Document:

exv10w34

Exhibit 10.34

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

BY AND AMONG

TRUSTWAVE HOLDINGS, INC.,

AMBIRONTRUSTWAVE GOVERNMENT SOLUTIONS, INC.,

INTELLITACTICS INC.

AND

CERTAIN STOCKHOLDERS OF INTELLITACTICS INC.

March 1, 2010

 

TABLE OF CONTENTS

	 	 	 
	 	 	Page
	ARTICLE I. THE MERGER
	 	2
	1.1. The Merger
	 	2
	1.2. Effect of the Merger
	 	2
	1.3. Certificate of Incorporation; Bylaws
	 	2
	1.4. Directors and Officers
	 	2
	1.5. Effect on Capital Stock
	 	3
	1.6. Exchange Procedures
	 	5
	1.7. No Further Ownership Rights in Target Preferred Stock
	 	6
	1.8. Lost, Stolen or Destroyed Preferred Certificates
	 	6
	1.9. Tax Consequences
	 	7
	1.10. Withholding Rights
	 	7
	1.11. Target Stock Options
	 	7
	1.12. Target Warrants
	 	7
	1.13. Dissenting Shares
	 	8
	1.14. Taking of Necessary Action; Further Action
	 	8
	1.15. The Agent
	 	9
	1.16. Transfer Restrictions
	 	9
	1.17. Key Employee Bonuses
	 	10
	1.18. Transfer of Certain Intellectual Property
	 	12
	 
	 	 
	ARTICLE II. MERGER CONSIDERATION REDUCTIONS
	 	12
	2.1. Closing Net Asset Position Reconciliation
	 	12
	2.2. Closing Date Balance Sheet
	 	12
	2.3. Closing Net Asset Position
	 	14
	 
	 	 
	ARTICLE III. CLOSING
	 	14
	3.1. Closing; Effective Time
	 	14
	3.2. Target’s Deliveries
	 	14
	3.3. Purchaser’s Deliveries
	 	14
	 
	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TARGET
	 	14
	4.1. Organization of the Companies; Capitalization
	 	14
	4.2. Authority Relative to Agreement
	 	17
	4.3. Absence of Conflicts
	 	17
	4.4. Books and Records
	 	17
	4.5. Financial Statements
	 	18
	4.6. Accounts Receivable
	 	18
	4.7. Absence of Undisclosed Liabilities
	 	18
	4.8. Absence of Certain Changes or Events
	 	19
	4.9. Taxes
	 	21

i

 

	 	 	 
	 	 	Page
	4.10. Title to Properties
	 	24
	4.11. Contracts; Defaults
	 	24
	4.12. Compliance With Laws
	 	26
	4.13. Real Property
	 	27
	4.14. Condition of Properties
	 	27
	4.15. Litigation
	 	27
	4.16. Labor and Employee Matters
	 	28
	4.17. Employee Plans
	 	29
	4.18. Environmental Matters
	 	30
	4.19. Intentionally Omitted
	 	30
	4.20. Intellectual Property
	 	30
	4.21. Licenses
	 	31
	4.22. Insurance
	 	32
	4.23. Customers
	 	32
	4.24. Transactions with Related Parties
	 	32
	4.25. Absence of Certain Commercial Practices
	 	33
	4.26. Name
	 	33
	4.27. Brokers or Finders
	 	33
	4.28. Indebtedness
	 	33
	4.29. Bank Accounts, Etc
	 	34
	4.30. Quotas; Foreign Trade Zones
	 	34
	4.31. Board Approval
	 	34
	4.32. Required Stockholder Vote
	 	34
	4.33. Rights Agreements
	 	34
	4.34. Sufficiency of Assets
	 	34
	4.35. Documents
	 	34
	 
	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	 	35
	5.1. Ownership of Stock
	 	35
	5.2. Intentionally Omitted
	 	35
	5.3. Authority Relative to Agreement
	 	35
	5.4. Absence of Conflicts
	 	35
	5.5. Litigation
	 	36
	5.6. Accredited Investor
	 	36
	5.7. Information and Opportunity to Inquire
	 	36
	 
	 	 
	ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	36
	6.1. Organization, Ownership and Qualification of Purchaser and Merger Sub
	 	37
	6.2. Authority Relative to Agreement
	 	37
	6.3. Absence of Conflicts
	 	37
	6.4. Capitalization
	 	37
	6.5. Financial Statements
	 	38
	6.6. Compliance With Laws
	 	39
	6.7. Litigation
	 	39
	6.8. Ownership of Merger Sub; No Prior Activities
	 	39

ii.

 

	 	 	 
	 	 	Page
	6.9. Absence of Undisclosed Liabilities
	 	39
	6.10. Absence of Certain Changes or Events
	 	40
	6.11. Transactions with Related Parties
	 	41
	6.12. Labor Agreements
	 	41
	6.13. Contracts; Defaults
	 	41
	6.14. Environmental Matters
	 	44
	6.15. Intellectual Property
	 	44
	6.16. Taxes
	 	44
	6.17. Brokers or Finders
	 	45
	 
	 	 
	ARTICLE VII. COVENANTS
	 	45
	7.1. Confidentiality; Public Announcements
	 	45
	7.2. Stockholders Consent
	 	45
	7.3. All Reasonable Efforts
	 	46
	7.4. Employees and Employee Plans
	 	46
	7.5. Directors’ and Officers’ Insurance
	 	47
	7.6. Tax Covenants
	 	48
	7.7. Section 368(a) Reorganization Covenants
	 	49
	 
	 	 
	ARTICLE VIII. INDEMNIFICATION
	 	52
	8.1. Survival of Representations, Warranties and Covenants
	 	52
	8.2. Intentionally Omitted
	 	53
	8.3. Indemnification by Sellers
	 	53
	8.4. Indemnification by Purchaser
	 	54
	8.5. Certain Rights
	 	55
	8.6. Limitations
	 	55
	8.7. Cooperation
	 	57
	8.8. Indemnification Procedure for Third Party Claims
	 	57
	8.9. Nature of Other Liabilities
	 	59
	8.10. Intentionally Omitted
	 	59
	8.11. Payment of Losses
	 	59
	8.12. Exclusive Remedy
	 	59
	8.13. Contract Intent and Construction; Avoidance of Ambiguity
	 	60
	 
	 	 
	ARTICLE IX. CONDITIONS TO CLOSING
	 	60
	9.1. Conditions to Obligations of Purchaser and Merger Sub
	 	60
	9.2. Conditions to Obligations of Target and Sellers
	 	60
	 
	 	 
	ARTICLE X. TERMINATION AND ABANDONMENT
	 	61
	10.1. Methods of Termination
	 	61
	10.2. Procedure Upon Termination
	 	61

iii.

 

	 	 	 
	 	 	Page
	ARTICLE XI. MISCELLANEOUS
	 	61
	11.1. Right to Equitable Relief
	 	61
	11.2. Expenses
	 	61
	11.3. Entire Agreement
	 	61
	11.4. Benefit
	 	62
	11.5. Notices
	 	62
	11.6. Further Assurances
	 	62
	11.7. Governing Law
	 	62
	11.8. Captions and Schedules
	 	62
	11.9. Severability
	 	63
	11.10. Non-Assignability
	 	63
	11.11. Counterparts; Terms; Knowledge
	 	63
	11.12. Documentation
	 	64
	11.13. Reliance Upon Representations and Warranties
	 	64
	11.14. Facsimile/Federal Express
	 	64

LIST OF EXHIBITS AND SCHEDULES

	 	 	 
	EXHIBIT	 	DESCRIPTION
	A

	 	Defined Terms
	B

	 	Certificate of Merger
	C

	 	[Intentionally Omitted]
	D

	 	Form of Stock Power
	E

	 	Form of Letter of Transmittal
	F

	 	Form of Bonus Release
	G

	 	Form of Key Employee Warrant Agreement
	H

	 	[Intentionally Omitted]
	I

	 	Form of Stockholders Agreement Amendment
	J

	 	Form of Investor Rights Agreement Amendment
	K

	 	Form of Confidentiality Agreement
	L

	 	Form of Restrictive Covenant Agreement
	M

	 	Form of General Release
	N

	 	Form of Opinion of Target’s Counsel
	O

	 	Form of Opinion of Purchaser’s Counsel
	P

	 	Preliminary Balance Sheet
	Q

	 	Standard Warranty Terms

	 	 	 
	SCHEDULE	 	DESCRIPTION
	A

	 	Stockholders
	B

	 	Employee Holders
	C

	 	Permitted Liens
	D

	 	The Software
	1.5(a)

	 	Pro-Rata Percentages
	1.11

	 	Covered Employee Stock Options
	1.12

	 	Assumed Warrants

iv.

 

	 	 	 
	SCHEDULE	 	DESCRIPTION
	2.2(a)

	 	Certain Accounting Principles
	3.2

	 	Target’s Deliveries
	3.2-1

	 	Certain Covered Employees
	3.3

	 	Purchaser’s Deliveries
	4.1(a)

	 	Target Foreign Qualifications
	4.1(b)-1

	 	IC Foreign Qualifications
	4.1(b)-2

	 	Liens on IC Capital Stock
	4.1(d)

	 	Certain Obligations
	4.1(e)

	 	Target Options
	4.1(f)

	 	Disqualified Individuals
	4.1(g)

	 	Warrants
	4.1(h)

	 	Certain Rights
	4.1(i)

	 	Certain Obligations
	4.3

	 	Target Conflicts
	4.4

	 	Books and Records Locations
	4.6

	 	Accounts Receivable
	4.7

	 	Undisclosed Liabilities
	4.8

	 	Certain Events
	4.9(e)

	 	Certain Written Notices
	4.9(f)

	 	Certain Tax Agreements
	4.10

	 	Certain Liens; Tangible Personal Property
	4.11

	 	Company Contracts
	4.12

	 	Certain Government Contracts
	4.13

	 	Leased Real Property
	4.15

	 	Litigation
	4.16(a)

	 	Labor Agreements
	4.16(b)

	 	Certain Contracts
	4.16(c)

	 	Employee Matters
	4.16(d)

	 	Personnel Documents
	4.17

	 	Employee Plans
	4.20(a)

	 	Intellectual Property
	4.20(b)

	 	Intellectual Property Exceptions
	4.20(c)

	 	Royalties
	4.21

	 	Licenses
	4.22

	 	Insurance
	4.23

	 	Customers
	4.24

	 	Related Party Transactions
	4.28

	 	Indebtedness for Borrowed Funds
	4.29

	 	Bank Accounts
	4.30

	 	Foreign Trade
	5.1

	 	Seller Commitments
	5.4

	 	Seller Conflicts
	5.5

	 	Seller Litigation
	6.1

	 	Purchaser Subsidiaries
	6.3

	 	Purchaser Conflicts
	6.4(a)

	 	Purchaser Obligations

v.

 

	 	 	 
	SCHEDULE	 	DESCRIPTION
	6.4(c)

	 	Purchaser Warrants
	6.5

	 	Purchaser Financial Statements
	6.6

	 	Certain Purchaser Government Contracts
	6.7

	 	Purchaser Litigation
	6.9

	 	Purchaser Undisclosed Liabilities
	6.10

	 	Purchaser Certain Events
	6.11

	 	Purchaser Related Party Transactions
	6.15

	 	Purchaser Intellectual Property
	7.4

	 	Certain Termination Arrangements
	7.6(a)

	 	Tax Return Principles
	11.5

	 	Notice Addresses

vi.

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”) is made and entered
into as of March 1, 2010, by and among TrustWave Holdings, Inc., a Delaware corporation
(“Purchaser”), AmbironTrustWave Government Solutions, Inc., a Delaware corporation and a
wholly-owned subsidiary of Purchaser (“Merger Sub”), Intellitactics Inc., a Delaware corporation
(“Target”), Lazard Technology Partners II LP (“LTP II”), JMI Equity Fund IV, L.P. (“Equity Fund”),
JMI Equity Fund IV (AI), L.P. (“AI”), JMI Euro Equity Fund IV, L.P. (“Euro”), JMI Equity Side Fund,
L.P. (“Side Fund”), JMI Incubator Fund, L.P. (“Incubator”), JMI Incubator Fund (QP), L.P. (“QP”
and, together with LTP II, Equity Fund, AI, Euro, Side Fund and Incubator, the “Sellers”).
Capitalized terms used in this Agreement are referenced in the attached Exhibit A.

RECITALS

     A. Target owns all of the issued and outstanding capital stock of Intellitactics Inc., an
Ontario, Canada corporation (“IC” and, together with Target, individually a “Company” and,
collectively, the “Companies”).

     B. The Companies are engaged in the business of providing its customers with security
information and event management software solutions (the “Business”).

     C. The stockholders of Target listed on the attached Schedule A (individually a
"Stockholder” and collectively, the “Stockholders”), in the aggregate, own all of the issued and
outstanding capital stock of Target.

     D. The Boards of Directors of Target, Purchaser and Merger Sub believe it is in the best
interests of their respective companies and the stockholders of their respective companies that
Purchaser acquire Target by the merger of Merger Sub with and into the Target (the “Merger”), with
the Target being the surviving corporation in accordance with the Delaware General Corporation Law
(the “Delaware Law"), and that Target, Purchaser and Merger Sub enter into this Agreement and
consummate the Merger and the other transactions contemplated hereby on the terms and subject to
the conditions provided for in this Agreement.

     E. In furtherance thereof, the Boards of Directors of Target, Purchaser (on its own behalf
and as the sole stockholder of Merger Sub) and Merger Sub have approved the Merger.

     F. The Sellers own, in the aggregate, all of the issued and outstanding shares of Target
Series B Preferred Stock, Target Series D Preferred Stock, Target Series E Preferred Stock, Target
Series F Preferred Stock and Target Series G Preferred Stock.

     G. Pursuant to the Merger, among other things, all of the issued and outstanding shares of
Target Series B Preferred Stock, Target Series D Preferred Stock, Target Series E Preferred Stock,
Target Series F Preferred Stock and Target Series G Preferred Stock shall be converted into shares
of the Class A Voting Common Stock, $0.0001 par value, of Purchaser (the “Purchaser Common Stock”),
as set forth herein.

 

     H. The employees of Target listed on the attached Schedule B (collectively, the
"Employee Holders”) have been granted rights pursuant to the Key Employee Plan (the “Employee
Rights”) entitling them to certain payments in connection with the consummation of the Merger.

     I. Target, Purchaser, Merger Sub and Sellers desire to make certain representations and
warranties and other agreements in connection with the Merger.

     NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and
for other good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

ARTICLE I.

THE MERGER

     1.1. The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement, the Certificate of Merger attached hereto as Exhibit B, and
in accordance with the applicable provisions of the 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 Purchaser immediately
following the Merger (hereinafter sometimes referred to as the “Surviving Corporation”).

     1.2. 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 the
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.

     1.3. Certificate of Incorporation; Bylaws.

     (a) At the Effective Time, the Target shall amend the Certificate of Incorporation
so as to be in the form attached to the Certificate of Merger and, as so amended, such
certificate of incorporation shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided by Delaware Law and such certificate of
incorporation.

     (b) At the Effective Time, the bylaws of Merger Sub, as in effect immediately prior
to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter
amended.

     1.4. Directors and Officers. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, in each case until
their successors are elected or appointed and qualified or until their earlier resignation or
removal. The officers of Merger Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation.

- 2 -

 

     1.5. Effect on Capital Stock. By virtue of the Merger and without any action on
the part of Purchaser, Target, Merger Sub, Sellers or the holders of any of the following
securities:

     (a)
Conversion of Target Capital Stock. At the Effective Time, all of the shares of Target Capital Stock issued and outstanding immediately prior to the Effective
Time (other than shares of Target Capital Stock cancelled pursuant to Section 1.5(b) and
Dissenting Shares whose appraisal rights are being exercised pursuant to Section 1.13) will
be cancelled and extinguished and be converted automatically into the right to receive, in
the aggregate an amount equal to the Seller Base Number of shares of Purchaser Common Stock
(the “Merger Payment”). The Merger Payment shall be allocated among Sellers such that each
Seller receives his, her or its Pro-Rata Percentage of the Seller Base Number of shares of
the Merger Payment.

     (i) The “Base Number” shall equal 7,000,000, minus the sum of (A) the
quotient obtained by dividing (I) the amount, if any, by which the Closing Net Asset
Position is more negative than negative $1,013,640, by (II) $5.00, plus (B) the
quotient obtained by dividing (I) the amount, if any, by which the Closing Net Asset
Position is more negative than negative $1,213,640, by (II) $0.79, in each case
subject to any adjustments made pursuant to Section 1.5(f).

     (ii) The “Merger Consideration” shall mean the Base Number of shares of
Purchaser Common Stock.

     (iii) The “Pro-Rata Percentage” for each Seller shall be the percentage set
forth to the right of such Seller’s name under the column labeled Pro-Rata
Percentage on the attached Schedule 1.5(a).

     (iv) The “Seller Base Number” shall equal the Base Number multiplied by
89.4523857%.

     (b) Cancellation of Target Common Stock, Series C Preferred Stock and Treasury
Stock. At the Effective Time, all shares of Target Common Stock and Target Series C
Preferred Stock issued and outstanding immediately prior to the
Effective Time and all shares of Target Capital Stock owned by Target as treasury stock, shall be cancelled and
extinguished without any conversion thereof. Promptly following the Effective Time
Purchaser or the Surviving Corporation shall request that each Stockholder deliver to
Purchaser the certificate or certificates which immediately prior to the Effective Time
represented all of the outstanding shares of Target Common Stock and Series C Preferred
Stock owned by such Stockholder, together in each case with a duly completed and validly
executed stock power, in the form attached hereto as Exhibit D (each, a “Stock
Power”).

     (i) The “Certificate of Incorporation” shall mean the Fourth Amended and
Restated Certificate of Incorporation of Intellitactics Inc., as filed with the
Delaware Secretary of State on November 10, 2008, as amended through the date
hereof.

- 3 -

 

     (ii) The “Target Capital Stock” shall mean, collectively, the Target Common
Stock and the Target Preferred Stock.

     (iii) The “Target Common Stock” shall mean the Common Stock, par value
$0.001 per share, of Target.

     (iv) The “Target Preferred Stock” shall mean the Target Series B Preferred
Stock, the Target Series C Preferred Stock, the Target Series D Preferred Stock, the
Target Series E Preferred Stock, the Target Series F Preferred Stock and the Target
Series G Preferred Stock.

     (v) The “Target Series B Preferred Stock” shall mean the Series B Preferred
Stock, par value $0.001 per share, of the Target with the designations, powers,
preferences and rights set forth in the Certificate of Incorporation.

     (vi) The “Target Series C Preferred Stock” shall mean the Series C
Preferred Stock, par value $0.001 per share, of the Target with the designations,
powers, preferences and rights set forth in the Certificate of Incorporation.

     (vii) The “Target Series D Preferred Stock” shall mean the Series D
Preferred Stock, par value $0.001 per share, of the Target with the designations,
powers, preferences and rights set forth in the Certificate of Incorporation.

     (viii) The “Target Series E Preferred Stock” shall mean the Series E
Preferred Stock, par value $0.001 per share, of the Target with the designations,
powers, preferences and rights set forth in the Certificate of Incorporation.

     (ix) The “Target Series F Preferred Stock” shall mean the Series F
Preferred Stock, par value $0.001 per share, of the Target with the designations,
powers, preferences and rights set forth in the Certificate of Incorporation.

     (x) The “Target Series G Preferred Stock” shall mean the Series G Preferred
Stock, par value $0.001 per share, of the Target with the designations, powers,
preferences and rights set forth in the Certificate of Incorporation.

     (c) Target Stock Option Plan. At the Effective Time, all options to
purchase Target Capital Stock then outstanding under the Target Stock Option Plan shall be
cancelled in accordance with Section 1.11.

     (d) Target Warrants. At the Effective Time, all warrants to purchase
Target Capital Stock then outstanding shall be cancelled or assumed in accordance with
Section 1.12.

     (e) Conversion of Merger Sub Common Stock. Each issued and outstanding
share of common stock, $0.0001 par value, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and become one share of common stock of the Surviving
Corporation with the same rights, powers and privileges as the shares so

- 4 -

 

converted and shall constitute the only outstanding shares of capital stock of the
Surviving Corporation.

     (f) Adjustments. The Base Number shall be adjusted to reflect fully the
effect of any stock split, reverse split, stock dividend (including any dividend or
distribution of securities convertible into Purchaser Common Stock), reorganization,
recapitalization or other like change with respect to Purchaser Common Stock occurring after
the date hereof, so as to provide Sellers and Purchaser the same economic effect as
contemplated by this Agreement prior to such stock split, reverse split, stock dividend,
reorganization, recapitalization or like change.

     (g) No Fractional Shares. Notwithstanding any other provision in this
Agreement to the contrary, no fraction of a share of Purchaser Common Stock will be issued
and all issuances of Purchaser Common Stock will be rounded down to the nearest whole number
of shares of Purchaser Common Stock.

     1.6. Exchange Procedures.

     (a) Surrender of Target Preferred Stock. No later than the
Effective Time, each Seller shall deliver to Purchaser a duly completed and validly
executed letter of transmittal, in the form attached hereto as Exhibit E
(each, a “Letter of Transmittal”), together with the certificate or certificates
(the “Preferred Certificates”) which immediately prior to the Effective Time
represented all of the outstanding shares of Target Preferred Stock owned by such
Seller and a duly completed and validly executed Stock Power with respect to such
shares. Until so surrendered, each outstanding Preferred Certificate will be deemed
from and after the Effective Time, for all corporate purposes, to evidence the
ownership of the number of full shares of Purchaser Common Stock into which the
shares of Target Preferred Stock evidenced thereby shall have been so converted in
accordance with Section 1.5.

     (b) Delivery of Merger Payment. At the Closing, Purchaser shall
deliver to the Agent on behalf of each Seller, in exchange for the Target Preferred
Stock surrendered by such Seller, a certificate representing the number of whole
shares of Purchaser Common Stock equal to the Preliminary Seller Base Number
multiplied by the Pro-Rata Percentage for each such Seller. The Agent shall retain
custody of such certificates until the True-Up Date, at which time the Agent shall
either:

     (i) if the Base Number is greater than the Preliminary Base Number,
deliver each such certificate to the Seller to whom it belongs, or

     (ii) if the Base Number is less than the Preliminary Base Number,
deliver such certificates to Purchaser so that Purchaser may issue and
deliver to each Seller new certificates representing the number of shares of
Purchaser Common Stock to which such Seller is entitled

- 5 -

 

following the reduction in the number of shares contemplated by clause
(II) of Section 2.1(b).

     (c) Distributions With Respect to Unexchanged Target Preferred
Stock. No dividends or other distributions with respect to Purchaser Common
Stock with a record date after the Effective Time will be paid to the holder of any
unsurrendered Target Preferred Stock with respect to the shares of Purchaser Common
Stock represented thereby until the holder of record of such Target Preferred Stock
shall surrender such Target Preferred Stock. Subject to applicable Rules, following
surrender of any such Target Preferred Stock, there shall be paid to the record
holder of the certificates representing whole shares of Purchaser Common Stock
issued in exchange therefor, without interest, at the time of such surrender, the
amount of any such dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this Section 1.6(d))
with respect to such shares of Purchaser Common Stock.

     (d) Transfers of Ownership. If any certificate for shares of
Purchaser Common Stock is to be issued in a name other than that in which the Target
Preferred Stock surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Target Preferred Stock so surrendered
will be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Purchaser or any agent designated
by it any transfer or other Taxes required by reason of the issuance of a
certificate for shares of Purchaser Common Stock in any name other than that of the
registered holder of the Target Preferred Stock surrendered, or established to the
reasonable satisfaction of Purchaser or any agent designated by it that such Tax has
been paid or is not payable.

     (e) No Liability. Notwithstanding anything to the contrary in this
Section 1.6, none of the Surviving Corporation, Purchaser or any party hereto shall
be liable to any person for any amount properly paid to a Governmental Authority
pursuant to any applicable abandoned property, escheat or similar Rule.

     1.7. No Further Ownership Rights in Target Preferred Stock. All shares of
Purchaser Common Stock issued upon the surrender for exchange of Target Preferred Stock in
accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all
rights pertaining to such Target Preferred Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of Target Preferred Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective Time, Target
Preferred Stock are presented to the Surviving Corporation for any reason, they shall be cancelled
and exchanged as provided in this Article I.

     1.8. Lost, Stolen or Destroyed Preferred Certificates. In the event any Preferred
Certificate shall have been lost, stolen or destroyed, Purchaser shall issue in exchange for such
lost, stolen or destroyed Preferred Certificate, upon the making of an affidavit of that fact by
the holder thereof, such shares of Purchaser Common Stock as may be required pursuant to Section
1.5; provided, however, that Purchaser may, in its discretion and as a condition precedent to the

- 6 -

 

issuance thereof, require the owner of such lost, stolen or destroyed Preferred Certificate to
deliver to Purchaser a lost note affidavit, in form and substance reasonably satisfactory to
Purchaser, which includes an indemnity against any Claim that may be made against Purchaser or the
Surviving Corporation with respect to the Preferred Certificate alleged to have been lost, stolen
or destroyed.

     1.9. Tax Consequences. It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The parties hereto
hereby adopt this Agreement as a “plan of reorganization” within the meaning of Section 1.368-2(g)
and 1.368-3(a) of the Treasury Regulations.

     1.10. Withholding Rights. Purchaser shall be entitled to deduct and withhold from
the number of shares of Purchaser Common Stock otherwise deliverable under this Agreement, such
amounts as Purchaser is required to deduct and withhold with respect to such delivery and payment
under the Code or any provision of state, local, provincial or foreign Tax Rule. To the extent
that amounts are so withheld, such withheld amounts shall be treated for all purposes of this
Agreement as having been delivered and paid to each Seller in respect of which such deduction and
withholding was made by Purchaser. To the extent Purchaser determines that withholding is required
with respect to certain amounts of the number of shares of Purchaser Common Stock, Sellers shall
use reasonable efforts to provide Purchaser with withholding certificates or other required
certifications. Withholding with respect to Purchaser Common Stock shall be made based upon a
value per share of Purchaser Common Stock as mutually agreed upon by the parties.

     1.11. Target Stock Options. At the Effective Time, each outstanding option to
purchase shares of Target Common Stock under the Target Stock Option Plan, whether vested or
unvested, will be cancelled. At or prior to the Closing, Target shall take all actions required to
cancel each outstanding option to purchase shares of Target Capital Stock under the Target Stock
Option Plan upon the closing of the Merger or the transactions contemplated hereby. Within the
later of (a) 30 calendar days after the Effective Time, and (b) 10 calendar days after Purchaser’s
Board of Directors adopts an independent, third party valuation of Purchaser Common Stock as of the
Closing Date, but in any event as soon as reasonably practicable and no later than 90 calendar days
after the Closing Date, Purchaser will issue options to purchase Purchaser Common Stock under the
Purchaser Stock Option Plan to those of the Covered Employees, on such terms, as is set forth on
the attached Schedule 1.11. At or prior to the Effective Time, Purchaser shall take all
corporate action necessary to reserve for future issuance, and shall maintain such reservation for
so long as any of the issued options remain outstanding, a sufficient number of shares of Purchaser
Common Stock for delivery upon the exercise of such options.

