Document:

EX-10.2

Fiscal Year 2007

Executive Bonus Agreement

Pursuant to the 2003 Performance Award Plan

July 1, 2007– June 30, 2007

	 	 	 	 	 	 	 
	Name:

	 	[Insert Name]
	 	Job Title:
	 	[Insert Title]

INTRODUCTION

This guide provides a summary of the Executive Bonus Plan for July 1, 2006 – June 30, 2007.

The plan provides a lump-sum cash payment following the completion of fiscal year 2007 for
achievement of annual budgeted operating profit and other goals based on predetermined performance
and award schedules.

	 	 	 	 	 
	PERFORMANCE MEASURES

	 	•	 	Company Budgeted Operating Profit – 75% of Bonus Award

	 	•	 	Management Objectives – 25% of Bonus Award

AWARD DETERMINATION AND SIZE OF AWARDS

The plan operates under a “target award” framework, where participants have a bonus target as a
percentage of base pay, and earn awards based on the degree to which performance goals are
achieved. Target and Maximum awards are:

Award as % of Annual Base Pay

	 	 	 	 	 
	Target

	 
	[Insert Target]%

	 	 	 	 	 
	Maximum

	 
	[Insert Maximum]%

Award calculation is based on a percentage of a participant’s annual base salary in effect at the
end of the fiscal year (or, if the participant transfers to another job within the company during
the fiscal year, the end of the participant’s employment in this job, as applicable).

	1.	 	Operating Profit “Gate.” Actual operating profit for the fiscal year must be 90% or more of
budget to achieve a bonus award.

	2.	 	Regulatory Compliance Performance “Gate.” The company must receive an annual average
compliance audit score of “3” or better to achieve a bonus award.

	3.	 	Award Schedules. A plan participant may receive a bonus award for achievement of performance
goals measured at the end of the fiscal year, as specified in the following chart:

	 	•	 	

1

• Performance Measure:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	% of Operating Profit Goal Achieved	 	% of Target Bonus Earned	 	Bonus as % of Annual Base Pay
	Maximum
	 	 	130.0	%	 	 	200.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	125.0	%	 	 	183.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	120.0	%	 	 	167.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	115.0	%	 	 	150.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	110.0	%	 	 	133.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	105.0	%	 	 	117.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Target
	 	 	100.0	%	 	 	100.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	98.0	%	 	 	88.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	96.0	%	 	 	76.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	94.0	%	 	 	64.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	92.0	%	 	 	52.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	90.0	%	 	 	40.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	90.0	%	 	 	0.0	%	 	 	[___]	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 

	 	•	 	Awards for performance between levels shown are calculated using interpolation
between points.

OTHER INFORMATION

If an employee starts in the position after the start of the fiscal year or leaves the position
before the end of the fiscal year but remains employed by the company, goals and performance will
be based on the full fiscal year, but awards will be pro-rated based on the number of full calendar
months the employee is in the position. Awards are paid within 90 days following the end of the
fiscal year. Plan participants must be employed at the time of award payout to receive an award
payout.

The company reserves the right to suspend, modify or terminate this plan at any time. For example,
the company may reduce, suspend, modify or eliminate the payment of any quarterly bonus earned if
significant regulatory and/or business practices are found to be out of compliance by the company’s
executive management team.

The company also reserves the right to adjust bonus plan performance targets upon the occurrence of
unusual or extraordinary events. Nothing in this document is to be construed to guarantee its
continuation in this or any future years.

The company’s Board of Directors will make the final decision regarding any disputed bonus
computation or award.

2

REQUEST FOR PLAN PARTICIPANT SIGNATURE

Please sign and return this document to Corporate Human Resources.

	 
	 

	Employee Signature

	 

	Company

	 

3EX-10.127

Exhibit 10.127

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (the “Agreement”) is made and entered into as of
August      , 2006 by and among HALO Technology Holdings, Inc., a Nevada corporation
(“Acquiror”), Tenebril Acquisition Sub, Inc., a Delaware corporation (“Merger Sub”)
and wholly-owned subsidiary of Acquiror, Tenebril Inc., a Delaware corporation (“Target”),
and, solely with respect to Section 7 hereof, Sierra Ventures, as agent for the Target
stockholders (the “Stockholders’ Agent”).

RECITALS

A. The Boards of Directors of each of Target, Acquiror and Merger Sub have determined it to be
advisable and in the best interests of each company and its respective stockholders that Acquiror
acquire Target through the statutory merger of Target with and into Merger Sub (the
“Merger”) and, in furtherance thereof, have approved this Agreement and declared its
advisability.

B. Pursuant to the Merger, among other things, the outstanding shares of Target’s Common
Stock, par value $0.0001 per share (“Target Common Stock”), Target’s Class A Common Stock,
par value $0.01 per share (“Target Class A Common Stock”), Target’s Series A Preferred
Stock, par value $0.01 per share (“Target Series A Preferred Stock”) and Target’s Series B
Preferred Stock, par value $0.01 per share (“Target Series A Preferred Stock” and, together
with the Target Common Stock, the Target Class A Common Stock and the Target Series A Preferred
Stock, the “Target Capital Stock”) shall be converted into the right to receive the
Aggregate Merger Consideration (as defined in Section 2.6(a)) upon the terms and subject to
the conditions set forth herein.

C. Target, Acquiror and Merger Sub desire to make certain representations and warranties and
other agreements in connection with the Merger.

NOW, THEREFORE, in consideration of the covenants, promises, representations and warranties
set forth herein, and for other good and valuable consideration (the receipt and sufficiency of
which are hereby acknowledged by the parties), intending to be legally bound hereby, the parties
agree as follows:

1. Definitions.

1.1 Certain Defined Terms. As used in this Agreement, the following terms have the
meanings set forth in the Sections referenced below:

1

S.CONTDefinition Location

2. The Merger.

2.1 The Merger. At the Effective Time, and upon the terms and subject to the
conditions of this Agreement and the applicable provisions of Delaware Law, Merger Sub shall be
merged with and into Target, the separate corporate existence of Merger Sub shall cease, and Target
shall continue as the surviving corporation and as a wholly-owned subsidiary of Acquiror. The
surviving corporation in the Merger is sometimes referred to herein as the “Surviving
Corporation.”

2.2 Closing; Effective Time. The parties hereto shall consummate the Merger and the
transactions contemplated hereby at a closing (the “Closing”) to be held immediately after
the execution and delivery of this Agreement by the parties hereto at the offices of DLA Piper
Rudnick Gray Cary US LLP, 1775 Wiehle Avenue, Suite 400, Reston, Virginia 20190, unless another
time and/or place is mutually agreed upon in writing by Acquiror and Target. The date upon which
the Closing actually occurs is herein referred to as the “Closing Date.” On the Closing
Date, the certificate of merger (the “Certificate of Merger”), substantially in the form of
Exhibit A hereto, shall be duly prepared and executed by the Surviving Corporation and
thereafter delivered to the Secretary of State of the State of Delaware for filing, as provided in
Section 251 of Delaware Law, on the Closing Date. The parties shall make all other filings
required under Delaware Law, and the Merger shall become effective at the time of the filing of the
Certificate of Merger with the Secretary of State, or at such later time as may be agreed by
Acquiror and Target and stated in the Certificate of Merger (the date and time of such filing (or
stated later time, if any) being referred to herein as the “Effective Time”).

2.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as
provided in this Agreement, the Certificate of Merger and the applicable provisions of Delaware
Law. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time,
all the property, rights, privileges, powers and franchises of Target and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Target and Merger Sub shall
become the debts, liabilities and duties of the Surviving Corporation.

2.4 Certificate of Incorporation; Bylaws.

(a) At the Effective Time, the Certificate of
Incorporation of Target shall be amended and restated
in its entirety to be identical with the certificate
of incorporation of Merger Sub in effect prior to the
Effective Time and, as so amended, shall constitute
the certificate of incorporation of the Surviving
Corporation until thereafter amended.

(b) The Bylaws of Merger Sub as in effect
immediately prior to the Effective Time shall be the
Bylaws of the Surviving Corporation at the Effective
Time, until thereafter amended in accordance with
Delaware Law and as provided in the Certificate of
Incorporation of the Surviving Corporation and such
Bylaws.

2.5 Directors and Officers. At the Effective Time, the directors and officers of
Merger Sub immediately prior to the Effective Time shall be the directors and officers of the
Surviving Corporation, to serve until their respective successors are duly elected or appointed and
qualified.

2.6 Effect on Capital Stock. At the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, Target or any holder of Target Capital Stock, each
share of Target Capital Stock issued and outstanding immediately prior to the Effective Time (other
than any Dissenting Shares and any shares owned by Acquiror, Target or any direct or indirect
wholly-owned subsidiary thereof) shall be canceled and extinguished and shall be converted
automatically into the right to receive, upon the terms and subject to the conditions set forth
below and throughout this Agreement:

(a) Purchase Price. Upon the surrender
of the certificate representing such share of Target
Capital Stock in accordance with Section 2.7
and this Section 2.6, Acquiror shall issue to
each Target stockholder a promissory note in the form
attached hereto as Exhibit C (each, a
“Promissory Note” and collectively, the
“Promissory Notes”) in the original principal
amount set forth opposite such Target stockholder’s
name under the heading “Promissory Note Amount” on
Exhibit D attached hereto (the “Promissory
Note Amount”). The aggregate original principal
amount of all Promissory Notes issued by Acquiror
shall be equal to $3,000,000 (the “Aggregate
Merger Consideration”). The original principal
amount of each Target stockholder’s Promissory Note
shall be equal to such Target Stockholder’s Share
Percentage set forth opposite such Target
stockholder’s name under the heading “Share
Percentage” on Exhibit D attached hereto (the
“Share Percentage”), multiplied by the
Aggregate Merger Consideration.

