of costs of collection. For the
purpose of quantifying an Indemnified Party’s Losses under this Article VII only
(but not for the purpose of determining whether or not a breach has occurred),
any representation or warranty given or made by the Company in this Agreement
that is qualified in scope as to materiality (including Company Material Adverse
Effect) shall be deemed to be made or given without such qualification, and such
qualification will not have any effect with respect to the calculation of the
amount of any Losses attributable to a breach of such representation or
warranty. There shall be no right of contribution from the Surviving
Corporation, Parent or any of their respective Subsidiaries with respect to any
Loss claimed by an Indemnified Party.

(e) Knowledge of Indemnified Parties. The Company and the Securityholder
Representative (on behalf of Company Securityholders) agree that the Indemnified
Parties’ rights to indemnification contained in this Article VII relating to the
representations, warranties and covenants of the Company contained in this
Agreement are part of the basis of the bargain contemplated by this Agreement;
and such representations, warranties and covenants, and the rights and remedies
that may be exercised by the Indemnified Parties with respect thereto, shall not
be waived, limited, qualified, or otherwise affected by or as a result of (and
the Indemnified Parties shall be deemed to have relied upon such
representations, warranties or covenants notwithstanding) any knowledge on the
part of any of the Indemnified Parties or any of their Representatives,
regardless of whether obtained (or should have been obtained) through any due
diligence review, audit or other investigation by any Indemnified Party or any
Representative of any Indemnified Party or through disclosure by the Company or
any other Person, and regardless of whether such knowledge was obtained before
or after the execution and delivery of this Agreement, other than as disclosed
in the Schedule of Exceptions; provided, however, that regardless of any
disclosure made or information contained in the Schedule of Exceptions, each
Indemnified Party shall be entitled to recover for any Losses related to
Sections 7.2(a)(iii), (vii) and (viii) above.

(f) Treatment of Indemnification Payments. All indemnification payments under
this Agreement shall be treated as an adjustment to the purchase price for all
Tax purposes.

 

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7.3 Claims for Indemnification.

(a) Procedure for Claims. An Indemnified Party wishing to assert a claim for
indemnification under this Article VII shall deliver to the Securityholder
Representative a certificate (an “Officer’s Certificate”) signed by any officer
of Parent (or another Indemnified Party) no later than fifteen (15) days after
the applicable survival date (if any): (i) stating that Parent (or such other
Indemnified Party) has paid, sustained, incurred or accrued Losses,
(ii) specifying in reasonable detail the facts pertinent to such claim(s) and
the nature of the basis for indemnification with respect thereto, and (iii) if
practicable, containing a non-binding, preliminary, good faith estimate of the
amount of Losses to which the Indemnified Party in good faith believes it is
entitled (the aggregate amount of such Losses, the “Claimed Amount”). Within
thirty (30) days after delivery of such Officer’s Certificate, the
Securityholder Representative shall deliver to the Indemnified Party a written
response in which the Securityholder Representative shall: (A) agree that the
Indemnified Party is entitled to receive all of the Claimed Amount (in which
case the Securityholder Representative and the Indemnified Party shall deliver
to the Escrow Agent, within three (3) Business Days following delivery of the
response, a written notice executed by both such parties instructing the Escrow
Agent to distribute to the Indemnified Party, out of the Escrow Fund, an amount
equal to the Claimed Amount), (B) agree that the Indemnified Party is entitled
to receive part, but not all, of the Claimed Amount (the “Agreed Amount”) (in
which case the Securityholder Representative and the Indemnified Party shall
deliver to the Escrow Agent, within three (3) Business Days following delivery
of the response, a written notice executed by both such parties instructing the
Escrow Agent to distribute to the Indemnified Party, out of the Indemnity Escrow
Amount of the Escrow Fund, an amount equal to the Agreed Amount), or (C) contest
that the Indemnified Party is entitled to receive all or part of the Claimed
Amount. If the Securityholder Representative in such response contests the
payment of all or part of the Claimed Amount, then the Securityholder
Representative and the Indemnified Party shall use good faith efforts to resolve
such dispute in accordance with Section 7.3(c) below. Failure of the
Securityholder Representative to respond in writing to an Officer’s Certificate
within the thirty (30) day period specified above shall be treated as agreement
by the Securityholder Representative that the Indemnified Party is entitled to
the Claimed Amount, which Indemnified Party may then recover unilaterally from
the Indemnity Escrow Amount of the Escrow Fund.

(b) Defense of Third-Party Claims. In the event an Indemnified Party becomes
aware of the commencement by a third-party of any action, suit or proceeding
which such Indemnified Party reasonably believes may result in a Loss for which
the Company Securityholders would become obligated to indemnify such Indemnified
Party (a “Third-Party Claim”), such Indemnified Party shall promptly deliver
written notice to the Securityholder Representative of such Third-Party Claim.
Any delay or failure in so notifying the Securityholder Representative of such
Third-Party Claim shall not limit or relieve the Company Securityholders of
their obligations under this Article VII (except to the extent, if at all, that
the defense of such Third-Party Claim is materially prejudiced by reason of such
delay or failure). Within thirty (30) days after the Indemnified Party delivers
written notice to the Securityholder Representative of such Third-Party Claim,
the Securityholder Representative may, upon written notice thereof to the
Indemnified Party, assume control of the defense of such action, suit or
proceeding if (1) the Securityholder Representative provides written notice to
such Indemnified Party that the Securityholder Representative intends to
undertake such defense and that the Company Securityholders will indemnify the
Indemnified Parties against all Losses resulting from or relating to such
Third-Party Claim; (2) the Securityholder Representative provides Parent and
such Indemnified Party with evidence reasonably acceptable to Parent and such
Indemnified Party that the Company Securityholders will have the financial
resources to defend against the third-party claimant and fulfill their
indemnification obligations hereunder; (3) the Third-Party Claim involves only
monetary damages that will be fully covered by the Indemnity Escrow Amount of
the Escrow Fund (taking into account all other pending claims against the
Indemnity Escrow Amount of the Escrow Fund) and does not seek an

 

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injunction or other equitable relief; (4) settlement of or an adverse judgment
with respect to the action, suit or proceeding is not, in the good faith
judgment of Parent, likely to establish a precedent adverse to the continuing
business of Parent; (5) the Third-Party Claim does not involve any Intellectual
Property or Intellectual Property Rights of Parent or any of its Subsidiaries;
and (6) the defense of the action, suit or proceeding is conducted actively and
diligently by legal counsel reasonably acceptable to Parent and such Indemnified
Party. If the Securityholder Representative does not assume control of such
defense, the Indemnified Party may control such defense. The party not
controlling such defense may participate therein at its own expense; provided,
however, that if the Securityholder Representative assumes control of such
defense and the Indemnified Party reasonably concludes, based on advice of
counsel, that the Securityholder Representative and the Indemnified Party have
an actual conflict of interest with respect to such action, suit or proceeding,
the reasonable fees and expenses of counsel to the Indemnified Party solely in
connection therewith shall be considered “Losses” that may be recovered by the
Indemnified Party under this Article VII; provided, further, that in no event
shall the Securityholder Representative or the Company Securityholders be
responsible for the fees and expenses of more than one counsel per jurisdiction
for all Indemnified Parties. The party controlling such defense shall keep the
other party reasonably advised of the status of such action, suit or proceeding
and the defense thereof and shall consider recommendations made by the other
party with respect thereto. The Securityholder Representative shall not agree to
any settlement of such action, suit or proceeding that does not include a
complete release of all potential Indemnified Parties from all Liability with
respect thereto or that imposes any Liability on any potential Indemnified Party
without the prior written consent of such Indemnified Party. The Indemnified
Party shall not consent to the entry of any judgment or enter into any
settlement with respect to any Third-Party Claim without the prior written
consent of the Securityholder Representative, such consent not to be
unreasonably withheld, conditioned or delayed.