     1.12. Target Warrants. At the Effective Time, each outstanding warrant to
purchase shares of Target Capital Stock, whether vested or unvested, will be cancelled, other than
the warrants issued to ORIX Venture Finance LLC described in Schedule 1.12 (the “Assumed
Warrants”), which shall be assumed by Purchaser in accordance with the terms of Assumed Warrants
and shall represent the right to purchase the number of shares of Purchase Common Stock, at the
exercise price, in each case as set forth on Schedule 1.12. At or prior to the Closing,
Target shall take all actions required to cancel each outstanding warrant to purchase

- 7 -

 

shares of Target Capital Stock, other than the Assumed Warrants, upon or prior to the closing
of the Merger or the transactions contemplated hereby.

     1.13. Dissenting Shares. Notwithstanding anything to the contrary herein, shares
of Target Capital Stock issued and outstanding immediately prior to the Effective Time and held by
a Stockholder who is entitled to and has properly exercised and perfected appraisal rights pursuant
to Section 262 of the Delaware Law (collectively, the “Dissenting Shares”) shall not be converted
as of the Effective Time into the right to receive any of the Merger Payment, if applicable, but
instead shall have such rights as may be available under the Delaware Law. At the Effective Time,
all Dissenting Shares shall no longer be outstanding and shall be cancelled and each holder of
Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive
the fair value of such Dissenting Shares in accordance with Section 262 of the Delaware Law;
provided, however, that if any such Stockholder shall have failed to perfect or
shall effectively withdraw or lose its right to appraisal and payment under the Delaware Law, or a
court of competent jurisdiction shall determine that such holder is not entitled to the relief
provided by Section 262, such stockholder’s shares of Target Capital Stock shall thereupon be
deemed to have been converted as of the Effective Time into the right to receive the applicable
portion of the Merger Payment pursuant to Section 1.5, if any, and such shares of Target Capital
Stock shall no longer be Dissenting Shares. Target shall give Purchaser prompt notice identifying
those Stockholders who did not vote in favor of the Merger or consent thereto in writing. Promptly
following Stockholder approval of the Merger, Purchaser or the Surviving Corporation shall prepare
and deliver to the Stockholders all written notices required to be delivered in accordance with
Sections 228, 251 and 262 of the Delaware Law, in forms reasonably acceptable to the Agent. Prior
to the Effective Time, (i) Target shall have the right to control the negotiations, proceedings and
any settlement of any such demands, (ii) Target shall give Purchaser prompt notice of any demands
received by Target for appraisal of shares of Target Capital Stock and (iii) Purchaser shall have
the right to participate in all negotiations, proceedings and settlements with respect to such
demands. On and after the Effective Time, (a) Purchaser shall give the Agent prompt notice of any
demands for appraisal received by the Surviving Corporation, (b) so long as (I) the Agent can
demonstrate that it has sufficient amounts which may be used in connection with such demand for
appraisal to (A) defend such demand for appraisal, and (B) defend all other demands for appraisal
then pending which the Agent is defending pursuant to this Section 1.13 and defend all Third Party
Claims then pending which the Agent is defending pursuant to Section 8.8, and (II) the Agent has
acknowledged in writing to Purchaser the Sellers’ unconditional obligation to indemnify Purchaser
for such demand for appraisal, the Agent shall have the right to control the negotiations,
proceedings and any settlement of any such demands for appraisal; provided that the Agent shall not
settle or compromise any such demand for appraisal without the prior written consent of Purchaser
if pursuant to or as a result of such settlement, such settlement would lead to Liability or create
any financial or other obligation on the part of any Purchaser Protected Party for which such
Purchaser Protected Party is not entitled to be indemnified pursuant to Section 8.3 and (c)
Purchaser shall have the right to participate in all negotiations, proceedings and settlements with
respect to such demands.

     1.14. Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the purposes of this
Agreement and to vest the Surviving Corporation with full right, title and possession to all
assets, property,

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rights, privileges, powers and franchises of Target, the officers and directors of Target and
Purchaser 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.

     1.15. The Agent. For purposes of this Agreement and all actions and decisions to
be made by the Agent pursuant to this Agreement, JMI Associates IV, LLC (the “Agent”), shall be the
representative and agent of Sellers to act on their behalf, and Purchaser and its Affiliates shall
be entitled to rely exclusively on the acts and omissions of the Agent with respect to actions to
be taken by, or inferences from omissions of, any Seller. Sellers may (or if JMI Associates IV,
LLC should at any time choose not to serve, or be unable to serve, as the Agent, shall), at any
time and from time to time, by written notice delivered to Purchaser executed by Sellers who held
Target Preferred Stock or Employee Rights representing, in the aggregate, at least a majority of
the Pro-Rata Percentages immediately prior to the Closing, appoint a replacement Agent; provided,
however, that such new person shall not be deemed the Agent for purposes of this Agreement until
Purchaser has received such written notice.

     1.16. Transfer Restrictions. In addition to any restrictions contained in the
Purchaser Stockholder Agreement, without the prior written consent of Purchaser, no Seller may
sell, assign, transfer, pledge, hypothecate or otherwise dispose of (a “Transfer”), by operation of
law or otherwise, to any Person any shares of Purchaser Common Stock owned or held by such Seller
until the later of (i) the earlier of (A) the Cut-Off Date and (B) the date that a Change of
Control of Purchaser is consummated and (ii) and the date that a Purchaser Capital Transaction is
consummated; provided that such written consent shall not be required for:

     (a) a Transfer in accordance with the provisions of Section 3.3 or 3.6 of the
Purchaser Stockholder Agreement, so long as either (i) after such Transfer, the transferring
Seller continues to own and hold no less than fifteen percent (15%) of the shares of
Purchaser Common Stock into which such Seller’s Target Capital Stock was converted at the
Effective Time pursuant to Section 1.5, or (ii) a portion of the proceeds of such Transfer
equal to the then Current Value of fifteen percent (15%) of the shares of Purchaser Common
Stock into which such Seller’s Target Capital Stock was converted at the Effective Time
pursuant to Section 1.5 is escrowed through the later of the Cut-Off Date and the date that
a Purchaser Capital Transaction is consummated with an escrow agent, and pursuant to an
escrow agreement, in each case reasonably satisfactory to Purchaser, as security for the
obligations of the transferring Seller pursuant to this Agreement, including the obligations
pursuant to Article VIII and this Section 1.16; or

     (b) a Transfer by a Seller to a single Affiliate of such Seller which is a private
equity fund of all of the shares of Purchaser Common Stock owned or held by such Seller, so
long as the transferee assumes all of the obligations of the transferring Seller pursuant to
this Agreement, including the obligations pursuant to Article VIII and this Section 1.16.

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     1.17. Key Employee Bonuses.

     (a) By no later than the Effective Time, Target shall have terminated the Key
Employee Plan in accordance with the terms thereof. At the Effective Time, Target shall
deliver to Purchaser a release, in the form attached hereto as Exhibit F (the “Bonus
Release”), duly executed by each Employee Holder, releasing the Purchaser Protected Parties
from any Liability or obligation to such Employee Holder pursuant to the Key Employee Plan.

     (b) Within the later of (I) 30 calendar days after the Effective Time, and (II) 10
calendar days after Purchaser’s Board of Directors adopts an independent, third party
valuation of Purchaser Common Stock as of the Closing Date (the “Independent Valuation”),
but in any event as soon as reasonably practicable and no later than 90 calendar days after
the Closing Date, Purchaser will issue (A) to each Employee Holder, and deliver to the Agent
on behalf of each Employee Holder, either one or more warrant agreements in the form
attached hereto as Exhibit G (“Key Employee Warrant Agreements”) to purchase a
number of shares of Purchaser Common Stock equal to such Employee Holder’s Bonus Pro-Rata
Percentage of the Preliminary Bonus Base Number, and (B) to Gary Greenfield (“Greenfield”),
in addition to any Key Employee Warrant Agreements to which he is entitled pursuant to
clause (A) of this Section 1.17(b), one or more Key Employee Warrant Agreements to purchase
a number of shares of Purchaser Common Stock equal to Greenfield’s Special Bonus Pro-Rata
Percentage of the Preliminary Bonus Base Number, in each such case which warrants are fully
exercisable from and after the date of their issuance through the tenth (10th)
anniversary of their issuance without regard to whether the applicable Employee Holder
remains an employee or independent contractor of Purchaser or any of its Affiliates. The
Agent shall retain custody of such Key Employee Warrant Agreements until the True-Up Date,
at which time the Agent shall either:

     (i) if the Base Number is greater than the Preliminary Base Number, deliver
each such Key Employee Warrant Agreements to the Employee Holders to whom they
belong, or

     (ii) if the Base Number is less than the Preliminary Base Number, deliver
such Key Employee Warrant Agreements to Purchaser so that Purchaser may issue and
deliver to each Employee Holder new Key Employee Warrant Agreements representing the
right to purchase the number of shares of Purchaser Common Stock to which such
Employee Holder is entitled following the reduction contemplated by clause (ii) of
Section 1.17(c).

     (c) On the True-Up Date, (i) if the Bonus Base Number is greater than the
Preliminary Bonus Base Number, Purchaser shall deliver (A) to each Employee Holder a Key
Employee Warrant Agreement representing the right to purchase a number of shares of
Purchaser Common Stock equal to such Employee Holder’s Bonus Pro-Rata Percentage of such
excess, and (B) to Greenfield, in addition to any Key Employee Warrant Agreements to which
he is entitled pursuant to clause (A) of clause (i) of this Section 1.17(c), to Greenfield a
Key Employee Warrant Agreement representing the right

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to purchase a number of shares of Purchaser Common Stock equal to Greenfield’s Special
Bonus Pro-Rata Percentage of such excess, and (ii) if the Bonus Base Number is less than the
Preliminary Bonus Base Number, (A) each Employee Holder, severally and not jointly, shall
have the number of shares of Purchaser Common Stock purchasable pursuant to the Key Employee
Warrant Agreement previously delivered to the Agent on his or her behalf pursuant to clause
(A) of Section 1.17(b) reduced (through the mechanism described in Section 1.17(b)(ii)) by a
number of shares of Purchaser Common Stock equal to such Employee Holder’s Bonus Pro-Rata
Percentage of such deficit, and (B) Greenfield, in addition to any reductions pursuant to
clause (A) of clause (ii) of this Section 1.17(c), shall have the number of shares of
Purchaser Common Stock purchasable pursuant to the Key Employee Warrant Agreement previously
delivered to the Agent on his behalf pursuant to clause (B) of Section 1.17(b) reduced
(through the mechanism described in Section 1.17(b)(ii)) by a number of shares of Purchaser
Common Stock equal to Greenfield’s Special Bonus Pro-Rata Percentage of such deficit.

     (d) At or prior to the Effective Time, Purchaser shall take all corporate action
necessary to reserve for future issuance, and shall maintain such reservation for so long as
any of the issued warrants remain outstanding, a sufficient number of shares of Purchaser
Common Stock for delivery upon the exercise of such warrants.

     (e) For purposes of this Section 1.17,

     (i) The “Bonus Base Number” shall equal the (A) Base Number, multiplied by
(B) 10%, multiplied by (C) one plus a fraction, (I) the numerator of which is the
Bonus Strike Price, and (II) the denominator of which is 4 minus the Bonus Strike
Price.

     (ii) The “Bonus Pro-Rata Percentage” for each Employee Holder shall be the
percentage set forth to the right of such Employee Holder’s name under the column
labeled Pro-Rata Percentage on the attached Schedule B.

     (iii) The “Bonus Strike Price” shall equal the value of one share of
Purchaser Common Stock as of the Closing Date as set forth in the Independent
Valuation.

     (iv) The “Preliminary Bonus Base Number” shall equal the (A) Preliminary
Base Number, multiplied by (B) 10%, multiplied by (C) one plus a fraction, (I) the
numerator of which is the Bonus Strike Price, and (II) the denominator of which is 4
minus the Bonus Strike Price.

     (v) The “Special Bonus Pro-Rata Percentage” for Greenfield shall be
0.5476143%.

     (f) Purchaser shall indemnify and hold harmless each Employee Holder from and
against (1) any additional Tax (including interest penalties) imposed on such Employee
Holder pursuant to Section 409A(a)(1)(B) of the Code (and any comparable state Tax
provisions), and (2) any federal, state, and local Taxes triggered by the accelerated
recognition of taxable income under Section 409A(a)(1)(A) of the Code and

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receipt of the indemnity payment under this Section 1.17(f), in the case of clauses (1)
or (2) above to the extent such Tax is attributable to such Employee Holder’s receipt of Key
Employee Warrant Agreements or Key Employee Warrants or indemnity payments under this
Section 1.17(f); provided, however, that such indemnification shall only be available to the
extent that Target has complied with the covenants contained in Section 1.17(a), and the
Employee Holder’s obligation to pay the Taxes described in clauses (1) or (2) above did not
arise out of Target’s breach of Section 1.17(a). The payment of any amounts under this
Section 1.17(f) shall be made in a manner consistent with Section 409A of the Code and
Section 1.409A-3(i)(1)(j)(v) of the Treasury Regulations (or any successor thereto). The
provisions of this Section 1.17(f) are intended to be for the benefit of, and shall be
enforceable by, each Employee Holder and their respective heirs and representatives.

     1.18. Transfer of Certain Intellectual Property. By no later than immediately
prior to the Closing, Target shall cause IC to (a) form a new Nova Scotia Unlimited Liability
Company (“Newco”) as a wholly-owned subsidiary of IC, and (b) contribute to Newco all of the
Company Intellectual Property owned or held by IC immediately prior to the Closing, in each case
pursuant to documents prepared by Purchaser which are reasonably acceptable to Target.

ARTICLE II.

MERGER CONSIDERATION REDUCTIONS.

     2.1. Closing Net Asset Position Reconciliation. On the date (the “True-Up Date”)
which is the fifteenth day following the date on which Purchaser and the Agent have either agreed
to the Closing Net Asset Position or completed the dispute resolution procedure described in
Section 2.2 below, (I) if the Seller Base Number is greater than the Preliminary Seller Base
Number, Purchaser shall deliver to each Seller a certificate representing a number of shares of
Purchaser Common Stock equal to such Seller’s Pro-Rata Percentage of such excess; provided that no
certificates shall be delivered pursuant to this Section 2.1 to the holder of any unsurrendered
Target Preferred Stock until the holder of record of such Target Preferred Stock shall surrender
such Target Preferred Stock, and (II) if the Seller Base Number is less than the Preliminary Seller
Base Number, each Seller, severally and not jointly, shall be liable to deliver to Purchaser
(through the mechanism described in Section 1.6(b)(ii)) a number of shares of Purchaser Common
Stock equal to such Seller’s Pro-Rata Percentage of such deficit.

     2.2. Closing Date Balance Sheet.

     (a) As soon as reasonably practical after the Closing (but in any event no later
than the earlier of (i) 10 calendar days after Purchaser receives the audited Closing Date
Balance Sheet from Grant Thornton, LLP, and (ii) 120 calendar days after the Closing),
Purchaser, at its cost and expense, shall prepare and close the financial books and records
of the Companies as of 11:59 p.m., Chicago time, on the day prior to the Closing Date, and,
based on such books and records, shall prepare and deliver, or cause to be prepared and
delivered, to the Agent, a balance sheet, dated as of the effective date of the Closing (the
“Closing Date Balance Sheet”). The Closing Date Balance Sheet shall be prepared in
accordance with United States generally accepted accounting principles (“GAAP”),
consistently applied in accordance with past practices of the Companies (except for the

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absence of footnotes), and shall present fairly the financial condition of the
Companies, on a consolidated basis, as of the close of business on the Closing Date, except
that the Closing Date Balance Sheet shall be prepared in accordance with the principles set
forth on the attached Schedule 2.2(a).

     (b) Purchaser shall deliver to the Agent the Closing Date Balance Sheet and include
therein Purchaser’s calculation of the Closing Net Asset Position and the Base Number. If
the Agent objects to the Closing Date Balance Sheet, including the Closing Net Asset
Position or the Base Number calculation, provided to it by Purchaser, then within 30
calendar days of its receipt of the Closing Date Balance Sheet, the Agent shall give written
notice in reasonable detail (the “Notice”) of its objections to Purchaser. During such
30-day period, Purchaser and Purchaser’s accountants shall give the Agent and its
accountants access, upon reasonable notice and during normal business hours, to all books,
records and work papers of the Companies, Purchaser and its accountants related to the
preparation of the Closing Date Balance Sheet and calculation of the Closing Net Asset
Position and the Base Number. If Purchaser has not received the Notice within such 30-day
period, Sellers shall be deemed to have no objection to the Closing Date Balance Sheet and
the Closing Date Balance Sheet shall become final and binding on the parties hereto for all
purposes of this Agreement. The parties shall negotiate in good faith to resolve any
disputes as promptly as practicable. If the parties are unable to resolve all disputes
within twenty calendar days of receipt by Purchaser of the Notice, then only the unresolved
disputes shall be submitted to an independent certified public accounting firm mutually
agreed to by the parties which has not represented and has no relationship with either
party, utilizing partners that have not represented and have no relationship with either
party (the “Independent Accountant”). The parties shall be entitled to provide the
Independent Accountant with supporting documentation in connection with resolution of such
disputes. The Independent Accountant shall, within 30 calendar days of its engagement,
provide a final and conclusive resolution of all unresolved disputes and shall conform the
Closing Date Balance Sheet accordingly. All references in this Agreement to the Closing
Date Balance Sheet shall mean the Closing Date Balance Sheet as modified pursuant to this
resolution procedure, and the resolution of the Independent Accountant shall be binding on
the parties hereto, except that the foregoing shall not limit or prohibit a party from
asserting a Claim and obtaining relief on account of any breach of a representation,
warranty or covenant contained in this Agreement. The fees and expenses of the Independent
Accountant shall be borne by the parties in an amount proportionate to the dollar amount
contested and not awarded to each such party as a percentage of the total dollar amount
contested by the parties, as determined by the Independent Accountant.

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     2.3. Closing Net Asset Position. As used herein, the term “Closing Net Asset
Position” shall mean the amount by which the current assets of the Companies exceed the total
liabilities of the Companies (excluding deferred revenues), in each case on a consolidated basis as
reflected on the Closing Date Balance Sheet.

ARTICLE III.

CLOSING.

     3.1. Closing; Effective Time. The closing of the transactions contemplated hereby
(the “Closing”) shall take place by electronic exchange of executed documents, with Target’s and
Sellers’ documents being transmitted from Morrison & Foerster LLP in McLean, Virginia, and
Purchaser’s documents being transmitted from Kaye Scholer LLP in Chicago, Illinois, at 10:00 a.m.
(CST), on the date hereof, or such other time or date agreed upon by the parties (the “Closing
Date”). In connection with the Closing, the parties hereto shall cause the Merger to be
consummated by filing the Certificate of Merger with the Secretary of State of the State of
Delaware, in accordance with the relevant provisions of Delaware Law (the time of such filing being
the “Effective Time”).

     3.2. Target’s Deliveries. Subject to the conditions set forth in this Agreement,
at the Closing, simultaneous with Purchaser’s deliveries hereunder, Target shall deliver to
Purchaser the documents, certificates and instruments listed in Schedule 3.2, all in form
and substance reasonably satisfactory to Purchaser and its counsel.

     3.3. Purchaser’s Deliveries. Subject to the conditions set forth in this
Agreement, at the Closing, simultaneous with Target’s deliveries hereunder, Purchaser shall deliver
to the Agent the documents, certificates and instruments listed in Schedule 3.3, all in
form and substance reasonably satisfactory to Target and its counsel.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF TARGET.

     Target represents and warrants to Purchaser and Merger Sub as follows. The following
representations and warranties are qualified by the exceptions set forth in the Schedules to this
Article IV only (i) to the extent an exception expressly refers to the specific representations and
warranties which it qualifies or (ii) to the extent by the nature of the disclosure, a reasonable
person would believe that such disclosure should be applicable to any other representation or
warranty, regardless of whether or not such exception contains an express cross-reference to any
such other representations and warranties. The inclusion of any item in the Schedules does not
constitute an admission of liability with respect to any Claims or an admission that any breach,
violation, default or event of default exists with respect to any Company Contract.

     4.1. Organization of the Companies; Capitalization.

     (a) Target is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with all requisite corporate power and authority to
own, operate and lease its properties and assets, to carry on its business as is currently
conducted, and to execute this Agreement and to perform the transactions contemplated
herein. Target has qualified as a foreign corporation and is in good

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standing under the laws of all jurisdictions where the nature of the Business or the
nature and location of its assets requires such qualification except where the absence of
such qualification would not have a Material Adverse Effect on Target, all as set forth in
Schedule 4.1(a). Except for IC and Newco, Target does not have any subsidiary or
any other equity interest or investment in any Person.

     (b) IC is a corporation duly organized, validly existing and in good standing under
the laws of the Province of Ontario, Canada, with all requisite corporate power and
authority to own, operate and lease its properties and assets and to carry on its business
as is currently conducted. IC has qualified as a foreign corporation and is in good
standing under the laws of all jurisdictions where the nature of the Business or the nature
and location of its assets requires such qualification except where the absence of such
qualification would not have a material adverse effect on the business, financial condition
or operations of IC, all as set forth in Schedule 4.1(b)-1. Other than Newco, IC
does not have any subsidiary or any other equity interest or investment in any Person. The
authorized capital stock of IC consists of an unlimited number of Class A common shares and
an unlimited number of Class B special shares, of which there are 2,484,441 Class A common
shares issued and outstanding and no Class B special shares issued and outstanding. Except
as set forth in Schedule 4.1(b)-2, Target is the record and beneficial owner and
holder of all of the issued and outstanding capital stock of IC, free and clear of all Liens
(other than restrictions on the transferability of securities arising under applicable
laws), there are no other outstanding shares of capital stock or voting securities, and no
outstanding commitments to issue any shares of capital stock or voting securities, of IC and
there are no other options, warrants, calls, rights, commitments or agreements of any
character to which either Company is a party or by which it is bound obligating either
Company to, after the date hereof, issue, deliver, sell, repurchase or redeem, or cause to
be issued, delivered, sold, repurchased or redeemed, any shares of capital stock of IC or
obligating IC to grant, extend, accelerate the vesting and/or repurchase rights of, change
the price of, or otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement.

     (c) The authorized capital stock of Target consists of (i) 25,000,000 shares of
Target Common Stock, of which there are 1,166,163 shares issued and outstanding, (ii)
2,157,632 shares of Target Series B Preferred Stock, of which there are 2,157,632 shares
issued and outstanding, (iii) 326,709 shares of Target Series C Preferred Stock, of which
there are 326,709 shares issued and outstanding, (iv) 6,200,330 shares of Target Series D
Preferred Stock, of which there are 6,200,330 shares issued and outstanding, (v) 2,478,648
shares of Target Series E Preferred Stock, of which there are 2,478,648 shares issued and
outstanding, (vi) 2,481,859 shares of Target Series F Preferred Stock, of which there are
1,996,893 shares issued and outstanding, and (vii) 898,614 shares of Target Series G
Preferred Stock, of which there are 855,823 shares issued and outstanding. The Stockholders
are the record and beneficial owners and holders of the Target Common Stock and the Target
Preferred Stock, in the amounts shown on Schedule A, free and clear of all Liens
(other than restrictions on the transferability of securities arising under applicable
laws).

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     (d) Except as listed on Schedule B, there are no other outstanding shares
of capital stock or voting securities, and no outstanding commitments to issue any shares of
capital stock or voting securities, in each case of Target other than (i) pursuant to the
exercise of options outstanding under the Intellitactics Inc. Stock Incentive Plan (the
“Target Stock Option Plan”), or (ii) pursuant to the Warrants. Except for the rights
created pursuant to this Agreement, the Certificate of Incorporation, the Target Stock
Option Plan and the Warrants, Target’s rights to repurchase any unvested shares under the
Target Stock Option Plan or the stock option agreements thereunder and as set forth in
Schedule 4.1(d), 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, after the date hereof, issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of capital stock of Target or
obligating Target to grant, extend, accelerate the vesting and/or repurchase rights of,
change the price of, or otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. At or prior to the Effective Time, all outstanding, unexercised
options and all of the Warrants other than the Assumed Warrants will have been cancelled or
otherwise terminated.

     (e) Schedule 4.1(e) hereto sets forth a true and complete list of all
holders of outstanding options under the Target Stock Option Plan, including the number of
shares of Target Common Stock and Target Preferred Stock subject to each such option, the
exercise or vesting schedule, the exercise price per share and the term of each such option.
As of the date hereof, (i) Target has reserved 3,901,303 shares of Target Common Stock for
issuance to employees, consultants and directors pursuant to the Target Stock Option Plan,
of which 292,508 shares have been issued pursuant to option exercises, 982,967 shares have
been issued pursuant to restricted stock agreements and 2,395,192 shares are subject to
outstanding, unexercised options.

     (f) Schedule 4.1(f) contains a list of all persons whom Target reasonably
believes are, with respect to the Target and as of the date of this Agreement, “disqualified
individuals” (within the meaning of Section 280G of the Code and the regulations promulgated
thereunder).

     (g) Schedule 4.1(g) sets forth a true and complete list of all outstanding
warrants to purchase any Target Capital Stock (collectively, the “Warrants”), including the
holders thereof, number of shares of Target Capital Stock subject to each such warrant, the
exercise price per share and the term of each such warrant.

     (h) Except as set forth in Schedule 4.1(h), all outstanding shares of
Target Capital Stock are, or will be, duly authorized, validly issued, fully paid and
non-assessable and are not subject to preemptive rights or rights of first refusal created
by statute, the Organizational Documents of Target or any agreement to which Target is a
party or by which it is bound.

     (i) Except as set forth in Schedule 4.1(i), there are no contracts,
commitments or agreements relating to voting, purchase or sale of Target’s capital stock
between or among Target and any of its stockholders and, to the best of Target’s knowledge,
between

- 16 -

 

or among any of Target’s stockholders, in any such case which will be in effect after
the Effective Time. Assuming the accuracy of certain representations and warranties made by
the holders thereof to Target in connection with the issuance thereof, the shares of Target
Capital Stock issued under the Target Stock Option Plan, as amended and under all prior
versions thereof, have either been registered under the Securities Act or were issued in
transactions which qualified for exemptions under, either Section 4(2) of, or Rule 701
under, the Securities Act for stock issuances under compensatory benefit plans. At or prior
to the Effective Time, all of the Contracts listed as Items 1 and 2 on Schedule
4.1(i) will have been cancelled or otherwise terminated.

     4.2. Authority Relative to Agreement. Target has the corporate power and
authority to enter into this Agreement and to carry out its obligations hereunder. The execution
and delivery of this Agreement and the performance by Target of its obligations hereunder have been
duly authorized by its Board of Directors, and no other proceedings on the part of Target are
necessary to authorize such execution, delivery and performance other than the approval and
adoption of this Agreement and approval of the Merger by the Stockholders. This Agreement has been
duly executed by Target and constitutes the valid and legally binding obligation of Target
enforceable against Target in accordance with its terms, subject to Bankruptcy Laws and Equitable
Principles.

     4.3. Absence of Conflicts. Except as set forth in Schedule 4.3, the
execution and delivery of this Agreement, the performance by Target of its obligations hereunder
and the consummation of the transactions contemplated hereby do not and will not (a) violate, or
constitute a breach or default under, any provisions of either Company’s Organizational Documents,
(b) require the consent of any third party (including any Governmental Authority), (c) result in
the creation or imposition of any Lien upon the Target Capital Stock or any of the Company Assets
(other than Permitted Liens), (d) violate any Rule or Judgment to which either Company or any of
the Company Assets may be subject, or (e) result in the breach of any of the terms or conditions
of, or constitute a default under, or in any manner release any party thereto from any obligation
under, any mortgage, note, bond, indenture, contract, agreement, license or other instrument or
obligation of any kind or nature by which either Company or any of the Company Assets may be bound
or affected.