(b) Cancellation of Target Common Stock Owned
by Acquiror. At the Effective Time, each share of
Target Capital Stock owned by Acquiror or any direct
or indirect wholly-owned subsidiary of Acquiror
immediately prior to the Effective Time shall be
cancelled and extinguished without any conversion
thereof.

(c) Target Stock Options. At the
Effective Time, all options to purchase Target Common
Stock then outstanding under the Target Option Plan
(as defined in Section 3.5) at the Effective
Time, whether vested or unvested, shall be terminated
and cancelled and shall not be assumed by Acquiror.

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

(e) Dissenters’ Rights. Notwithstanding
any provision of this Agreement to the contrary, any
 shares of Target Capital Stock held by a holder that
has demanded and perfected dissenters’ rights for such
 shares in accordance with Delaware Law and who, as of
the Effective Time, has not effectively withdrawn or
lost such dissenters’ rights (“Dissenting
Shares”) shall not be converted into or represent
the right to receive the Aggregate Merger
Consideration pursuant to this Section 2.6,
but the holder thereof shall only be entitled to such
rights as are granted by Delaware Law.
Notwithstanding the provisions of Section
2.6(e), if any holder of Dissenting Shares shall
effectively withdraw or lose (through failure to
perfect or otherwise) his, her or its appraisal or
dissenter’s rights, then, as of the later of the
Effective Time and the occurrence of such event, such
holder’s Dissenting Shares shall then cease to be
Dissenting Shares and shall automatically be converted
into and represent only the right to receive, upon
surrender by such holder of a certificate or
certificates (the “Certificates”) representing
 shares of Target Capital Stock, the portion of the
Aggregate Merger Consideration to which such holder
would otherwise be entitled under this
Section 2.6 and the Certificate of
Merger.

2.7 Surrender of Certificates.

(a) Exchange Agent. Acquiror shall act
as exchange agent (the “Exchange Agent”) in
the Merger.

(b) Exchange Procedures. Promptly (and
no later than one business day) after the Effective
Time, the Surviving Corporation shall cause to be
mailed to each holder of record of a Certificate or
Certificates that immediately prior to the Effective
Time represented outstanding shares of Target Capital
Stock, whose shares were converted into the right to
receive a portion of the Aggregate Merger
Consideration pursuant to Section 2.6, (i) a
letter of transmittal; and (ii) instructions for use
in effecting the surrender of the Certificates in
exchange for its respective portion of the Aggregate
Merger Consideration. Upon surrender of a Certificate
for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Acquiror,
together with such letter of transmittal, duly
completed and validly executed in accordance with the
instructions thereto, the holder of such Certificate
shall be entitled to receive in exchange therefore a
Promissory Note representing such holder’s respective
portion of the Aggregate Merger Consideration as
provided in Section 2.6 (which Acquiror shall
mail promptly and in any event no later than 10
calendar days after receipt of such required
documentation), and the Certificate so surrendered
shall forthwith be canceled. Until so surrendered,
each outstanding Certificate that prior to the
Effective Time represented shares of Target Capital
Stock will be deemed from and after the Effective
Time, for all corporate purposes, to evidence the
ownership of the right to receive a Promissory Note in
the principal amount equal to the portion of the
Aggregate Merger Consideration into which such shares
of Target Capital Stock shall have been so converted
in accordance with Section 2.6.

(c) Transfers of Ownership. At the
Effective Time, the stock transfer books of Target
shall be closed, and there shall be no further
registration of transfers of Target Capital Stock
thereafter on the records of Target.

(d) No Liability. Notwithstanding
anything to the contrary in this Section 2.7,
none of the Exchange Agent, the Surviving Corporation
or any party hereto shall be liable to any person for
any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or
similar law.

(e) Dissenting Shares. The provisions of
this Section 2.7 shall also apply to
Dissenting Shares that lose their status as such,
except that the obligations of Acquiror under this
Section 2.7 shall commence on the date of loss
of such status and the holder of such shares shall be
entitled to receive in exchange for such shares the
portion of the Aggregate Merger Consideration to which
such holder is entitled pursuant to
Section 2.6 hereof.

2.8 No Further Ownership Rights in Target Capital Stock. The portion of the Aggregate
Merger Consideration delivered upon the surrender for exchange of shares of Target Capital Stock in
accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such shares of Target Capital Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares of Target Capital
Stock which were outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason, they shall be
canceled and exchanged as provided in this Section 2.

2.9 Lost, Stolen or Destroyed Certificates. In the event any Certificates shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or
destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof such
portion of the Aggregate Merger Consideration as may be required pursuant to Section 2.6;
provided, however, that Acquiror may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates
to enter into an agreement to provide for indemnity against any claim that may be made against
Acquiror, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged
to have been lost, stolen or destroyed.

2.10 Taking of Necessary Action; Further Action. Each of Acquiror, Merger Sub and
Target will take all such reasonable and lawful action as may be necessary or desirable in order to
effectuate the Merger in accordance with this Agreement as promptly as possible. 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 Target and Merger Sub, the officers
and directors of Target and Merger Sub are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary action, so long as
such action is not inconsistent with this Agreement.

3. Representations and Warranties of Target.

Target represents and warrants to Acquiror and Merger Sub that the statements contained in
this Section 3 are true and correct, except as disclosed in a document of even date
herewith and delivered by Target to Acquiror on the date hereof referring to the representations
and warranties in this Agreement (the “Target Disclosure Schedule”). The Target Disclosure
Schedule will be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section 3, and the disclosure in one section may be deemed to qualify
another section of the Agreement if it is reasonably clear, upon a reading of such disclosure that
the disclosure would be expected to apply to such other section.

3.1 Organization, Standing and Power.

(a) Target is a corporation duly organized,
validly existing and in good standing under the laws
of the State of Delaware. Target has the corporate
power to own its properties and to carry on its
business as now being conducted and is duly qualified
to do business and is in good standing in each
jurisdiction in which the failure to be so qualified
and in good standing could reasonably be expected to
have a Material Adverse Effect on Target. Target has
delivered to Acquiror a true and correct copy of the
certificate of incorporation and bylaws of Target,
each as amended to date, and each such document is in
full force and effect. Target is not in violation of
any of the provisions of its certificate of
incorporation or bylaws.

(b) Target has no Subsidiaries and does not
directly or indirectly own any equity or similar
interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint
venture or other business association or entity.

3.2 Authority. Target has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated hereby. All corporate action on the
part of Target, its officers, directors and stockholders necessary for the authorization of this
Agreement and the performance of all obligations of Target hereunder has been taken. This
Agreement, when executed and delivered, will be a valid and binding obligation of Target
enforceable in accordance with its terms, except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other laws of general application affecting enforcement
of creditors’ rights and (b) general principles of equity that restrict the availability of
equitable remedies.  No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or other governmental
authority or instrumentality (“Governmental Entity”) is required by or with respect to
Target in connection with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (a) the filing of the Certificate of Merger as
provided in Section 2.2; and (b)  such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, could not be reasonably expected to have a
Material Adverse Effect on Target and could not reasonably be expected to prevent, or materially
alter or delay, any of the transactions contemplated by this Agreement.

3.3 Governmental Authorization. Target has obtained each federal, state, county,
local or foreign governmental consent, license, permit, grant, or other authorization of a
Governmental Entity: (a) pursuant to which Target currently operates or holds any interest in any
of its properties; or (b) that is required for the operation of Target’s business or the holding of
any such interest and all of such authorizations are in full force and effect except where the
failure to obtain or have any such authorizations could not reasonably be expected to have a
Material Adverse Effect on Target.

3.4 Financial Statements. Target has delivered to Acquiror its unaudited financial
statements (consisting solely of a balance sheet and statement of operations) (collectively, the
“Target Financial Statements”)for the fiscal year ended December 31, 2005 and for the
seven-month period ended July 31, 2006 (the “Target Balance Sheet Date”). The Target
Financial Statements have been prepared in accordance with generally accepted accounting principles
(“GAAP”) (except that the unaudited financial statements do not contain footnotes and are subject
to normal recurring year-end audit adjustments) applied on a consistent basis throughout the
periods presented and consistent with each other. The Target Financial Statements fairly present
the consolidated financial condition and operating results of Target as of the dates, and for the
periods, indicated therein, subject to normal year-end audit adjustments and the absence of
footnotes. Target has maintained a system of internal accounting controls sufficient to provide
reasonable assurance that transactions have been executed with management’s authorizations, and
transactions have been recorded as necessary to permit preparation of the Target Financial
Statements in accordance with GAAP.

3.5 Capital Structure. The authorized capital stock of Target, immediately prior to
the Closing, consists of (i) 90,000,000 shares of Target Common Stock, 1,518,820 of which are
issued and outstanding, (ii) 4,793,600 shares of Target Class A Common Stock, all of which are
issued and outstanding, and (iii) 73,003,511 shares of Preferred Stock, par value $0.01 per share,
(x) 6,602,873 of which are designated as Target Series A Preferred Stock, all of which are issued
and outstanding, and (y) 66,400,638 of which are designated as Target Series B Preferred Stock, all
of which are issued and outstanding. All outstanding shares of Target Capital Stock are duly
authorized, validly issued, fully paid and non-assessable and are free of any liens or encumbrances
other than any liens or encumbrances created by or imposed upon the holders thereof, and are not
subject to preemptive rights or rights of first refusal created by statute, the certificate of
incorporation or bylaws of Target or any agreement to which Target is a party or by which it is
bound. As of that same date, there were 9,218,253 shares of Target Common Stock reserved for
issuance under the Target 2005 Stock Option and Incentive Plan (the “Target Option Plan”),
of which 5,461,905 shares were subject to outstanding options and 3,756,348 shares were reserved
for future option grants. Except for the rights created pursuant to this Agreement and the rights
disclosed in the preceding three sentences, there are no other options, warrants, calls, rights,
commitments or agreements of any character to which Target is a party or by which it is bound,
obligating Target to issue, deliver, sell, repurchase or redeem or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of Target capital stock or obligating Target to grant,
extend, accelerate the vesting of, change the price of, or otherwise amend or enter into any such
option, warrant, call, right, commitment or agreement. There are no other contracts, commitments
or agreements relating to voting, purchase or sale of Target capital stock (i) between or among
Target and any of its stockholders; and (ii) to Target’s knowledge, between or among any of
Target’s stockholders.