(c) Resolution of Conflicts. In case the Securityholder Representative shall
object in writing to any claim or claims made in any Officer’s Certificate, the
Securityholder Representative and Indemnified Party shall attempt in good faith
to agree upon the rights of the respective parties with respect to each of such
claims within forty-five (45) days following the delivery by the Securityholder
Representative of its response to such Officer’s Certificate. If the
Securityholder Representative and Indemnified Party should so agree, a
memorandum setting forth such agreement shall be prepared and signed by both
parties and, in the case of a claim against the Indemnity Escrow Amount of 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
Indemnity Escrow Amount of the Escrow Fund in accordance with the terms thereof.
If the Securityholder Representative and the Indemnified Party are unable to
agree upon the rights of the respective parties with respect to such claims
within forty-five (45) days, then such conflict or dispute will be resolved in
accordance with Section 9.7 of this Agreement.

7.4 Escrow Fund . Prior to the Closing, Parent, JP Morgan Chase Bank, National
Association (the “Escrow Agent”), and the Securityholder Representative shall
execute and deliver the Escrow Agreement in substantially the form attached
hereto as Exhibit F (the “Escrow Agreement”), and, as promptly as practicable
after the Effective Time, Parent or Sub shall deposit with the Escrow Agent, as
a withholding from each Company Securityholder immediately prior to the
Effective Time, the Indemnity Escrow Amount and the Working Capital Escrow
Portion to be held as a trust fund (the “Escrow Fund”). The Indemnity Escrow
Amount of the Escrow Fund shall be held in escrow by the Escrow Agent for the
purpose of securing the indemnification obligations set forth in Article VII.
The Working Capital Escrow Portion of the Escrow Fund shall be held in escrow by
the Escrow Agent for the purpose of securing the working capital adjustments
(including adjustments based on a Cash Deficiency), if any, to the Adjusted
Purchase Price as set forth in Section 5.16. The Company has delivered a
schedule that sets forth the estimated Pro Rata Share of each Company
Securityholder (the “Escrow Allocation Schedule”). The Company will amend the
Escrow Allocation Schedule as of the

 

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Effective Time to reflect any actual adjustments to the Adjusted Purchase Price
as required by, and in accordance with, this Agreement, it being understood that
the maximum value of the shares of Parent Restricted Stock to be withheld and
contributed to the Escrow Fund shall be no greater than 18.5% of the combined
value of the cash and Parent Restricted Stock withheld and contributed by the
Major Common Holders to the Escrow Fund. The value of the shares of Parent
Restricted Stock to be contributed to the Escrow Fund shall be determined as
provided in Section 1.6(a)(iv).

The Escrow Fund shall be held by the Escrow Agent under the Escrow Agreement
pursuant to the terms thereof. The Escrow Fund shall be held as a trust fund and
shall not be subject to any lien, attachment, trustee process or any other
judicial process of any creditor of any party, and shall be held and disbursed
solely for the purposes and in accordance with the terms of the Escrow
Agreement. A portion of the Escrow Fund will be treated as imputed interest as
required under the Code.

7.5 Securityholder Representative.

(a) The Company Securityholders, by the approval and adoption of this Agreement
and the execution of the Stockholder Consent and the letters of transmittal,
shall be deemed to have designated Shareholder Representative Services LLC
(together with its permitted successors) as his, her or its representative and
true and lawful agent and attorney-in-fact for purposes of (i) taking all action
necessary to consummate the transactions contemplated hereby, or the defense
and/or settlement of any claims for which the Company Securityholders may be
required to indemnify Parent or any other Indemnified Party pursuant to
Article VII of this Agreement, (ii) giving and receiving all notices required to
be given under this Agreement or the Escrow Agreement, and (iii) taking any and
all additional action as is contemplated to be taken by or on behalf of the
Company Securityholders by the terms of this Agreement.

(b) All decisions and actions by the Securityholder Representative, including
any agreement between the Securityholder Representative and Parent relating to
the defense or settlement of any claims for which the Company Securityholders
may be required to indemnify Parent pursuant to Article VII of this Agreement,
shall be binding upon all of the Company Securityholders, and no Company
Securityholder shall have the right to object, dissent, protest or otherwise
contest the same.

(c) The Securityholder Representative shall not have any Liability to any of the
parties hereto or to the Company Securityholders for any act done or omitted
hereunder as Securityholder Representative while acting in good faith and in the
exercise of reasonable judgment, and any act done or omitted pursuant to the
advice of counsel shall be conclusive evidence of such good faith. The Company
Securityholders shall severally and not jointly (based on each Company
Securityholder’s Pro Rata Share) indemnify the Securityholder Representative and
hold it harmless against any loss, Liability or expense incurred without gross
negligence or bad faith on the part of the Securityholder Representative and
arising out of or in connection with the acceptance or administration of his
duties hereunder, including any out-of-pocket costs and expenses and legal fees
and other legal costs incurred by the Securityholder Representative. If not paid
directly to the Securityholder Representative by the Company Securityholders,
such losses, liabilities or expenses may be distributed to the Securityholder
Representative, on behalf of the Company Securityholders, from the cash
deposited in the Indemnity Escrow Amount of the Escrow Fund that is otherwise
distributable to Company Securityholders after the Survival Date (and not
distributed or distributable to Parent or subject to a pending indemnification
claim of Parent) pursuant to the terms hereof and of the Escrow Agreement, at
the time of distribution; provided that while this section allows the
Securityholder Representative to be paid from the Indemnity Escrow Amount of the
Escrow Fund, this does not relieve the Company Securityholders from their
obligation to indemnify the Securityholder Representative and hold it harmless
against any loss, Liability or expense incurred without gross negligence or bad
faith on the part of the Securityholder Representative, nor does it prevent the
Securityholder Representative from seeking any remedies available to it at law
or otherwise.

 

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(d) The Securityholder Representative shall have full power and authority on
behalf of each Company Securityholder to take any and all actions on behalf of,
execute any and all instruments on behalf of, and execute or waive any and all
rights of, the Company Securityholders under this Article VII.