     4.4. Books and Records. The Companies’ books and records, customer lists and
records, vendor lists and records, Tax Returns and other Tax records, wherever located
(collectively, the “Designated Books and Records”), are accurate and complete and have been
maintained in the Companies’ usual, regular and ordinary manner, in accordance with GAAP,
consistently applied in accordance with past practices of the Companies, where applicable, and all
transactions of the Companies are properly reflected therein. The Companies’ studies, surveys,
reports, correspondence, sales and promotional literature and materials, advertising and
advertising copy, and other similar materials, microfilm, microfiche, computer and other records,
and all similar data, documents and items, wherever located (collectively, the “Other Books and
Records” and, together with the Designated Books and Records, the “Books and Records”), have been
maintained in the Companies’ usual, regular and ordinary manner, consistent with past practices.
The minute books of the Companies contain accurate and complete records of all material actions
taken by the stockholders, board of directors and committees of the board of

- 17 -

 

directors of each Company. Except as set forth in Schedule 4.4, all Designated Books
and Records are located at the Leased Real Property.

     4.5. Financial Statements. Target has delivered to Purchaser accurate and
complete (i) copies of the audited consolidated balance sheets of the Companies as of the last day
of each of the two fiscal years of the Companies for the periods ended December 31, 2008 and 2007,
respectively, together with the related consolidated statements of income, stockholders’ equity and
changes in cash flow for such fiscal years, and the notes thereto, in each case accompanied by the
unqualified opinion thereon of Target’s independent public accountants (“Historical Statements”),
and (ii) copies of the unaudited consolidated balance sheet of the Companies as of December 31,
2009 (the balance sheet of the Companies as of December 31, 2009 (the “Balance Sheet Date”) being
referred to as the “Balance Sheet”), together with the related unaudited consolidated statements of
income, stockholders’ equity and changes in cash flow for the 12-month period ended on such date,
(“Interim Statements” and, together with the Historical Statements, the “Financial Statements”).
The Financial Statements, including the notes to the Historical Statements, (a) were prepared in
accordance with GAAP, applied on a basis consistent with prior periods (except, in the case of the
Interim Statements, for immaterial year-end and audit adjustments and the absence of notes
thereto), (b) present fairly the consolidated financial position, results of operations and changes
in cash flows of the Companies as of such dates and for the periods then ended, and (c) are
accurate, correct and complete and were prepared in accordance with the Books and Records.

     4.6. Accounts Receivable. Except as set forth on Schedule 4.6, all
outstanding accounts receivable and other receivables, billed and unbilled, and all negotiable
instruments or other instruments and chattel paper, as are payable to either Company as of the
Closing Date (collectively the “Accounts Receivable”), (i) have arisen in bona fide transactions,
(ii) are valid claims against account debtors for goods or services delivered or rendered, subject
to no defenses, offsets or counterclaims, except for the reserves for doubtful accounts related
thereto reflected on the Balance Sheet in accordance with GAAP, consistently applied in accordance
with past practices of the Companies (the “Reserves”), and (iii) to Target’s knowledge, subject to
the Reserves, are collectible in the ordinary course; provided, however, that, notwithstanding any
other provision of this Agreement (including the provisions of Article VIII to the extent, if any,
inconsistent with the remainder of this sentence), Target is not guaranteeing that any such
Accounts Receivable will be collected. All Accounts Receivables arose in the ordinary course of
business and, except as set forth on Schedule 4.6, none of the obligors of such receivables
have refused in writing or, to Target’s knowledge, orally, or given notice in writing or, to
Target’s knowledge, orally, that they refuse to pay the full amount thereof. Except as set forth
on Schedule 4.6, no receivables are subject to prior assignment, claim or other Lien
(except, in each case, for Permitted Liens). After the Closing Date, the Surviving Corporation
will not have any obligation (whether in bankruptcy or insolvency proceedings or otherwise) to
repay any receivables collected by either Company prior to the Closing Date or, to Target’s
knowledge, any receivables reflected on the Closing Date Balance Sheet which the Surviving
Corporation or IC collects after the Closing Date.

     4.7. Absence of Undisclosed Liabilities. Notwithstanding any representation or
warranty contained herein, or any limitations or qualifications of, or exceptions to (whether in a
Schedule attached hereto or otherwise), any such representation and warranty, except as set forth

- 18 -

 

on Schedule 4.7, neither Company has any obligation or liability (including accounts
payable), absolute or contingent, known or unknown, liquidated or unliquidated, whether due or to
become due and regardless of when or by whom asserted (a “Liability”) including, without
limitation, deferred Tax liabilities, vacation time or pay, severance pay, future amounts payable
arising out of prior transactions, and any other Liabilities relating to or arising out of any act,
omission, transaction, circumstance, sale of goods or services, or other condition, which occurred
or existed on or before the Closing Date, which is not fully shown or provided for in the Balance
Sheet, and will have no Liability which is not fully shown or provided for in the Closing Date
Balance Sheet, except: (a) under the executory portion of any Contract (i) by which either Company
is bound on the Closing Date, (ii) which either (A) if required by this Agreement, is disclosed in
a Schedule hereto, or (B) is reasonably expected to generate aggregate revenues after the Closing
in excess of aggregate expenses and Liabilities to be incurred thereunder after the Closing, and
(iii) the existence of which does not otherwise constitute or result from a breach of any
representation, warranty or covenant of this Agreement or a breach or default by either Company
under any Company Contract; (b) with respect only to the Balance Sheet, Liabilities incurred in the
usual and ordinary course of business subsequent to the date of the Balance Sheet consistent with
past practice, which will be reflected in the Closing Date Balance Sheet and the existence of which
does not (and will not) otherwise constitute or result from a breach of any representation,
warranty or covenant of this Agreement or from a breach or default under any Company Contract
listed or required to be listed in any Schedule to this Agreement; (c) Liabilities incurred in
connection with the transactions contemplated by this Agreement to the extent reflected in the
Closing Date Balance Sheet and (d) Liabilities incurred on the Closing Date.

     4.8. Absence of Certain Changes or Events. Since November 30, 2009, there has not
occurred, nor does Target have knowledge of the occurrence of, any development (including
consummation of the transactions contemplated hereby) or threatened development which could be
reasonably expected to have a Material Adverse Effect on either Company. Except as set forth on
Schedule 4.8 hereto or as expressly contemplated by this Agreement, since November 30,
2009, each Company has operated the Business only in the ordinary course and has not:

     (a) redeemed or repurchased, directly or indirectly, any shares of capital stock or
other equity security or declared, set aside or paid any dividends or made any other
distributions (whether in cash or in kind) with respect to any shares of its capital stock
or other equity security;

     (b) issued, granted, sold or transferred any equity securities, any securities
convertible, exchangeable or exercisable into shares of its capital stock or other equity
securities, or warrants, options or other rights to acquire shares of its capital stock or
other of its equity securities;

     (c) incurred any material indebtedness, obligation, lease or other material
Liability (contingent or otherwise) other than any Company Contract related solely to the
purchase or license from either Company of the products or services of either Company which
is either listed or not required to be listed in any Schedule to this Agreement;

- 19 -

 

     (d) suffered any significant adverse change in condition (financial or otherwise),
results of operations, earnings, properties, business revenues, costs or its relations with
its employees, agents, customers, or others;

     (e) created, permitted or suffered any Lien (other than Permitted Liens) with
respect to any of the Company Assets;

     (f) sold, transferred, leased or removed from its premises any of its tangible
assets except inventory in the ordinary course of business or sold, assigned, transferred or
granted any rights under or with respect to any of the Company Intellectual Property, other
than licenses of the Software to Target’s customers in the ordinary course of business,
consistent with past practices;

     (g) executed, amended, or terminated (or committed to do such) any material
agreement by which the Company Assets or either Company are or were bound or affected other
than any Company Contract related solely to the purchase or license from either Company of
the products or services of either Company which is either listed or not required to be
listed in any Schedule to this Agreement;

     (h) increased the compensation or benefits payable or to become payable to any
officers or directors of either Company, or increased the compensation or benefits payable
or to become payable to any other employee, independent contractor or agent of either
Company by more than $10,000 in the aggregate;

     (i) made any material change in the operation or nature of any aspect of the
Business whether made in the ordinary course of business or not;

     (j) induced any employee or independent contractor of either Company to leave his
or her employment or retention, or, to Target’s knowledge, acted to otherwise adversely
affect the relations of either Company with any employee or independent contractor other
than in the ordinary course of business, consistent with past practice, or with respect to
those employees whose employment with either Company Purchaser has requested Target to
terminate prior to the Closing;

     (k) prepaid or accelerated payment of indebtedness, delayed payment of payables in
a manner inconsistent with past practices, changed credit practices or done anything to
materially and adversely affect the relationship of either Company to any of its customers
or suppliers;

     (l) failed to replenish its inventories and supplies in a manner consistent with
its prior practice and any prudent business practices prevailing in the industry, or made
any purchase commitment in excess of the normal ordinary and usual requirements of the
Business or at any price in excess of the then-current market price or upon terms and
conditions more onerous than those usual and customary in the industry or made any change in
its selling, pricing, advertising or personnel practices inconsistent with its prior
practice and prudent business practices prevailing in the industry;

     (m) made any change in any method of accounting or accounting practice;

- 20 -

 

     (n) waived any material rights relating to the Business or arising under or in
connection with any of the Company Assets;

     (o) acquired any assets or properties in an aggregate amount greater than $25,000;

     (p) entered into any transaction, agreement, contract or understanding with any
Related Party affecting either Company or the Company Assets or altered the terms of any
transaction, agreement, contract or understanding with any Related Party;

     (q) suffered any adverse labor dispute or controversy;

     (r) without limiting the foregoing, entered into any material transaction (except
as contemplated by this Agreement) adversely affecting any of the Company Assets or the
operations or financial condition of either Company, other than in the usual and ordinary
course of business; or

     (s) except for this Agreement and as expressly contemplated hereby, entered into
any oral or written agreement, contract, commitment, arrangement or understanding with
respect to any of the matters described in clauses (a) through (r) above.

     4.9. Taxes.

     (a) Each Company has accurately prepared and timely filed all required Tax Returns
required to have been filed by such Company and each such Tax Return is true, correct
accurate and complete in all respects; provided that the foregoing shall not be construed as
a representation regarding the amount or availability of any net operating losses and tax
credits reflected on such Tax Returns.

     (b) Each Company has paid all Taxes required to be have been paid by it, and has
withheld with respect to its employees all Taxes, required to have been withheld by it under
the Federal Insurance Contributions Act, as amended, the Federal Unemployment Tax Act, as
amended, and other Taxes it is required to have withheld from amounts paid or owing to any
employee, stockholder, creditor, director, officer, agent or other third party and, to the
extent required, has remitted the same to the applicable Governmental Authority.

     (c) Since the Balance Sheet Date, neither Company has incurred liability for Taxes
other than in the usual and ordinary course of business consistent with past practice, other
than Tax liabilities arising connection with the transactions contemplated by this
Agreement.

     (d) Neither Company has executed any waiver of any statute of limitations nor
extended the period for the assessment or collection of any Tax.

     (e) Except as set forth in Schedule 4.9(e), neither Company has received
any written notice since December 31, 2004 (or to its knowledge, any other notice) from a
Taxing Authority that (a) its Tax Returns relating to income, sales, payroll, real and

- 21 -

 

personal property Taxes have been audited by any Taxing Authority, or (b) any audit or
other examination of any Tax Return of either Company is presently in progress. Neither
Company has received any notice from a Taxing Authority indicating an intent to open any
such audit or other examination or to assess any additional Tax against such Company.

     (f) Neither Company is (nor has either ever been) required to join with any other
Person in the filing of a consolidated income Tax return for federal or foreign Tax purposes
or a consolidated or combined return or report for state or provincial Tax purposes.
Neither Company is a party to or bound by any Tax indemnity, Tax sharing or Tax allocation
agreement under which it may be required to pay or reimburse any other Person for Tax
liabilities incurred by such other Person, except for agreements not dealing principally
with the sharing, allocation, or indemnification of Taxes and in which the provisions
dealing with Taxes are of a type typically included in such agreements (such as acquisition
agreements, employment agreements, leases and loan agreements).

     (g) Target has no knowledge of any existing circumstances that reasonably may be
expected to result in the assertion of a claim by any Taxing Authority that either Company
has unsatisfied obligations with respect to any period for which Tax Returns are required to
have been filed or Tax is required to have been paid by either Company. There are no Liens
with respect to Taxes upon any of the Company Assets (except for Taxes not yet due).

     (h) No property owned by either Company is property that the Purchaser, Merger Sub,
either Company or the Surviving Corporation is or will be required to treat as being owned
by another person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended and in effect immediately before the enactment of the Tax Reform
Act of 1986, or is “tax-exempt use property” within the meaning of Section 168(h) of the
Code.

     (i) Neither Company has (a) agreed to nor is required to make any change in method
of accounting previously used by it in any Tax Return filed by it, which change in method
would require such Company to make a positive adjustment to its income pursuant to Section
481(a) of the Code on any Tax Return for any taxable period for which the Company has not
yet filed a Tax Return; (b) knowledge that the IRS has proposed any such adjustment or
change in accounting method with respect to such Company, or (c) an application pending with
any Taxing Authority requesting permission for any change in accounting method.

     (j) There is no contract, agreement, plan or arrangement covering any Person that,
individually or collectively, as a consequence of the transactions contemplated by this
Agreement, could give rise to the payment of any amount the deduction of which would be
prohibited or that would not be deductible by Purchaser, Merger Sub, either Company or the
Surviving Corporation by reason of Section 280G of the Code or, with respect to IC, under
any similar provision of Canadian law.

- 22 -

 

     (k) Neither Company owns an interest in any (i) domestic international sales
corporation, (ii) controlled foreign corporation, or (iii) passive foreign investment
company.

     (l) Neither Company is a party (other than as an investor) to any industrial
development bond.

     (m) During the previous two years, neither Company has engaged in any exchange
under which the gain realized on such exchange was not recognized due to Section 1031 of the
Code.

     (n) None of the property owned or used by either Company is subject to a lease
other than a “true” lease for federal income Tax purposes.

     (o) Since January 1, 2008, no claim has been made by a Taxing Authority in a
jurisdiction in which either Company does not currently file Tax Returns that such Company
is or may be subject to taxation by that jurisdiction.

     (p) During the past eight (8) years, neither Company has been a “distributing
corporation” or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of the
Code in a distribution qualifying (or intended to qualify) under Section 355 of the Code (or
so much of Section 356 as relates to Section 355).

     (q) Neither Company has been a beneficiary of or participated in any “reportable
transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(1) that is, was
or, to the knowledge of Target, will be required to be disclosed under Treasury Regulations
Section 1.6011-4. No Tax Return filed by or on behalf of Target within the last six (6)
years has contained a disclosure statement under Section 6662 of the Code (or any similar
provision of law), and no Tax Return has been filed by or on behalf of Target with respect
to which the preparer of such Tax Return advised consideration of inclusion of such a
disclosure, which disclosure was not made.

     (r) Any and all transactions and dealings between or among any of the Companies and
any other Persons directly or indirectly related to the Companies have at all times occurred
on arm’s-length terms, as if between and among unrelated parties. Each of the Companies has
at all times fully complied with any and all Tax-related requirements that the arm’s-length
nature of the terms of such transactions and dealings be documented.

     (s) Neither Company has taken or has any intention to take any action, either
before or after the Closing, which could cause the Merger to fail to qualify as a
reorganization within the meaning of Section 368(a) of the Code.

     (t) IC has not at any time benefitted from a forgiveness of debt entered into in
any transaction or arrangement (including conversion of debt into shares of its capital)
which could have resulted in application of Section 80 and following of the Income Tax Act
(Canada) and the regulations thereunder.

- 23 -

 

     4.10. Title to Properties. Except as expressly set forth in the third and fourth
sentences of Section 4.20(b), the Companies have, in the aggregate, good and marketable title to
all of the Company Assets, free and clear of any Lien except Permitted Liens and Liens set forth on
Schedule 4.10, all of which Liens, except for Permitted Liens, shall be fully released
prior to Closing. None of the directors, officers, employees, agents or Affiliates of either
Company (except for the other Company) owns any of the Company Assets. Except as set forth on
Schedule 4.10, other than (a) property subject to the Personal Property Leases and the Real
Property Leases and (b) assets which are not material to the Business which are owned by employees
or consultants of either Company and used by such employees or consultants in connection with
performing their duties for either Company, so long as one of the Companies has the absolute right
to require, at any time, such employees or consultants to return to one of the Companies (without
retaining any copies) any property (including any Company Intellectual Property) owned by the
Company which is a part of, or used in connection with, any of such assets, neither Company holds
or uses any asset or property in connection with the Business which is not owned by such Company or
which such Company does not have the legal right to use. Schedule 4.10 sets forth an
accurate and complete list of all tangible personal property (other than Inventory) with a book
value in excess of $1,000.00 (individually), including the owner thereof, owned by either Company.

     4.11. Contracts; Defaults.

     (a) Schedule 4.11(a) contains an accurate and complete list of all of the
Material Company Contracts other than the Designated Company Contracts and those Company
Contracts set forth in another Schedule hereto. The “Material Company Contracts” are those
Company Contracts:

     (i) which requires aggregate payments by either Company having a value in
excess of $20,000;

     (ii) which requires aggregate payments to either Company, or involve an
unperformed commitment or services of either Company having a value, in excess of
$50,000;

     (iii) pursuant to which either Company has made or will make loans or
advances, or has or will incur debts or become a guarantor or surety or pledged its
credit on or otherwise become responsible with respect to any undertaking of
another;

     (iv) which is an indenture, credit agreement, loan agreement, note,
mortgage, security agreement, lease of real property or personal property or
agreement for financing;

     (v) involving a partnership, joint venture or other cooperative
undertaking;

     (vi) which is a power of attorney or agency agreement or written
arrangement with any Person pursuant to which such Person is granted the authority
to act for or on behalf of either Company;

- 24 -

 

     (vii) which contain warranties regarding the operation in conformance with
specifications of software and hardware products sold or licensed by either Company,
which warranties are still in effect on the date hereof and other than warranties in
substantially the form attached hereto as Exhibit Q;

     (viii) which provides for the acquisition, directly or indirectly (by
merger or otherwise), of material assets (whether tangible or intangible) or the
capital stock of another Person;

     (ix) which is an employment, consulting or professional advisor agreement;

     (x) which cannot be terminated without penalty, payment or other Liability
in excess of $10,000 on no more than sixty (60) calendar days’ notice, other than
the sale of inventory or licenses of either Company’s products to either Company’s
customers, in either case in the ordinary course of business, consistent with past
practices;

     (xi) which involves the sale, issuance or repurchase of any capital stock
or securities of either Company or the securities of any other Person, which is to
be performed after the date of this Agreement;

     (xii) with any Government or Governmental Authority, other than Company
Contracts with any Government or Governmental Authority related solely to the
purchase or license from either Company by such Government or Governmental Authority
of the products or services of either Company in the ordinary course of business,
consistent with past practices;

     (xiii) which requires the consent of any other party thereto or triggers a
change-of-control provision therein, in each case in connection with the execution,
delivery or performance of this Agreement or the consummation of the transactions
contemplated hereby;

     (xiv) for the purchase, sale, lease (as lessee or lessor), or mortgage (as
mortgagee or mortgagor), of any assets of either Company with an aggregate value in
excess of $10,000 and which imposes any obligations or Liabilities on either Company
after the date of this Agreement, other than the sale of inventory or licenses of
the Software to either Company’s customers, in either case in the ordinary course of
business, consistent with past practices;

     (xv) with any Related Party;

     (xvi) which involves supply or requirements obligations in excess of
$10,000 and which is to be performed after the date of this Agreement;

     (xvii) provides for payments to any Person other than employees based on
sales, purchases, or profits, other than direct payments for goods;

- 25 -

 

     (xviii) which provides for consignment or similar arrangement;

     (xix) which is a “futures” contract committing either Company to purchase,
or accept delivery of, product at future times at fixed prices;

     (xx) for the resolution or settlement of any actual or threatened legal
action with a value of greater than $5,000;

     (xxi) which is not made in the ordinary course of business consistent with
past practice and which is to be performed at or after the date of this Agreement;
or

     (xxii) is an amendment, supplement, or modification in respect of any of
the Contracts described in clauses (i) through (xxi) above.

     (b) Schedule 4.11(b) contains an accurate and complete list of all of the
Designated Company Contracts, in each case identifying the subsection below which describes
such Designated Company Contract. The “Designated Company Contracts” are those Company
Contracts:

     (i) which grant to the other party the exclusive right to sell or resell
any specific product or any product in any specific geographic market or industry;

     (ii) which restricts either Company from carrying on any business or other
activities anywhere in the world under any name or otherwise or from soliciting
business from any Person or Persons; or

     (iii) is an amendment, supplement, or modification in respect of any of the
Contracts described in clauses (i) through (ii) above.

     (c) Subject to Bankruptcy Laws and Equitable Principles, each Company Contract is a
valid, binding and enforceable obligation of one of the Companies and, to Target’s
knowledge, the other party or parties thereto and each Company Contract is in full force and
effect. Neither Company, nor, to Target’s knowledge, any other party thereto, is in default
under any Company Contract and, to Target’s knowledge, there has not occurred any event that
with the lapse of time or the giving of notice or both would constitute such an event of
default thereunder.

     4.12. Compliance With Laws. Each Company (i) has been at all times and is in
compliance with all federal, state, municipal, provincial, foreign and other laws, regulations,
orders and other legal requirements applicable thereto (collectively, “Rules”) except Rules which
are not material to the operations of the Business, as to which each Company has been at all times,
and is, in compliance in all material respects and, to Target’s knowledge, no condition exists
which, with or without notice or passage of time or both, shall cause it not to remain in such
compliance; and (ii) has received no notification and Target has no knowledge that any notification
is forthcoming from any Governmental Authority: (a) asserting that such Company is not in
compliance with any Rule; (b) threatening to revoke any License; or (c) notifying such Company of
any investigation or product recall by any such Governmental Authority. Except as

- 26 -

 

set forth on Schedule 4.12, neither Company is subject to any agreement or written
understanding with any Governmental Authority with respect to the Company Assets or the Business,
other than Company Contracts with Governmental Authorities related solely to the purchase or
license from either Company by such Governmental Authorities of the products or services of either
Company.

     4.13. Real Property. Neither Company owns any real property. Schedule
4.13 sets forth an accurate and complete list of all real property leased or subleased by
either Company (the “Leased Real Property”), including identification of the lease or sublease to
which either Company is a party or by which any of its interests in real property is bound (the
"Real Property Leases”). Neither Company has any Liability with respect to any Real Property Lease
except as expressly set forth in such Real Property Lease. One of the Companies is in peaceable
possession of each parcel of the Leased Real Property. None of such Leased Real Property is
subject to any easements, rights of way, licenses, grants, building or use restrictions,
exceptions, reservations, limitations or other impediments which materially and adversely affect
the value to the Companies of the leasehold interest therein or which materially interfere with or
impair the present and continued use thereof in the usual and normal conduct of the Business as
presently conducted. Except as disclosed on Schedule 4.13, to Target’s knowledge, none of
the Leased Real Property is subject to any mortgage, deed of trust or other Lien (except for
Permitted Liens and the Lien of current Taxes not yet due and payable) which could, by foreclosure,
enforcement or deed-in-lieu transfer, terminate or otherwise adversely affect any of the Real
Property Leases. The Leased Real Property is subject to no leases or tenancies (including ground
leases and other underlying leases) except the Real Property Leases. To the knowledge of Target,
(i) neither the whole nor any portion of any Leased Real Property has been condemned, requisitioned
or otherwise taken by any public authority, (ii) no notice of any such condemnation, requisition or
taking has been received, (iii) no such condemnation, requisition or taking the Leased Real
Property is threatened, and (iv) there are no public improvements pending or threatened which may
result in special assessments against or otherwise affecting the Leased Real Property.

     4.14. Condition of Properties. The tangible Company Assets with a book value in
excess of $1,000 individually are in good operating condition, normal wear and tear excepted, and
are fit for their intended purpose. To the knowledge of Target, (a) there are no structural or
other material physical defects or deficiencies in the condition of any Leased Real Property or
improvements thereon, and (b) the buildings, structures and improvements comprising the Leased Real
Property are in good condition (subject to normal wear and tear), and as such are adequate to
conduct the Business as presently conducted.

     4.15. Litigation. Except as set forth in Schedule 4.15, there are no
pending or, to the knowledge of Target, threatened Claims, legal actions, proceedings,
investigations or outstanding orders, rulings, decrees or stipulations to which either Company is a
party, by which either Company, the Business or the Company Assets are bound or which affect the
transactions contemplated hereby. To the knowledge of Target, there is no reasonable basis for any
other legal action, proceeding or investigation. None of either Company, the Business nor any
Company Asset is subject to any Judgment which remains unsatisfied or unsettled.

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     4.16. Labor and Employee Matters.

     (a) Labor Agreements. Except as set forth on Schedule 4.16(a),
neither Company is a party to or otherwise bound by any collective bargaining agreement or
any other agreement with any labor organization applicable to employees of or Persons
providing services to either Company. No current union representation questions involving
employees of or Persons providing services to either Company are outstanding. Target has no
knowledge of any actual or threatened activity or proceeding of any labor organization (or
representative thereof) to organize any unorganized employees of either Company. During the
past five years, neither Company has experienced any material work stoppage, and no labor
dispute, grievance, slowdown, lockout, strike, work stoppage or other collective labor
action is in effect, pending or, to the knowledge of Target, threatened against or affecting
the Business. Neither Company is engaged in any unfair labor practice. There has been no
mass lay-off, plant closure, employment loss or other event covered by the Worker Adjustment
and Retraining Notification Act within the last year. During the past year, neither Company
has terminated more than ten (10) employees (excluding any employees terminated for cause
within the meaning of applicable law).

     (b) Agreements. Except as set forth on Schedule 4.16(b), neither
Company is currently a party to or bound by any Contract for the employment of any director,
officer or employee or for the performance by any independent contractor of services.
Except as set forth on Schedule 4.16(b), there are no agreements, arrangements or
understandings that would restrict the ability of either Company to terminate the employment
of any of its employees at any time, at will, without Liability. Except as set forth on
Schedule 4.16(b), there are no agreements, arrangements or understandings that would
restrict the ability of either Company to terminate at will, at any time upon thirty days’
notice or less, without Liability, the agency, distributorship, consultancy or other
contract or arrangement of any employee or independent contractor, except to the extent
longer notice periods are expressly required pursuant to the terms of the Contracts
disclosed in a Schedule to this Agreement, accurate and complete copies of which have been
provided to Purchaser. Neither Company is a party, directly or indirectly, to any Contract
with any Governmental Authority which would require it to maintain an affirmative action
plan or similar program or arrangement. To Target’s knowledge, no employee of either
Company has any plan or intention to terminate employment with such Company or not to accept
an offer of employment by a Purchaser, if made.