3.6 Absence of Certain Changes. Since the Target Balance Sheet Date, Target has
conducted its business in the ordinary course consistent with past practice and there has not
occurred (a)  any acquisition, sale or transfer of any material asset of Target other than in the
ordinary course of business and consistent with past practice; (b) any change in accounting methods
or practices (including any change in depreciation or amortization policies or rates) by Target or
any revaluation by Target of any of its assets; (c) any declaration, setting aside, or payment of a
dividend or other distribution with respect to the shares of Target or any direct or indirect
redemption, purchase or other acquisition by Target of any of its shares of capital stock; (d) any
amendment or change to the certificate of incorporation or bylaws of Target; (e) any increase in or
modification of the compensation or benefits payable or to become payable by Target to any of its
directors or employees; (f) created, incurred, assumed or guaranteed any indebtedness; or (f) any
negotiation or agreement by Target to do any of the things described in the preceding clauses (a)
through (f) (other than negotiations with Acquiror and its representatives regarding the
transactions contemplated by this Agreement).

3.7 Absence of Undisclosed Liabilities. Target does not have any material obligations
or liabilities of any nature (matured or unmatured, fixed or contingent) other than (a) those set
forth or adequately provided for in the balance sheet of Target as of the Target Balance Sheet Date
(the “Target Balance Sheet”); (b) obligations to perform under the Material Contracts;
(c) those incurred in the ordinary course of business since the Target Balance Sheet Date and
consistent with past practice; and (d) those incurred in connection with the execution of this
Agreement, including, without limitation, the Transaction Costs.

3.8 Litigation. There is no existing private or governmental action, suit,
proceeding, claim, arbitration or, to Target’s knowledge, any investigation pending before any
Governmental Entity, foreign or domestic, or, to the knowledge of Target, threatened against Target
or any of its properties or any of its officers or directors (in their capacities as such). There
is no judgment, decree or order against Target, or, to the knowledge of Target, any of its
respective directors or officers (in their capacities as such), that could prevent, enjoin, or
materially alter or delay any of the transactions contemplated by this Agreement, or that could
reasonably be expected to have a Material Adverse Effect on Target.

3.9 Intellectual Property.

(a) For purposes of this Agreement,
“Intellectual Property” means:

(i) all issued patents, reissued or reexamined patents, revivals of patents, utility models,
certificates of invention, registrations of patents and extensions thereof, regardless of country
or formal name (collectively, “Issued Patents”);

(ii) all published or unpublished nonprovisional and provisional patent applications,
reexamination proceedings, invention disclosures and records of invention (collectively “Patent
Applications” and, with the Issued Patents, the “Patents”);

(iii) all copyrights, copyrightable works and mask work rights, including all rights of
authorship, use, publication, reproduction, distribution, performance transformation, moral rights
and rights of ownership of copyrightable works and mask works, and all rights to register and
obtain renewals and extensions of registrations, together with all other interests accruing by
reason of international copyright and mask work conventions (collectively, “Copyrights”);

(iv) trademarks, registered trademarks, applications for registration of trademarks, service
marks, registered service marks, applications for registration of service marks, trade names,
registered trade names and applications for registrations of trade names (collectively,
“Trademarks”) and domain name registrations;

(v) all technology, ideas, inventions, designs, proprietary information, manufacturing and
operating specifications, know-how, formulae, trade secrets, technical data, computer programs,
hardware, software and processes; and

(vi) all other intangible assets, properties and rights (whether or not appropriate steps have
been taken to protect, under applicable law, such other intangible assets, properties or rights).

(b) Target owns and has good and marketable title
to, or possess legally enforceable rights to use, all
Intellectual Property used in the business of Target
as currently conducted by Target. The Intellectual
Property owned by and licensed to Target collectively
constitutes all of the Intellectual Property necessary
to enable Target to conduct its business as such
business is currently being conducted. No current or
former officer, director, stockholder, employee,
consultant or independent contractor has any right,
claim or interest in or with respect to any Target
Intellectual Property (as defined in Section
3.10(c) below).

(c) With respect to each item of Intellectual
Property used in the business of Target (except “off
the shelf” or other software widely available through
regular commercial distribution channels on standard
terms and conditions, as modified for Target’s
operations) (“Target Intellectual Property”),
Section 3.9 of the Target Disclosure Schedule
sets forth:

(i) a complete and correct list of all Issued Patents and Patent Applications, registered
Trademarks, registered service marks, mask works, trade names, registered Copyrights, software
owned or licensed, under development or held for use by the Target, and, in the case of software
developed by the Target, a product description, the language in which it is written and the type of
hardware platform(s) on which it runs; and

(ii) the following agreements relating to Target Intellectual Property: (A) any exclusive
licenses of Intellectual Property to or from Target; (B) any agreement by which Target grants any
ownership right to any Target Intellectual Property owned by Target; (C) any order relating to
Intellectual Property; and (D) agreements pursuant to which any party is granted any rights to
access source code.

(d) Section 3.9 of the Target Disclosure
Schedule contains an accurate list as of the date of
this Agreement of all licenses, sublicenses and other
agreements to which Target is a party and pursuant to
which Target is authorized to use any Intellectual
Property owned by any third party, excluding “off the
shelf” or other software widely available through
regular commercial distribution channels on standard
terms and conditions (“Third Party Intellectual
Property”).

(e) To Target’s knowledge, there is no
unauthorized use, disclosure, infringement or
misappropriation of any Target Intellectual Property,
including any Third Party Intellectual Property, by
any third party, including any employee or former
employee of Target.

(f) To Target’s knowledge, Target is not in
material breach of any license, sublicense or other
agreement relating to the Target Intellectual Property
or Third Party Intellectual Property. Neither the
execution, delivery or performance of this Agreement
or any ancillary agreement contemplated hereby nor the
consummation of the Merger or any of the transactions
contemplated by this Agreement will contravene,
conflict with or result in any material limitation on
the Acquiror’s right to own or use any Target
Intellectual Property, including any Third Party
Intellectual Property.

(g) To Target’s knowledge, Target is not
infringing, misappropriating or making unlawful use
of, or received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible
or potential infringement, misappropriation or
unlawful use of any proprietary asset owned or used by
any third party. There is no proceeding pending or to
Target’s knowledge threatened, nor has any claim or
demand been made that challenges the legality,
validity, enforceability or ownership of any item of
Target Intellectual Property or Third Party
Intellectual Property or alleges a claim of
infringement of any Patents, Copyrights or Trademarks,
or violation of any trade secret or other proprietary
right of any third party. Target has not brought a
proceeding alleging infringement of Target
Intellectual Property or breach of any license or
agreement involving Intellectual Property against any
third party.

(h) All current and former officers and employees
of Target and consultants and independent contractors
to Target involved in the development, modification,
marketing and servicing of any Target Intellectual
Property have executed and delivered to Target an
agreement regarding the protection of proprietary
information and the assignment to Target of any
Intellectual Property arising from services performed
for Target by such persons.

(i) Target maintains in connection with its
operations, activity, conduct and business on the
World Wide Web (“Web”) and any and all other
applicable Internet operations, activity, conduct, and
business, a written privacy statement or policy
governing the collection, maintenance, and use of data
and information collected from users of Web sites
owned, operated, or maintained by, on behalf of, or
for the benefit of the Target in connection with,
related to, pursuant to, in the conduct of, or as part
its business and operations.

3.10 Interested Party Transactions. Target is not indebted to any director, officer,
employee or agent of Target (except for amounts due as salaries and bonuses and in reimbursement of
ordinary expenses), and no such person is indebted to Target.

3.11 Material Contracts. All Material Contracts of Target are listed in
Section 3.11 of the Target Disclosure Schedule. With respect to each Material Contract:
(a) the Material Contract is legal, valid, binding and enforceable and in full force and effect
with respect to Target, and, to Target’s knowledge, is legal, valid, binding, enforceable and in
full force and effect with respect to each other party thereto, in either case subject to the
effect of bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of
creditors’ rights generally and except as the availability of equitable remedies may be limited by
general principles of equity; (b) the Material Contract will continue to be legal, valid, binding
and enforceable and in full force and effect immediately following the Effective Time in accordance
with its terms as in effect prior to the Effective Time, subject to the effect of bankruptcy,
insolvency, moratorium or other similar laws affecting the enforcement of creditors’ rights
generally and except as the availability of equitable remedies may be limited by general principles
of equity; and (c) neither Target nor, to Target’s knowledge, any other party is in material breach
or default, and no event has occurred that with notice or lapse of time would constitute a material
breach or default by Target or, to Target’s knowledge, by any such other party, or permit
termination, modification or acceleration, under such Material Contract. “Material
Contract” means any contract, agreement or commitment to which Target is a party: (a) with
expected receipts or expenditures in excess of $10,000 per year; (b) required to be listed on the
Target Disclosure Schedule pursuant to Section 3.9; (c) granting any exclusive rights to
any party; (d) evidencing indebtedness for borrowed or loaned money, including guarantees of such
indebtedness; (e) obligating Target to make any capital expenditures or sell or lease any of its
assets; (f) restricting the Target’s ability to compete with any other person or limiting the lines
of business or geographic areas in which Target is allowed to conduct business; (g) all leases,
subleases, licenses and other lease agreements, together with all amendments, supplements and
nondisturbance agreements pertaining thereto, to which Target is a party and pursuant to which
Target leases, subleases or licenses any real or personal property (“Leases”); (h) any
agreement under which the consummation of the transactions contemplated by this Agreement requires
Target to obtain a consent or deliver a notice; (i) any indemnification agreement to which Target
is a party; (j) any barter or off-set agreement to which Target is a party; or (k) that could
reasonably be expected to have a Material Adverse Effect on Target if breached by Target or any
other party to the agreement in such a manner as would (i) permit any other party to cancel or
terminate the same (with or without notice of passage of time); (ii) provide a basis for any other
party to claim money damages (either individually or in the aggregate with all other such claims
under that contract) from Target; or (iii) give rise to a right of acceleration of any material
obligation or loss of any material benefit under such Material Contract.