(e) By his, her or its approval of the Merger, this Agreement and the Escrow
Agreement, each Company Securityholder agrees, in addition to the foregoing,
that:

(i) Parent and any other Indemnified Party shall be entitled to rely
conclusively on the instructions and decisions of the Securityholder
Representative as to (i) the settlement of any claims for indemnification by
Parent or such Indemnified Party pursuant to Article VII of this Agreement, or
(ii) any other actions required or permitted to be taken by the Securityholder
Representative hereunder or under the Escrow Agreement, and no party hereunder
shall have any cause of action against Parent or such Indemnified Party for any
action taken by Parent or such Indemnified Party in reliance upon the
instructions or decisions of the Securityholder Representative;

(ii) all actions, decisions and instructions of the Securityholder
Representative shall be conclusive and binding upon all of the Company
Securityholders and no Company Securityholder shall have any cause of action
against the Securityholder Representative for any action taken, decision made or
instruction given by the Securityholder Representative under this Agreement or
the Escrow Agreement, except for gross negligence or bad faith by the
Securityholder Representative in connection with the matters described in this
Section 7.5;

(iii) the provisions of this Section 7.5 are independent and severable, are
irrevocable and coupled with an interest and shall be enforceable
notwithstanding any rights or remedies that any Company Securityholder may have
in connection with the transactions contemplated by this Agreement; and

(f) The individual serving as the Securityholder Representative may resign (upon
no less than thirty (30) days prior notice to Parent, the Escrow Agent and each
Company Securityholder that was outstanding immediately prior to the Effective
Time (other than holders of Dissenting Shares)). In the event of the death or
permanent disability of the then-acting Securityholder Representative, or if the
then-acting Securityholder Representative shall give notice of intent to resign,
the holders of a majority in interest of Company Securityholders (other than
holders of Dissenting Shares) outstanding as of immediately prior to the
Effective Time (on an as-converted to Company Common Stock basis, assuming the
exercise of all Vested Options and Company Warrants) shall, by written notice to
Parent and the Escrow Agent, appoint a successor Securityholder Representative
as soon as practicable, and in no event later than thirty (30) days following
such death, permanent disability or notice of intent to resign. In addition, the
individual serving as the Securityholder Representative may be replaced from
time to time by the holders of a majority in interest of the Company
Securityholders (other than holders of Dissenting Shares) outstanding as of
immediately prior to the Effective Time (on an as-converted to Company Common
Stock basis, assuming the exercise of all Vested Options and Company
Warrants) upon not less than ten (10) days prior written notice to Parent, the
Escrow Agent and each Company Securityholder (other than holders of Dissenting
Shares). Each successor Securityholder Representative shall have all of the
power, authority, rights and privileges conferred by this Agreement upon the
original Securityholder Representative, and the term “Securityholder
Representative” as used herein shall be deemed to include any such successor
Securityholder Representatives.

 

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(g) In connection with any claim by an Indemnified Party for indemnification
under this Article VII, Parent shall, upon the reasonable request of the
Securityholder Representative, provide the Securityholder Representative with
reasonable access to information (including electronic access, to the extent
available and secure) about the Surviving Corporation and the reasonable
assistance of the officers and employees of Parent and the Surviving Corporation
for the purpose of performing its duties and exercising its rights under this
Agreement with respect to such claim; provided that the Securityholder
Representative will treat confidentially any nonpublic information it receives
from Parent regarding the Surviving Corporation (except the Securityholder
Representative (i) may disclose information to its employees, advisors or
consultants or the Company Securityholders in connection with the performance by
the Securityholder Representative of its duties or the exercise of its rights
under this Agreement, (ii) shall disclose to such parties the confidentiality
restrictions contained in this Section 7.5(g) and (iii) be responsible for any
disclosure by such parties that would be in violation of the provisions of this
Section 7.5(g) as if such parties were party to this Agreement).

(h) The provisions of this Section 7.5 shall be binding upon the executors,
heirs, legal representatives, personal representatives, successor trustees and
successors of each Company Securityholder, and any references in this Agreement
to a Company Securityholder or the Company Securityholders shall mean and
include the successors to the rights of the Company Securityholders hereunder,
whether pursuant to testamentary disposition, the Laws of descent and
distribution or otherwise.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

8.1 Termination. Except as provided in Section 8.2 of this Agreement, this
Agreement may be terminated and the Merger abandoned at any time prior to the
Effective Time:

(a) by mutual written consent of the Company and Parent;

(b) by Parent or the Company if: the Effective Time has not occurred before 5:00
p.m. (Eastern time) on January 31, 2012 (the “End Date”); provided, however,
that if the Effective Time shall not have occurred before the End Date, but as
of the End Date all of the conditions to the obligations of the parties to
consummate the Merger pursuant to Article VI of this Agreement (other than those
conditions that by their nature are to be satisfied at the Closing) have been
satisfied or waived in writing, then at the election of either Parent or the
Company, the End Date shall be extended a maximum of one (1) time for up to ten
(10) days; provided, further, however, that the right to terminate this
Agreement under this Section 8.1(b) shall not be available to any party whose
failure to perform any covenant hereunder has been the principal cause of, or
resulted in, the failure of the Effective Time to occur on or before the End
Date;

(c) by Parent or the Company if (i) there shall be a final non-appealable order
of a court of competent jurisdiction in effect preventing consummation of the
Merger, or (ii) there shall be any statute, rule, regulation or order enacted,
promulgated or issued by any Governmental Entity that would make consummation of
the Merger illegal;

(d) by Parent, if Parent is not in breach of any material terms of this
Agreement, upon a breach of any representation, warranty, covenant or agreement
on the part of the Company set forth in this Agreement, or if any representation
or warranty of the Company shall have become untrue, in

 

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either case such that the conditions set forth in Section 6.2(a) would not be
satisfied as of the time of such breach or as of the time such representation or
warranty shall have become untrue; provided, however that if any such inaccuracy
in the Company’s representations and warranties or breach by the Company is
curable by the Company prior to the End Date through the exercise of its
commercially reasonable efforts, then Parent may not terminate this Agreement
under this Section 8.1(d) prior to the end of a twenty (20) day period following
the delivery of written notice by Parent to the Company of Parent’s intent to
terminate this Agreement pursuant to this Section 8.1(e) as a result of such
breach (or inaccuracy arising) so long as the Company continues to exercise
commercially reasonable efforts to cure such breach during such period (it being
understood that Parent may not terminate this Agreement pursuant to this
Section 8.1(d) if such breach by the Company is cured prior to the end of such
period);

(e) by the Company, if the Company is not in breach of any material terms of
this Agreement, upon a breach of any representation, warranty, covenant or
agreement on the part of Parent set forth in this Agreement, or if any
representation or warranty of Parent shall have become untrue, in either case
such that the conditions set forth in Section 6.3(a) would not be satisfied as
of the time of such breach or as of the time such representation or warranty
shall have become untrue; provided, however that if any such inaccuracy in
Parent’s representations and warranties or breach by Parent is curable by Parent
prior to the End Date through the exercise of its commercially reasonable
efforts, then the Company may not terminate this Agreement under this
Section 8.1(e) prior to the end of a twenty (20) day period following the
delivery of written notice by the Company to Parent of the Company’s intent to
terminate this Agreement pursuant to this Section 8.1(e) as a result of such
breach (or inaccuracy arising) so long as Parent continues to exercise
commercially reasonable efforts to cure such breach during such period (it being
understood that the Company may not terminate this Agreement pursuant to this
Section 8.1(e) if such breach by Parent is cured prior to the end of such
period);

(f) by Parent, if Parent is not in breach of any material terms of this
Agreement, if a Company Material Adverse Effect shall have occurred after the
date of this Agreement and such Company Material Adverse Effect has not been
cured within twenty (20) days; or

(g) by Parent, if the Company has not obtained the Stockholder Consent within
two four (2) hours after the execution of this Agreement so long as Parent
actually exercises its right to terminate this Agreement under this
Section 8.1(g) within five (5) days following the date of this Agreement.