     (c) Compensation. Schedule 4.16(c) sets forth an accurate and
complete (i) list of directors, officers, employees and independent contractors who perform
services for either Company, (ii) summary description, for each such Person, of the current
rate of compensation payable to such Person (including the date of the most recent increase
thereof), whether such Person is an active employee or on leave, whether such Person is
employed on a full-time or part-time basis and any severance pay, lump sum or other payment,
compensation or other remuneration that such Person is or would be eligible to receive upon
termination of employment or service or as a result of any of the transactions contemplated
by this Agreement, and (iii) list of all former directors, officers, employees and
independent contractors to whom either Company is currently

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obligated to pay any severance, compensation or other remuneration or benefit.
Except as expressly set forth in Schedules 4.16(b) and 4.16(c), neither
Company has any severance policy or other severance obligation. Schedules 4.16(b)
and 4.16(c) also contain a complete and accurate list of any bonus, severance
payment, change of control payment, payment triggered by termination of any employment
agreement to which either Company is a party or other payments owed by either Company at
Closing on account of any Employee Plan or other Contract, or owed at any other time and
which would not be payable but for, individually or among other things, the consummation of
the transactions contemplated by this Agreement.

     (d) Manuals. Set forth in Schedule 4.16(d) is an accurate and complete
list of all of each Company’s current published or formal written employee manuals,
brochures, publications, policies, procedures or similar documents concerning any policies
or procedures regarding compensation, benefits, perquisites, office administration,
personnel matters and hiring, evaluation, supervision, training, termination and promotion
of employees of either Company and all material written communications since November 30,
2009 to employees generally concerning any employment or employee benefit policies or
procedures.

     4.17. Employee Plans.

     (a) Schedule 4.17(a) contains a list of all (a) employee welfare benefit plans
(as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), (b) plans, policies or arrangements which provide non-qualified deferred
compensation, bonus or retirement benefits, severance or “change of control” (as set forth
in Section 280G of the Code) benefits, or life, disability, accident, vacation, tuition
reimbursement or other material fringe benefits, and (c) employee pension benefit plans (as
defined in Section 3(2) of ERISA), in each case maintained with respect to any employees of
either Company and those employees on lay-off, disability or leave of absence, former
employees, and retired employees other than any employees employed in Canada (collectively,
the “US Employee Plans”). Each of the US Employee Plans and, with respect to each US
Employee Plan, each Company, is and has been maintained in compliance, in form and
operation, with the requirements provided by any and all applicable Rules, including ERISA
and the Code. All required reports and descriptions of the US Employee Plans have been
timely filed with the appropriate Governmental Authority and distributed. Neither Company
maintains, contributes to, or has any Liability or obligations with respect to any
multiemployer plan” (within the meaning of Section 3(37) of ERISA), any plan that is subject
to the provisions of Title IV of ERISA or Section 412 of the Code, or any plan, program,
arrangement, or agreement providing for medical, health, life or other welfare benefits for
present or future terminated employees (other than any welfare benefits provided in
compliance with the Consolidated Omnibus Budget Reconciliation Act of 1985 or other similar
law (“COBRA”)). Each Company is in compliance with Section 4980B of the Code.

     (b) Schedule 4.17(a) contains a list of all Canadian Welfare Plans and each
other plan, policy or arrangement which provides deferred compensation, bonus, pension or
retirement benefits, severance or change of control benefits, or life, disability,

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accident, vacation, tuition reimbursement or other material fringe benefits, and (c)
employee pension benefit plans (as defined in Section 3(2) of ERISA), in each case
maintained with respect to any employees of either Company and those employees on lay-off,
disability or leave of absence, former employees, and retired employees employed in Canada
(collectively, the “Canadian Employee Plans” and, together with the US Employee Plans, the
“Employee Plans”). Each Canadian Employee Plan has been duly registered where required by
applicable Rules. With respect to any Canadian Welfare Plans, (i) all statutory obligations
required to be performed in connection with the Canadian Welfare Plans or the funding
agreements therefor have been performed in a timely fashion; (ii) all contributions or
premiums required to be made to the Canadian Welfare Plans have been made in a timely
fashion in accordance with applicable Rules, (iii) all employee contributions to the
Canadian Welfare Plans required to be made by way of authorized payroll deduction have been
properly withheld, and (iv) all reports and disclosures relating to the Canadian Welfare
Plans required by any applicable Rules have been filed or distributed in a timely fashion.
Each of the Canadian Employee Plans and, with respect to each Canadian Employee Plan, each
Company, is and has been maintained in compliance, in form and operation, with the
requirements provided by any and all applicable Rules, including the Income Tax Act
(Canada).

     4.18. Environmental Matters. To Target’s knowledge, the operations of the Business
have been at all time and are in compliance with all Rules relating to pollution or protection of
the environment, including, but not limited to, any statutes, rules or regulations relating
primarily to emissions, discharges, release of pollutants, contaminants or hazardous or toxic
materials or wastes into ambient air, surface water, groundwater or land or otherwise relating to
the manufacture, process, distribution, use, treatment, storage, disposal, transport, or handling
of chemical substances, pollutants, contaminants or hazardous toxic materials or water (the
"Environmental Laws”). No notice or Claim has been received by either Company with respect to
violations of any such Environmental Laws and Target does not know of any obligation or Liability
relating to violations of any such Environmental Laws. Each Company possesses all required
permits, licenses, certifications and approvals and has filed all notices or applications relating
or pertaining to such Environmental Laws.

     4.19. Intentionally Omitted.

     4.20. Intellectual Property.

     (a) Schedule 4.20(a)(i) sets forth an accurate and complete list (together
with, for Company Registered Intellectual Property, the date granted or applied for, and the
expiration date and status thereof) of all (i) Company Registered Intellectual Property, and
(ii) unregistered United States and foreign Patents, Trademarks, Trade Names, service marks,
web sites, domain names, material logos and material copyrights, in each case (A) owned by,
or registered or applied for by, or in the name of, either Company, (B) in which either
Company has any rights (other than pursuant to Contracts for Shrink-Wrap Software or the
Contracts listed on Schedule 4.20(a)(ii)), or (C) which are utilized in the
operation of the Business (other than pursuant to Contracts for Shrink-Wrap Software or the
Contracts listed on Schedule 4.20(a)(ii)). Schedule 4.20(a)(ii) sets forth
all Contracts (other than Contracts for Shrink-Wrap Software) with a third party pursuant

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to which either Company has received a license to use any Company Intellectual
Property. Schedule 4.20(a)(iii) sets forth all Contracts with a third party
pursuant to which either Company has granted such third party a license to use any Company
Intellectual Property, other than any Company Contract related solely to the purchase or
license from either Company of the products or services of either Company.

     (b) Except as expressly set forth in the second, third and fourth sentences of this
Section 4.20(b) and as expressly set forth in Schedule 4.20(b), the Companies owns,
on an exclusive basis, free and clear of all Liens other than Permitted Liens, all right,
title and interest in, or possesses sufficient rights to use, all of the Intellectual
Property utilized in the operation of the Business as conducted since November 30, 2009 (the
“Company Intellectual Property”), including the Intellectual Property identified in
Schedule 4.20(a)(i) and Schedule 4.20(a)(ii). None of the Company
Intellectual Property owned by either Company, nor the operations of the Business, infringe
the proprietary rights of any third party. To Target’s knowledge, none of the Company
Intellectual Property which is not owned by either Company infringe the proprietary rights
of any third party. Any breach of the immediately preceding two sentences shall not be
deemed to be a breach of the representations and warranties made in the first sentence of
this Section 4.20(b) nor those which are made in Section 4.10 of this Agreement. The
representations and warranties contained in this Section 4.20(b) do not apply to any
commercially available software products used by either Company under standard end-user
license agreements (“Shrink-Wrap Software”).

     (c) Except as set forth in Schedule 4.20(c), neither Company pays any royalty
to anyone with respect to any of the Company Intellectual Property. Except as set forth in
Schedule 4.3, consummation of the transactions contemplated by this Agreement will
not adversely affect the right, title and interest of either Company in and to the Company
Intellectual Property. To the knowledge of Target, none of the Company Intellectual
Property owned by either Company is being infringed by any Person. Each Company has
sufficient software licenses for all of the Shrink-Wrap Software which it uses in the
operation of the Business without violating the terms or provisions of any such software
license.

     4.21. Licenses. Set forth in Schedule 4.21 is a true and complete list of all
of each Company’s licenses, permits, quotas, authorizations, franchises, registrations and other
approvals from any Governmental Authority (collectively, “Licenses”). Each of the Licenses has
been duly obtained, is valid and in full force and effect, and is not subject to any Liens or any
pending or, to Target’s knowledge, threatened administrative or judicial proceeding to revoke,
cancel or declare such License invalid in any respect. Except as set forth in Schedule
4.3, consummation of the transactions contemplated by this Agreement will not adversely affect
the rights of either Company in and to the Licenses. The Licenses are sufficient in all respects
to permit the continued lawful conduct by the Companies of the Business in the manner now conducted
by the Companies. Neither Company is in default or in violation with respect to any of the
Licenses, and no event has occurred which constitutes, or with due notice or lapse of time or both
may constitute, a default by either Company under or violation of any License.

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     4.22. Insurance. Each Company maintains commercially reasonable amounts of insurance
to protect such Company and the Company Assets against the types of liabilities customarily insured
against by Persons in connection with the operation of similar businesses in Target’s industry, an
accurate and complete list of which are set forth in Schedule 4.22, and all premiums due on
such policies have been paid. Each Company has complied with the provisions of all such policies.
To the knowledge of Target, such policies are in full force and effect and neither Company is in
default under any of them. Neither Company has received any written notice of cancellation or
intent to cancel or increase premiums with respect to such insurance policies, nor, to Target’s
knowledge, is there any basis for any such action. Schedule 4.22 also contains a list of
all claims or asserted claims reported to insurers under such policies, including all claims,
actions or proceedings asserted against the Company at any time within the past five (5) years; it
being agreed that Schedule 4.22 need not disclose any claims, asserted claims, actions or
proceedings (a) related to any Employee Plan, or (b) under $5,000 individually.

     4.23. Customers. Set forth in Schedule 4.23 is an accurate and complete list
of (a) all of the current customers of the Companies whose purchases from the Companies during the
last twelve months exceeded $20,000, and (b) customers of the Companies from 2008 or 2007 who are
no longer customers and whose annual purchases during any calendar year exceeded $20,000. (i) No
customer of either Company set forth on Schedule 4.23 in response to clause (a) of this
Section 4.23 (each, a “Major Customer”), has threatened in writing or, to the knowledge of Target,
orally, within the last twelve months to cancel or otherwise terminate, or to the knowledge of
Target, intends to cancel or otherwise terminate, the relationship of such Person with either
Company, (ii) no such Major Customer has during the last twelve months decreased materially or
threatened in writing or, to the knowledge of Target, orally, to decrease or limit materially its
usage or purchase of services or products of either Company, or to the knowledge of Target, intends
to modify materially its relationship with either Company, and (iii) to the knowledge of Target,
the purchase of the Business by Purchaser will not materially and adversely affect the relationship
of the Business with any Major Customer. Except as set forth in Schedule 4.23, neither
Company has offered to any Person, and Target has no knowledge of any Person entitled to claim, any
cash discount, profit participation, stock adjustment or other rebate or premium in connection with
or on account of the purchase of products or services of either Company.

     4.24. Transactions with Related Parties. For purposes of this Agreement, the term
“Related Party” shall mean (i) each Seller, (ii) any past or present director or officer of either
Company, (iii) to the knowledge of any person referred to in (i) or (ii), any Immediate Family
Member of such person, or (iv) to the knowledge of Target, any employee of either Company (such
persons in (i), (ii), (iii) or (iv) referred to herein as a “Related Party” or collectively as the
“Related Parties”). Except as set forth in Schedule 4.24, during the past three years no
Related Party has been a member, manager, director or officer of, or has had any direct or indirect
economic interest in, any person or entity which during such period has been a supplier or customer
of products or services of either Company, or has competed with or been engaged in any business
similar to the Business. Except as set forth in Schedule 4.24, no Related Party owns,
directly or indirectly, in whole or in part, any tangible or intangible property of either Company
or that either Company uses in the conduct of the Business (other than by reason of ownership of
equity securities of Target) other than assets which are not material to the Business which are
owned by employees or consultants of either Company and used by such employees or

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consultants in connection with performing their duties for either Company, so long as one of
the Companies has the absolute right to require, at any time, such employees or consultants to
return to one of the Companies (without retaining any copies) any property (including any Company
Intellectual Property) owned by the Company which is a part of, or used in connection with, any of
such assets. Except as set forth in Schedule 4.24, no Related Party owes any money or
other amounts to, nor is any Related Party owed any money or other amounts by either Company other
than compensation paid for services actually performed in amounts in keeping with past practice and
in the ordinary course of business and not in violation of any other provision of this Agreement.
For purposes of this Section 4.24, the beneficial ownership of no more than three percent (3%) of
the outstanding voting stock of a publicly traded corporation shall not be deemed to be a “direct
or indirect economic interest” in any Person.

     4.25. Absence of Certain Commercial Practices. Neither Company nor any of their
respective officers, directors, employees or agents (or any Person acting on behalf of any of the
foregoing) has given or agreed to give in connection with the Business (i) any gift or similar
benefit of more than nominal value to any supplier, Governmental Authority (including any
governmental employee or official) or any other Person who is or may be in a position to help,
hinder or assist either Company, the Business or the Person giving such gift or benefit in
connection with any actual or proposed transaction relating to the Business, which gifts or similar
benefits would individually or in the aggregate subject either Company or any such officer,
director, employee or agent to any fine, penalty, cost or expense or to any criminal sanctions,
(ii) receipts from or payments to any governmental officials or employees, (iii) commercial bribes
or kick-backs, (iv) political contributions, or (v) any receipts or disbursements in connection
with any unlawful boycott, in the case of each of clauses (i), (ii), (iii), (iv) and (v), in
violation of any Rule. No such gift or benefit is required in connection with the operation of the
Business to avoid any fine, penalty, cost, expense or Material Adverse Effect on Target.

     4.26. Name. Neither Company has ever operated during the past five years under, or
used, any corporate name other than “Intellitactics Inc.”

     4.27. Brokers or Finders. Except for America’s Growth Capital, neither Company has
employed or engaged any firm, corporation, agency or other person to act as a broker, finder or
investment banker in connection with the transactions contemplated by this Agreement.

     4.28. Indebtedness. All of the Liabilities of the Companies for accounts payable as
of the Closing Date (a) have arisen in bona fide transactions, and (b) arose in the ordinary course
of business, consistent with past practice or in connection with the transactions contemplated
hereby. Neither Company has experienced or suffered any delay in the payment of its Liabilities to
its trade creditors (including suppliers) or with respect to its trade debt. Neither Company has
outstanding any Indebtedness for Borrowed Funds other than as set forth on Schedule 4.28
and neither Company has agreed to create or incur any additional or other Indebtedness for Borrowed
Funds. Except as set forth on Schedule 4.28, neither Company has any Liability to any
Seller other than compensation paid for services actually performed in amounts in keeping with past
practice and in the ordinary course of business and not in violation of any other provision of this
Agreement.

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     4.29. Bank Accounts, Etc. Schedule 4.29 sets forth an accurate and complete
list of each financial institution in or with which either Company has an account, credit line or
safety deposit box, and a brief description thereof including amounts and the names of all persons
currently authorized to draw thereon or having access thereto.

     4.30. Quotas; Foreign Trade Zones. Except as set forth on Schedule 4.30, each
Company has obtained and is in compliance with all approvals and permits necessary for the
operation of the import and export operations of the Business.

     4.31. Board Approval. The Board of Directors of Target has (i) approved this
Agreement and the Merger, (ii) determined that this Agreement and the Merger are advisable and in
the best interests of the stockholders of Target and are on terms that are fair to such
stockholders and (iii) recommended that the Stockholders approve this Agreement and consummation of
the Merger.

     4.32. Required Stockholder Vote. The only votes, consents or approvals of the
stockholders of Target required pursuant to Target’s Organizational Documents, Delaware Law, or any
agreement between Target and holders of Target Capital Stock to adopt and approve the terms of this
Agreement, the Merger and the transactions contemplated hereby are the vote (at a duly called
meeting of stockholders of Target for such purpose) or written consent of (i) at least 50% of all
of the Stockholders, calculated on an as-if-converted to Common Stock basis, voting together as a
single class and (ii) at least 66-2/3% of all of the holders of Target Series B Preferred Stock,
Target Series D Preferred Stock, Target Series E Preferred Stock, Target Series G Preferred Stock
and Target Series G Preferred Stock, calculated on an as-if-converted to Common Stock basis, voting
together as a single class.

     4.33. Rights Agreements. Neither Company has any “poison pill” or similar instruments
or plans which will be triggered on account of the execution of this Agreement by Target.

     4.34. Sufficiency of Assets. The assets and properties owned by either Company, or
which either Company has the right to use pursuant to a binding and legally enforceable Contract,
constitute all of the assets and properties, tangible and intangible, (a) which are used (whether
or not owned) by the Companies in the operation of the Business as conducted since November 30,
2009 other than assets which are not material to the Business which are owned by employees or
consultants of either Company and used by such employees or consultants in connection with
performing their duties for either Company, so long as one of the Companies has the absolute right
to require, at any time, such employees or consultants to return to one of the Companies (without
retaining any copies) any property (including any Company Intellectual Property) owned by the
Company which is a part of, or used in connection with, any of such assets, or (b) which are
necessary for the operation of the Business in the ordinary course consistent with past practice.

     4.35. Documents. Complete and accurate copies of the following have been Made
Available to Purchaser, none of the following have been amended, modified or supplemented, except
as has been Made Available to Purchaser and there are no agreements to amend, modify or supplement
any of the following from the form Made Available to Purchaser:

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     (a) All Company Contracts listed or referred to in the Schedules to this Article IV;
and

     (b) With respect to each Employee Plan, to the extent applicable, (i) all plan
documents, (ii) the most recent determination or opinion letters received from the IRS,
(iii) the most recent application for determination filed with the IRS, (iv) the latest
actuarial valuations, (v) the latest financial statements, (vi) Form 5500 Annual Reports and
Schedule A and Schedule B thereto for the last three years, (vii) all related trust
agreements, insurance contracts or other funding arrangements which implement any of such
Employee Plans, and (viii) all Summary Plan Descriptions and summaries of modifications
thereto communicated to employees.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE SELLERS.

     Each Seller, solely on behalf of himself, herself or itself and not on behalf of any other
Seller, hereby represents and warrants to Purchaser and Merger Sub as follows:

     5.1. Ownership of Stock. Such Seller is the record and beneficial owner and holder of
the Target Common Stock and the Target Preferred Stock in the amounts shown next to such Seller’s
name on Schedule A, free and clear of all Liens (except for restrictions on the
transferability of securities arising under applicable laws), and except as set forth in
Schedule 5.1, such Seller is not a party to any contract, commitment or agreement relating
to voting, purchase or sale of the Target’s capital stock.

     5.2. Intentionally Omitted

     5.3. Authority Relative to Agreement. Such Seller has the power and authority to
enter into this Agreement and to carry out his, her or its obligations hereunder. The execution
and delivery of this Agreement and the performance by such Seller of his, her or its obligations
hereunder have been duly authorized, and no other proceedings on the part of such Seller are
necessary to authorize such execution, delivery and performance. This Agreement has been duly
executed by such Seller and constitutes the valid and legally binding obligation of such Seller
enforceable against such Seller in accordance with its terms, subject to Bankruptcy Laws and
Equitable Principles.

     5.4. Absence of Conflicts. Except as set forth in Schedule 5.4, the execution
and delivery of this Agreement, the performance by such Seller of his, her or its obligations
hereunder and the consummation of the transactions contemplated hereby will not (a) violate, or
constitute a breach or default under, any provisions of such Seller’s Organizational Documents, (b)
require the consent of any third party (including any Governmental Authority), (c) result in the
creation or imposition of any Lien upon the Target Common Stock or the Target Preferred Stock owned
by such Seller, (d) violate any Rule or Judgment to which such Seller or the Target Common Stock or
the Target Preferred Stock owned by such Seller may be subject, or (e) result in the breach of any
of the terms or conditions of, or constitute a default under, or in any manner release any party
thereto from any obligation under, any mortgage, note, bond, indenture, contract, agreement,
license or other instrument or obligation of any kind or nature by which

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such Seller or the Target Common Stock or the Target Preferred Stock owned by such Seller may
be bound or affected.

     5.5. Litigation. Except as set forth in Schedule 5.5, there are no pending
or, to the knowledge of such Seller, threatened Claims, legal actions, proceedings, investigations
or outstanding orders, rulings, decrees or stipulations to which such Seller is a party either by
which the Target Capital Stock or Employee Rights owned by such Seller is bound or affected or
which affect or relate to the transactions contemplated hereby. To such Seller’s knowledge, there
is no reasonable basis for any such legal action, proceeding or investigation. None of the Target
Capital Stock or Employee Rights owned by such Seller is subject to any Judgment which remains
unsatisfied or unsettled.

     5.6. Accredited Investor. Such Seller is an “accredited investor” as that term is
defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the “Securities Act”).

     5.7. Information and Opportunity to Inquire.

     (a) Such Seller has been given access to all documents and information he, she or it
has requested in connection with making a decision to invest in the Purchaser Common Stock
and has been advised by counsel. Such Seller has had the opportunity to ask questions of
representatives of Purchaser and has had all of his, her or its questions answered to his,
her or its satisfaction. Such Seller has received and had a chance to review all of the
information (both financial and otherwise) which he, she or it has requested to review in
connection with his, her or its decision to invest in the Purchaser Common Stock.

     (b) Such Seller has such knowledge and experience in business and financial matters
that he, she or it is capable of evaluating the merits and risk of his, her or its
investment in the Purchaser Common Stock and protecting his, her or its own interests in
connection with this transaction.

     (c) Such Seller is acquiring the Purchaser Common Stock solely for his, her or its own
account and beneficial interest for investment and not with a view to or for sale in
connection with any distribution of any part thereof, has no present intention of selling,
granting any participation in or otherwise distributing the same, and does not presently
have reason to anticipate a change in such intention. The entire legal and beneficial
interest of the Purchaser Common Stock which such Seller is acquiring is being acquired for
his, her or its own account only and not in whole nor in part for any other person.

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF PURCHASER.

     Purchaser represents and warrants to Target and Sellers as follows. The following
representations and warranties are qualified by the exceptions set forth in the Schedules to this
Article IV only (i) to the extent an exception expressly refers to the specific representations and
warranties which it qualifies or (ii) to the extent by the nature of the disclosure, a reasonable
person would believe that such disclosure should be applicable to any other representation or

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warranty, regardless of whether or not such exception contains an express cross-reference to
any such other representations and warranties. The inclusion of any item in the Schedules does not
constitute an admission of liability with respect to any Claims or an admission that any breach,
violation, default or event of default exists with respect to any contract or agreement to which
Purchaser is a party.

     6.1. Organization, Ownership and Qualification of Purchaser and Merger Sub. Each of
Purchaser and Merger Sub is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with all requisite corporate power and authority to own,
operate and lease their respective properties and assets, to carry on their business as is
currently conducted, and to execute this Agreement and to perform the transactions contemplated
herein. Purchaser has qualified as a foreign corporation and is in good standing under the laws of
all jurisdictions where the nature of its business or the nature and location of its assets
requires such qualification except where the absence of such qualification would not have a
Material Adverse Effect on Purchaser. Purchaser has delivered to Target complete and accurate
copies of the Organizational Documents of Purchaser and Merger Sub as currently in effect, the
Purchaser Stockholder Agreement and the Purchaser Investor Rights Agreement, together with all
amendments and modifications thereto as currently in effect. Other than Merger Sub and as set
forth on Schedule 6.1, Purchaser does not have any subsidiary or any other equity interest
or investment in any Person and each subsidiary identified in Schedule 6.1 is, directly or
indirectly, wholly owned by Purchaser.

     6.2. Authority Relative to Agreement. Each of Purchaser and Merger Sub has the
corporate power and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance by Purchaser and
Merger Sub of its respective obligations hereunder have been duly authorized by their respective
boards of directors and stockholders, and no other proceedings on the part of Purchaser or Merger
Sub are necessary to authorize such execution, delivery and performance. This Agreement has been
duly executed by Purchaser and Merger Sub and constitutes the valid and legally binding obligation
of Purchaser and Merger Sub enforceable against Purchaser in accordance with its terms, subject to
Bankruptcy Laws and Equitable Principles.

     6.3. Absence of Conflicts. Except as set forth in Schedule 6.3, the execution
and delivery of this Agreement, the performance by Purchaser and Merger Sub of its respective
obligations hereunder and the consummation of the transactions contemplated hereby do not and will
not (a) violate, or constitute a breach or default under, any provisions of the Organizational
Documents of Purchaser or Merger Sub, (b) require the consent of any third party (including any
Governmental Authority), (c) result in the creation or imposition of any Lien upon the Merger
Consideration or any of Purchaser’s assets (other than Permitted Liens), (d) violate any Rule or
Judgment to which Purchaser, Merger Sub or any of their respective assets may be subject, or (e)
result in the breach of any of the terms or conditions of, or constitute a default under, or in any
manner release any party thereto from any obligation under, any mortgage, note, bond, indenture,
contract, agreement, license or other instrument or obligation of any kind or nature by which
Purchaser, Merger Sub or any assets of Purchaser or Merger Sub may be bound or affected.

     6.4. Capitalization.

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     (a) The authorized capital stock of Purchaser as of February 26, 2010 consists of (a)
129,175,210 (which, by no later than the Closing Date, shall be increased to 136,775,210)
shares of Purchaser Common Stock, of which 78,404,821 shares are issued and outstanding as
of the date hereof, (b) 6,174,654 shares of Class B Non-Voting Common Stock, par value
$0.0001 per share (“Purchaser Class B Common Stock”), of which 2,965,752 shares are issued
and outstanding as of the date hereof, (c) 10,952,633 shares of Series A-1 Preferred Stock,
par value $0.0001 per share, of which 10,952,633 shares are issued and outstanding as of the
date hereof, (d) 11,505,258 shares of Series A-2 Preferred Stock, par value $0.0001 per
share, of which 11,505,258 shares are issued and outstanding as of the date hereof, and (e)
5,882,353 shares of Series B Preferred Stock, par value $0.0001 per share, of which
5,882,351 shares are issued and outstanding as of the date hereof. Except as set forth in
Schedule 6.4(a), there are no other outstanding shares of capital stock or voting
securities and no outstanding commitments to issue any shares of capital stock or voting
securities after the date hereof, other than (i) pursuant to the exercise of options
outstanding as of such date under the Purchaser Stock Option Plan, or (ii) pursuant to the
Purchaser Warrants. The shares of Purchaser Common Stock to be issued pursuant to this
Agreement will be duly authorized, validly issued, fully paid, and non-assessable, free of
any Liens imposed by Purchaser (other than restrictions on transferability of securities
arising under applicable laws).

     (b) As of February 26, 2010, (i) Purchaser has reserved 15,981,303 shares of Purchaser
Common Stock and for issuance to employees, consultants and directors pursuant to the
Purchaser Stock Option Plan, of which 2,407,604 shares have been issued pursuant to option
exercises and 11,804,045 shares are subject to outstanding, unexercised options, and (ii)
Purchaser has reserved 6,174,654 shares of Purchaser Class B Common Stock and for issuance
to employees, consultants and directors pursuant to the Purchaser Stock Option Plan, of
which 2,965,752 shares have been issued pursuant to option exercises and 2,734,301 shares
are subject to outstanding, unexercised options.