3.12 Accounts Receivable. Subject to any reserves set forth therein, the accounts
receivable shown on the Target Financial Statements have arisen solely out of bona fide sales and
deliveries of goods, performance of services, and other business transactions in the ordinary
course of business consistent with past practices in each case with persons other than affiliates.

3.13 Title to Property. Target has good, legally valid and marketable title to all of
its properties (including real property, premises, buildings, inheritable building rights, land
property, similar rights of use or ownership and any other office space), interests in properties
and assets, real and personal, reflected in the Target Balance Sheet or acquired after the Target
Balance Sheet Date (except properties, interests in properties and assets sold or otherwise
disposed of since the Target Balance Sheet Date in the ordinary course of business), or with
respect to leased properties and assets, valid leasehold interests therein, free and clear of all
mortgages, liens, pledges, charges or encumbrances of any kind or character, except (a) the lien of
current taxes not yet due and payable (b) such imperfections of title, liens and easements as do
not and will not materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations involving such
properties and are correctly reflected in the agreements or similar documents made available to
Acquiror or its counsel; (c) liens securing debt that is reflected on the Target Balance Sheet; and
(d) such other mortgages, liens, pledges, charges or encumbrances as would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the properties used or
owned by Target or on the use of such properties by Target.

3.14 Taxes.

(a) As used in this Agreement, the terms
“Tax” and, collectively, “Taxes” mean
any and all federal, state and local taxes of any
country, assessments and other governmental charges,
duties, impositions and liabilities, including taxes
based upon or measured by gross receipts, income,
profits, sales, use and occupation, and value added,
ad valorem, stamp transfer, franchise, withholding,
payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and
additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with
any other person with respect to such amounts and
including any liability for taxes of a predecessor
entity.

(b) Target has timely filed all Tax returns
(federal, state and local) required by Law to be filed
by it (“Returns”). All Taxes shown to be due
and payable on such Returns, any assessments imposed,
and to Target’s knowledge all other Taxes due and
payable by Target on or before the Effective Time,
have been paid, are accrued for in the Target
Financial Statements or will be paid prior to the time
they become delinquent, except those contested by
Target in good faith and which are identified on the
Target Disclosure Schedule. Target has not been
advised (i) that any of its Returns, federal, state or
other, have been or are being audited as of the date
hereof or (ii) of any deficiency in assessment or
proposed judgment to its federal, state or other
Taxes. To the knowledge of Target, it has no
liability for any Tax to be imposed upon its
properties or assets as of the date of this Agreement
that is not adequately accrued or provided for.
Target has withheld with respect to its employees and
other third parties for which it is obligated to make
Tax withholdings (and timely paid over (if due prior
to the Effective Time) any withheld amounts to the
appropriate taxing authority) all federal and state
income Taxes, Federal Insurance Contribution Act,
Federal Unemployment Tax Act and other Taxes required
to be withheld. Target is not, nor has it been at any
time, a “United States Real Property Holding
Corporation” within the meaning of Section 897(c)(2)
of the Code.

3.15 Employee Benefit Plans.

(a) Section 3.15 of the Target Disclosure
Schedule contains a complete and accurate list of each
plan, program, policy, practice, contract, agreement
or other arrangement providing for employment,
compensation, retirement, deferred compensation,
loans, severance, separation, relocation,
repatriation, expatriation, visas, work permits,
termination pay, performance awards, bonus, incentive,
stock option, stock purchase, stock bonus, phantom
stock, stock appreciation right, supplemental
retirement, fringe benefits, cafeteria benefits or
other benefits, whether written or unwritten,
including without limitation each “employee benefit
plan” within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), which is or has been
sponsored, maintained, contributed to, or required to
be contributed to by Target and, with respect to any
such plans which are subject to Code Section 401(a),
any trade or business (whether or not incorporated)
that is or at any relevant time was treated as a
single employer with Target within the meaning of
Section 414(b), (c), (m) or (o) of the Code, (an
“ERISA Affiliate”) for the benefit of any
person who performs or who has performed services for
Target or with respect to which Target or any ERISA
Affiliate has or may have any liability (including
without limitation contingent liability) or obligation
(collectively, the “Target Employee Plans”).
At no time has Target or any ERISA Affiliate
contributed to or been obligated to contribute to any
multiemployer plan (as defined in Section 3(37) of
ERISA). Neither Target nor any ERISA Affiliate has
ever sponsored, participated in, or contributed to any
pension plan which is subject to Title IV of ERISA or
Section 412 of the Code. No Target Employee Plan
promises or provides retiree medical or other retiree
welfare benefits to any person. Section 3.15
of the Target Disclosure Schedule contains a complete
and accurate list of the Target’s employees, job
titles or general job description and salary and bonus
information.

(b) Documents. Target has furnished or
made available to Acquiror true and complete copies of
documents embodying each of the Target Employee Plans
and related plan documents, including without
limitation trust documents, group annuity contracts,
plan amendments, insurance policies or contracts,
administrative service agreements, summary plan
descriptions, annual reports and compliance and
nondiscrimination tests, standard COBRA forms and
related notices, registration statements and
prospectuses and, to the extent still in its
possession, any material employee communications
relating thereto and the most recent Internal Revenue
Service determination or opinion letter issued with
respect to each such Target Employee Plan.

(c) Compliance. Target has performed in
all material respects all obligations required to be
performed by it under each Target Benefit Plan and
each Target Benefit Plan has been established and
maintained in all material respect in accordance with
its terms and in compliance with all applicable laws,
statutes, orders, rules and regulations, including but
not limited to ERISA or the Code. Target has complied
in all material respects with the applicable health
care continuation requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), except to the extent that such
failure to comply could not reasonably be expected,
individually or in the aggregate, to have a Material
Adverse Effect on Target.

(d) Effect of Transaction. The
consummation of the transactions contemplated by this
Agreement will not (i) entitle any current or former
employee or other service provider of Target or any
ERISA Affiliate to severance benefits or any other
payment (including without limitation unemployment
compensation, golden parachute, bonus or benefits
under any Target Employee Plan), except as expressly
provided in this Agreement or as required by
applicable law; or (ii) accelerate the time of payment
or vesting of any such benefits or increase the amount
of compensation due any such employee or service
provider. Each Target Employee Plan can be amended,
terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without
material liability to Acquirer or Target other than
ordinary administration expenses typically incurred in
a termination event.

3.16 Employee Matters. Target is in compliance with all currently applicable laws and
regulations respecting terms and conditions of employment except to the extent that such failure to
comply could not reasonably be expected, individually or in the aggregate, to have a Material
Adverse Effect on Target. There are no claims pending, or, to Target’s knowledge, reasonably
expected or threatened, against Target under any workers’ compensation or long-term disability plan
or policy. Target is not a party to any collective bargaining agreement or other labor union
contract, nor does Target know of any activities or proceedings of any labor union to organize its
employees.

3.17 Insurance. Target maintains policies of insurance set forth on Section
3.17 of the Target Disclosure Schedule. There is no material claim pending under any of such
policies as to which coverage has been questioned, denied or disputed by the underwriters of such
policies. All premiums due and payable under all such policies have been paid and Target is
otherwise in compliance with the terms of such policies. Target has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such policies.

3.18 Compliance With Laws. Target has complied with, is not in violation of and has
not received any notices of violation with respect to, any federal state, local or foreign statute,
law or regulation with respect to the conduct of its business, or the ownership or operation of its
business, except where such non-compliance or violation would not reasonably be expected to have a
Material Adverse Effect on Target.

3.19 Brokers’ and Finders’ Fee. Except for amounts owed to Updata Capital, Inc., its
successors, assigns and affiliates (the “Target Broker”), no broker, finder or investment
banker is entitled to brokerage or finders’ fees or agents’ commissions or investment bankers’ fees
or any similar charges in connection with the Merger, this Agreement or any transaction
contemplated hereby.

3.20 Customers. Section 3.20 of the Target Disclosure Schedule sets forth a
complete and accurate list of the names of all of the customers of Target, showing the approximate
total billings in United States dollars to each such customer during the last fiscal year and the
present year to date. Target has not received any written communication from any customer named on
Section 3.20 of the Target Disclosure Schedule of any intention to return, terminate or
materially reduce purchases from Target.

3.21 Bank Accounts. Section 3.21 of the Target Disclosure Schedule contains a
complete list of all bank, brokerage or similar accounts of Target and the names of all officers or
employees who are authorized to make withdrawals therefrom or dispositions thereof.

3.22 Books and Records. Except as set forth in Section 3.22 of the Target
Disclosure Schedule, the books and records of Target have been maintained in accordance with
generally accepted industry practice.

3.23 Questionable Payments. None of the partners, members, owners, directors,
managers, executives, officers, representatives, agents or employees of Target (when acting in such
capacity or otherwise on behalf of Target): (i) has used or is using any corporate funds for
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 government officials or employees; (iii) has violated or is
violating any provision of the Foreign Corrupt Practices Act of 1977; (iv) has established or
maintained, or is maintaining, any unlawful or unrecorded fund of corporate monies or other
corporate properties; or (v) has made at any time since the date of formation any false or
fictitious entries on the books and records of Target; or (vi) has made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of any nature using corporate funds or
otherwise on behalf of Target.

4. Representations and Warranties of Acquiror and Merger Sub.

Acquiror and Merger Sub represent and warrant to Target that the statements contained in this
Section 4 are true and correct.