8.2 Effect of Termination. If a party wishes to terminate this Agreement
pursuant to Section 8.1, then in addition to any notices required pursuant to
Section 8.1 such party shall deliver to the other parties to this Agreement a
written notice stating that such party is terminating this Agreement and setting
forth a brief description of the basis on which such party is terminating this
Agreement and the applicable paragraph of Section 8.1 under which this Agreement
is terminated. In the event of termination of this Agreement as provided in
Section 8.1 of this Agreement, this Agreement shall forthwith become void and
there shall be no Liability on the part of Parent, Sub, the Company or their
respective officers, directors, employees, agents, consultants, representatives
or stockholders (in their respective capacities as such), if applicable;
provided, however, that each party hereto shall remain liable for any willful
breach of this Agreement by such party prior to its termination; and provided
further, that, the provisions of Sections 5.3 (Confidentiality), the first
sentence of Section 5.4 (Expenses) and Article IX (General Provisions) of this
Agreement and this Section 8.2 (Notice of Termination; Effect of
Termination) shall remain in full force and effect and survive any termination
of this Agreement pursuant to the terms of this Article VIII.

 

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8.3 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 8.3, any amendment that
purports to be enforceable against the Company Securityholders must be signed by
the Securityholder Representative and the Company Securityholders agree that any
such amendment of this Agreement signed by the Securityholder Representative
after the Effective Time shall be binding upon and effective against the Company
Securityholders whether or not they have signed such amendment.

8.4 Extension; Waiver. At any time prior to the Effective Time, Parent and the
Company may, to the extent legally allowed, (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 contained
herein or in any document delivered pursuant hereto, and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. For purposes of this Section 8.4, the Company
Securityholders agree that any such extension or waiver that is signed prior to
the Effective Time that purports to be enforceable against the Company
Securityholders must be signed by the Company or the Securityholder
Representative and any extension or waiver signed by the Company or
Securityholder Representative `shall be binding upon and effective against all
Company Securityholders whether or not they have signed such extension or
waiver. Such extension or waiver shall not be deemed to apply to any time for
performance, inaccuracy in any representation or warranty, or noncompliance with
any agreement or condition, as the case may be, other than that which is
specified in the written extension or waiver. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of such rights.

ARTICLE IX

GENERAL PROVISIONS

9.1 Notices. All notices and other communications hereunder shall be in writing
and shall be deemed duly delivered (a) five (5) Business Days after being sent
by registered or certified mail, return receipt requested, postage prepaid,
(b) one (1) Business Day after being sent for next Business Day delivery, fees
prepaid, via a reputable nationwide overnight courier service, or (c) on the
first Business Day following the date of confirmation of receipt of transmission
by facsimile, in each case to the intended recipient as set forth below:

(a) if to Parent, Midco or Sub, to:

Vistaprint N.V.

c/o Vistaprint USA, Incorporated

95 Hayden Avenue

Lexington, MA 02421

Attention: General Counsel

Facsimile: (781) 652-6092

 

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

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Attention: Kenneth J. Gordon

Facsimile No.: (617) 523-1231

(b) if to the Company (prior to the Effective Time), to:

Webs, Inc.

1100 Wayne Avenue, Suite 801

Silver Spring, MD 20910

Attention: Haroon Mokhtarzada

Facsimile No.: (301) 960-9021

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

Cooley LLP

One Freedom Square

Reston Town Center

11951 Freedom Drive

Reston, VA 20190

Attention: Michael R. Lincoln

Facsimile No.: (703) 456-8100

(c) if to the Securityholder Representative, to:

Shareholder Representative Services LLC

601 Montgomery Street, Suite 2020

San Francisco, CA 94111

Attention: Managing Director

Telecopy: (415) 962-4147

Telephone: (415) 367-9400

Email: deals@shareholderrep.com with a copy (which shall not constitute notice)
to:

Cooley LLP

One Freedom Square

Reston Town Center

11951 Freedom Drive

Reston, VA 20190

Attention: Michael R. Lincoln

Facsimile No.: (703) 456-8100

Any party to this Agreement may change the address to which notices and other
communications hereunder are to be delivered by giving the other parties to this
Agreement notice in the manner herein set forth.

 

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9.2 Interpretation. The words “include,” “includes” and “including” when used
herein shall be deemed in each case to be followed by the words “without
limitation.” The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. The term “willful breach” shall mean an action
or omission that constitutes a breach of a covenant and that was taken or
omitted to be taken for the purpose of breaching such covenant and was not
merely a volitional action or omission but does not require malicious or
tortious intent. The term “intentional misrepresentation” shall mean that an
action or omission that constitutes a breach of a representation or warranty and
that was taken or omitted to be taken for the purpose of misleading the party to
whom such representation or warranty was made and was not merely a volitional
action or omission but does not otherwise require malicious or tortious intent.

9.3 Counterparts. This Agreement may be executed by facsimile or other
electronic transmission and 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.

9.4 Entire Agreement; Assignment. This Agreement, the Schedule of Exceptions,
the Confidential Disclosure Agreement, and the documents and instruments and
other agreements among the parties hereto referenced herein: (i) constitute the
entire agreement among the parties with respect to the subject matter 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;
(ii) except with respect to Indemnified Parties under Article VII of this
Agreement and as provided in the final sentence of this Section 9.4, are not
intended to confer upon any other Person any rights or remedies hereunder; and
(iii) shall not be assigned by operation of Law or otherwise, except that Parent
may assign its rights and delegate its obligations hereunder to its Affiliates
or (after the Closing) to any purchaser of the Surviving Corporation or of all
or substantially all of the assets or business of the Surviving Corporation
provided further that in the case of such assignment, Parent will remain liable
for all of their obligations hereunder and any failure of assignee or assignees
to discharge the same. Notwithstanding anything to the contrary contained in
this Agreement (but without limiting any of the rights of the Securityholder
Representative hereunder), if the Merger is consummated, (i) the Company
Securityholders shall be third party beneficiaries of the provisions set forth
in Article I, and (ii) the Company’s former officers and directors shall be
third party beneficiaries of the provisions set forth in Section 5.20.

9.5 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.

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

 

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9.7 Governing Law; Jurisdiction; Venue. EXCEPT AS OTHERWISE PROVIDED HEREIN, ALL
QUESTIONS AND/OR DISPUTES CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL
BE GOVERNED BY THE INTERNAL LAWS, AND NOT THE LAW OF CONFLICTS, OF THE
COMMONWEALTH OF MASSACHUSETTS PROVIDED THAT THE MERGER SHALL BE GOVERNED BY
DELAWARE LAW. SUBJECT TO SECTION 5.16(b) OF THIS AGREEMENT, THE PARTIES HERETO,
HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE TO BE SUBJECT TO, AND HEREBY
CONSENT AND SUBMIT TO, THE JURISDICTION OF THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS AND AGREE THAT ANY ACTION INVOLVING ANY EQUITABLE OR OTHER CLAIM
SHALL BE BROUGHT EXCLUSIVELY IN THE COMMONWEALTH OF MASSACHUSETTS. IN THE EVENT
THAT THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS DO NOT ACCEPT JURISDICTION
OVER ANY SUCH ACTION, THE PARTIES HERETO, HEREBY IRREVOCABLY AND UNCONDITIONALLY
AGREE THAT ANY SUCH ACTION THEN SHALL BE BROUGHT EXCLUSIVELY IN THE UNITED
STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS.

9.8 No Waiver Relating to Claims for Fraud, Intentional Misrepresentation or
Willful Misconduct. 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,
intentional misrepresentations or willful misconduct. Notwithstanding anything
to the contrary contained in this Agreement, none of the provisions set forth in
this Agreement, including the provisions set forth in Article VII, 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 based on any other Person’s fraudulent acts
or omissions, intentional misrepresentation or willful misconduct, nor will any
such provisions limit, or be deemed to limit: (a) the amounts of recovery sought
or awarded in any such claim for fraud, intentional misrepresentation or willful
misconduct; (b) the time period during which a claim for fraud, intentional
misrepresentation or willful misconduct may be brought; or (c) the recourse
which any such party may seek against another Person with respect to a claim for
fraud, intentional misrepresentation or willful misconduct.