     (c) Schedule 6.4(c) sets forth a true and complete list of all outstanding
warrants to purchase any Purchaser Capital Stock (collectively, the “Purchaser Warrants”),
including the holders thereof, number of shares of Purchaser Capital Stock subject to each
such warrant, the exercise price per share and the term of each such warrant.

     6.5. Financial Statements. Purchaser has delivered to Target accurate and complete
(i) copies of the audited consolidated balance sheets of Purchaser and its subsidiaries as of the
last day of each of the two fiscal years of Purchaser for the periods ended December 31, 2008 and
2007, respectively, together with the related consolidated statements of income, stockholders’
equity and changes in cash flow for such fiscal years, and the notes thereto, in each case
accompanied by the unqualified opinion thereon of Purchaser’s independent auditors (“Purchaser
Historical Statements”), and (ii) copies of the unaudited consolidated balance sheet of Purchaser
and its subsidiaries (the “Purchaser Balance Sheet”) as of December 31, 2009, together with the
related unaudited consolidated statements of income, stockholders’ equity and changes in cash flow
for the 12-month period ended on such date, (“Purchaser Interim Statements” and, together with the
Purchaser Historical Statements, the “Purchaser Financial Statements”). Except as set forth on
Schedule 6.5, the Purchaser Financial Statements, including

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the notes to the Purchaser Historical Statements, (a) were prepared in accordance with GAAP,
applied on a basis consistent with prior periods (except, in the case of the Purchaser Interim
Statements, for immaterial year-end and audit adjustments and the absence of notes thereto), (b)
present fairly the consolidated financial position, results of operations and changes in cash flows
of Purchaser and its subsidiaries as of such dates and for the periods then ended, and (c) are
accurate, correct and complete and were prepared in accordance with the financial books and records
maintained by Purchaser.

     6.6. Compliance With Laws. (i) Each of Purchaser and Merger Sub is in compliance with
all Rules, except Rules which are not material to the operations of Purchaser and Merger Sub’s
business, as to which Purchaser and Merger Sub have been at all times, and are, in compliance in
all material respects, and, to the knowledge of Purchaser or Merger Sub, no condition exists which,
with or without notice or passage of time or both, shall cause either of Purchaser or Merger Sub
not to remain in compliance; and (ii) neither Purchaser nor Merger Sub has received notification
and neither Purchaser nor Merger Sub has knowledge that any notification is forthcoming from any
Governmental Authority: (a) asserting that Purchaser or Merger Sub is not in compliance with any
Rule; (b) threatening to revoke any licenses (including licenses to use computer software),
permits, quotas, authorizations, franchises, registrations and other approvals from any
Governmental Authority or from any private party; or (c) notifying Purchaser or Merger Sub of any
investigation or product recall by any such Governmental Authority. Except as set forth on
Schedule 6.6, neither Purchaser nor any of its subsidiaries is subject to any agreement or
written understanding with any Governmental Authority with respect to its assets or business, other
than Contracts with Governmental Authorities related solely to the purchase or license from
Purchaser or any of its subsidiaries by such Governmental Authorities of the products or services
of Purchaser or any of its subsidiaries.

     6.7. Litigation. Except as set forth in Schedule 6.7, there are no pending
or, to the knowledge of Purchaser, threatened Claims, legal actions, proceedings, investigations or
outstanding orders, rulings, decrees or stipulations to which Purchaser and any of its subsidiaries
is a party, by which Purchaser, any of its subsidiaries or any of their respective assets or
businesses are bound or which affect the transactions contemplated hereby. None of the Purchaser,
any of its subsidiaries or any of their respective assets or businesses is subject to any Judgment
which remains unsatisfied or unsettled.

     6.8. Ownership of Merger Sub; No Prior Activities. Merger Sub is a direct,
wholly-owned subsidiary of Purchaser and has engaged in no business activity other than as
contemplated by this Agreement and qualifying for certain security clearances from Governmental
Authorities. Except for obligations or liabilities incurred in connection with its incorporation,
the Merger and the transactions contemplated by this Agreement, and qualifying for such security
clearances from Governmental Authorities, Merger Sub has not incurred, and will not incur, directly
or indirectly, through any subsidiary or other Affiliate, any obligations or liabilities and has
not engaged in, and will not engage in, any business activities of any type or kind whatsoever or
entered into any agreements or arrangements with any Person.

     6.9. Absence of Undisclosed Liabilities. Except as set forth on Schedule 6.9,
Purchaser does not have any Liability, including, without limitation, deferred Tax liabilities,
vacation time or pay, severance pay, future amounts payable arising out of prior transactions, and

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any other Liabilities relating to or arising out of any act, omission, transaction,
circumstance, sale of goods or services, or other condition which occurred or existed on or before
the Closing Date, which is not fully shown or provided for in the Purchaser Balance Sheet, except:
(a) under the executory portion of any Contract (i) by which Purchaser or any of its subsidiaries
is bound on the Closing Date, and (ii) the existence of which does not otherwise constitute or
result from a breach of any representation, warranty or covenant of this Agreement or a breach or
default by Purchaser or any of its subsidiaries under any of Purchaser’s and its subsidiaries’
Contracts, (b) Liabilities incurred in the usual and ordinary course of business subsequent to the
Purchaser Balance Sheet Date consistent with past practice, (c) Liabilities incurred in connection
with the transactions contemplated by this Agreement, and (d) Liabilities not required by GAAP,
consistently applied in accordance with past practices of Purchaser and its subsidiaries, to be
reflected on a balance sheet of Purchaser or any of its subsidiaries.

     6.10. Absence of Certain Changes or Events. Since November 30, 2009, there has not
occurred, nor does Purchaser have knowledge of the occurrence of, any development (including
consummation of the transactions contemplated hereby) or threatened development which could
reasonably be expected to have a Material Adverse Effect on Purchaser or any of its subsidiaries,
taken as a whole. Except as set forth on Schedule 6.10 hereto or as expressly contemplated
by this Agreement, since November 30, 2009, Purchaser and its subsidiaries have operated their
businesses in the ordinary course and have not:

     (a) redeemed or repurchased (other than from Persons whose employment or affiliation
with Purchaser has terminated), directly or indirectly, any shares of capital stock or other
equity security or declared, set aside or paid any dividends or made any other distributions
(whether in cash or in kind) with respect to any shares of its capital stock or other equity
security;

     (b) incurred any material indebtedness, obligation, lease or other Liability
(contingent or otherwise), in each case in excess of $250,000 individually;

     (c) made any material change in the operation or nature of any aspect of its Business
other than in the ordinary course of business;

     (d) made any change in any method of accounting or accounting practice, except as
required by GAAP, consistently applied in accordance with past practices of Purchaser, or
any applicable Rules;

     (e) suffered any materially adverse labor dispute or controversy;

     (f) entered into any transaction, agreement, contract or understanding with any
Purchaser Related Party affecting either Purchaser, any of its subsidiaries or any of their
respective assets or altered the terms of any Contract with any Purchaser Related Party; or

     (g) except for this Agreement and as expressly contemplated hereby, entered into any
oral or written agreement, contract, commitment, arrangement or understanding with respect
to any of the matters described in clauses (a) through (f) above.

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     6.11. Transactions with Related Parties. For purposes of this Agreement, the term
"Purchaser Related Party” shall mean (i) any past or present director or executive officer of
Purchaser or any of its subsidiaries (but, with respect to such subsidiaries, only directors or
executive officers thereof during the time that such subsidiaries were subsidiaries of Purchaser),
and (ii) to the knowledge of any person referred to in (i) or (ii), any Immediate Family Member of
such person (such persons in (i) or (ii) referred to herein as a “Purchaser Related Party” or
collectively as the “Purchaser Related Parties”). Except as set forth in Schedule 6.11,
during the past three years no Purchaser Related Party has been a member, manager, director or
officer of, or has had any direct or indirect economic interest in, any person or entity which
during such period has been a supplier or customer of products or services of Purchaser or any of
its subsidiaries, or has competed with or been engaged in any business similar to the Purchaser’s
business. Except as set forth in Schedule 6.11, no Purchaser Related Party owns, directly
or indirectly, in whole or in part, any tangible or intangible property of Purchaser or any of its
subsidiaries or that Purchaser or any of its subsidiaries uses in the conduct of its business
(other than by reason of ownership of equity securities of Purchaser). Except as set forth in
Schedule 6.11, no Purchaser Related Party owes any money or other amounts to, nor is any
Purchaser Related Party owed any money or other amounts by Purchaser or any of its subsidiaries
other than compensation paid for services actually performed in amounts in keeping with past
practice and in the ordinary course of business. For purposes of this Section 6.11, the beneficial
ownership of no more than three percent (3%) of the outstanding voting stock of a publicly traded
corporation shall not be deemed to be a “direct or indirect economic interest” in any Person.

     6.12. Labor Agreements. None of Purchaser or any of its subsidiaries is a party to or
otherwise bound by any collective bargaining agreement or any other agreement with any labor
organization applicable to employees of or Persons providing services to Purchaser or any of its
subsidiaries. No current union representation questions involving employees of or Persons
providing services to Purchaser or any of its subsidiaries are outstanding. Purchaser has no
knowledge of any actual or threatened activity or proceeding of any labor organization (or
representative thereof) to organize any unorganized employees of Purchaser or any of its
subsidiaries.

     6.13. Contracts; Defaults.

     (a) For purposes of this Section 6.13, a “Material Purchaser Contract” is any written
Contracts to which Purchaser or any of its subsidiaries is a party as of the date hereof:

     (i) which requires aggregate payments by Purchaser or any of its subsidiaries
having a value in excess of $100,000;

     (ii) which requires aggregate payments to Purchaser or any of its subsidiaries,
or involve an unperformed commitment or services of Purchaser or any of its
subsidiaries having a value, in excess of $100,000;

     (iii) pursuant to which Purchaser or any of its subsidiaries has made or will
make loans or advances, or has or will incur debts or become a guarantor or

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surety or pledged its credit on or otherwise become responsible with respect to
any undertaking of another;

     (iv) which is an indenture, credit agreement, loan agreement, note, mortgage,
security agreement, lease of real property or personal property or agreement for
financing;

     (v) involving a partnership, joint venture or other cooperative undertaking;

     (vi) which is a power of attorney or agency agreement or written arrangement
with any Person pursuant to which such Person is granted the authority to act for or
on behalf of Purchaser or any of its subsidiaries;

     (vii) which contains warranties regarding the operation in conformance with
specifications of software and hardware products sold or licensed by Purchaser or
any of its subsidiaries, which warranties are still in effect on the date hereof
other than Purchaser’s standard forms of warranties;

     (viii) which provides for the acquisition, directly or indirectly (by merger or
otherwise), of material assets (whether tangible or intangible) or the capital stock
of another Person;

     (ix) which is an employment, consulting or professional advisor agreement;

     (x) which cannot be terminated without penalty, payment or other Liability in
excess of $50,000 on no more than sixty (60) calendar days’ notice, other than the
sale of inventory or licenses of the products of Purchaser or any of its
subsidiaries to the customers of Purchaser or any of its subsidiaries, in either
case in the ordinary course of business, consistent with past practices;

     (xi) which involves the sale, issuance or repurchase of any capital stock or
securities of Purchaser or any of its subsidiaries or the securities of any other
Person, which is to be performed after the date of this Agreement;

     (xii) with any Government or Governmental Authority, other than Contracts with
any Government or Governmental Authority related solely to the purchase or license
from Purchaser or any of its subsidiaries by such Government or Governmental
Authority of the products or services of Purchaser or any of its subsidiaries in the
ordinary course of business, consistent with past practices;

     (xiii) which requires the consent of any other party thereto or triggers a
change-of-control provision therein, in each case in connection with the execution,
delivery or performance of this Agreement or the consummation of the transactions
contemplated hereby;

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     (xiv)  for the purchase, sale, lease (as lessee or lessor), or mortgage (as
mortgagee or mortgagor), of any assets of Purchaser or any of its subsidiaries with
an aggregate value in excess of $100,000 and which imposes any obligations or
Liabilities on Purchaser or any of its subsidiaries after the date of this
Agreement, other than the sale of inventory or licenses of software to the customers
of Purchaser or any of its subsidiaries, in either case in the ordinary course of
business, consistent with past practices;

     (xv) with any Purchaser Related Party;

     (xvi) which involves supply or requirements obligations in excess of $50,000
and which is to be performed after the date of this Agreement;

     (xvii) provides for payments to any Person other than employees based on sales,
purchases, or profits, other than direct payments for goods;

     (xviii) which provides for consignment or similar arrangement;

     (xix) which is a “futures” contract committing Purchaser or any of its
subsidiaries to purchase, or accept delivery of, product at future times at fixed
prices;

     (xx) for the resolution or settlement of any actual or threatened legal action
with a value of greater than $50,000;

     (xxi) which is not made in the ordinary course of business consistent with past
practice and which is to be performed at or after the date of this Agreement;

     (xxii) which grant to the other party the exclusive right to sell or resell any
specific product or any product in any specific geographic market or industry;

     (xxiii) which restricts Purchaser or any of its subsidiaries from carrying on
any business or other activities anywhere in the world under any name or otherwise
or from soliciting business from any Person or Persons; or

     (xxiv) is an amendment, supplement, or modification in respect of any of the
Contracts described in clauses (i) through (xxiii) above.

     (b) Subject to Bankruptcy Laws and Equitable Principles, each Material Purchaser
Contract is a valid, binding and enforceable obligation of Purchaser and/or the applicable
subsidiary or subsidiaries and, to Purchaser’s knowledge, the other party or parties thereto
and each Material Purchaser Contract is in full force and effect. None of Purchaser or any
of its subsidiaries nor, to Purchaser’s knowledge, any other party thereto, is in default
under any Material Purchaser Contract and, to Purchaser’s knowledge, there has not occurred
any event that with the lapse of time or the giving of notice or both would constitute such
an event of default thereunder.

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     (c) Substantially all United States based employees of Purchaser and its subsidiaries
who were hired after January 1, 2006 have executed and delivered to Purchaser (or its
subsidiary, if applicable) either an Employment, Confidentiality and Assignment Agreement in
substantially the form attached hereto as Exhibit K or an agreement containing,
among other provisions, substantially similar provisions.

     6.14. Environmental Matters. To Purchaser’s knowledge, the operations of the
Purchaser’s and its subsidiaries’ business have been at all time and are in compliance with all
Environmental Laws. No notice or Claim has been received by Purchaser or any of its subsidiaries
with respect to violations of any such Environmental Laws and Purchaser does not know of any
obligation or Liability relating to violations of any such Environmental Laws. Purchaser and each
of its subsidiaries possesses all required permits, licenses, certifications and approvals and has
filed all notices or applications relating or pertaining to such Environmental Laws.

     6.15. Intellectual Property. Except as expressly set forth in the second, third and
fourth sentences of this Section 6.15 and as expressly set forth in Schedule 6.15, one of
Purchaser or its subsidiaries owns, on an exclusive basis, all right, title and interest in, or
possesses sufficient rights to use, all of the Intellectual Property utilized in the operation of
the Purchaser’s and its subsidiaries’ business as conducted since November 30, 2009 (the “Purchaser
Intellectual Property”). To the knowledge of Purchaser, none of the material items of Purchaser
Intellectual Property owned by Purchaser or any of its subsidiaries, nor the operation of the
businesses of Purchaser or any of its subsidiaries, infringe the proprietary rights of any third
party. To the knowledge of Purchaser, none of the material items of Purchaser Intellectual
Property which are not owned by Purchaser or any of its subsidiaries infringe the proprietary
rights of any third party. Any breach of the immediately preceding two sentences shall not be
deemed to be a breach of the representations and warranties made in the first sentence of this
Section 6.15. The representations and warranties contained in this Section 6.15 do not apply to
any Shrink-Wrap Software.

     6.16. Taxes.

     (a) Each of Purchaser and its subsidiaries has accurately prepared and filed all Tax
Returns required to have been filed by it and each such Tax Return is true, correct and
complete in all material respects.

     (b) Each of Purchaser and its subsidiaries has paid all Taxes required to have been
paid by it and has withheld with respect to its employees all Taxes, required to be withheld
by it under the Federal Insurance Contributions Act, as amended, the Federal Unemployment
Tax Act, as amended, and other Taxes it is required to have withheld from amounts paid or
owing to any employee, stockholder, creditor or other third party and to the extent
required, has remitted the same to the applicable Governmental Authority.

     (c) Since the closing date of the Purchaser Interim Statements, none of Purchaser or
its subsidiaries has incurred liability for Taxes other than in the usual and

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ordinary course of business consistent with past practice, other than Tax liabilities
arising connection with the transactions contemplated by this Agreement.

     (d) Since December 31, 2008, none of Purchaser or its subsidiaries has received any
written notice (or to Purchaser’s knowledge, any other notice) from a Taxing Authority that
any audit or other examination of any Tax Return of Purchaser or any of its subsidiaries is
presently in progress, or any notice from a Taxing Authority indicating an intent to open
any such audit or other examination or to assess any additional Tax against such Company.

     (e) None of Purchaser or its subsidiaries has been a beneficiary of or participated in
any “reportable transaction” within the meaning of Treasury Regulations Section
1.6011-4(b)(1) that is, was or, to the knowledge of Purchaser, will be required to be
disclosed under Treasury Regulations Section 1.6011-4.

     (f) Purchaser is not and has not been a United States real property holding corporation
within the meaning of Section 897(c)(2) of the Code at any time during the preceding five
(5) years.

     (g) Neither Purchaser nor Merger Sub has taken nor has any intention to take any
action, either before or after the Closing, which would cause the Merger to fail to qualify
as a reorganization within the meaning of Section 368(a) of the Code.

     6.17. Brokers or Finders. Purchaser has not employed or engaged any firm,
corporation, agency or other person to act as a broker, finder or investment banker in connection
with the transactions contemplated by this Agreement.

ARTICLE VII.

COVENANTS

     7.1. Confidentiality; Public Announcements. This Agreement and the terms hereof are
confidential and no party or signatory hereto shall disclose any of the terms of this Agreement or
the transaction contemplated hereby, without the prior approval of the other parties. Purchaser,
Merger Sub and Target shall consult with each other on the desirability, timing and substance of
any press release or public announcement, publicity statement or other public disclosure relating
to the transaction contemplated hereby. Purchaser, Merger Sub, Target and each Seller agree not to
make any such press release or public announcement, publicity statement or other public disclosures
without the prior consent of the other as to the content and timing of such disclosure. The
parties acknowledge that the obligations of Purchaser, Merger Sub and Target pursuant to this
Section 7.1 shall terminate at the Closing; provided that Purchaser shall not make any press
release or public announcement, publicity statement or other public disclosure of the transactions
contemplated by this Agreement which intentionally disparage, with the intent to harm, any Seller
or any of their respective Affiliates.

     7.2. Stockholders Consent. Target will (i) as promptly as practicable following the
date of this Agreement, use its reasonable best efforts to obtain a written consent of the
Stockholders (the “Stockholders Consent”) approving this Agreement and the transactions
contemplated hereby to the extent required by the Delaware Law and the Organizational

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Documents of Target, and (ii) through its Board of Directors, recommend to the Stockholders
approval of the foregoing matters.

     7.3. All Reasonable Efforts.

     (a) Subject to the terms and conditions herein provided, each of the parties hereto
agrees to use all reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done as promptly as practicable, all things necessary, proper and advisable
under applicable laws and regulations to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. Each party hereto shall use
reasonable efforts to obtain all necessary permits, consents, waivers, approvals,
agreements, orders and authorizations of all Governmental Authorities and other persons or
entities required to be obtained by such party hereto in connection with the execution,
delivery and performance of this Agreement and the consummation of the transactions
contemplated hereby or thereby by such party.

     (b) The Agent shall cause those of the Designated Books and Records which are not
located at the Leased Real Property to be delivered to Purchaser within ten (10) calendar
days after the Closing Date.

     7.4. Employees and Employee Plans.

     (a) Intentionally Omitted

     (b) If so directed by Purchaser no less than five (5) days prior to the Effective Time,
Target shall terminate or, if applicable, give notice of withdrawal from, effective no later
than the Effective Time (or such later date as may be required by the terms of any
applicable employee leasing or similar agreement), any or all Employee Plans in which Target
employees participate, with the exception of any individual arrangements or agreements.
Target shall provide evidence reasonably satisfactory to Purchaser to reflect the
termination or withdrawal from any such Employee Plans.

     (c) As of and subsequent to the Effective Time, Purchaser shall: (i) provide Target’s
employees as of immediately prior to the Effective Time who continue to be employed by the
Purchaser or the Surviving Corporation on and after the Effective Time (the “Covered
Employees”) with employee benefits and compensation plans, programs and arrangements that
are no less favorable, in the aggregate, to the employee benefits and compensation plans,
programs and arrangements provided by the Purchaser to similarly situated employees of the
Purchaser; (ii) provide all Covered Employees with service credit for purposes of
eligibility, participation and, other than with respect to the Purchaser Stock Option Plan,
vesting (but not for accrual of benefits or to the extent such credit would result in a
duplication of benefits) under any employee benefit or compensation plan, program or
arrangement adopted, maintained or contributed to by Purchaser in which Covered Employees
are or become eligible to participate (other than the Purchaser Stock Option Plan), for all
periods of employment with Target or its subsidiaries (or any predecessor entities) prior to
the Effective Time and with the Purchaser and any of its Affiliates on and after the
Effective Time; (iii) cause any pre-

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existing conditions or limitations, eligibility waiting periods or required physical
examinations under any welfare benefit plans of Purchaser to be waived with respect to the
Covered Employees and their eligible dependents, to the extent waived under the
corresponding plan in which the applicable Covered Employee participated immediately prior
to the Effective Time and to the extent permitted by Purchaser’s plans; and (iv) give the
Covered Employees and their eligible dependents credit for the plan year in which the
Effective Time (or commencement of participation in a plan of Purchaser) occurs towards
applicable deductibles and annual out-of-pocket limits for expenses incurred prior to the
Effective Time (or the date of commencement of participation in a plan of Purchaser) to the
extent permitted by Purchaser’s plans with no additional cost to Purchaser.

     (d) Promptly following the Closing (but no later than ten days following the Closing
Date), Purchaser shall provide agreements with each of the Covered Employees listed on
Schedule 7.4 hereto, pursuant to which Purchaser shall agree to pay severance
payments and provide the other benefits currently provided for either (i) in each such
Covered Employee’s respective employment agreements with Target as they exist immediately
prior to Closing, upon the terms and conditions set forth therein, or (ii) in the amount
listed opposite each such Covered Employee’s name on Schedule 7.4, and provide a
transition period and bonus, if any, in the amount listed opposite each such Covered
Employee’s name on Schedule 7.4.

     7.5. Directors’ and Officers’ Insurance.

     (a) Purchaser shall purchase, maintain in effect, and cause the Surviving Corporation
to maintain in effect, an extended reporting period endorsement under Target’s existing
directors’ and officers’ liability insurance coverage for Target’s current and former
directors and officers in a form acceptable to Target that shall provide such directors and
officers with coverage for six (6) years following the Effective Time of not less than the
existing coverage and have other terms not materially less favorable to, the insured persons
than the directors’ and officers’ liability insurance coverage presently maintained by
Target. Purchaser shall, and shall cause the Surviving Corporation to, continue to honor
the obligations thereunder. Notwithstanding the foregoing, policies providing at least the
existing coverage and having other terms not materially less favorable to the insured
persons may be substituted therefore, but in no event shall Purchaser or the Surviving
Corporation, in the aggregate, be required to spend more than $15,000 for such insurance.

     (b) Purchaser agrees, and shall cause the Surviving Corporation to agree, that for a
period of six (6) years following the Effective Time, all rights to exculpation and
indemnification for acts or omissions occurring prior to the Effective Time now existing in
favor of the current or former directors or officers of Target as provided in Target’s
Organizational Documents and indemnification agreements (which provide for exculpation and
indemnification and advancement of expenses to the fullest extent permitted under Delaware
Law and which shall not be amended except as required by applicable law or except to make
changes permitted by law that would enlarge the right of indemnification) shall become the
obligations of the Surviving Corporation and shall survive the Merger and shall continue in
full force and effect in accordance with their

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terms; provided that Purchaser’s obligations under this Section 7.5(b) shall not exceed
the aggregate of (i) amounts paid to the Surviving Corporation by the insurance policy or
policies referred to in Section 7.5(a), plus (ii) any amounts recovered by Purchaser
pursuant to Section 8.3(b)(v).

     (c) The provisions of this Section 7.5 are intended to be for the benefit of, and shall
be enforceable by, each Target current and former director and officer and the heirs and
representatives of such person.

     7.6. Tax Covenants.

     (a) Post-Closing Tax Returns.

     (i) Purchaser shall prepare and timely file (or cause to be prepared and timely
filed) with the appropriate Tax Authorities all Tax Returns required to be filed by
the Companies with respect to any taxable period beginning before the Closing Date
that become due after the Closing Date (each a “Purchaser Prepared Return”). Each
such Tax Return shall be prepared in a manner consistent with the prior practice of
the Companies unless otherwise required by applicable Tax Rules or specified in
Schedule 7.6(a).

     (ii) Purchaser shall provide the Agent with a copy of each Purchaser Prepared
Return for review and comment at least forty-five (45) days prior to the filing of
such Tax Return (or, if required to be filed within forty-five (45) days after the
Closing or the end of the taxable period to which such Purchaser Prepared Return
relates, as soon as reasonably possible following the Closing or the end of such
taxable period, as the case may be), accompanied by a statement (an “Indemnified Tax
Statement”) setting forth and calculating in reasonable detail the Taxes that are
shown as due on such Tax Return and claimed to be indemnifiable pursuant to Section
8.3(b)(vii). The Agent shall have the right to review and approve (which approval
shall not be unreasonably withheld or delayed) each Purchaser Prepared Return. For
this purpose, the Agent’s withholding of approval of a Purchaser Prepared Return
based upon Purchaser’s failure to adopt in such Tax Return an alternative reporting
position suggested by the Agent shall be deemed reasonable if the reporting position
proposed by the Agent on such Tax Return is more likely than not to be sustained if
challenged by a relevant Tax Authority.

     (iii) If the Agent disagrees with the manner of preparation of a Purchaser
Prepared Return or the amount of indemnified Taxes calculated in any Indemnified Tax
Statement, within fifteen (15) days of the receipt of a Purchaser Prepared Return or
any Indemnified Tax Statement, the Agent shall provide to Purchaser a notice of such
dispute (a “Tax Statement Dispute”). If the Agent does not provide a notice of Tax
Statement Dispute within such 15-day period, the Agent shall be deemed to have
accepted the Tax Return and, for purposes of Article VIII, the Indemnified Tax
Statement relating thereto. If the Agent provides Purchaser with a notice of a Tax
Statement Dispute, the Agent shall also

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provide Purchaser with a written explanation of the reasons for its
disagreement and its proposed changes. Purchaser and the Agent shall attempt to
resolve their disagreement with respect to any Purchaser Prepared Return and any
Indemnified Tax Statement. If the Agent and Purchaser cannot reach complete
agreement within fifteen (15) days after receipt of a Tax Statement Dispute, the
dispute shall be submitted to an arbitrator (the “Tax Arbitrator”) pursuant to the
procedures described with respect to the Independent Accountant in Section 2.2(b)
for resolution within fifteen (15) days after such submission. The decision of the
Tax Arbitrator with respect to such dispute shall be binding upon the parties.
Purchaser shall, subject to any indemnification pursuant to Section 8.3(b)(vii),
timely file any Purchaser Prepared Return as finally determined under this Section
7.6, and shall pay or cause to be paid the Tax shown as due on each such Tax Return.