4.1 Organization, Standing and Power. Each of Acquiror and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws of the states of
Nevada and Delaware, respectively. Acquiror has the corporate power to own its properties and to
carry on its business as now being conducted and as proposed to be conducted and is duly qualified
to do business and is in good standing in each jurisdiction in which the failure to be so qualified
and in good standing could reasonably be expected to have a Material Adverse Effect on Acquiror.

4.2 Authority. Acquiror and Merger Sub have 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, or will have been by the Closing, duly authorized by all necessary corporate
action on the part of Acquiror and Merger Sub. This Agreement has been duly executed and delivered
by Acquiror and Merger Sub and constitutes the valid and binding obligations of Acquiror and Merger
Sub enforceable against Acquiror and Merger Sub in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or
relating to creditors’ rights generally, and subject to general principles of equity. The
execution and delivery of this Agreement do 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 right of termination, cancellation
or acceleration of any material obligation or loss of a material benefit under (a) any provision of
the charter or bylaws of Acquiror or Merger Sub; or (b) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Acquiror or Merger Sub or their
properties or assets except in the case of clause (b), for such conflicts, violations, defaults,
rights of termination, cancellation or acceleration as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Acquiror. No consent, approval, order
or authorization of or registration, declaration or filing with any Governmental Entity is required
by or with respect to Acquiror or Merger Sub in connection with the execution and delivery of this
Agreement by Acquiror and Merger Sub or the consummation by Acquiror and Merger Sub of the
transactions contemplated hereby, except for (a) the filing of the Certificate of Merger as
provided in Section 2.2; and (b) such other consents, authorizations, filings, approvals
and registrations which, if not obtained or made, could not reasonably be expected to have a
Material Adverse Effect on Acquiror and could not prevent, materially alter or delay any of the
transactions contemplated by this Agreement. Neither the execution and delivery of, nor the
payment obligations under any of the Promissory Notes (whether in cash or shares of Acquiror’s
capital stock) pursuant to the terms herein and therein will result in any breach of or constitute
a default (or an event which with the giving of notice or lapse of time or both could reasonably be
expected to become a default) by Acquiror or any Subsidiary of Acquiror under any note, indenture,
mortgage, lien, security interest, contract, agreement or obligation to which Acquiror or any
Subsidiary of Acquiror is a party or is bound.

4.3 Interim Operations of Merger Sub. Merger Sub 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.

4.4 Financial Ability. Acquiror has sufficient funds to consummate the transactions
provided for under this Agreement.

4.5 Brokers. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the Merger based upon arrangements made by
or on behalf of Acquiror.

4.6 Litigation. Except as disclosed in the SEC Documents or as otherwise would not
have a Material Adverse Effect on Acquiror, there is no existing private or governmental action,
suit, proceeding, claim, arbitration or, to Acquiror’s knowledge, any investigation pending before
any Governmental Entity, foreign or domestic, or, to the knowledge of Acquiror, threatened against
Acquiror, Merger Sub or any of their respective properties or any of their respective officers or
directors (in their capacities as such). There is no judgment, decree or order against Acquiror or
Merger Sub, or, to the knowledge of Acquiror, any of their respective directors or officers (in
their capacities as such), that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Acquiror.

4.7 SEC Documents; Acquiror Financial Statements. Acquiror has furnished or made
available to Target true and complete copies of all reports or registration statements filed by it
with the U.S. Securities and Exchange Commission (the “SEC”) since January 1, 2004, all in
the form so filed (all of the foregoing being collectively referred to herein as the “SEC
Documents”). As of their respective filing dates, the SEC Documents complied in all material
respects with the requirements of the Act or the Securities Exchange Act of 1934, as amended, as
the case may be. The consolidated financial statements of Acquiror, including the notes thereto,
included in the SEC Documents (the “Acquiror Financial Statements”) have been prepared in
accordance with GAAP consistently applied (except as may be indicated in the notes thereto or, in
the case of unaudited statements, as permitted by SEC rule) and present fairly, in all material
respects, the consolidated financial position of Acquiror at the dates thereof and the consolidated
results of its operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). All Indebtedness of Acquiror and its
Subsidiaries is disclosed in the SEC Documents. Neither Acquiror nor its Subsidiaries is in
material violation of any terms of any Indebtedness.

4.8 Taxes. With respect to Acquiror, since January 1, 2004 and with respect to each
Subsidiary of Acquiror, since the date of the acquisition of such Subsidiary by Acquiror: (i) all
Tax Returns relating to Acquiror and its Subsidiaries that are required by law to be filed have
been duly filed on a timely basis, (ii) to Acquiror’s knowledge, all amounts set forth thereon have
been paid in full and all such Tax Returns are correct and complete in all material respects, and
(iii) there are no material pending or threatened actions, claims, audits or, to the knowledge of
Acquiror, investigations for the assessment or collection of Taxes that relate to the activities or
income of Acquiror or its Subsidiaries.

4.9 Capital Structure. As of June 30, 2006, the authorized capital stock of Acquiror
consists only of: 150,000,000 shares of Common Stock; and 50,000,000 shares of preferred stock, par
value $0.00001 per share; of which 8,863,636 shares of Series D Preferred Stock have been
designated (of which 7,045,045 is outstanding). As of the date hereof, there are [     ]
shares of Common Stock issued and outstanding; and outstanding options and warrants to purchase
[     ] shares of Common Stock and there are no other authorized shares of any class
authorized, issued or outstanding. The outstanding warrants to purchase Common Stock include
warrants issued in connection with the Acquiror’s senior credit facility entered into on August 2,
2005 (the “Senior Credit Warrants”). Other than the convertible instruments described
above or in the SEC Documents, no person has any phantom rights, options, warrants or other equity
interest or instrument convertible into any equity interest in Acquiror or otherwise has any right
to acquire any equity interest or any instrument convertible into any equity interest in Acquiror.
All of the issued and outstanding shares of Acquiror’s capital stock have been duly authorized and
validly issued and are fully paid, nonassessable and free of preemptive rights and were issued in
full compliance with applicable state and Federal securities law and any rights of third parties.
If the Promissory Notes are converted in connection with their terms, the shares of Common Stock
issuable upon such conversion, will be, when issued, duly authorized, validly issued, fully paid,
nonassessable, free of preemptive rights and issued in accordance with applicable state and Federal
securities laws and any rights of third parties, free and clear of all liens or encumbrances.
Other than as set forth in the SEC Documents, Acquiror is not a party to any voting agreements,
buy-sell agreements, options or rights of first purchase agreements, registration rights agreements
or other agreement of any kind among Acquiror and any of the security holders of Acquiror relating
to the securities of Acquiror held by them. The issuance of the Promissory Notes hereunder will not
obligate Acquiror to issue shares or other securities to any other Person (other than the Target
stockholders).

4.10 Undisclosed Liabilities. Acquiror and its Subsidiaries do not have any
liabilities or obligations except (i) liabilities which are reflected and properly reserved against
in the most recent balance sheet included in the SEC Documents, (ii) liabilities incurred in the
ordinary course of Acquiror’s and its Subsidiaries’ business since the date of such balance sheet,
(iii) liabilities arising under any of the contracts, arrangements, licenses, leases,
understandings, purchase orders, invoices or other agreements to which Acquiror or any of its
Subsidiaries are a party, whether written, oral, established through course of dealing or
otherwise, or (iv) liabilities which are not required to be reflected on a balance sheet prepared
in accordance with GAAP.

4.11 Internal Controls. Acquiror and its Subsidiaries currently conduct their
business in compliance in all material respects with all laws and regulations applicable to the
conduct of their respective business, including the Sarbanes-Oxley Act of 2002, to the extent
applicable to Acquiror.

5. Additional Agreements.

5.1 Expenses. Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated hereby shall be paid
by the party incurring such expense. Except for the fees and expenses payable to (a) the Target
Broker pursuant to the issuance of the Target Broker Promissory Note and (b) DLA Piper Rudnick Gray
Cary US LLP, counsel for Target, in an aggregate amount not to exceed $45,000 (collectively, the
“Transaction Costs”), Target shall have paid all transaction fees and expenses to any
financial, legal or other advisor relating to the Merger.

5.2 Extension; Waiver. At any time prior to the Effective Time, the parties hereto,
by action taken or authorized by their respective Boards of Directors, may, to the extent legally
allowed: (i) extend the time for the performance of any of the obligations or other acts of the
other parties hereto; (ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto; and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party hereto to any such
extension or waiver shall be valid only if set forth in a written instrument signed on behalf of
such party.

5.3 Indemnification Relating to Target Officers and Directors.

(a) From the Effective Time until the third
anniversary of the Effective Time (or, in the case of
matters occurring prior to the Effective Time which
have not been resolved prior to the third anniversary
of the Effective Time, until such matters are finally
resolved, the “D&O Insurance Period”),
Acquiror shall cause the Surviving Corporation to
fulfill and honor all obligations of Target relating
to the limitation of liability and indemnification of
officers and directors pursuant to Target’s
certificate of incorporation and bylaws, as each are
in effect immediately prior to the Effective Time, or
pursuant to any existing indemnification agreements,
and pay all amounts due and payable under such
provisions.