9.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefor, waive the application of any Law, 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.

9.10 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that any party shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which it is entitled at law or in equity.

9.11 Attorneys’ Fees. If any action or other proceeding relating to the
enforcement of any provision of this Agreement is brought by any party hereto,
the prevailing party shall be entitled to recover reasonable attorneys’ fees,
costs, and disbursements (in addition to any other relief to which the
prevailing party may be entitled).

 

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

ARTICLE X

DEFINITIONS

10.1 For all purposes of this Agreement, the following terms shall have the
following respective meanings:

“Adjusted Purchase Price” shall mean (without double counting): (A) the Base
Purchase Price; minus (B) unpaid Third-Party Expenses incurred by the Company or
any of its Subsidiaries; minus (C) Closing Indebtedness Amount minus (D) any
Company Bonus Amounts; plus (E) the sum of the exercise prices of all Vested
Options that have an exercise price less than the Per Share Consideration; plus
(F) the sum of the exercise prices of all Company Warrants that have an exercise
price less than the Per Share Consideration; minus (G) the greater of the
(i) Working Capital Adjustment Amount and (ii) Cash Adjustment Amount, if and
only if such number is a positive number.

“Affiliate” shall mean, with respect to any Person, any other Person directly or
indirectly through one or more intermediaries controlling, controlled by or
under common control with such other Person.

“Aggregate Capped Participation Spread” shall mean the aggregate Capped
Participation Spread applicable to the shares of Company Common Stock issuable
upon conversion of the shares of Company Preferred Stock outstanding as of the
Effective Time.

“Aggregate Series A Preference Amount” shall mean the aggregate Series A
Preference Amount applicable to the shares of Series A Preferred Stock
outstanding as of the Effective Time.

“Base Purchase Price” shall mean one hundred seventeen million five hundred
thousand dollars ($117,500,000).

“Business Day” shall mean any day other than (a) a Saturday or Sunday or (b) a
day on which banking institutions located in Boston, Massachusetts are permitted
or required by Law to remain closed.

“Capped Participation Spread” shall mean, with respect to each share of Company
Common Stock issuable upon conversion of the corresponding share of Company
Preferred Stock outstanding as of the Effective Time, the amount equal to
(A) the Per Share Purchase Price minus (B) two times (2X) the Series A
Preference Amount applicable to such share of Company Preferred Stock.

“Cash Adjustment Amount” shall mean the Target Cash Amount minus the Cash and
Cash Equivalents.

“Cash and Cash Equivalents” shall mean the cash and cash equivalents of the
Company as determined in accordance with GAAP, (Accounting Standards
Codification 305-10-20) including amounts restricted for use as collateral under
the Merchant Services Agreement with Bank of America Merchant Services;
provided, however, that “Cash and Cash Equivalents” shall not include any
proceeds from the sale of the Hyperoffice Patents.

 

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“Cash Deficiency” shall mean, if the Cash Adjustment Amount as delivered by the
Company prior to Closing is less than the Final Cash Adjustment Amount, the
Final Cash Adjustment Amount; otherwise “Cash Deficiency” shall mean zero (0).

“Charter Documents” shall mean the certificate of incorporation and bylaws, both
as amended and in effect.

“Closing Employees” shall mean an employee of the Company or any of its
Subsidiaries who shall have: (a) remained employed by the Company or a
Subsidiary of the Company through and including the Closing Date; and (b) either
(i) if resident within the United States, entered into, and not revoked,
“at-will” employment arrangements with Parent pursuant to their execution of an
Offer Letter, as well as intellectual property, confidentiality,
non-solicitation and non-competition agreement in a form acceptable to Parent
prior to Closing Date and agreed to be employees of Parent, a Subsidiary of
Parent or the Surviving Corporation after the Closing Date, or (ii) if resident
outside of the United States, agreed to be employees of Parent, a Subsidiary of
Parent or the Surviving Corporation after the Closing Date.

“Closing Indebtedness Amount” shall mean the aggregate amount of Indebtedness of
the Company and its Subsidiaries as of the Effective Time.

“COBRA” shall mean the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended and as codified in Section 4980B of the Code and Section 601 et. seq.
of ERISA.

“Code” shall mean the Internal Revenue Code of 1986, as amended.

“Company Bonus Amounts” shall mean the aggregate amount of any cash bonuses paid
or payable to the Company Bonus Recipients in connection with the Merger and
that are set forth on Schedule 4.1(p).

“Company Bonus Recipients” shall mean the Company Personnel identified on
Schedule 4.1(p).

“Company Capital Stock” shall mean all capital stock of the Company, whether or
not issued or outstanding.

“Company Common Stock” shall mean shares of common stock, $0.0001 par value per
share, of the Company.

“Company Common Warrants” shall mean the outstanding warrants to purchase
Company Common Stock, including without limitation the outstanding warrants to
purchase 128,504 shares of Company Common Stock.

“Company Employee Plan” shall mean any plan, program, policy, practice, Contract
or other material arrangement providing for compensation, severance, bonus or
incentive compensation, termination pay, deferred compensation, performance
awards, stock or stock-related awards, retention or change of control bonus,
fringe, retirement, death, disability or medical 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), but specifically excluding regular wages and
salaries, that is maintained, contributed to, or required to be contributed to,
by the Company or any of its Subsidiaries or ERISA Affiliates for the benefit of
any Company Personnel, or with respect to which the Company, any of its
Subsidiaries or ERISA Affiliates has or may have any Liability, other than any
Employee Agreement.

 

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“Company Intellectual Property” shall mean any and all Licensed Company
Intellectual Property and Owned Company Intellectual Property.

“Company Material Adverse Effect” shall mean any change, event or effect that,
individually or taken together with all other adverse changes, events or
effects, is, or would reasonably be expected to be, materially adverse to
(a) the business, assets (whether tangible or intangible), Liabilities,
condition (financial or otherwise), operations or results of operations of the
Company and its Subsidiaries, taken as a whole or (b) the Company’s ability to
consummate the Merger; provided, however, a change resulting from any of the
following shall not be deemed in and of themselves, either alone or in
combination, to constitute, and none of the following shall be taken into
account in determining whether there has been or will be, a Company Material
Adverse Effect: (i) any adverse effect to the extent attributable to the
execution of this Agreement or the announcement or pendency of the Merger;
(ii) any adverse effect that results from changes affecting the industries in
which the Company participates (to the extent that such changes do not
disproportionately adversely affect the Company as a whole compared to other
firms in the industries in which the Company participates); (iii) changes in
applicable legal requirements or GAAP after the date of this Agreement; (iv) any
adverse effect that results from any act of God, any act of terrorism, war or
other hostilities, any regional, national or international calamity or any other
similar event; (v) the failure of the Company to meet any financial forecast,
projection, estimate, prediction or models, whether internal to the Company or
otherwise; or (vi) any matter set forth in the Schedule of Exceptions.

“Company Options” shall mean Vested Option and Unvested Options.

“Company Personnel” shall mean any current or former Employee, consultant or
director of the Company or any of its Subsidiaries or Affiliates including,
without limitation, all temporary employees, leased employees or other servants
or agents employed or used with respect to the operation of the business of the
Company.

“Company Preferred Stock” shall mean shares of Series A Preferred Stock.