     (iv) The amount of the Losses attributable to Taxes shown in any Indemnified
Tax Statement as accepted or finally determined pursuant to the preceding paragraph,
shall be treated as a Loss that is indemnifiable by the Sellers pursuant to Section
8.3(b)(vii).

     (b) Payment or Reimbursement for Indemnified Taxes. The Sellers shall either
remit the amount of any indemnified Tax liability shown as due on any Purchaser Prepared
Return to the relevant Taxing Authority by electronic funds transfer or wire transfer or pay
to Purchaser, pursuant to Section 8.11, such amount either by delivery of a certified check
drawn payable to the relevant Taxing Authority or Purchaser Common Stock or wire transfer of
immediately available funds to such account as directed in writing by the Purchaser, not
later than the latest of (i) fifteen (15) days after provision to Agent of the Indemnified
Tax Statement, (ii) three (3) business days before the required payment date of such Tax, or
(iii) in the case of a disputed amount, three (3) business days after final resolution
pursuant to Section 7.6(a)(iii) of any dispute regarding the amount shown on the Indemnified
Tax Statement

     (c) Taxable Year Closing; Allocation of Taxes. Purchaser shall, unless
prohibited by applicable law, cause the taxable periods of the Companies to end as of the
close of the Closing Date. Purchaser shall not permit the Companies to take any actions
after Closing on the Closing Date that are out of the ordinary course of business, except as
required by applicable Rules, this Agreement or consented to by the Agent. For purposes of
this Agreement, Taxes incurred by the Companies with respect to a taxable period that
includes but does not end on the Closing Date, shall be allocated to the portion of the
taxable period ending on the Closing Date: (i) except as provided in (ii) and (iii) below,
to the extent feasible, on a specific identification basis, according to the date of the
event or transaction giving rise to the Tax, and (ii) except as provided in (iii) below,
with respect to periodically assessed ad valorem Taxes and Taxes not otherwise reasonably
allocable to specific transactions or events, in proportion to the number of days in such
period occurring through the Closing Date compared to the total number of days in such
taxable period, and (iii) in the case of any Tax based upon or related to income or
receipts, in an amount equal to the Tax which would be payable if the relevant taxable
period ended on the Closing Date. Any credits relating to a taxable period that

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begins before and ends after the Closing Date shall be taken into account as though the
relevant taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with prior
practices of the Companies.

     (d) Amended Returns. Except as required by applicable Rules or in connection
with an audit resolved pursuant to Section 7.6(f) (including consistent correlative
adjustments to Tax Returns for non-audited taxable periods), no party or affiliate of a
party may amend or cause the amendment of a Tax Return of the Companies, or file or amend
any Tax election, or file a Tax Return after the due date thereof, concerning the Companies,
in each case, with respect to any taxable period beginning on or before the Closing Date
that would affect the amount of any indemnity liability under Section 8.3 without the
written consent of the Agent, which consent shall not be unreasonably withheld or delayed.
Purchaser shall, upon request by the Agent, and at the expense of Sellers, cooperate in the
preparation of and submission to the proper Taxing Authority of any amended Tax Return with
respect to the Companies for any taxable period ending before the Closing Date to the extent
appropriate to reduce or prevent indemnity liability under Section 8.3.

     (e) Overpayments and Overaccruals Indemnified Taxes. To the extent that any
determination of Tax liability, whether as the result of an audit or examination, a claim
for refund, the filing of an amended Tax Return or otherwise, results in a determination of
an overpayment of Taxes for any period, or portion thereof, ending on or before the Closing
Date that are related to a liability for Taxes for which Sellers would have indemnity
liability under Section 8.3(b), Purchaser shall offset the amount of such overpayment
against any unpaid indemnity obligation of Sellers in respect of Taxes for which indemnity
would be owed under Section 8.3(b), and shall promptly pay to the Agent for the benefit of
the Sellers an amount equal to the lesser of (a) the portion of such overpayment (including
interest actually received thereon) that has not been so offset and (b) any net indemnity
obligations previously satisfied by Sellers in respect of Taxes of the Companies pursuant to
Section 8.3(b). Such offset or payment shall be made by Purchaser promptly after receipt by
(or crediting for the benefit of) Purchaser or its Affiliates. Any payment under this
Section 7.6(e) shall be made in shares of Purchaser Common Stock to the extent necessary (in
the reasonable judgment of the Agent) to cause the Merger to continue to qualify as a
reorganization under section 368(a)(1)(A) of the Code and shall be equal to the number of shares of Purchaser Common Stock having a Current Value equal to the amount of such payment.

     (f) Audits and Contests Regarding Taxes. Any party who receives, or whose
Affiliate receives, any notice of a pending or threatened Tax audit, assessment, or
adjustment against or with respect to any of the Companies which may give rise to a right to
indemnification pursuant to the terms of Article VIII shall promptly notify the Agent and
Purchaser within five (5) Business Days of the receipt of such notice. Purchaser and the
Agent each agree to consult with and to keep the other informed on a regular basis regarding
the status of any Tax audit or proceeding to the extent that such audit or proceeding could
affect a liability of the parties hereto (including indemnity obligations hereunder). The
Agent shall have the right to represent any of the Companies’ interests

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in any Tax audit or administrative or judicial proceeding pertaining to taxable periods
ending on or before the Closing Date and to employ counsel of his choice, but reasonably
satisfactory to Purchaser, at his expense, and shall control the disposition of any issue
involved in such proceeding; provided that Purchaser shall have the right to participate in
such proceeding at its own expense, and shall be entitled to control the disposition of any
issue involved in such proceeding which does not affect a potential claim for indemnity
under Section 8.3(b). Notwithstanding the foregoing provisions of this Section 7.6(f), the
Agent shall not, without the Purchaser’s consent, agree to any settlement with respect to
any Tax if such settlement could adversely affect any Tax liability of the Purchaser, its
Affiliates or (with respect to any taxable period or portion thereof beginning after the
Closing Date) either Company. Both Purchaser and the Sellers (through the Agent) shall be
entitled to represent their own interests in light of their responsibilities (including
indemnity obligations) for the related Taxes, at their own expense, in any audit or
administrative or judicial proceedings involving a taxable period of the Companies that
includes but does not end on the Closing Date or involving both a taxable period of any of
the Companies ending on or before the Closing Date and a taxable period ending after the
Closing Date and no such audit or proceeding may be settled or compromised by the Agent or
Purchaser without the consent of both the Agent and Purchaser, which consent shall not be
unreasonably withheld or delayed. Except as otherwise provided in this Section 7.6(f), the
provisions of Article VIII shall govern the conduct of any Tax audit or administrative or
judicial proceedings with respect to which an Indemnity Claim may be made.

     (g) Cooperation, Access to Information and Records Retention. The Agent and
Purchaser shall cooperate, and cause their representatives and Affiliates to cooperate, as
and to the extent reasonably requested by the other in connection with the preparation and
filing of Tax Returns as provided herein and any audit, litigation or other proceeding with
respect to Taxes relating to the Companies. Such cooperation shall include the provision of
records and information which are reasonably relevant to any such Tax Return, 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.
Purchaser agrees (i) to retain all books and records relevant to Taxes of the Companies
(including Tax Returns) relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations for assessment of Taxes for such
respective taxable period, and (ii) to give the Agent reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the Agent so
requests, Purchaser shall allow the Agent to take possession or copy of such books and
records.

     (h) Tax Certificates. Purchaser and the Agent agree, upon request of the
other, to use all reasonable efforts to obtain any certificate or other document from any
Governmental Authority as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including with respect to the transactions contemplated by this
Agreement).

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     (i) Characterization of Indemnity Payments. The parties agree to treat any
payment made by Sellers to Purchaser as an adjustment to the Merger Consideration, to the
extent it may properly be so treated for income Tax purposes.

     7.7. Section 368(a) Reorganization Covenants.

     (a) Prior to the Effective Time, each party will use its best efforts to cause the
Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code and,
either before or after the Merger, no party will take any action reasonably likely to cause
the Merger not to qualify as such reorganization. Pursuant to the foregoing, each party
agrees to make such commercially reasonable additions or modifications to the terms of this
Agreement as may be reasonably necessary to permit the Merger so to qualify.

     (b) The Purchaser will cause the Surviving Corporation or other members of the
Purchaser “qualified group” (within the meaning of Treasury Regulations Section
1.368-1(d)(4)(ii)) to either continue the historic business of Target or use a significant
portion of Target’s historic business assets in a business, both within the meaning of
Treasury Regulation Section 1.368-1(d).

     (c) The parties hereto agree that, unless otherwise required by law, they (i) will
report in their respective federal income Tax Returns for the taxable period including the
Closing Date that the Merger qualified as a reorganization under Section 368(a)(1)(A) of the
Code and Section 368(a)(2)(E) of the Code, (ii) will not take any Tax reporting position
inconsistent with the characterization of the Merger as a reorganization within the meaning
of Section 368(a) of the Code, and (iii) will properly file with their federal income Tax
Returns all information required by Treasury Regulations Section 1.368-3.

ARTICLE VIII.

INDEMNIFICATION.

     8.1. Survival of Representations, Warranties and Covenants.

     (a) The respective representations, warranties and covenants of each of the parties to
this Agreement shall be deemed to be material and to have been relied upon by the parties
hereto, and shall survive the Closing and the consummation of the transactions contemplated
hereby, regardless of any investigation made by or on behalf of, or disclosure to, any party
to whom such representations, warranties or covenants have been made.

     (b) No party or other Person entitled to indemnification under this Article VIII shall
commence any suit or proceeding alleging an Indemnity Claim due to a breach of any
representation or warranty in Article IV, V or VI of this Agreement after the eighteen (18)
month anniversary of the Closing (the eighteen (18) month anniversary of the Closing Date
being called the “Cut-Off Date”). Notwithstanding the foregoing, the prohibition contained
in the first sentence of this Section 8.1(b) shall not apply to:

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          (i) any Indemnity Claim relating to Sections 4.1, 4.2, 4.9, 4.10 (but only the
first sentence thereof), 4.17, 4.20(b), 5.1, 5.3, 6.1, 6.2, 6.4 or 6.15, it being
agreed that the representations and warranties of those Sections shall continue
until the thirty-six (36) month anniversary of the Closing (regardless of whether
the facts giving rise to such Claim are also the subject of any expired
representation and warranty); and

          (ii) any party or other Person entitled to indemnification under this Article
VIII to the extent that such party or Person asserted in writing a specific
Indemnity Claim prior to the date by which an Indemnity Claim relating to the
representations and warranties in question must be commenced pursuant to this
Section 8.1(b), in which event the relevant representations and warranties shall
continue in effect and remain a basis for indemnity with respect to each such
asserted Indemnity Claim until such Indemnity Claim is finally resolved (pursuant to
a non-appealable order by a court of competent jurisdiction or agreement of Agent
and Purchaser).

     (c) Notwithstanding anything contained in this Article VIII to the contrary, no party
or other Person shall be entitled to bring any Indemnity Claim under this Article VIII after
the earlier of (i) the date that is 180 days after the closing of a transaction or series of
transactions pursuant to which Purchaser (or any Person who acquires all or substantially
all of Purchaser’s assets or all or substantially all of the Purchaser Common Stock, in
either such case in exchange for securities of such Person or any successor to Purchaser by
merger) becoming subject to Section 13 or Section 15 of the Exchange Act or (ii) the
consummation of a Change of Control.

     8.2. Intentionally Omitted

     8.3. Indemnification by Sellers.

     (a) Subject to the terms and conditions herein, including the limitations set forth in
Section 8.6, after the Closing, each Seller, solely as to himself, herself or itself, shall
indemnify and hold harmless Purchaser and its Affiliates and their respective officers,
directors, stockholders, controlling persons, employees, agents, successors and assigns
(collectively, the “Purchaser Protected Parties”) from and against and in respect of any and
all demands, Claims, causes of action, administrative orders and notices, losses, costs,
fines, Liabilities, penalties, damages (direct or indirect but specifically excluding
special, exemplary or punitive damages, other than special, exemplary or punitive damages
owed to an unrelated third party) and expenses (including reasonable legal, paralegal,
accounting and consultant fees and other expenses incurred in the investigation, defense and
enforcement of Claims and actions) (collectively, “Losses”) sustained or incurred by any
Purchaser Protected Party resulting from or arising out of (i) any breach of any
representation or warranty made by such Seller in Article V of this Agreement, or (ii) any
breach by such Seller of any of the covenants made by such Seller in this Agreement that has
not been cured within ten (10) days after receipt by such Seller (or the Agent on behalf of
such Seller) of written notice thereof from Purchaser.

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     (b) Subject to the terms and conditions herein, including the limitations set forth in
Section 8.6, after the Closing, each Seller, severally and not jointly, shall indemnify and
hold harmless the Purchaser Protected Parties from and against and in respect of such
Seller’s Pro-Rata Percentage of any and all Losses sustained or incurred by any Purchaser
Protected Party resulting from or arising out of any of the following:

     (i) any breach of any representation or warranty made by Target in this
Agreement;

     (ii) any breach by Target prior to the Effective Time of any of the covenants
made by Target in this Agreement;

     (iii) any breach of any of the covenants imposed upon the Agent in this
Agreement that has not been cured within ten (10) days after receipt of written
notice thereof by the Agent from Purchaser;

     (iv) any Claim relating to any Dissenting Shares;

     (v) any amounts paid or payable by Purchaser pursuant to Section 7.5(b) to the
extent they exceed the amounts paid to the Surviving Corporation by the insurance
policy or policies referred to in Section 7.5(a);

     (vi) the matters disclosed on Schedule 4.15 except to the extent
accrued on the Closing Date Balance Sheet; and

     (vii) any Taxes (A) of the Companies for all taxable periods, or portions
thereof, ending on or before the Closing Date other than any Taxes resulting from
the transfer of Company Intellectual Property contemplated by Section 1.18, or (B)
owing by any Person (other than the Companies) for which either Company is liable as
a result of transactions or circumstances occurring or existing on or before the
Closing Date, including without limitation, under any agreement or arrangements with
respect to payment of any Tax.

     8.4. Indemnification by Purchaser. Subject to the terms and conditions herein,
including the limitations set forth in Section 8.6, after the Closing, Purchaser shall indemnify
and hold harmless Sellers and their respective Affiliates and their respective officers, directors,
stockholders, controlling persons, employees, agents, successors and assigns (collectively, the
"Seller Protected Parties”) from and against and in respect of any and all Losses incurred by such
Persons resulting from or arising out of (a) any breach of any representation or warranty made by
Purchaser in this Agreement, or (b) any breach by Purchaser or Merger Sub of any of the covenants
made by Purchaser or Merger Sub in this Agreement that has not been cured within ten (10) days
after receipt by Purchaser of written notice thereof from the Agent. Any payment under this
Section 8.4 shall be made in shares of Purchaser Common Stock to the extent necessary (in the
reasonable judgment of the Agent) to cause the Merger to continue to qualify as a reorganization
under section 368(a)(1)(A) of the Code and shall be equal to the number of shares of Purchaser
Common Stock having a Current Value equal to the amount of such payment.

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     8.5. Certain Rights. Notwithstanding the provisions of any representation or warranty
that includes, or requires disclosure of matters above, a specific monetary threshold, if Target
breaches any of such representations and warranties due to the monetary thresholds contained
therein having been exceeded, then Losses for each such breached representation and warranty shall
include the full amount of the Losses incurred by the Purchaser Protected Parties relating to any
such matter notwithstanding the monetary thresholds listed in such representations or warranties.
The rights of the Purchaser Protected Parties under Section 8.3 shall not be affected by the fact
that the transactions contemplated by this Agreement were consummated notwithstanding Purchaser’s
knowledge of any breach of a representation or warranty. Nothing in this Agreement shall limit any
obligation of Sellers by virtue of the fact that Target has no obligation or Liability after the
Closing for any breach of any representation, warranty or covenant made by Target, and there shall
be no obligation on the part of Purchaser to seek recourse against Target with respect to any such
claim or demand.

     8.6. Limitations.

     (a) Notwithstanding the foregoing, (a) the amount of any Losses for which
indemnification is to be provided pursuant to the provisions of this Article VIII shall be
reduced by (i) any amounts recovered or recoverable by the Indemnified Party under insurance
policies with respect to such Loss, net of any increased premiums or self retention payments
related thereto, and (ii) the amount of any actual reduction in Taxes of an Indemnified
Party or its Affiliates, which are attributable to such Losses and (b) Losses shall not
include any specific liability or reserve to the extent accrued for on the Closing Date
Balance Sheet (as finally determined in accordance with Section 2.2). Any amounts payable
by the Indemnifying Party to or on behalf of an Indemnified Party pursuant to this Agreement
shall be reduced to the extent that, taking into account the effect of the payment itself,
the Indemnified Party actually realizes a Tax reduction attributable to a Loss; provided,
that, if a Tax reduction has not been realized in the taxable period during which an
Indemnifying Party makes an indemnification payment or the Indemnified Party incurs or pays
any loss, the Indemnified Party shall thereafter make payments to the Indemnifying Party at
the end of each subsequent taxable period to reflect the net Tax reductions subsequently
realized by the Indemnified Party.

     (b) Notwithstanding anything to the contrary contained herein, in no event will any
Seller be liable for and pay the Purchaser Protected Parties (i) under clause (a)(i) or
(b)(i) of Section 8.3 on account of any breach of representations or warranties under this
Agreement (except for a breach of any of the representations and warranties contained in
Sections 4.1, 4.2, 4.10 (but only the first sentence thereof), 4.20(b), 5.1 or 5.3 as to
which this clause (i) shall not apply) or clause (b)(vi) of Section 8.3, in each case to the
extent the aggregate Losses for Indemnity Claims under such Sections exceed fifteen percent
(15%) of such Seller’s Pro-Rata Percentage of the Merger Consideration, (ii) with respect to
Losses on account of any breach of any of the representations or warranties contained in
Section 4.20(b) (but only the second and third sentences thereof) to the extent the
aggregate Losses for Indemnity Claims under such Section exceed twenty five percent (25%) of
such Seller’s Pro-Rata Percentage of the Merger Consideration, and (iii) with respect to
Losses resulting from fraud by Target or any Seller or on account of any breach of any of
the representations or warranties contained

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in Sections 4.1, 4.2, 4.10 (but only the first sentence thereof), 4.20(b) (but only the
first sentence thereof), 5.1 or 5.3 to the extent the aggregate Losses for Indemnity Claims
under such Sections, together with Indemnity Claims under clauses (i) and (ii) above, exceed
such Seller’s Pro-Rata Percentage of the Merger Consideration; it being agreed that in no
event will any Seller be liable for and pay the Purchaser Protected Parties in excess of
such Seller’s Pro-Rata Percentage of the Merger Consideration.

     (c) Notwithstanding anything to the contrary contained herein, in no event will
Purchaser be liable for and pay the Sellers, in the aggregate, (i) under clause (a) of
Section 8.4 on account of any breach of representations or warranties under this Agreement
(except for a breach of any of the representations and warranties contained in Sections 6.1,
6.2, 6.4 or 6.15 as to which this clause (i) shall not apply) to the extent the aggregate
Losses for Indemnity Claims under such Sections exceed fifteen percent (15%) of the Merger
Consideration, (ii) with respect to Losses on account of any breach of any of the
representations or warranties contained in Section 6.15 (but only the second and third
sentences thereof) to the extent the aggregate Losses for Indemnity Claims under such
Section exceed twenty five percent (25%) of the Merger Consideration, and (iii) with respect
to Losses resulting from fraud by Purchaser or on account of any breach of any of the
representations or warranties contained in Sections 6.1, 6.2, 6.4 or 6.15 (but only the
first sentence thereof) to the extent the aggregate Losses for Indemnity Claims under such
Sections, together with Indemnity Claims under clauses (i) and (ii) above, exceed the Merger
Consideration; it being agreed that in no event will Purchaser be liable for and pay Sellers
in excess of the Merger Consideration.

     (d) Notwithstanding anything to the contrary contained herein, no claim for
indemnification may be made under Section 8.3(a)(i) or 8.3(b)(i) on account of any breach of
representations or warranties under this Agreement (except for a breach of any of the
representations and warranties contained in Sections 4.1, 4.2, 5.1 or 5.3 as to which the
Purchaser Deductible Amount shall not apply) or under Section 8.3(b)(vi) unless and until
the Purchaser Protected Parties have incurred aggregate Losses for which the Purchaser
Protected Parties are entitled to indemnification pursuant to this Agreement in excess of
$300,000.00 in the aggregate (the “Purchaser Deductible Amount”) and then only to the extent
that such aggregate amount of Losses exceeds the Purchaser Deductible Amount.
Notwithstanding the generality of the immediately preceding sentence, no claim for
indemnification that may be made under Section 8.3(b)(i) on account of any breach of the
representations and warranties contained in Section 4.7 to the extent that such breach
consists of a Liability which was not fully shown or provided for in the Closing Date
Balance Sheet shall count towards the Purchaser Deductible Amount unless and until the
Purchaser Protected Parties have incurred aggregate Losses on account of such breaches of
Section 4.7 for which the Purchaser Protected Parties are entitled to indemnification
pursuant to this Agreement in excess of the Remaining Basket in the aggregate and then only
to the extent that such aggregate amount of Losses exceeds the Remaining Basket. The
“Remaining Basket” shall mean the amount, if any, by which the Closing Net Asset Position is
less negative than negative $1,013,640.

     (e) Notwithstanding anything to the contrary contained herein, no claim for
indemnification may be made under Section 8.4(a) on account of any breach of

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representations or warranties under this Agreement (except for a breach of any of the
representations and warranties contained in Sections 6.1, 6.2 or 6.4 as to which the Seller
Deductible Amount shall not apply) unless and until the Seller Protected Parties have
incurred aggregate Losses for which the Seller Protected Parties are entitled to
indemnification pursuant to this Agreement in excess of $300,000.00 in the aggregate (the
“Seller Deductible Amount”) and then only to the extent that such aggregate amount of Losses
exceeds the Seller Deductible Amount.

     8.7. Cooperation. Subject to the provisions of Section 8.8, a party or parties
against whom an Indemnity Claim has been asserted (individually and collectively, “Indemnifying
Party”) shall have the right, at its own expense, to participate in the defense of any action or
proceeding brought by a third party which resulted in such Indemnity Claim, and if such right is
exercised, the party or parties entitled to indemnification (individually and collectively,
"Indemnified Party”) and the Indemnifying Party shall reasonably cooperate in the defense of such
action or proceeding.

     8.8. Indemnification Procedure for Third Party Claims.

     (a) In the event that subsequent to the Closing Date any Indemnified Party becomes
aware of any Claim or the commencement of any action or proceeding against such Indemnified
Party by any Person who is not a party to this Agreement (including any Governmental
Authority) (a “Third Party Claim”), as to which such Indemnified Party would be entitled to
assert an Indemnity Claim, such Indemnified Party shall promptly give written notice thereof
together with a statement of any available information regarding such Third Party Claim,
including, to the extent known by such Indemnified Party, the alleged factual basis for the
Third Party Claim and the Losses claimed and referring to the provision of this Agreement
pursuant to which indemnification is sought (the “Notice of Claim”) to the Indemnifying
Party promptly after learning of such Third Party Claim. Failure by the Indemnified Party
to provide notice on a timely basis of a Third Party Claim shall not affect the right of the
Indemnified Party to obtain indemnification as a result of such Third Party Claim, except to
the extent of any direct damages caused by such delay. If (i) the Indemnifying Party is any
Seller and (A) such Third Party Claim does not seek injunctive or other equitable relief
involving Purchaser or its Affiliates, (B) a Purchaser Protected Party’s insurance carrier
does not require, as a condition to such Purchaser Protected Party’s eligibility to recover
insurance proceeds on account of such Third Party Claim, that such carrier control the
defense of any such Third Party Claim, (C) such Third Party Claim does not seek recourse
which could reasonably be expected to adversely affect the ongoing business or operations
(including customer, supplier or employee relationships) of a Purchaser Protected Party or
any of its Affiliates (including their rights to use the Company Intellectual Property) or
otherwise have a Material Adverse Effect, (D) the Agent can demonstrate that it has
sufficient amounts which may be used in connection with such Third Party Claim to (I) defend
such Third Party Claim, and (II) defend all other Third Party Claims then pending which the
Agent is defending pursuant to this Section 8.8, and (E) the Indemnifying Party has
acknowledged in writing to the Indemnified Party its unconditional obligation to indemnify
the Indemnified Party for such Third Party Claim, or (ii) if the Indemnifying Party is
Purchaser, then in any such

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case, except in the case of Claims described in Section 7.6(f), the Indemnifying Party
shall have the right, upon written notice to the Indemnified Party (the “Defense Notice”)
within fifteen days of its receipt from the Indemnified Party of the Notice of Claim, to
conduct at its expense the defense against such Claim in its own name, or, if necessary, in
the name of the Indemnified Party; provided, however, that the Indemnified Party shall have
the right to approve the defense counsel representing the Indemnifying Party in such
defense, which approval shall not be unreasonably withheld or delayed, and in the event the
Indemnifying Party and the Indemnified Party cannot agree upon such counsel within ten days
after the Defense Notice is provided, then the Indemnifying Party shall propose an alternate
defense counsel, which shall be subject again to the Indemnified Party’s approval, which
approval shall not be unreasonably withheld or delayed.

     (b) In the event that the Indemnifying Party shall fail to give the Defense Notice
within the time and as prescribed by Section 8.8(a), or if the Indemnifying Party does not
have the right to defend such Third Party Claim pursuant to Section 8.8(a), then, except in
the case of Claims described in Section 7.6(f), in either such event the Indemnified Party
shall have the right to conduct such defense in good faith with counsel reasonably
acceptable to the Indemnifying Party, but the Indemnified Party (or any insurance carrier
defending such Third Party Claim on the Indemnified Party’s behalf) shall be prohibited from
compromising or settling the Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed; provided,
however, that if the Agent is prohibited from conducting the defense of a Third Party Claim
solely because of the operation of clause (i)(E) of Section 8.8(a), then (i) the Agent shall
have the right to assume the conduct of such defense upon its delivery of an acknowledgement
in writing meeting the requirements of such clause (i)(E), and (ii) the Indemnified Party
shall have the right to approve the defense counsel representing the Indemnifying Party in
such defense, which approval shall not be unreasonably withheld or delayed.