(b) Acquiror shall cause to be maintained in
effect for the D&O Insurance Period (the “Tail
Insurance”) the current policies of directors’ and
officers’ liability insurance currently maintained by
Target; provided, however, that the
Acquiror may substitute therefor policies of
comparable coverage (including, without limitation,
coverage under Acquiror’s existing polices of
directors’ and officers’ liability insurance);
provided, further, that in no event
shall Acquiror be required to expend in excess of the
aggregate net amount of $10,000 for the Tail
Insurance, and if the cost of such Tail Insurance
would exceed the aggregate net amount of $10,000,
Acquiror shall purchase the maximum amount of coverage
for the D&O Insurance Period as is available for the
aggregate net amount of $10,000. If the Tail
Insurance cannot be maintained, expires or is
terminated or cancelled during such three-year period,
Acquiror will use reasonable efforts to replace such
coverage for the remainder of such period on terms and
conditions substantially similar to the existing
directors’ and officers’ insurance and indemnification
policy; provided, however, that in no
event shall the Parent be required to expend in excess
of the aggregate net amount of $10,000 to replace the
Tail Insurance, and if the expense of replacing such
Tail Insurance would exceed the aggregate net amount
of $10,000, Acquiror shall purchase the maximum amount
of coverage for the D&O Insurance Period as is
available for the aggregate net amount of $50,000.
The provisions of this Section 5.3(b) are
intended to be for the benefit of, and will be
enforceable by, the individuals who were directors and
officers of Target immediately prior to the Effective
Time. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of this
Section 5.3 shall survive the Expiration Date
in accordance with their terms.

5.4 Employee Matters.

(a) Acquiror will honor and pay or cause Target
to pay all amounts when due under all existing
employment, severance, retention and bonus agreements
of Target currently in effect, including, without
limitation, the Retention Payments described in
Section 5.3(b). For all purposes (including,
without limitation, eligibility, vesting, and benefit
accrual) under the employee benefit plans of Acquiror
and its Subsidiaries providing benefits to former
employees of Target or the Surviving Corporation after
the Effective Time (the “Target Employees”),
each such Target Employee shall be credited with his
or her years of service with Target, as applicable,
before the Effective Time, to the same extent as such
Target Employee was entitled, before the Effective
Time, to credit for such service under any similar
Target Employee Plan, except for purposes of benefit
accrual under defined benefit pension plans, if any.

(b) Promptly following the Closing (but in any
event, within 10 days thereafter), Acquiror will honor
and pay or cause Target to pay to each of the
individuals listed on Exhibit E attached
hereto under the heading “Eligible Employees”
(collectively, the “Eligible Employees”) the
amount set forth opposite such Eligible Employee’s
name on Exhibit E attached hereto (each
amount, an “Retention Payment”) as determined
in accordance with those certain letter agreements
delivered to each of the Eligible Employees pursuant
which such Eligible Employees were granted the right
to receive their respective Retention Payments. Each
of the Retention Payments shall be paid to such
Eligible Employees in U.S. dollars in cash, by check
or other immediately available funds.

(c) Effective as of the Closing Date, Target’s
employees shall cease to participate in Target’s
existing 401(k) Plan (“Target 401(k) Plan”),
and on or as soon as administratively practicable
following the Closing Date, Acquiror shall provide to
the Target Employees either the right to participate
in a 401(k) plan offered by Acquiror to its employees
or to employees of other companies affiliated with
Acquiror or shall establish a new 401(k) plan for the
Target Employees (any such 401(k) plan is referred to
as “Acquiror’s 401(k) Plan”). As soon as is
reasonably practicable following the Closing Date, the
trustee of the Target 401(k) Plan shall transfer
account balances related to the Target Employees
(including any outstanding loans) from the Target
401(k) Plan to the Acquiror 401(k) Plan in accordance
with the requirements of Sections 411(d)(6) and 414(l)
of the Code. Such transfer shall be made in cash,
except that any promissory notes evidencing
participant loans shall be transferred in kind. The
parties hereto shall use commercially reasonable
efforts to effect such transfer of assets in a timely
manner. Until such transfer is accomplished, the
trustee(s) of the Target 401(k) Plan shall suspend any
default on any loan from the Target 401(k) Plan to any
Target Employee prior to the Effective Time.

5.5 Target Broker Promissory Note At the Closing, Acquiror shall deliver to Target
Broker a promissory note in the form of Exhibit F attached hereto (the “Target Broker
Promissory Note”). The Target Broker Promissory Note shall be in the original principal amount
of $110,000 which shall be due and payable by Acquiror to Target Broker in full on February 15,
2007 and which shall bear interest at a fixed rate equal to the prime rate determined as of the
date of the Closing.

5.6 Confidentiality Prior to the Effective Date, each party shall hold in strict
confidence, and shall use its commercially reasonable efforts to cause all of its officers,
directors, employees, accountants, consultants, legal counsel, agents and other representatives
(collectively, “Representatives”) to hold in strict confidence, unless compelled to
disclose by judicial or administrative process, or by other requirements of law, all confidential
information concerning the other party which it has obtained from the other party or its
Representatives in connection with the Merger and this Agreement, and the receiving party shall not
use or disclose to others, or permit the use of or disclosure of, any such information so obtained,
and will not release or disclose such information to any other person, except its Representatives
who need to know such information in connection with this Agreement (and who shall be advised of
the provisions of this Section 5.6). The foregoing provision shall not apply to any such
information to the extent: (i) known by the receiving party prior to the date such information was
provided to that party by the other party or its Representatives in connection with the Merger;
(ii) made known to the receiving party from a third party not in breach of any confidentiality
requirement; or (iii) made public through no fault of the disclosing party or any of its
Representatives.

5.7 Announcements. Except as otherwise set forth in the next sentence of this
Section 5.7, from and after the date of this Agreement until the Effective Time, each party
agrees not to make any public announcement or other disclosure concerning this Agreement or the
transactions contemplated herein without obtaining the prior written consent of Acquiror and Target
as to form, content and timing except to the extent required by applicable law, in which case the
issuing party shall use all reasonable efforts to consult with the other party before issuing any
such release or making any such public statement.

5.8 Cooperation on Tax Matters. The Stockholders’ Agent shall prepare and file or
cause to be prepared and filed all Tax Returns of Target which are required to be filed before the
Closing Date or which are required to be filed after the Closing Date in respect of any pre-Closing
Tax period. Acquiror shall have the opportunity to review such Tax Returns and the Stockholders’
Agent shall provide such Tax Returns to Acquiror (for Acquiror’s review and comment) prior to their
due date. Acquiror shall prepare and file all other Tax Returns of Target. Acquiror and the
Surviving Corporation, on the one hand, and the Stockholders’ Agent, on the other hand, shall
cooperate fully, as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns in connection with this Merger and the respective Tax obligations of the
parties hereto prior to the Merger, and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party’s request) the
provision of records and information which are reasonably relevant to any such audit, litigation or
other proceeding and making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder. Acquiror, the Surviving
Corporation, and Stockholders’ Agent shall (i) retain all books and records with respect to Tax
matters pertinent to Target relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent notified by Acquiror or
Stockholders’ Agent, any extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any Governmental Entity and (ii) to give the other
party reasonable written notice prior to transferring, destroying or discarding any such books and
records and, if the other party so requests, the Surviving Corporation or Stockholders’ Agent as
the case may be, shall allow the other party to take possession of such books and records. Upon
request, Acquiror and Stockholders’ Agent further agree to use their reasonable commercial efforts
to obtain any certificate or other document from any Governmental Entity or any other Person as may
be necessary to mitigate, reduce or eliminate any Tax that could be imposed (including but not
limited to with respect to the transactions contemplated hereby).

6. Closing Deliverables.

6.1 Target Closing Deliverables. For the Closing, Target is herewith presenting to
Acquiror the following:

(a) Stockholder Approval. Written
consents evidencing the approval of this Agreement and
the Merger by the stockholders of Target with the
requisite vote under Delaware Law and Target’s
certificate of incorporation.

(b) Board Authorizations. Certified copy
of resolutions duly adopted by the Board of Directors
of Target authorizing this Agreement, the Merger and
the transactions contemplated hereby.

(c) Resignation of Officers and
Directors. Resignations of the directors and
officers of Target in office immediately prior to the
date hereof.

(d) Target 401(k) Plan. Resolutions of
Target’s board of directors terminating the 401(k)
Plan effective as of the date immediately preceding
the date hereof and amending the 401(k) Plan, as
necessary, to assure compliance with all applicable
requirements of the Code and regulations thereunder so
that the tax-qualified status of the 401(k) Plan shall
be maintained at the time of the termination.

6.2 Acquiror Closing Deliverables. For the Closing, Acquiror is herewith presenting
to Target the following:

(a) Certificate of Payment. A
certificate of an executive officer of Acquiror
authorizing and instructing payment to:

(i) each Target stockholder’s pro-rata portion of the Aggregate Merger Consideration (based on
such Target stockholder’s Share Percentage) by issuance to such stockholder of a Promissory Note as
contemplated by Sections 2.6 and 2.7(b) hereof, along with a exhibit setting forth
each individual payment;

(ii) each Eligible Employee, the amount of such Eligible Employee’s Retention Payment in
accordance with Section 5.4; and

(iii) Target Broker, the Target Broker Promissory Note in accordance with Section 5.5.

(b) Promissory Notes. Copies of the
Promissory Notes and the Target Broker Promissory Note
being issued and delivered to Target stockholders and
the Target Broker, respectively; and

(c) Board Authorizations. Certified copy
of resolutions duly adopted by the Board of Directors
of Acquiror authorizing this Agreement, the Merger and
the transactions contemplated hereby.

7. Indemnification.

7.1 Indemnification.

(a) Survival of Representations, Warranties
and Covenants. All representations and warranties
made by Target, Acquiror and Merger Sub, herein, or in
any certificate, schedule or exhibit delivered
pursuant hereto, shall survive the Closing and
continue in full force and effect until (i) with
respect to the representations and warranties
contained in Section 3.1 and Section
4.1 (Organization), Section 3.2 and
Section 4.2 (Authority), Section 3.5
(Capital Structure) and Section 3.15 (Employee
Benefit Plans), the date of the applicable statute of
limitations and (ii) with respect to all other
representations and warranties of Target and Acquiror,
respectively, in the case of representations and
warranties made by (x) Target, that date which is the
six (6) month anniversary of the Closing Date and (y)
Acquiror, until the full payment and satisfaction of
Acquiror’s obligations under the Promissory Notes
(collectively, the “Expiration Date”). All
covenants and agreements made by the parties hereto
shall survive the Closing for the applicable statute
of limitations.