“Company Preferred Warrants” shall mean the outstanding warrants to purchase
Company Preferred Stock, including without limitation the outstanding warrants
to purchase 97,137 shares of Company Preferred Stock.

“Company Restricted Stock” shall mean shares of Company Capital Stock
outstanding immediately prior to the Effective Time that are unvested or are
subject to a right of repurchase by the Company, risk of forfeiture or other
condition under any applicable restricted stock purchase agreement or other
Contract with the Company.

“Company Securityholders” shall mean (i) the holders of Company Capital Stock,
Vested Options and Company Warrants as of immediately prior to the Effective
Time and (ii) the Company Bonus Recipients.

“Company Source Code” shall mean source code for which the Intellectual Property
and Intellectual Property Rights therein are part of the Owned Company
Intellectual Property.

“Company Warrants” shall mean the Company Preferred Warrants and the Company
Common Warrants.

“Data Room” shall mean the online RR Donnelley Datasite for “Project
Washington”.

 

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“Domain Name” shall mean any or all of the following and all worldwide rights
in, arising out of, or associated therewith: domain names, uniform resource
locators (“URLs”) and other names and locators associated with the Internet.

“Employee” shall mean any current or former employee of the Company or any of
its Subsidiaries or Affiliates.

“Employee Agreement” shall mean each management, employment, severance,
consulting, relocation, repatriation, expatriation, visas, work permit or other
individual Contract between the Company or any of its Subsidiaries or Affiliates
and any Company Personnel.

“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 any of its Subsidiaries within the meaning of Section 414(b), (c),
(m) or (o) of the Code, and the regulations issued thereunder.

“Escrow Period” shall mean the period beginning on the Closing Date and ending
on the date that is thirty (30) days after the Survival Date.

“Final Cash Adjustment Amount” shall be calculated in accordance with
Section 5.16.

“Final WC Adjustment Amount” shall be calculated in accordance with
Section 5.16.

“Founders” shall mean Zeki Mokhtarzada, Haroon Mokhtarzada and Idris
Mokhtarzada.

“GAAP” shall mean United States generally accepted accounting principles,
consistently applied.

“HIPAA” shall mean the Health Insurance Portability and Accountability Act of
1996, as amended.

“Hyperoffice Patents” shall mean the patents and patent applications (including
continuations, divisionals, and foreign counterparts) numbered 7,155,490,
11/644,709, 12/421,917, 13/091,963, 13/091,978 and 13/091,993.

“Indebtedness” shall mean, with respect to any Person (a) all obligations of
such Person for borrowed money, whether current or funded, secured or unsecured,
(b) all obligations of such Person for the deferred purchase price of any
property or services (other than trade accounts payable arising in the ordinary
course of the business of such Person and the amount accrued for the deferred
consideration payable to the former owners of Pagemodo), (c) all obligations of
such Person secured by a purchase money mortgage or other lien to secure all or
part of the purchase price of property subject to such mortgage or lien, (d) all
obligations under leases which shall have been or should be, in accordance with
GAAP or other generally accepted accounting principles as applicable to such
Person, recorded as capital leases in respect of which such Person is liable as
lessee, (e) any obligation of such Person in respect of letters of credit or
bankers’ acceptances (other than any obligation of the Company in respect of
that certain Bank of America Merchant Services Letter of Credit with Comerica
Bank), (f) any obligations secured by Liens on property acquired by such Person,
whether or not such obligations were assumed by such Person at the time of
acquisition of such property, (g) all obligations of a type referred to in
clauses (a), (b), (c), (d), (e), or (f) above which is directly or indirectly
guaranteed by such Person or which it has agreed (contingently or otherwise) to
purchase or otherwise acquire or in respect of which it has otherwise assured a
credit against loss, (h) any refinancings of any of the foregoing obligations,
(i) any penalties or

 

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fees accrued under any of the foregoing, including those resulting from the
prepayment or repayment of any of the foregoing obligations, (j) all accrued
interest payable on any of the foregoing obligations and (k) employer payroll
Taxes attributable to the cash out of Vested Options or payment of Company Bonus
Amounts.

“Indefinite Representations” shall mean the representations and warranties of
the Company set forth in Section 2.2 (Company Capital Structure), Section 2.4
(Authority), Section 2.10 (Tax Matters) with respect to all foreign Taxes, Tax
Laws and matters in connection therewith and Section 2.24 (Fees and Expenses).

“Indemnity Escrow Amount” shall mean eleven million seven hundred seventy-fifty
thousand dollars ($11,750,000).

“Intellectual Property” shall mean any or all of the following: (a) inventions
(whether patentable or not), invention disclosures, industrial designs,
improvements, Trade Secrets, proprietary information, know how, technology,
techniques, processes, technical data and customer lists, and all documentation
relating to any of the foregoing; (b) business, technical and know-how
information, non-public information, confidential information and rights to
limit the use or disclosure thereof by any party; (c) works of authorship
(including computer programs, in any form, including source code, object code,
or executable code, and whether embodied in software, firmware or otherwise),
architecture, artwork, logo images, documentation, files, records, databases and
data collections, schematics, diagrams, application programming interfaces, user
interfaces, algorithms, websites, verilog files, netlists, emulation and
simulation reports, test vectors and hardware development tools; (d) devices,
prototypes, bread boards, test methodologies and hardware development tools; and
(e) Trademarks and Domain Names.

“Intellectual Property Indemnification Amount” shall mean the amount equal to
the sum of (A) the then remaining Indemnity Escrow Amount of the Escrow Fund
plus (B) eleven million seven hundred seventy-fifty thousand dollars
($11,750,000).

“Intellectual Property Representations” shall mean the representations and
warranties of the Company contained in Section 2.13 (Intellectual Property).

“Intellectual Property Rights” shall mean any or all of the following and all
worldwide common law and statutory rights in, arising out of, or associated
therewith: (a) patents and applications therefor and all reissues,
re-examinations, divisionals, renewals, extensions, provisionals, continuations
and continuations-in-part thereof (“Patents”); (b) copyrights, copyrights
registrations and applications therefor, and all rights in works of authorship
and other rights corresponding thereto throughout the world including moral and
economic rights of authors and inventors, however denominated (“Copyrights”);
(c) rights in industrial designs and any registrations and applications therefor
throughout the world; (d) trade names, logos, common law trademarks and service
marks, trademark and service mark registrations and applications therefor and
all goodwill associated therewith (“Trademarks”); (e) rights in trade secrets
(including, those trade secrets defined in the Uniform Trade Secrets Act and
under corresponding foreign statutory and common law), business, technical and
know-how information, non-public information, and confidential information and
rights to limit the use or disclosure thereof by any person; including rights in
databases and data collections and all rights therein (“Trade Secrets”);
(f) rights in mask works, mask work registrations and applications, and all
other rights corresponding thereto throughout the world; and (g) any rights
similar or equivalent to any of the foregoing.

“International Plan” shall mean each Company Employee Plan that has been adopted
or maintained by the Company or any of its Subsidiaries or ERISA Affiliates,
whether informally or formally, or with respect to which the Company or any of
its Subsidiaries or ERISA Affiliates will or may

 

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have any Liability, in any non-United States jurisdiction or for the benefit of
Company Personnel who perform services outside the United States or that is
otherwise subject to the laws of any jurisdiction outside the United States.

“IRS” shall mean the United States Internal Revenue Service.