     (c) In the event that the Indemnifying Party does deliver a Defense Notice and thereby
elects to conduct the defense of such Third Party Claim in accordance with Section 8.8(a),
the Indemnified Party will cooperate with and make available to the Indemnifying Party such
assistance and materials as it may reasonably request, and such cooperation shall be at the
expense of the Indemnifying Party. Without the prior written consent of the Indemnified
Party, the Indemnifying Party (and any insurance carrier defending such Third Party Claim on
the Indemnifying Party’s behalf) will not enter into any settlement of any Third Party Claim
if pursuant to or as a result of such settlement, such settlement would lead to Liability or
create any financial or other obligation on the part of any Indemnified Party for which such
Indemnified Party is not entitled to be indemnified hereunder. If a firm offer is made to
settle a Third Party Claim, which offer the Indemnifying Party is permitted to settle under
this Section 8.8, and the Indemnifying Party desires to accept and agree to such offer, the
Indemnifying Party will give written notice to the Indemnified Party to that effect. If the
Indemnified Party objects to such firm offer within fifteen days after its receipt of such
notice, the Indemnified Party may continue to contest or defend such Third Party Claim and,
in such event, the maximum amount for which the Indemnifying Party shall be liable in
connection with such Third Party Claim will not exceed the amount of such settlement offer,
plus costs and expenses

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paid or incurred up to the point such notice had been delivered. Failure at any time
of the Indemnifying Party to diligently defend a Third Party Claim as required herein shall
entitle the Indemnified Party to assume the defense and settlement of such Third Party Claim
as if the Indemnifying Party had never elected to do so as provided in this Section.

     (d) Any judgment entered or settlement agreed upon in the manner provided herein
shall be binding upon the Indemnifying Party, and shall be conclusively deemed to be an
obligation with respect to which the Indemnifying Party shall be obligated to indemnify the
Indemnified Party, in each case subject to the Indemnifying Party’s right to appeal an
appealable judgment or order.

     8.9. Nature of Other Liabilities. In the event any Indemnified Party should have
an Indemnity Claim which does not involve a Third Party Claim, the Indemnified Party shall transmit
to the Indemnifying Party a written notice (the “Indemnity Notice”) describing in detail the nature
of the Indemnity Claim and the basis of the Indemnified Party’s request for indemnification and, if
known by the Indemnified Party, a calculation of Losses attributable to such Indemnity Claim. If
the Indemnifying Party does not notify the Indemnified Party within forty five (45) days from its
receipt of the Indemnity Notice that the Indemnifying Party disputes such Indemnity Claim, the
Indemnity Claim specified by the Indemnified Party in the Indemnity Notice shall become the
obligation of the Indemnifying Party.

     8.10. Intentionally Omitted

     8.11. Payment of Losses.

     (a) All Losses in respect of any Indemnity Claim payable by any Seller shall be
paid, at such Seller’s option, either in cash or by such Seller delivering to Purchaser a
number of shares of Purchaser Common Stock having a Current Value equal to the amount of
such Losses. If any Losses owed by a Seller are not paid to Purchaser by one of the methods
described in the first sentence of this Section 8.11(a) within ten (10) days of a final
determination that such Losses are payable (as evidenced either by the agreement of
Purchaser and the Agent, or by entry of a final, nonappealable order by a court of competent
jurisdiction), such Seller shall be deemed to have forfeited, and Purchaser shall reduce, on
its books and records and for all purposes, the number of shares of Purchaser Common Stock
which are owned by such Seller by a number of shares of Purchaser Common Stock having a
Current Value equal to such unpaid Losses.

     (b) All Losses in respect of any Indemnity Claim against Purchaser may be paid, at
Purchaser’s option, either in cash or by Purchaser delivering to the applicable Seller a
number of shares of Purchaser Common Stock having a Current Value as of the date such
Indemnity Claim is payable equal to the amount of such Losses.

     8.12. Exclusive Remedy. Except with respect to any Claim based on actual fraud or
seeking injunctive or other equitable relief for breach of this Agreement, the rights and
obligations of the parties under this Article VIII shall be the sole and exclusive rights and
obligations of the parties with respect to any breach of any representation, warranty, covenant or
agreement in this Agreement and shall be in lieu of any other rights or remedies to which the

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party entitled to indemnification hereunder would otherwise be entitled as a result of such breach.

     8.13. Contract Intent and Construction; Avoidance of Ambiguity. The rights and
remedies of any Person based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this Agreement shall in
no way be limited by the fact that the act, omission, occurrence or other state of facts upon which
any Claim of any such inaccuracy, breach or indemnity is based may also be the subject matter of
any representation, warranty, covenant or agreement contained in this Agreement as to which there
is no inaccuracy or breach. BY WAY OF EXAMPLE AND TO REFLECT THE INTENT, AGREEMENT AND
UNDERSTANDING OF THE PARTIES, THE EXISTENCE OF ANY FACTS OR CIRCUMSTANCES WHICH WOULD CONSTITUTE A
BREACH OF SECTION 4.7 WILL CONSTITUTE A BREACH OF SECTION 4.7 (AS TO WHICH PURCHASER MAY BE
ENTITLED TO INDEMNIFICATION IN ACCORDANCE WITH THE TERMS OF THIS ARTICLE VIII) EVEN THOUGH THE
EXISTENCE OF SUCH FACTS OR CIRCUMSTANCES MIGHT NOT CONSTITUTE A BREACH OF A MORE SPECIFIC
REPRESENTATION AND WARRANTY OR ANOTHER REPRESENTATION AND WARRANTY THAT IS QUALIFIED BY KNOWLEDGE
OR OTHERWISE.

ARTICLE IX.

CONDITIONS TO CLOSING

     9.1. Conditions to Obligations of Purchaser and Merger Sub. All obligations of
Purchaser and Merger Sub under this Agreement are subject to the fulfillment, at or prior to the
Closing, of the following conditions, any one or more of which may be waived by Purchaser:

     (a) Performance of Target’s and Sellers’ Obligations. Target and Sellers
shall have delivered all documents and agreements described in Schedule 3.2 and
Target and Sellers shall have otherwise performed in all respects all obligations required
under this Agreement to be performed by them on or prior to the Closing Date.

     (b) Pending Proceedings. No action or proceeding shall be pending before
any court or governmental authority seeking to restrain or prohibit or obtain damages or
other relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.

     (c) Closing Net Asset Position. The Closing Net Asset Position as shown on
the Preliminary Balance Sheet must be no more negative than negative $1,200,000.

     (d) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the Stockholders under Delaware Law.

     9.2. Conditions to Obligations of Target and Sellers. All obligations of Target
and Sellers under this Agreement are subject to the fulfillment, at or prior to the Closing, of the
following conditions, any one or more of which may be waived by Target:

     (a) Performance of Purchaser’s and Merger Sub’s Obligations. Purchaser and
Merger Sub shall have delivered all documents and agreements described in Schedule
3.3

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and otherwise performed in all respects all obligations required under this Agreement to be
performed by them on or prior to the Closing Date.

     (b) Pending Proceedings. No action or proceeding against Target shall be
pending before any court or governmental authority seeking to restrain or prohibit or obtain
damages or other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.

     (c) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the Stockholders under Delaware Law.

ARTICLE X.

TERMINATION AND ABANDONMENT

     10.1. Methods of Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the Closing:

     (a) by the mutual written consent of Purchaser and Target; or

     (b) by either party if the Closing does not occur on the date hereof.

     10.2. Procedure Upon Termination. In the event of termination of this Agreement
by Target or Purchaser pursuant to this Article X, written notice thereof shall forthwith be given
to the other parties and this Agreement shall terminate and the transactions contemplated hereby
shall be abandoned, without further action by any party to this Agreement. The agreements set
forth in Section 7.1, this Section 10.2, Article VIII and Article XI shall survive the termination
of this Agreement.

ARTICLE XI.

MISCELLANEOUS.

     11.1. Right to Equitable Relief. In the event that any party fails to perform any
of his, her or its obligations hereunder, the other parties shall have the right to require
specific performance of the obligations not performed, and in the event that any party fails to
honor any of the covenants set forth in this Agreement, the other parties shall have the right to
obtain injunctive relief, without bond or other security, to enforce such obligations.

     11.2. Expenses. Each of the parties hereto shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with this transaction, including fees and
expenses of its own financial or other consultants, accountants and counsel (such costs and
expenses incurred by the Companies for the benefit of the Companies or Sellers, the “Transaction
Expenses”).

     11.3. Entire Agreement. This Agreement (including the Schedules hereto) contains
the entire agreement between the parties with respect to this transaction and supersedes all prior
arrangements or understandings with respect thereto, written or oral. This Agreement may not be
modified or changed except by an instrument or instruments in writing signed by the party against
whom enforcement is sought. The waiver by or on behalf of any party hereto of a breach

- 61 -

 

of any provision of this Agreement shall not operate or be construed as a waiver of any subsequent
breach.

     11.4. Benefit. The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors, assigns,
executors, administrators or other personal representatives. Except as otherwise set forth in
Sections 1.17, 7.4(d), and 7.5, nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties and their respective successors in interest, any
rights, remedies, obligations or liabilities under or by reason of this Agreement, except as
expressly provided herein.

     11.5. Notices. All notices or other communications which are required or
permitted hereunder shall be in writing or by written telecommunication and will be deemed to be
sufficient if (i) delivered personally or sent by registered or certified mail, postage prepaid,
(ii) sent by confirmed electronic mail or facsimile if sent during normal business hours of the
recipient, and if not so confirmed, then on the next business day or facsimile (provided that a
copy is simultaneously sent by regular mail) or (iii) sent by overnight courier, to the persons and
addresses listed on Schedule 11.5, or to such other persons and addresses as may be
designated from time to time by the receiving party. Any such notices shall be deemed to have been
given as of the date so personally delivered or transmitted by electronic mail or facsimile if
receipt is confirmed, or one (1) day after sent by overnight courier or five (5) days after mailed.

     11.6. Further Assurances. After the Closing, the parties agree to execute all
additional documents and take all actions reasonably needed to accomplish the purposes of this
Agreement and to carry out the terms hereof.

     11.7. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED UNDER AND GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF DELAWARE. ANY ACTION OR PROCEEDING SEEKING TO ENFORCE ANY
PROVISION OF OR BASED ON ANY RIGHT ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT AGAINST ANY OF THE
PARTIES ONLY IN THE DELAWARE COURT OF CHANCERY AND ANY STATE APPELLATE COURT THEREFROM WITHIN THE
STATE OF DELAWARE (OR, IF THE DELAWARE COURT OF CHANCERY DECLINES TO ACCEPT JURISDICTION OVER A
PARTICULAR MATTER, ANY OTHER STATE OR FEDERAL COURT WITHIN THE STATE OF DELAWARE) EACH OF THE
PARTIES HEREBY WAIVES ANY RIGHT TO JURY TRIAL.

     11.8. Captions and Schedules. Paragraph titles or captions contained herein are
inserted as a matter of convenience and are for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof. All Schedules referred to in this
Agreement are incorporated herein and constitute a part of this Agreement. No information
contained in the Schedules shall be deemed to be an admission by any party hereto to any third
party of any matter whatsoever, including any violation of applicable law or breach of any
agreement. Disclosure of any item on any of the Schedules shall not constitute an admission that
such item is required to be so disclosed.

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     11.9. Severability. If any term or provision of this Agreement shall to any
extent be invalid or unenforceable, the remainder of this Agreement shall not be affected thereby,
and each term and provision of this Agreement shall be valid and enforced to the fullest extent
permitted by law.

     11.10. Non-Assignability. This Agreement shall not be assignable by any party
hereto without the prior written consent of the other parties. Any attempted assignment or
transfer hereof not permitted by the preceding sentence shall be in breach of this Agreement and
shall be null and void and of no force or effect. Notwithstanding the foregoing, Purchaser shall
have the unrestricted right to (a) assign any or all of its rights, remedies and obligations under
this Agreement to any of its Affiliates, so long as Purchaser remains jointly and severally liable
with such assignee for its obligations hereunder, and (b) collaterally assign its rights and
remedies under this Agreement to any lender or lenders for Purchaser.

     11.11. Counterparts; Terms; Knowledge.

     (a) This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original and all of which together shall be considered one and the same
agreement.

     (b) All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to such parts of this Agreement, unless the context shall otherwise
require. All references to singular or plural or masculine or feminine shall include the
other as the context may require. The words “hereof,” “herein,” “hereunder” and words of
similar import shall refer to this Agreement as a whole and not to any particular Section or
provision of this Agreement, and reference to a particular Section of this Agreement shall
include all subsections thereof. The words “party” and “parties” shall refer, as
applicable, to Target, Sellers and Purchaser. Accounting terms used herein and not
otherwise defined herein are used herein as defined by GAAP in effect as of the date hereof,
consistently applied. The word “including” shall mean including without limitation.

     (c) All references to Target’s “knowledge”, or phrases of similar import, shall
mean:

     (i) with respect to the representations and warranties contained in
Sections 4.1, 4.9, 4.13 and 4.14, the knowledge of Randall Davis, Robert Edwards and
Tim Walther;

     (ii) with respect to the representations and warranties contained in
Sections 4.6, 4.11 and 4.23, the knowledge of Randall Davis, Robert Edwards, Tim
Walther, Bill Rucker, Brent Davidson, Michael Cerick and Tom Wallace;

     (iii) with respect to the representations and warranties contained in
Section 4.15, the knowledge of Randall Davis, Robert Edwards, Tim Walther, Bill
Rucker, Brent Davidson, Michael Cerick and Sue Lang;

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     (iv) with respect to the representations and warranties contained in
Sections 4.8, 4.12,. 4.16, 4.18, 4.22 and 4.24, the knowledge of Randall Davis,
Robert Edwards, Tim Walther and Sue Lang; and

     (v) with respect to the representations and warranties contained in
Sections 4.20 and 4.21, the knowledge of Randall Davis, Robert Edwards, Tim Walther,
Sunil Bhargava and Terry Low.

     (d) All references to Purchaser’s or Merger Sub’s “knowledge”, or phrases of
similar import, shall mean the knowledge of Phillip J. Smith, Robert McCullen, Mark
Iserloth, Jim Frainey and Larry Podmolik.

     11.12. Documentation. This Agreement was initially prepared by Purchaser’s legal
counsel as a matter of convenience only, and has been thoroughly reviewed by Target, Sellers and
their legal counsel and the input of Target, Sellers and their legal counsel was properly
considered and, therefore, the parties acknowledge and agree that no interpretation will be made in
favor of any of the parties or signatories with respect to this Agreement for the reason that such
document was prepared by Purchaser’s legal counsel.

     11.13. Reliance Upon Representations and Warranties. The parties mutually agree
that, notwithstanding any right of Purchaser to fully investigate the affairs of the Companies
hereunder and notwithstanding any knowledge of facts determined or determinable by Purchaser
pursuant to such investigation or right of investigation, Purchaser has the right to fully rely
upon the representations and warranties of Target contained in this Agreement and on the accuracy
of any document, certificate or Schedule given or delivered to Purchaser pursuant to this
Agreement. Further, knowledge by an agent of Purchaser of any facts so determined or determinable
which are not otherwise disclosed in this Agreement or in any document, Schedule or certificate
delivered to Purchaser pursuant to this Agreement shall not constitute a defense by Target or any
Seller for any claim for loss or damage made by Purchaser against Target or any Seller for any
misrepresentation, breach of warranty or breach of covenant made by Target or any Seller in this
Agreement or in any such document, certificate or Schedule. The parties hereby acknowledge and
agree that there are no covenants, agreements, undertakings or obligations with respect to the
subject matter of this Agreement other than those expressly set forth herein, and no
representations or warranties of any kind or nature whatsoever, express or implied, including any
representations or warranties with respect to any projections, predictions, forecasts, estimates or
budgets previously made available to the Purchaser, its Affiliates or its representatives, are made
or shall be deemed to be made herein by the parties hereto except those expressly made herein.

     11.14. Facsimile/Federal Express. This Agreement may be executed and delivered by
facsimile, electronic mail and/or overnight courier, and the parties agree that the receipt of an
executed facsimile copy or copy delivered by electronic transmission or overnight courier shall be
deemed to be an original.

(SIGNATURES IN NEXT PAGES)

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

	 	 	 	 	 	 	 

	 
	TRUSTWAVE HOLDINGS, INC.	 	INTELLITACTICS INC.
	 
	By: 	 /s/ Mark Iserloth	 	By: 	/s/ Randall Davis
	 	Mark Iserloth	 	 	Randall Davis
	 	Chief Financial Officer	 	 	Chief Executive Officer
	 
	AMBIRONTRUSTWAVE GOVERNMENT
     SOLUTIONS, INC.	 	 	 	 
	 
	By: 	 /s/ Phillip J. Smith	 	 	 	 
	 	Phillip J. Smith	 	 	 	 
	 	Executive Vice President	 	 	 	 

[Signature Page to Agreement and Plan of Merger and Reorganization]

 

 

	 	 	 	 	 
	 	PREFERRED STOCKHOLDERS:

Lazard Technology Partners II LP

By:   LTP II LP

Its:   General Partner

By:   LTP II GenPar LLC

Its:   General Partner

By:   Lazard Alternative Investments LLC

Its:   Manager

 	 
	 	By:  	/s/ Kevin J. Burns
 	 
	 	 	Name:  	Kevin J. Burns 	 
	 	 	Title:  	Managing Principal 	 
	 

[Signature Page to Agreement and Plan of Merger and Reorganization]

 

 

	 	 	 	 	 
	 	JMI Equity Fund IV, L.P.

By:   JMI Associates IV, LLC

Its:   General Partner

 	 
	 	By:  	/s/ Harry S. Gruner
 	 
	 	 	Name:  	Harry S. Gruner 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	JMI Equity Fund IV (AI), L.P.

By:   JMI Associates IV, LLC

Its:   General Partner

 	 
	 	By:  	/s/ Harry S. Gruner
 	 
	 	 	Name:  	Harry S. Gruner 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	JMI Euro Equity Fund IV, L.P.

By:   JMI Associates IV, LLC

Its:   General Partner

 	 
	 	By:  	/s/ Harry S. Gruner
 	 
	 	 	Name:  	Harry S. Gruner 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	JMI Equity Side Fund, L.P.

By:   JMI Side Associates, LLC

Its:   General Partner

 	 
	 	By:  	/s/ Harry S. Gruner
 	 
	 	 	Name:  	Harry S. Gruner 	 
	 	 	Title:  	Managing Member 	 
	 

[Signature Page to Agreement and Plan of Merger and Reorganization]

 

 

	 	 	 	 	 
	 	JMI Incubator Fund, L.P.

By:   JMI Incubator Associates L.L.C.

Its:   General Partner

 	 
	 	By:  	/s/ Harry S. Gruner
 	 
	 	 	Name:  	Harry S. Gruner 	 
	 	 	Title:  	Managing Member 	 
	 

	 	 	 	 	 
	 	JMI Incubator Fund (QP), L.P.

By:   JMI Incubator Associates L.L.C.

Its:   General Partner

 	 
	 	By:  	/s/ Harry S. Gruner
 	 
	 	 	Name:  	Harry S. Gruner 	 
	 	 	Title:  	Managing Member 	 
	 

[Signature Page to Agreement and Plan of Merger and Reorganization]

 

 

EXHIBIT A

Defined Terms

The following terms shall have the meanings as ascribed to them or referenced below:

Accounts Receivable shall have the meaning set forth in Section 4.6.

Affiliates shall mean a person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, another Person.

Agent shall have the meaning set forth in Section 1.15.

Agreement shall have the meaning set forth in the Preamble.

AI shall have the meaning set forth in the Preamble.

Assumed Warrants shall have the meaning set forth in Section 1.12.

Balance Sheet shall have the meaning set forth in Section 4.5.

Balance Sheet Date shall have the meaning set forth in Section 4.5.

Bankruptcy Laws and Equitable Principles shall mean (i) laws, regulations, decrees, injunctions and
Judgments of general application relating to bankruptcy, insolvency, reorganization, fraudulent
transfer, the relief of debtors, and similar laws, regulations, decrees, injunctions and Judgments
affecting the rights of creditors generally, (ii) rules of law governing specific performance,
injunctive relief and other equitable principles and remedies and (iii) public policy.

Base Number shall have the meaning set forth in Section 1.5(a)(i).

Bonus Base Number shall have the meaning set forth in Section 1.17(e)(i).

Bonus Pro-Rata Percentage shall have the meaning set forth in Section 1.17(e)(ii).

Bonus Release shall have the meaning set forth in Section 1.17(a).

Bonus Strike Price shall have the meaning set forth in Section 1.17(e)(iii).

Books and Records shall have the meaning set forth in Section 4.4.

Business shall have the meaning set forth in the Recitals.

Canadian Employee Plans shall have the meaning set forth in Section 4.17(b).

Canadian Welfare Plan shall mean any medical health hospitalization, dental, insurance or other
employee benefit or welfare plan, agreement or arrangement which IC sponsors, maintains or to which
it makes, is making or is obligated to make contributions.

A-1

 

Certificate of Incorporation shall have the meaning set forth in Section 1.5(b)(i).

Change of Control shall mean the acquisition after the date hereof, directly or indirectly,
including through a merger, consolidation or other acquisitive transaction, by any individual,
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than an
individual, entity or group together with their Affiliates that owns Purchaser capital stock) of
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) of more than fifty percent
50% of the aggregate outstanding voting power of Purchaser or the aggregate outstanding stock of
Purchaser; provided that an underwritten sale of common equity securities of Purchaser pursuant to
an effective registration statement under the Securities Act of 1933 filed with the United States
Securities and Exchange Commission shall not be deemed to be a Change of Control.

Claims shall mean all claims, complaints, charges, actions, suits, proceedings, disputes and
investigations.

Closing shall have the meaning set forth in Section 3.1.

Closing Date shall have the meaning set forth in Section 3.1.

Closing Date Balance Sheet shall have the meaning set forth in Section 2.2(a).

Closing Net Asset Position shall have the meaning set forth in Section 2.3.

COBRA shall have the meaning set forth in Section 4.17(a).

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

Company or Companies shall have the meaning set forth in the Recitals.

Company Assets shall mean all of the assets and properties of every kind and nature, real and
personal, tangible and intangible, wherever situated, whether or not carried or reflected on the
books and records of either Company which are owned by either Company or used by either Company in
connection with the operation of the Business as currently conducted by the Companies including,
without limitation, the Accounts Receivable, the Books and Records, the Company Intellectual
Property and the Company Contracts.

Company Contract shall mean any Contract to which either Company is a party or by which either
Company or the Company Assets are bound.

Company Intellectual Property shall have the meaning set forth in Section 4.20(b).

Company Registered Intellectual Property shall mean United States and foreign Patents, registered
Trademarks and registered copyrights, and applications for each of the foregoing, that are
registered or filed in the name of either Company in the patent, trademark, copyright or equivalent
offices and agencies of the appropriate Governmental Authority.

Confidentiality Agreements shall have the meaning set forth in Schedule 3.2.

A-2

 

Contract shall mean any agreement, lease, license agreement (other than a license granted by a
Governmental Authority), contract, consensual obligation, promise, commitment, arrangement,
understanding or undertaking (whether written or oral and whether express or implied) of any type,
nature or description. As used herein, the word “Contract” shall be limited in scope if modified
by an adjective specifying the type of contract to which this Agreement or a provision hereof
refers.

Covered Employees shall have the meaning set forth in Section 7.4(c).

Current Value, as of any date, shall mean the fair market value of a share of Purchaser Common
Stock (or such amount of any securities into which a share of Purchaser Common Stock has been
converted) as of such date, determined as follows:

     (a) the average of the closing prices of the sales of Purchaser Common Stock (or
such amount of any securities into which a share of Purchaser Common Stock has been
converted) on all securities exchanges on which such of Purchaser Common Stock (or such
amount of any securities into which a share of Purchaser Common Stock has been converted)
may at the time be listed, or, if there have been no sales on any such exchange on any day,
the average of the highest bid and lowest asked prices on all such exchanges at the end of
such day, or, if on any day such of Purchaser Common Stock (or such amount of any securities
into which a share of Purchaser Common Stock has been converted) is not so listed, the
average of the representative bid and asked prices quoted in the NASDAQ System as of
4:00 P.M., New York time, or, if on any day such Purchaser Common Stock is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau Incorporated,
or any similar successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Current Value is being determined and the 20
consecutive business days prior to such day.

     (b) If at any time Purchaser Common Stock (or such amount of any securities into
which a share of Purchaser Common Stock has been converted) is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the Current Value
will be the fair value of such Purchaser Common Stock (or such amount of any securities into
which a share of Purchaser Common Stock has been converted) as determined in good faith by
the Board of Directors of Purchaser (the “Board”). If the Agent reasonably disagrees with
such determination, the Agent shall deliver to the Board a written notice of objection
within ten days after delivery of a notice of such determination. Upon receipt of the
Agent’s written notice of objection, the Board and the Agent will negotiate in good faith to
agree on such Current Value. If such agreement is not reached within 30 days after the
delivery of the determination of the Board, Current Value shall be determined by an
appraiser jointly selected by the Board and the Agent, which appraiser shall submit to the
Board and the Agent a report within 30 days of its engagement setting forth such
determination. If the parties are unable to agree on an appraiser within 45 days after
delivery of the determination of the Board, within seven days, each party shall submit the
names of four nationally recognized investment banking firms, and each party shall be
entitled to strike two names from the

A-3

 

other party’s list of firms, and the appraiser shall be selected by lot from the remaining
four investment banking firms. The expenses of such appraiser shall be borne by the Agent
unless the appraiser’s valuation is more than 10% greater than the amount determined by the
Board, in which case, the expenses of the appraiser shall be borne by Purchaser. The
determination of such appraiser as to Current Value shall be final and binding upon all
parties.

Cut-Off Date shall have the meaning set forth in Section 8.1(b).

Defense Notice shall have the meaning set forth in Section 8.8(a).

Delaware Law shall have the meaning set forth in the Recitals.

Designated Books and Records shall have the meaning set forth in Section 4.4.

Designated Company Contract shall have the meaning set forth in Section 4.11(b).

Dissenting Shares shall have the meaning set forth in Section 1.13.

Effective Time shall have the meaning set forth in Section 3.1.

Employee Holders shall have the meaning set forth in the Recitals.

Employee Plans shall have the meaning set forth in Section 4.17(b).

Employee Rights shall have the meaning set forth in the Recitals.

Environmental Laws shall have the meaning set forth in Section 4.18.

Equity Fund shall have the meaning set forth in the Preamble.

ERISA shall have the meaning set forth in Section 4.17(a).

Euro shall have the meaning set forth in the Preamble.

Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

Financial Statements shall have the meaning set forth in Section 4.5.

GAAP shall have the meaning set forth in Section 2.2(a).

Governmental Authority shall mean any foreign, domestic, federal, territorial, state or local
governmental authority, quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision, department or branch of any
of the foregoing.

Greenfield shall have the meaning set forth in Section 1.17(b).

A-4

 

Historical Statements shall have the meaning set forth in Section 4.5.

IC shall have the meaning set forth in the Recitals.

Immediate Family Member shall mean a spouse; natural or adoptive parent, child, or sibling;
stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a
grandparent or grandchild.

Incubator shall have the meaning set forth in the Preamble.

Indebtedness for Borrowed Funds shall mean, as to any Person, without duplication, (i) all
obligations (whether interest, principal, fees, penalties or otherwise) of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under leases which are required by GAAP to be classified as
capitalized leases, and (v) any of the foregoing guaranteed by such Person.

Indemnified Party shall have the meaning set forth in Section 8.7.

Indemnified Tax Statement shall have the meaning set forth in Section 7.6(a)(ii).

Indemnifying Party shall have the meaning set forth in Section 8.7.

Indemnity Claim shall mean a Claim for indemnification pursuant to Article VIII.

Indemnity Notice shall have the meaning set forth in Section 8.9.

Independent Accountant shall have the meaning set forth in Section 2.2(b).