(b) Indemnification.

(i) Indemnification by Target Stockholders. Subject to the limitations set forth in
this Section 7, the stockholders of Target will severally and not jointly indemnify and
hold harmless Acquiror and the Surviving Corporation and their respective officers, directors,
agents, attorneys and employees, and each person, if any, who controls or may control Acquiror or
the Surviving Corporation within the meaning of the Securities Act (individually an “Acquiror
Indemnified Person” and collectively the “Acquiror Indemnified Persons”) from and
against any and all losses, costs, damages, liabilities and expenses arising from claims, demands,
actions, causes of action, including, without limitation, legal fees, (collectively,
“Damages”) arising out of any (A) misrepresentation or breach of or default in connection
with any of the representations, warranties, covenants and agreements given or made by Target in
this Agreement, the Target Disclosure Schedule or any exhibit or schedule to this Agreement and (B)
any Dissenting Shares Excess Payments; provided, however, that Damages shall be net
of any tax benefits and shall not include: (i) any amounts for which any Acquiror Indemnified
Person is actually reimbursed under any insurance policy of Target or Acquiror; or (ii) any amounts
incurred in connection with investigating or defending any claims that are finally determined not
to create any claim for Damages.

(ii) Indemnification by Acquiror. Subject to the limitations set forth in this
Section 7, Acquiror will hold harmless Target and the stockholders of Target and their
respective officers, directors, agents, attorneys and employees, and each person, if any, who
controls or may control Target within the meaning of the Securities Act (individually a “Target
Indemnified Person” and collectively the “Target Indemnified Persons”) from and against
any Damages arising out of any misrepresentation or breach of or default in connection with any of
the representations, warranties, covenants and agreements given or made by Acquiror or Merger Sub
in this Agreement, or any exhibit or schedule to this Agreement; provided, however,
that Damages shall be net of any tax benefits and shall not include: (i) any amounts for which any
Target Indemnified Person is actually reimbursed under any insurance policy of Target; or (ii) any
amounts incurred in connection with investigating or defending any claims that are finally
determined not to create any claim for Damages.

(c) Limitations.

(i) Except in the case of fraud resulting in a breach of or default under any of the
representations, warranties, covenants or agreements given or made in this Agreement, or any
agreement contemplated herein or any exhibit or schedule to this Agreement (collectively,
“Fraud”), the sole and exclusive remedy of any Acquiror Indemnified Persons for any Damages
hereunder or otherwise shall be the right to set-off the amount of Damages against the principal
and accrued interest outstanding under the Promissory Notes.

(ii) Except with respect to Target’s Fraud, the amount of any Damages hereunder shall not
exceed fifty percent (50%) of the principal amount of the Promissory Note and no Target stockholder
shall be liable for any amount hereunder and Acquiror shall not be permitted to set-off against any
Target stockholder’s Promissory Note in excess of fifty percent (50%) of the principal amount of
such individual’s Promissory Note issued hereunder. No claim for Damages may be made after the
Expiration Date.

(iii) Except in cases of Acquiror’s Fraud, any Damages for which Acquiror may become liable
hereunder shall be limited solely and exclusively to the Aggregate Merger Consideration and neither
Acquiror nor Merger Sub shall be liable for any amount hereunder in excess of the Aggregate Merger
Consideration.

(d) Threshold for Claims. No claim for
Damages shall be made hereunder unless the aggregate
of Damages exceeds $25,000 for which claims are made
hereunder by the Acquiror Indemnified Persons or the
Target Indemnified Persons, as applicable, in which
case the Acquiror Indemnified Person or Target
Indemnified Persons, as applicable shall be entitled
to seek compensation for all Damages.

(e) Manner of Pursuing Claims. If
Acquiror (the “Claim Party”) believes in good
faith that it has incurred Damages indemnifiable under
this Section 7, such Claim Party shall send to
the Stockholders’ Agent (the “Receiving
Party”), on or before the Expiration Date a
certificate signed by any officer or authorized
representative of the Claim Party (an “Officer’s
Certificate”) stating that Damages exist with
respect to the indemnification obligations of the
stockholders of Target, as set forth under this
Section 7, and specifying in reasonable detail
the individual items of such Damages included in the
amount so stated, the date each such item was paid, or
properly accrued or arose, and the nature of the
misrepresentation, breach of warranty, covenant or
claim to which such item is related. If (i) the
Receiving Party shall not object in writing to any
claim or claims by Claim Party made in any Officer’s
Certificate within thirty (30) days of receipt of such
Officer’s Certificate or (ii) the Receiving Party
shall agree to such Damages (to which a memorandum
setting forth such agreement shall be prepared and
signed by Acquiror and Stockholders’ Agent), such
amount of Damages, subject to the limitations set
forth in this Sections 7, shall constitute
“Final Damages” to which Acquiror shall offset
the amount of such Final Damages pro-rata (based on
each Target stockholder’s Share Percentage) against
each Target stockholders’ respective Promissory Note.
In case the Receiving Party shall so object in writing
to any claim or claims by the Claim Party made in any
Officer’s Certificate, the Claim Party shall have
thirty (30) days to respond in a written statement to
the objection of the Receiving Party. If the Claim
Party does not respond in a written statement to such
objection within such thirty (30) day period, the
Claim Party shall not be able to pursue a claim for
Damages to which the Officer’s Certificate was
originally sent. If after such thirty (30) day period
there remains a dispute as to any claims, the
Stockholders’ Agent and Acquiror shall attempt in good
faith for sixty (60) days to agree upon the rights of
the respective parties with respect to each of such
claims. If the Stockholders’ Agent and Acquiror
should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both
parties, and such amount of Damages, subject to the
limitations set forth in this Sections 7,
shall constitute “Final Damages” to which
Acquiror shall offset the amount of such Final Damages
pro-rata (based on each Target stockholder’s Share
Percentage) against each Target stockholders’
respective Promissory Note.

(f) Exclusive Remedy. Except as
otherwise expressly provided in Section 8.9,
the indemnity provisions provided for in this
Section 7 shall be the exclusive remedies of
the parties to this Agreement and their respective
officers, directors, members, managers, partners,
employees, Affiliates, agents, representatives,
successors and assigns for any and all matters,
claims, actions or the like, including, but not
limited to, for any breach of a representation,
warranty, covenant or other agreement contained in
this Agreement and such parties shall not be entitled
to a rescission of this Agreement or to any further
rights (indemnification or otherwise) or claims of any
nature whatsoever in respect thereof, all of which the
parties hereto, hereby waive. Notwithstanding the
foregoing, in addition to and not in lieu of any right
or remedy provided in this Agreement, each Target
stockholder shall be entitled to the rights and
remedies provided in such stockholder’s Promissory
Note to enforce the payment and other obligations
contained therein.

(g) Dissenting Shares Excess Payments.
For purposes of this Agreement, “Dissenting Shares
Excess Payments” means any payment in respect of
Dissenting Shares in excess of the amount of cash (or
the principal amount of the Promissory Note) that
would have been payable pursuant to Section
2.6(a) in respect of such shares had they never
been Dissenting Shares plus expenses associated with
such appraisal rights claims. Dissenting Shares
Excess Payments shall constitute “Damages” for
purposes of Section 7.

7.2 Resolution of Conflicts and Arbitration.

(a) If no agreement regarding a dispute relating
to this Agreement can be reached after good faith
negotiation between the parties, either Acquiror or
the Stockholders’ Agent may, by written notice to the
other, demand arbitration of the matter unless the
amount of the Damages is at issue in pending
litigation with a third party, in which event
arbitration shall not be commenced until such amount
is ascertained or both parties agree to arbitration;
and in either such event the matter shall be settled
by arbitration conducted by one arbitrator. Acquiror
and the Stockholders’ Agent shall agree on the
arbitrator, provided that if Acquiror and the
Stockholders’ Agent cannot agree on such arbitrator,
either Acquiror or Stockholders’ Agent can request
that Judicial Arbitration and Mediation Services
(“JAMS”) select the arbitrator. The
arbitrator shall set a limited time period and
establish procedures designed to reduce the cost and
time for discovery while allowing the parties an
opportunity, adequate in the sole judgment of the
arbitrator, to discover relevant information from the
opposing parties about the subject matter of the
dispute. The arbitrator shall rule upon motions to
compel or limit discovery and shall have the authority
to impose sanctions, including attorneys’ fees and
costs, to the same extent as a court of competent law
or equity, should the arbitrator determine that
discovery was sought without substantial justification
or that discovery was refused or objected to without
substantial justification. The decision of the
arbitrator shall be written, shall be in accordance
with applicable law and with this Agreement, and shall
be supported by written findings of fact and
conclusion of law that shall set forth the basis for
the decision of the arbitrator. The decision of the
arbitrator as to the validity and amount of any
indemnification claim brought hereunder shall be
binding and conclusive upon the parties to this
Agreement, and such amount of Damages set forth in the
decision, subject to the limitations set forth in this
Section 7, shall constitute “Final
Damages” to which Acquiror shall offset the amount
of such Final Damages pro-rata (based on each Target
stockholder’s Share Percentage) against each Target
stockholders’ respective Promissory Note.

(b) Judgment; Fees and Costs of
Arbitration. Judgment upon any award rendered by
the arbitrator may be entered in any court having
jurisdiction. Any such arbitration shall be held in
Suffolk County, Massachusetts under the commercial
rules then in effect of JAMS. The non-prevailing
party to an arbitration shall pay its own expenses,
the fees of the arbitrator, any administrative fee of
JAMS, and the expenses, including attorneys’ fees and
costs, reasonably incurred by the other party to the
arbitration. For purposes of this
Section 7.2(a), in any arbitration hereunder
in which any claim or the amount thereof is at issue,
the party seeking indemnification shall be deemed to
be the non-prevailing party unless the arbitrators
award the party seeking indemnification more than
one-half (1/2) of the amount in dispute, plus any
amounts not in dispute; otherwise, the person against
whom indemnification is sought shall be deemed to be
the non-prevailing party.