“Knowledge” shall mean with respect to the Company and its Subsidiaries, that
such entity will be deemed to have “Knowledge” of a particular fact or matter if
Haroon Mokhtarzada, Rich Ellinger, Zeki Mokhtarzada, Touraj Parang, Idris
Mokhtarzada, Jamie Loving, Katya Marin, Mariam Mokhtarzada, Pierre Mallett, or
Kathy McGovern (i) is actually aware of such fact or matter or (ii) would
reasonably be expected to have become aware of such fact or matter after having
made all due inquiries that would be required in connection with the competent
performance of such individuals duties to the Company or its Subsidiaries.

“Law” shall mean any law, statute, ordinance, rule, regulation, code, order,
judgment, injunction, decree or other provision having the force or effect of
law enacted, issued, promulgated, enforced or ordered by a Governmental Entity.

“Liability” shall mean, with respect to any Person, any liability or obligation
of such Person of any kind, character or description, whether known or unknown,
absolute or contingent, accrued or unaccrued, disputed or undisputed, liquidated
or unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.

“Licensed Company Intellectual Property” shall mean all Intellectual Property
and Intellectual Property Rights licensed to the Company or any of its
Subsidiaries by third parties, but excluding third party software
non-exclusively licensed to the Company or any of its Subsidiaries for internal
use only which has not been substantially customized for use by the Company and
its Subsidiaries and is generally available on standard terms for less than
$25,000.

“made available” shall mean, with respect to a document, that such document has
been posted by the Company to the Data Room and that Parent has been granted
unrestricted access to view such document prior to 8:00 pm Eastern Time on the
date of this Agreement with respect to representations made as of signing this
Agreement and at least two (2) days prior to Closing with respect to
representations being made as of the Closing.

“Major Common Holder” shall mean any stockholder of the Company owning at least
one million (1,000,000) shares of Company Common Stock immediately prior to the
Effective Time.

“Net Working Capital Amount” shall mean: (a) the amount that would be set forth
on the “Total Current Assets” line item of a consolidated balance sheet of the
Company (excluding deferred tax assets, if any), minus (b) the sum (without
duplication) of the amount that would be set forth on the “Total Current
Liabilities” line item of a consolidated balance sheet of the Company (excluding
deferred tax liabilities, if any, Indebtedness, Third-Party Expenses and Company
Bonus Amounts incurred by the Company or any of its Subsidiaries), minus
(c) long-term deferred revenue, plus (d) the amount accrued for the deferred
consideration payable to the former owners of Pagemodo, plus (e) the amount of
deferred rent. All amounts are to be as of the Effective time and determined in
accordance with GAAP (applied on a basis consistent with the basis on which the
Financial Statements were prepared and in accordance with the Company’s historic
past practice). A sample calculation of Net Working Capital Amount is attached
hereto as Exhibit I; provided, however, that “Net Working Capital Amount” shall
not include any proceeds from the sale of the Hyperoffice Patents.

 

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“Non-Dissenting Stockholder” shall mean each Stockholder that does not perfect
such Stockholder’s appraisal or similar rights under the Delaware Law and is
otherwise entitled to receive consideration pursuant to Section 1.6(a) of this
Agreement.

“Owned Company Intellectual Property” shall mean all other Intellectual Property
and Intellectual Property Rights in which the Company or any of its Subsidiaries
has or purports to have an ownership interest of any nature, whether
exclusively, jointly with another person, or otherwise.

“Parent Material Adverse Effect” shall mean any change, event or effect that,
individually or taken together with all other adverse changes, events or
effects, is, or would reasonably be expected to be, materially adverse to
Parent’s ability to consummate the transactions contemplated by this Agreement.

“Parent Restricted Stock” shall mean the ordinary shares of Parent, subject to
certain vesting requirements and transfer restrictions in accordance with the
Restricted Share Award Agreement.

“Payoff Letter” shall mean letters relating to Indebtedness of the Company and
its Subsidiaries that: (a) indicate in each case the relevant and respective
amount of such Indebtedness; and (b) if such Indebtedness is secured, provide
for the release of all Liens upon payment in full upon payment of such amount at
the Closing.

“Per Share Purchase Price” shall mean the quotient obtained by dividing: (a) the
Adjusted Purchase Price minus the Aggregate Series A Preference Amount plus the
Aggregate Capped Participation Spread; by (b) the Total Fully Diluted Shares.

“Permits” shall mean any permits, consents, licenses, certificates,
registrations, certificates of occupancy or use, variances, orders, governmental
authorizations or approvals, or any other permits.

“Person” shall mean an individual, corporation, partnership, limited liability
company, limited liability partnership, syndicate, person, trust, association,
organization or other entity, including any Governmental Entity, and including
any successor, by merger or otherwise, of any of the foregoing.

“Plan” shall mean the Company’s Amended and Restated 2005 Equity Incentive Plan,
as amended.

“Post-Closing Purchase Price Adjustment” shall mean (A) if the Working Capital
Deficiency is greater than or equal to the Cash Deficiency, the amount equal to
the Final WC Adjustment Amount minus the Working Capital Adjustment Amount as of
Closing or (B) if the Cash Deficiency is greater than the Working Capital
Deficiency, the amount equal to the Final Cash Adjustment Amount minus the Cash
Adjustment Amount as of Closing; provided however that if the number obtained in
(A) or (B), as the case may be, is a negative number, the “Post-Closing Purchase
Price Adjustment” shall be equal to zero (0).

“Pro Rata Share” shall be as set forth in the Escrow Allocation Schedule.

“Release” shall mean any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the
environment or out of any property, including the movement of any materials
through or in the air, soil, surface water, ground water or property.

“Restricted Share Award Agreement” shall mean the Restricted Share Award
Agreement in substantially the form attached to this Agreement as Exhibit J.

 

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“Securities Act” shall mean the Securities Act of 1933, as amended.

“Series A Preference Amount” shall mean $2.5994 per share of Series A Preferred
Stock, plus all accrued but unpaid dividends thereon, accruing at a rate of
eight percent (8%) of the original per share purchase price of the Series A
Preferred Stock (i.e., $2.5994) per annum since the date of issuance of such
share of Series A Preferred Stock.

“Series A Preferred Stock” shall mean the Series A Convertible Preferred Stock,
par value $0.0001 per share, of the Company.

“Site Builder Product” shall mean the version of the web based application for
designing and publishing websites (without coding requirement by the end-user)
that the Company developed and readied for beta testing during the course of
2011, and includes all related and supporting technologies that enhance the
capabilities available to the end-user designing and publishing their website.

“Special Representations” shall mean the Indefinite Representations and the
Statute of Limitations Representations.

“Statute of Limitations Representations” shall mean the representations and
warranties of the Company contained in Section 2.10 (Tax Matters) with respect
to all United States federal, state and local Taxes, Tax Laws and matters in
connection therewith and Section 2.24 (Employee Benefit Plans and Compensation).

“Stockholder” shall mean any holder of any Company Capital Stock immediately
prior to the Effective Time.

“Subsidiary” shall mean, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or
any other subsidiary of such party is a general partner (excluding such
partnerships where such party or any subsidiary of such party does not have a
majority of the voting interest in such partnership) or (ii) at least a majority
of the securities or other interests having by their terms ordinary voting power
to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
subsidiaries.

“Target Cash Amount” shall mean one million five hundred fifty thousand dollars
($1,550,000).

“Target Net Working Capital Amount” shall mean a deficit of four million dollars
(-$4,000,000).