7.3 Stockholders’ Agent.

(a) Appointment of the Stockholders’
Agent. Sierra Ventures shall be constituted and
appointed as agent for and on behalf of the Target
stockholders to give and receive notices and
communications, to authorize reduction of amounts due
under the Promissory Notes in satisfaction of claims
by Acquiror, to object to such deliveries, to agree
to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of
courts and awards of arbitrators with respect to such
claims, and to take all actions necessary or
appropriate in his judgment for the accomplishment of
the foregoing. Such agency may be changed by the
holders of a majority in interest of the Promissory
Notes from time to time upon not less than 10 days’
prior written notice to Acquiror. No bond shall be
required of the Stockholders’ Agent, and the
Stockholders’ Agent shall receive no compensation for
his services. Notices or communications to or from
the Stockholders’ Agent shall constitute notice to or
from each of the Target stockholders.

(b) No Liability. The Stockholders’
Agent shall not be liable for any act done or omitted
hereunder as Stockholders’ Agent 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 Target stockholders shall severally
indemnify and hold the Stockholders’ Agent harmless
against any loss, liability or expense incurred
without gross negligence or bad faith on the part of
the Stockholders’ Agent and arising out of or in
connection with the acceptance or administration of
his duties hereunder.

(c) Access to Information. The
Stockholders’ Agent shall have reasonable access to
information about Target and Acquiror and the
reasonable assistance of Target’s and Acquiror’s
officers and employees for purposes of performing his
duties and exercising his rights hereunder, provided
that the Stockholders’ Agent shall treat
confidentially and not disclose any nonpublic
information from or about Target or Acquiror to anyone
(except on a need to know basis to individuals who
agree to treat such information confidentially).

(d) Conflict of Interest. Acquiror
acknowledges that the Stockholders’ Agent may have a
conflict of interest with respect to his duties as
Stockholders’ Agent, and in such regard the
Stockholders’ Agent has informed Acquiror that he will
act in the best interests of the Target stockholders.

7.4 Actions of the Stockholders’ Agent. A decision, act, consent or instruction of
the Stockholders’ Agent shall constitute a decision of all Target stockholders with respect to the
matters within the scope of this Section 7 and shall be final, binding and conclusive upon
each such Target stockholder, and the Acquiror may rely upon any decision, act, consent or
instruction of the Stockholders’ Agent as being the decision, act, consent or instruction of each
and every such Target stockholder.

7.5 Third-Party Claims. In the event any Acquiror or the Stockholders’ Agent (the
“Indemnified Person”) becomes aware of a third-party claim which such Indemnified Person
believes may result in indemnification under this Agreement, the Indemnified Person shall notify
the Stockholders’ Agent or the Acquiror, as the case may be (the “Indemnifying Person”), of
such claim, and the Indemnifying Person shall be entitled, at the expense of the Indemnifying
Person (which expenses, in cases where the Target’s stockholders are the indemnifying party, shall
be reimbursed pro-rata (based on such Target stockholder’s Share Percentage) out of each Target
stockholders’ Promissory Notes), to participate in any defense of such claim with the consent of
the Indemnified Party which shall not be unreasonably withheld; provided, however,
that the Indemnified Party shall not settle any such claim without the written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld. In the event that the
Stockholders’ Agent is the Indemnifying Party and has consented to any such settlement, the
Stockholders’ Agent shall not object to the amount of any claim by Acquiror against the Promissory
Notes for indemnity in accordance with the provisions and limitations of this Section 7
with respect to such settlement.

8. General Provisions.

8.1 Notices. All notices and other communications hereunder shall be in writing and
shall be deemed duly delivered: (i) upon receipt if delivered personally; (ii) three (3) business
days after being mailed by registered or certified mail, postage prepaid, return receipt requested;
(iii) one (1) business day after it is sent by commercial overnight courier service; or (iv) upon
transmission if sent via facsimile with confirmation of receipt to the parties at the following
address (or at such other address for a party as shall be specified upon like notice):

(a) if to Acquiror or Merger Sub, to:

	 	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	
 
	 	HALO Technology Holdings, Inc.

200 Railroad Avenue, 3rd Floor

Greenwich, CT 06830

Fax:
	
 
	 	Tel:

(b) if to Target to:

	 	 	 
	 
	 	 
	 
	 	 
	 
	 	 
	
 
	 	Tenebril Inc.

75 Federal Street, Suite 650

Boston, MA 2110

Attn: Rich Forcier

Fax: (617) 249-2094

Tel:
	 
	 	 
	 
	 	 
	 
	 	 
	
 
	 	with a copy to:
	 
	 	 
	
 
	 	DLA Piper Rudnick Gray Cary LLP

1775 Wiehle Avenue, Suite 400

Reston, VA 20190

Attention: Jason C. Reis, Esq.

Fax: (703) 773-4017

Tel: (703) 773-5017
	 
	 	 
	
 
	 	following the Closing, to Stockholders’ Agent:
	
 
	 	Sierra Ventures

c/o Steven P. Williams, Manager

2884 Sand Hill Road, Suite 100

Menlo Park, CA 94025

Fax: (650) 854-5593

Tel: (650) 854-1000

8.2 Definitions. In this Agreement any reference to any event, change, condition or
effect being “material” with respect to any entity or group of entities means any material
event, change, condition or effect related to the financial condition, properties, assets
(including intangible assets), liabilities, business, operations or results of operations of such
entity or group of entities. In this Agreement any reference to a “Material Adverse
Effect” with respect to any entity or group of entities means any event, change or effect that
is materially adverse to the financial condition, properties, assets, liabilities, business,
operations or results of operations of such entity and its subsidiaries, taken as a whole. In this
Agreement any reference to a party’s “knowledge” means such party’s actual knowledge. In
this Agreement, an entity shall be deemed to be a “Subsidiary” of a party if such party
directly or indirectly owns, beneficially or of record, at least 50% of the outstanding equity or
financial interests of such entity. In this Agreement, “person” means any natural person,
company, corporation, limited liability company, general partnership, limited partnership, trust,
proprietorship, joint venture, business organization or Governmental Entity. In this Agreement,
“Indebtedness” means, with respect to any Person, any liability or obligation (i) for
borrowed money, other than trade payables incurred in the ordinary course of business, (ii)
evidenced by bonds, debentures, notes, or other similar instruments, (iii) in respect of letters of
credit or other similar instruments (or reimbursement obligations with respect thereto), except
letters of credit or other similar instruments issued to secure payment of trade payables arising
in the ordinary course of business consistent with past practices, (iv) to pay the deferred
purchase price of property or services, except trade payables arising in the ordinary course of
business consistent with past practices, (v) as lessee under capitalized leases, (vi) secured by a
lien on any asset of such Person or a Subsidiary of such Person, whether or not such obligation is
assumed by such Person or such Subsidiary.

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

8.4 Entire Agreement; Nonassignability; Parties in Interest. This Agreement and the
documents and instruments and other agreements specifically referred to herein or delivered
pursuant hereto, including the exhibits and schedules hereto, including the Target Disclosure
Schedule: (a) together constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof; and (b) are not intended to confer
upon any other person any rights or remedies hereunder and shall not be assigned by operation of
law or otherwise without the written consent of the other party.

8.5 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.

8.6 Damages. In no event shall any Target stockholder or any party hereto be liable
hereunder or in connection herewith for any indirect, punitive, special or consequential damages or
lost profits.

8.7 Governing Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware, without giving effect to the conflicts of law
principles thereof.

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

8.9 Enforcement. Each of the parties hereto agrees that irreparable damage would
occur and that the parties would not have any adequate remedy at law 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 the parties 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 in any Federal or state court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the parties waives any
right to trial by jury with respect to any claim or proceeding related to or arising out of this
Agreement or any transaction contemplated by this Agreement.

8.10 Amendment; Waiver. Any amendment or waiver of any of the terms or conditions of
this Agreement must be in writing and must be duly executed by or on behalf of the party to be
charged with such waiver. The failure of a party to exercise any of its rights hereunder or to
insist upon strict adherence to any term or condition hereof on any one occasion shall not be
construed as a waiver or deprive that party of the right thereafter to insist upon strict adherence
to the terms and conditions of this Agreement at a later date. Further, no waiver of any of the
terms and conditions of this Agreement shall be deemed to or shall constitute a waiver of any other
term of condition hereof (whether or not similar).

8.11 No Third Party Beneficiary Rights. Except as otherwise provided in Section
5.3, no provisions of this Agreement are intended, nor shall be interpreted, to provide or
create any third party beneficiary rights or any other rights of any kind in any client, customer,
affiliate, stockholder, partner of any party hereto or any other person or entity unless
specifically provided otherwise herein, and, except as so provided, all provisions hereof shall be
solely between the parties to this Agreement.

[Signature Page Follows]

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IN WITNESS WHEREOF, Target, Acquiror, Merger Sub and Stockholders’ Agent have caused
this Agreement to be executed and delivered by each of them or their respective officers thereunto
duly authorized, all as of the date first written above.

	 
	 

	TARGET:

	 

	TENEBRIL, INC.

By: Christian Carrillo

Name: Christian Carrillo

Title: President and Chief Technology

Officer

	 

	ACQUIROR:

	 

	HALO TECHNOLOGY HOLDINGS, INC.

By: Ernest C. Mysogland

	 

	 

	Name: Ernest C. Mysogland

Title: EVP

	 

	MERGER SUB:

	TENEBRIL ACQUISITION SUB, INC.

	 

	By: Ernest C. Mysogland

	 

	 

	Name: Ernest C. Mysogland

Title: EVP

	 

	STOCKHOLDERS’ AGENT:

	 

	SIERRA VENTURES

By:

	 

	Name:

	Title:

	 

3

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