“Tax” or, collectively, “Taxes” shall mean (i) any and all federal, state, local
and foreign taxes, and other similar governmental charges in the nature of a
tax, including taxes based upon or measured by gross receipts, income, profits,
sales, use and occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, abandoned and unclaimed and/or
escheated property, capital stock, excise, stamp, severance, premium,
environmental, profits and property taxes, as well as public imposts, fees and
social security charges (including health, unemployment and pension insurance),
together with all interest, penalties and additions imposed with respect to such
amounts, whether disputed or not.

“Total Fully Diluted Shares” shall mean the sum (without duplication) obtained
by adding: (a) the aggregate number of shares of Company Common Stock
outstanding (or that would be outstanding upon exercise of all Company Warrants)
as of immediately prior to the Effective Time (not including any Company
Restricted Stock); plus (b) the aggregate number of shares of Company Common
Stock that

 

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would be issuable upon the conversion of the shares of Company Preferred Stock
outstanding (or that would be outstanding upon exercise of all Company Warrants)
as of immediately prior to the Effective Time; plus (c) the aggregate number of
shares of Company Capital Stock underlying all Vested Company Options
outstanding immediately prior to the Effective Time (after giving effect to any
acceleration as a result of the Merger).

“Unvested Options” means, as of the Closing Date, (i) all outstanding unvested
options to purchase shares of the Company Common Stock and (ii) all outstanding
vested options to purchase shares of the Company Common Stock with an exercise
price equal to or greater than the Per Share Purchase Price.

“Vested Options” means, as of the Closing Date, all outstanding vested options
to purchase shares of the Company Common Stock after giving effect to vesting
acceleration provisions contained in the stock option award agreements and any
vesting acceleration as set forth on Schedule 4.1 with an exercise price less
than the Per Share Purchase Price.

“Working Capital Adjustment Amount” shall mean the Target Net Working Capital
Amount minus the Net Working Capital Amount.

“Working Capital Deficiency” shall mean, if the Working Capital Adjustment
Amount as delivered by the Company prior to Closing is less than the Final WC
Adjustment Amount, the Final WC Adjustment Amount, otherwise the “Working
Capital Deficiency” shall mean zero (0).

“Working Capital Escrow Portion” shall mean $1,000,000.00.

10.2 Each of the following defined terms has the meaning given such term in the
Section set forth opposite such defined term:

 

Term

  

Section

Accounting Arbitrator    Section 5.16(b) Acquisition Activities    Section 4.2
Agreed Amount    Section 7.3(a) Agreement    Preamble Certificate of Merger   
Section 1.2 Claimed Amount    Section 7.3(a) Closing    Section 1.2 Closing
Balance Sheet    Section 5.15 Closing Date    Section 1.2 Company    Preamble
Company 401(k) Plan    Section 5.5 Company Charter Documents    Section 2.1
Company Inbound Intellectual Property Agreements    Section 2.13(e) Company
Intellectual Property Agreements    Section 2.13(e) Company Outbound
Intellectual Property Agreements    Section 2.13(e) Company Privacy Obligations
   Section 2.30 Company Privacy Policies    Section 2.30 Company Products   
Section 2.13(a) Company Stock Certificates    Section 1.8(c)(ii) Confidential
Disclosure Agreement    Section 5.3

 

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Conflict    Section 2.5 Continuing Employee    Section 5.11(a) Contract   
Section 2.5 Contracts    Section 2.5 Copyrights    Section 10.1 Current Balance
Sheet    Section 2.7(a) Customer Information    Section 2.12(f) D&O Tail Policy
   Section 5.20 Delaware Law    Section 1.1 Determination Date    Section
5.16(a) Disagreement Notice    Section 5.16(a) Dissenting Share Payments   
Section 1.7(c) Dissenting Shares    Section 1.7(a) Effective Time    Section 1.2
End Date    Section 8.1(b) Equipment    Section 2.12(e) Escrow Agent    Section
7.4 Escrow Agreement    Section 7.4 Escrow Allocation Schedule    Section 7.4
Escrow Fund    Section 7.4 FCPA    Section 2.27 Financial Statements   
Section 2.7(a) FIRPTA Compliance Certificate    Section 5.8 Government Contracts
   Section 2.16 Governmental Entity    Section 2.6 Immigration Laws   
Section 2.34 Indemnified Party    Section 7.2(a) Indemnified Parties    Section
7.2(a) Interested Person    Section 2.17(a) Key Employees    Section 5.11(b)
Lease Agreements    Section 2.12(b) Leased Real Property    Section 2.12(a)
Liens    Section 2.10(a)(viii) Loss    Section 7.2(d) Merger    Recitals A Midco
   Preamble Offer Letter    Section 5.11(a) Officer’s Certificate   
Section 7.3(a) Official    Section 2.27 Open Source Materials    Section 2.13(l)
Parent    Preamble Parent Statement    Section 5.16(a) Patents    Section 10.1
Paying Agent    Section 1.8(a) Payment Fund    Section 1.8(b) Permitted Liens   
Section 2.12(d) Prior Period Returns    Section 5.22(a) Proposed Final
Adjustment Amount    Section 5.16(a)

 

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Representative    Section 4.2 Returns    Section 2.10(a)(i) Schedule of
Exceptions    Preamble to Article II Section 280G Payment    Section 2.24(g)
Securityholder Representative    Preamble Severance Agreement and Release   
Section 5.18 Soliciting Materials    Section 5.1(d) Specified Contract   
Section 2.15 Spreadsheet    Section 5.15 Stockholder Consent    Recitals E
Stockholder Notice    Section 5.1(b)(i) Straddle Period    Section 5.22(c) Sub
   Preamble Subsidiary Charter Documents    Section 2.1 Survival Date   
Section 7.1(a) Surviving Corporation    Section 1.1 Third-Party Claim    Section
7.3(b) Third-Party Expenses    Section 5.4 Threshold Amount    Section
7.2(c)(ii) Trade Secrets    Section 10.1 Trademarks    Section 10.1 Working
Capital Deficiency    Section 5.16(c)(i) Working Capital Escrow Portion
Shortfall    Section 5.16(c)(ii)

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IN WITNESS WHEREOF, Parent, Midco, Sub, the Company and the Securityholder
Representative have caused this Agreement to be signed, all as of the date first
written above.

 

PARENT: VISTAPRINT N.V. By:  

/s/ Wendy Cebula

Name:   Wendy Cebula Title:   Member of the Management Board MIDCO: VISTAPRINT
USA, INCORPORATED By:  

/s/ Wendy Cebula

Name:   Wendy Cebula Title:   Treasurer and Chief Operating Officer SUB:
WOODBRIDGE ACQUISITION CORPORATION By:  

/s/ Wendy Cebula

Name:   Wendy Cebula Title:   President

[Signature Page to Agreement and Plan of Merger]

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IN WITNESS WHEREOF, Parent, Midco, Sub, the Company and the Securityholder
Representative have caused this Agreement to be signed, all as of the date first
written above.

 

WEBS, INC. By:  

/s/ Haroon Mokhtarzada

Name:   Haroon Mokhtarzada Title:   Chief Executive Officer

[Signature Page to Agreement and Plan of Merger]

 

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IN WITNESS WHEREOF, Parent, Midco, Sub, the Company and the Securityholder
Representative have caused this Agreement to be signed, all as of the date first
written above.

 

SECURITYHOLDER REPRESENTATIVE: SHAREHOLDER REPRESENTATIVE SERVICES LLC By:  

/s/ Paul Koenig

Name:   Paul Koenig Title:   Managing Director

[Signature Page to Agreement and Plan of Merger]