Intellectual Property shall mean the Software and all other (i) Patents, (ii) Trademarks,
(iii) Trade Names, (iv) Know-how, (v) proprietary rights in trade dress and packaging, and
(vi) shop rights, mask works, copyrights, inventions, trade secrets, service marks, web sites,
domain names and all other intellectual property rights, in each case whether registered or not and
in each case wherever such rights exist throughout the world, and including the right to recover
for any past infringement.

Interim Statements shall have the meaning set forth in Section 4.5.

Investor Rights Agreement Amendment shall have the meaning set forth in Schedule 3.2.

IRS shall mean the United States Internal Revenue Service.

Judgment means any order, decree, writ, injunction, award or judgment or any court or other
Governmental Authority or any arbitrator.

Key Employee Plan shall mean the Intellitactics Inc. Key Employee Bonus Plan, dated on or about
March 23, 2009.

A-5

 

Key Employee Warrant Agreements shall have the meaning set forth in Section 1.17(b).

Know-how shall mean specialized knowledge which is proprietary to the Company (including product
knowledge and use and application knowledge), formulae, product formulations, processes, product
designs, specifications, quality control, procedures, manufacturing, engineering and other
drawings, computer data bases and software, technology, other intangibles, technical information,
safety information, engineering data and design and engineering specifications, research records,
market surveys and all promotional literature, customer and supplier lists and similar data.

knowledge shall have the meaning set forth in Section 11.11(c) and (d).

Leased Real Property shall have the meaning set forth in Section 4.13.

Letter of Transmittal shall have the meaning set forth in Section 1.6(a).

Liability shall have the meaning set forth in Section 4.7.

Licenses shall have the meaning set forth in Section 4.21.

Liens shall mean all liens, Claims, options, charges, security interests, pledges, mortgages or
other encumbrances whatsoever.

Losses shall have the meaning set forth in Section 8.3(a).

LPT II shall have the meaning set forth in the Preamble.

Made Available shall mean delivered to Purchaser, or posted (without having been removed) to the
virtual data room hosted in a password protected section of the www.intralinks.com website, at
least two days prior to the date of this Agreement.

Major Customer shall have the meaning set forth in Section 4.23.

Material Adverse Effect shall mean, with respect to any Person, any change, event or effect
(collectively, a “Change”) that is materially adverse to the financial condition, net worth,
assets, liabilities, personnel, business or operations of such Person and its subsidiaries, taken
as a whole, or the ability of such Person to perform this Agreement excluding, in each case, any
Change arising out of or resulting from (i) Changes in general legal, Tax, regulatory or business
conditions that, in each case, generally affect the geographic regions or industries in which such
Person conducts its business, including changes in the use, adoption or non-adoption of industry
standards; (ii) Changes in conditions in the U.S. or global economy or capital, financial, credit,
foreign exchange or securities markets generally, including any disruption thereof; (iii) Changes
in Rules or accounting regulations or principles or interpretations thereof; (iv) such Person’s
actions taken, delayed or omitted to be taken in accordance with this Agreement or taken at the
request or with the consent of the other party or any change, event or effect relating to any
action taken (or any failure to take any action) by any other party hereto; (v) any Change that has
been cured prior to the Closing; or (vi) the negotiation, announcement, pendency, execution or
delivery of this Agreement or the other agreements to be entered into in connection herewith or

A-6

 

the identity of the other parties hereto, including any termination of, denial of, reduction in, or
similar negative impact on relationships, contractual or otherwise with any customers, suppliers,
distributors, partners or employees of such Person.

Material Company Contract shall have the meaning set forth in Section 4.11(a).

Material Purchaser Contract shall have the meaning set forth in Section 6.13.

Merger shall have the meaning set forth in the Recitals.

Merger Consideration shall have the meaning set forth in Section 1.5(a)(ii).

Merger Payment shall have the meaning set forth in Section 1.5(a).

Merger Sub shall have the meaning set forth in the Preamble.

Newco shall have the meaning set forth in Section 1.18.

Notice shall have the meaning set forth in Section 2.2(b).

Notice of Claim shall have the meaning set forth in Section 8.8(a).

Organizational Documents shall mean (a) the articles or certificate of incorporation and the bylaws
of a corporation; (b) the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of limited partnership of a
limited partnership; (d) the memorandum of association and articles of association of a Canadian
corporation; (e) any charter or similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (f) any amendment to any of the foregoing.

Other Books and Records shall have the meaning set forth in Section 4.4.

Patents shall mean all applications for and the right to make applications for Letters Patent in
the United States and all other countries, all Letters Patents that issue therefrom and all
reissues, extensions, renewals, divisional applications and continuations (including
continuations-in-part) thereof, for the full term thereof.

Permitted Liens shall mean the Liens set forth on the attached Schedule C and any Taxes
that are, to the extent set forth in Schedule 4.9, being contested by appropriate
proceedings.

Person shall mean any individual, corporation, association, partnership (general or limited), joint
venture, trust, estate, limited liability company or other legal entity or organization.

Personal Property Leases shall mean all Contacts pursuant to which either Company leases or
subleases tangible personal property from another Person.

Preferred Certificates shall have the meaning set forth in Section 1.6(a).

A-7

 

Preliminary Balance Sheet shall mean the preliminary balance sheet reflecting an estimate of the
Closing Net Asset Position attached hereto as Exhibit P.

Preliminary Base Number shall mean 700,000.

Preliminary Bonus Base Number shall have the meaning set forth in Section 1.17(e)(iv).

Preliminary Seller Base Number shall mean the Preliminary Base Number multiplied by 90%.

Pro-Rata Percentage shall have the meaning set forth in Section 1.5(a)(iii).

Purchaser shall have the meaning set forth in the Preamble.

Purchaser Balance Sheet shall have the meaning set forth in Section 6.5.

Purchaser Capital Transaction shall mean (A) the sale, exchange or other disposition of all or
substantially all of the assets of Purchaser (or any successor to Purchaser) in one or a series of
related transactions in exchange for cash, debt or equity securities of an entity which is subject
to Section 13 of the Exchange Act or a combination of cash and such securities, (B) any Change of
Control pursuant to which shares of Purchaser Common Stock (or any other securities into which the
Purchaser Common Stock has been converted) are converted into, exchanged for or purchased for cash,
debt or equity securities of an entity which is subject to Section 13 of the Exchange Act or a
combination of cash and such securities, or (C) Purchaser (or any Person who acquires all or
substantially all of Purchaser’s assets or all or substantially all of the Purchaser Common Stock,
in either such case in exchange for securities of such Person or any successor to Purchaser by
merger) becoming subject to Section 13 of the Exchange Act. For purposes of this definition, the
phrase “other disposition” includes a taking of all or substantially all of a property by eminent
domain or the damage or destruction of all or substantially all of such property or any transaction
not in the ordinary course of business which results in the Purchaser’s receipt of cash or other
consideration including condemnations, recoveries of damage awards and insurance proceeds.

Purchaser Class B Common Stock shall have the meaning set forth in Section 6.4(a).

Purchaser Common Stock shall have the meaning set forth in the Recitals.

Purchaser Deductible Amount shall have the meaning set forth in Section 8.6(d).

Purchaser Financial Statements shall have the meaning set forth in Section 6.5.

Purchaser Historical Statements shall have the meaning set forth in Section 6.5.

Purchaser Intellectual Property shall have the meaning set forth in Section 6.15.

Purchaser Interim Statements shall have the meaning set forth in Section 6.5.

Purchaser Investor Rights Agreement shall mean that certain Investor Rights Agreement, dated as of
March 14, 2005, among Purchaser and certain of its stockholders, as amended.

A-8

 

Purchaser Prepared Return shall have the meaning set forth in Section 7.6(a)(i).

Purchaser Protected Parties shall have the meaning set forth in Section 8.3(a).

Purchaser Related Party shall have the meaning set forth in Section 6.11.

Purchaser Stockholder Agreement shall mean that certain Stockholders’ Agreement, dated as of March
14, 2005, among Purchaser and its stockholders, as amended.

Purchaser Stock Option Plan shall mean the TrustWave Holdings, Inc. Stock Incentive Plan, as
amended from time to time.

Purchaser Warrants shall have the meaning set forth in Section 6.4(c).

QP shall have the meaning set forth in the Preamble.

Real Property Leases shall have the meaning set forth in Section 4.13.

Related Party shall have the meaning set forth in Section 4.24.

Remaining Basket shall have the meaning set forth in Section 8.6(d).

Reserves shall have the meaning set forth in Section 4.6.

Restrictive Covenant Agreements shall have the meaning set forth in Schedule 3.2.

Rules shall have the meaning set forth in Section 4.12.

Securities Act shall have the meaning set forth in Section 5.6.

Seller or Sellers shall have the meaning set forth in the Preamble.

Seller Base Number shall have the meaning set forth in Section 1.5(a)(iv).

Seller Deductible Amount shall have the meaning set forth in Section 8.6(e).

Seller Protected Parties shall have the meaning set forth in Section 8.4.

Shrink-Wrap Software shall have the meaning set forth in Section 4.20(b).

Side Fund shall have the meaning set forth in the Preamble.

Software shall mean the software and related items listed on the attached Schedule D.

Special Bonus Pro-Rata Percentage shall have the meaning set forth in Section 1.17(e)(v).

Stockholder or Stockholders shall have the meaning set forth in the Recitals.

Stockholders Agreement Amendment shall have the meaning set forth in Schedule 3.2.

A-9

 

Stockholders Consent shall have the meaning set forth in Section 7.2.

Stock Power shall have the meaning set forth in Section 1.5(b).

Surviving Corporation shall have the meaning set forth in Section 1.1.

Target shall have the meaning set forth in the Preamble.

Target Capital Stock shall have the meaning set forth in Section 1.5(b)(ii).

Target Common Stock shall have the meaning set forth in Section 1.5(b)(iii).

Target Preferred Stock shall have the meaning set forth in Section 1.5(b)(iv).

Target Series B Preferred Stock shall have the meaning set forth in Section 1.5(b)(v).

Target Series C Preferred Stock shall have the meaning set forth in Section 1.5(b)(vi).

Target Series D Preferred Stock shall have the meaning set forth in Section 1.5(b)(vii).

Target Series E Preferred Stock shall have the meaning set forth in Section 1.5(b)(viii).

Target Series F Preferred Stock shall have the meaning set forth in Section 1.5(b)(ix).

Target Series G Preferred Stock shall have the meaning set forth in Section 1.5(b)(x).

Target Stock Option Plan shall have the meaning set forth in Section 4.1(d).

Tax or Taxes shall mean any and all taxes imposed of any nature (whether federal, provincial,
state, county, local or foreign) including income tax, alternative or add-on minimum tax, profits
or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax,
employment-related tax (including employee withholding or employer payroll tax, FICA or FUTA),
Canada Pension Plan and Provincial pension plan contributions, real or personal property tax or ad
valorem tax, sales or use tax (including HST), excise tax, stamp tax or duty, any withholding or
back up withholding tax, value added tax, severance tax, prohibited transaction tax, transfer tax,
capital stock tax, license or customs duty, unemployment tax and insurer contributions, disability
insurance, registration taxes, estimated taxes, installments of taxes, escheat, premiums tax or
occupation tax, together with any charges, interest or any penalty, addition to tax or additional
assessment or other amount imposed by any Taxing Authority responsible for the imposition of any
such tax.

Tax Arbitrator shall have the meaning set forth in Section 7.6(a)(iii).

Tax Return shall mean any return, declaration, report, claim for refund, information return or
statement in connection with the determination of or liability for any Tax that is required to be
filed or which is actually filed with a Taxing Authority, including any schedule or attachment
thereto, and including any amendment thereof.

Tax Statement Dispute shall have the meaning set forth in Section 7.6(a)(iii).

A-10

 

Taxing Authority shall mean any Governmental Authority responsible for the assessment,
determination, collection or administration of any Tax.

Third Party Claim shall have the meaning set forth in Section 8.8(a).

Trademarks shall mean trademarks, service marks, brand marks, registrations thereof, pending
applications for registration thereof, and such unregistered rights which are used in the Business.

Trade Names shall mean (i) trade names, (ii) brand names, and (iii) logos and all other names and
slogans used in the Business.

Transaction Expenses shall have the meaning set forth in Section 11.2.

Transfer shall have the meaning set forth in Section 1.16.

Treasury Regulations shall mean all proposed, temporary and final regulations promulgated under the
Code.

True-Up Date shall have the meaning set forth in Section 2.1.

US Employee Plans shall have the meaning set forth in Section 4.17(a).

Warrants shall have the meaning set forth in Section 4.1(g).

A-11

 

EXHIBIT B

Certificate of Merger

 

 

EXHIBIT C

[Intentionally Omitted]

A-1

 

EXHIBIT D

Stock Power

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto TrustWave
Holdings, Inc., a Delaware corporation, (a) _______ shares of Common Stock, par value $_______ per
share, represented by Certificate No. __; (b) _______ shares of Series B Preferred Stock, par value
$_______ per share, represented by Certificate No. __; (c) _______ shares of Series C Preferred
Stock, par value $_______ per share, represented by Certificate No. __; (d) _______ shares of
Series D Preferred Stock, par value $_______ per share, represented by Certificate No. __; (e)
_______ shares of Series E Preferred Stock, par value $_______ per share, represented by
Certificate No. __; (f) _______ shares of Series F Preferred Stock, par value $_______ per share,
represented by Certificate No. __; and (g) _______ shares of Series G Preferred Stock, par value
$_______ per share, represented by Certificate No. __, in each case of Intellitactics Inc., a
Delaware corporation, and does hereby constitute and appoint Phillip J. Smith attorney to transfer
such stock on the books of such corporation with full power of substitution.

     Executed this ___ day of ___________, 2010.

	 	 	 	 	 
	 	 
	Name:  	 	 
	 	(Please Print) 	 
	 	 	 
	   	 	 
	 	(Signature) 	 
	 	 	 
	 	 	 
	 	(Title) 	 
	 	 	 	 
	 

Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or by
person(s) authorized to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian, officer of a
corporation, attorney-in-fact or any other person acting in a fiduciary capacity, set forth full
title in such capacity.

 

 

EXHIBIT E

FORM OF

LETTER OF TRANSMITTAL

TO ACCOMPANY CERTIFICATE(S) FOR SHARES OF TARGET STOCK

     Reference is made to that certain AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
“Agreement”), made as of March __, 2010, by and among TrustWave Holdings, Inc., a Delaware
corporation (“Purchaser”), AmbironTrustWave Government Solutions, Inc., a Delaware corporation and
a wholly-owned subsidiary of Purchaser (“Merger Sub”), Intellitactics Inc., a Delaware corporation
(“Target”), and certain stockholders and employees of Target, including the undersigned. All
capitalized terms used in this Letter of Transmittal which are not defined herein shall have the
respective meanings assigned to them in the Agreement.

     This Letter of Transmittal is to accompany certificates for shares of Target Capital Stock to
receive shares of Purchaser Common Stock in connection with the Merger.

TrustWave Holdings, Inc.

70 West Madison Street, Suite 1050

Chicago, Illinois 60602

Attn: Chief Executive Officer

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, DOES NOT
CONSTITUTE A VALID DELIVERY.

PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Total Number and Type of
	Name and Address of Registered Holder	 	Certificate Number	 	Shares Represented by Certificate

Ladies and Gentlemen:

     In connection with the Merger, the undersigned hereby submits the certificate(s) for the
shares of Target Capital Stock listed above. Delivery of the enclosed certificates shall be
effected, and risk of loss of and title to such certificates shall pass, only upon delivery thereof
to you.

 

 

     It is understood that this Letter of Transmittal is subject to (i) the terms of the Agreement,
a conformed copy of which has been delivered to the undersigned, and (ii) the accompanying
Instructions.

     The undersigned will, upon request, execute any additional documents Purchaser considers
necessary or desirable to complete the surrender of such shares.

     Unless otherwise indicated under Special Instructions below, please issue the shares of
Purchaser Common Stock issuable in exchange for the Target Capital Stock represented by the
certificates submitted hereby in the name of the registered holder(s) of such Target Capital Stock.
Similarly, unless otherwise indicated under Special Delivery Instructions, please mail the
certificates the shares of Purchaser Common Stock issuable in exchange for the Target Capital Stock
represented by the certificates submitted hereby to the registered holder(s) of the Target Capital
Stock at the address or addresses shown above.

SPECIAL INSTRUCTIONS

If the shares of Purchaser Common Stock are to be issued in the name of someone other than the
registered holder(s) of the Target Capital Stock, please complete the following with respect to the
person or persons in whose names such shares of Purchaser Common Stock are to be issued:

	 	 	 	 	 
	 	 
	Name:  	 	 
	 	(Please Print) 	 
	 	 	 
	Address: 	 	 
	 	(Please Print) 	 
	 	 	 
	 	 	 
	 	(Including Zip Code) 	 
	 	 	 	 
	 	 	 
	 	(Tax Identification or Social Security Number) 	 
	 	 	 	 

- 2 -

 

	 	 	 	 	 

SPECIAL DELIVERY INSTRUCTIONS

If the shares of Purchaser Common Stock are to be issued to the registered holder(s) of Target
Capital Stock, but are to be sent to someone other than the registered holder(s) or to an address
other than the address of the registered holder(s) set forth above, please complete the following:

	 	 	 	 	 
	 	 
	Name:  	 	 
	 	(Please Print) 	 
	 	 	 
	Address: 	 	 
	 	(Please Print) 	 
	 	 	 
	 	 	 
	 	(Including Zip Code) 	 

SIGN HERE

	 	 	 	 	 
	 	 
	Name:  	 	 
	 	(Please Print) 	 
	 	 	 
	  	 	 
	 	(Signature) 	 
	 	 	 
	Name: 	 	 
	 	(Please Print) 	 
	 	 	 
	 	 	 
	 	(Signature) 	 

Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or by
person(s) authorized to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian, officer of a
corporation, attorney-in-fact or any other person acting in a fiduciary capacity, set forth full
title in such capacity.

- 3 -

 

EXHIBIT F

Form of Bonus Release

 

 

EXHIBIT G

Form of Key Employee Warrant Agreement

 

 

EXHIBIT H

[Intentionally Omitted]

 

 

EXHIBIT I

Form of Stockholders Agreement Amendment

 

 

EXHIBIT J

Form of Investors Rights Agreement Amendment

 

 

EXHIBIT K

Form of Confidentiality Agreement

 

 

EXHIBIT L

Form of Restrictive Covenant Agreement

 

 

EXHIBIT M

Form of General Release

RELEASE AND COVENANT NOT TO SUE

     This Release and Covenant Not to Sue is delivered by the undersigned (“Releasor”) to TrustWave
Holdings, Inc., a Delaware corporation (“Purchaser”), in connection with the Agreement referred to
below.

     Releasor acknowledges and agrees that:

	 	(a)	 	On the date hereof, AmbironTrustWave Government Solutions, Inc., a Delaware
corporation and a wholly-owned subsidiary of Purchaser (“Merger Sub”), is being merged
into Intellitactics Inc., a Delaware corporation (“Target”), as a result of which
Target shall become a wholly-owned subsidiary of Purchaser, pursuant to that certain
Agreement and Plan of Merger and Reorganization (the “Agreement”), made as of March __,
2010, by and among Purchaser, Merger Sub, Target and certain stockholders of Target;
	 
	 	(b)	 	All capitalized terms used in this Release and Covenant Not to Sue which are
not defined herein shall have the respective meanings assigned to them in the
Agreement;
	 
	 	(c)	 	Nothing contained in this Release and Covenant Not to Sue shall be deemed to
supersede any of the covenants, agreements, representations or warranties made in the
Agreement; and
	 
	 	(d)	 	The execution and delivery of this Release and Covenant Not to Sue is a
condition to the consummation by Purchaser of the transactions contemplated by the
Agreement.

     NOW, THEREFORE, for good and valuable consideration (including, without limitation, the
payment to Releasor of his, her or its share of the Merger Consideration), the receipt and
sufficiency of which are hereby acknowledged):

     1. Releasor, for himself, herself or itself, his, her or its Affiliates and each of the
respective heirs, executors, beneficiaries, officers, directors, employees, agents, successors,
assigns and personal representatives of Releasor and his, her or its Affiliates (all of the
foregoing persons other than Releasor are sometimes referred to herein collectively as the
“Derivative Claimants”), knowingly and voluntarily, hereby unconditionally and irrevocably
releases, waives and forever discharges (collectively, the “Release”) Purchaser, Merger Sub, each
of their respective Affiliates (including Target), and each of their respective successors,
assigns, directors, officers, shareholders, managers, members, partners, employees and agents
(collectively, “Released Parties”) from any and all claims, demands, damages, liabilities,
obligations, manner of actions, causes, causes of action, suits, debts, sums of money, accounts,
reckonings, bonds, bills, specialties, trespasses, judgments and executions, whatsoever, in law or
in equity (collectively, “Claims”) of any kind, nature or description whatever, whether known or

 

 

unknown (and if unknown, regardless of whether knowledge of the same may have affected the
decision to make this Release), which now exist or which may hereafter arise based on any fact or
circumstance arising or occurring on or at any time prior to the date hereof related to (i) the
Releasor’s ownership of capital stock in the Target, (ii) the business or operations of the Target,
or (iii) the acquisition of all of the capital stock in the Target and Employee Rights owned by
Releasor pursuant to the transactions contemplated by the Agreement, except that the Release shall
not apply to (a) the right of Releasor to enforce the provisions of this Agreement and (b) any
rights of individual Affiliates of Releasor who are employees or directors of Target with respect
to compensation and benefits or the right to receive indemnification (subject to Section 7.5 of the
Agreement), in each case arising from their employment with Target or service as a director on
Target’s board of directors.

     2. In furtherance (but not in limitation) of the foregoing, Releasor also agrees on behalf of
himself, herself or itself and the Derivative Claimants not to sue or prosecute any action against
any of the Released Parties with respect to any of the matters within the scope of this Release and
agrees to defend, hold harmless and indemnify each of the Released Parties from, against and with
respect to any such suit or prosecution in contravention of this paragraph and all reasonable costs
or expenses (including attorneys’ fees and expenses) which any of the Released Parties may pay or
incur in connection therewith.

     3. Releasor represents and warrants that he, she or it has the full power and authority to
enter into this Release and Covenant Not to Sue and by doing so to bind himself, herself or itself
and the Derivative Claimants to the provisions hereof, and that he, she or it has not heretofore
assigned or transferred to any person or entity any claim or claims against the Released Parties.

     4. This instrument contains the entire agreement between Releasor and the Released Parties
with respect to the subject matter hereof, and supersedes and cancels all previous agreements,
commitments and writings with respect to such subject matter. This instrument shall be construed
as a whole and not strictly for or against any of the Released Parties. This instrument binds the
administrators, representatives, successors and assigns of Releasor and the Derivative Claimants
and will inure to the benefit of all Released Parties and their heirs, administrators,
representatives, executors, successors and assigns.

     5. Releasor acknowledges that he, she or it (a) has read this Release and Covenant Not to Sue;
(b) understands that this Release and Covenant Not to Sue constitutes a Release of Claims; (c) has
been fully advised in the premises by his own legal counsel of his, her or its choosing; (d)
intends and expects to be bound personally and legally by this document; and (e) fully understands
that he, she or it cannot make any further Claims with respect to any of the matters within the
scope of this Release or seek any further recovery by reason of any Claims with respect to any of
the matters within the scope of this Release subsequent to the date hereof.

     6. This Release and Covenant Not to Sue shall be construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and performance of this
Release and Covenant Not to Sue shall be governed by, the laws of the State of Delaware, without
giving effect to the provisions thereof regarding conflict of laws.

3

 

     Executed as of this ___ day ____________, 2010.

	 	 	 	 	 
	 	RELEASOR:

 	 
	 	 	 
	 	 	 
	 	 	 

 

 

	 	 	 	 	 

EXHIBIT N

Form of Opinion of Counsel to Target

 

 

EXHIBIT O

Form of Opinion of Counsel to Purchaser

 

 

EXHIBIT P

Preliminary Balance Sheet

 

 

EXHIBIT Q

Standard Warranty Terms

 

 

SCHEDULE 3.2

TARGET’S DELIVERIES

	1.	 	Preferred Certificates and Letters of Transmittal. All of the Preferred
Certificates, accompanied by duly completed and validly executed Letters of Transmittal and
Stock Powers.
	 
	2.	 	Bonus Releases. A Bonus Release, duly executed by each Employee Holder.
	 
	3.	 	Option Cancellations. Evidence reasonably satisfactory to Purchaser that all of the
options listed in Schedule 4.1(e) have been cancelled.
	 
	4.	 	Warrant Cancellations. Evidence reasonably satisfactory to Purchaser that all of the
Warrants (other than the Assumed Warrants) have been cancelled.
	 
	5.	 	Amendment to Stockholders Agreement. An Amendment to Stockholders Agreement,
substantially in the form attached hereto as Exhibit I (the “Stockholders Agreement
Amendment”), duly executed by each Seller.
	 
	6.	 	Amendment to Investor Rights Agreement. An Amendment to Investor Rights Agreement,
substantially in the form attached hereto as Exhibit J (the “Investor Rights Agreement
Amendment”), duly executed by each Seller.
	 
	7.	 	IP Transfer. Evidence reasonably satisfactory to Purchaser that the transfer of
Company Intellectual Property contemplated by Section 1.17 has occurred.
	 
	8.	 	Confidentiality Agreements. An Employment, Confidentiality and Assignment Agreement
in substantially the form attached hereto as Exhibit K (the “Confidentiality
Agreements”), duly executed by each Covered Employee listed on the attached Schedule
3.2-1.
	 
	9.	 	Restrictive Covenant Agreements. Restrictive Covenant Agreements, in substantially
the form attached hereto as Exhibit L (the “Restrictive Covenant Agreements”), duly
executed by each Seller.
	 
	10.	 	Releases. A General Release and Covenant Not to Sue substantially in the form
attached hereto as Exhibit M, duly executed by each Seller.
	 
	11.	 	Bank Documents. Signature and authorization cards for the bank accounts set forth on
Schedule 4.29.
	 
	12.	 	Corporate Books and Records. The minute books, stock records and corporate seal of
each Company.
	 
	13.	 	Employee Plan Resolutions. Resolutions terminating certain Employee Plans as
contemplated by Section 7.4(b).

1

 

	14.	 	Merger Documents. The Certificate of Merger and the other documents referred to in
Section 1.5, duly executed by Target.
	 
	15.	 	Organizational Documents. Copies of the Organizational Documents of Target certified
by the Secretary of State of the State of Delaware no earlier than twenty (20) days prior to
the Closing Date, or the Secretary of Target as of the Closing Date, as appropriate and copies
of the Organizational Documents of IC certified by the Secretary of State of the Province of
Ontario no earlier than twenty (20) days prior to the Closing Date, or the Secretary of IC as
of the Closing Date, as appropriate.
	 
	16.	 	Good Standing Certificates. (i) Good standing certificates for the Target, issued no
earlier than twenty (20) days prior to the Closing Date, by the Secretary of State of each
jurisdiction in which the Target is either organized or qualified or licensed to do business
and (ii) Certificate of Status for IC issued no earlier than twenty (20) days prior to the
Closing Date, by the Director of the Ministry of Government Services of Ontario.
	 
	17.	 	Resolutions. A copy of directors’ and stockholders’ resolutions for Target,
certified as of the Closing Date by Target’s secretary or assistant secretary as having been
duly and validly adopted and as being in full force and effect on the Closing Date, approving
the Merger and authorizing the execution and delivery by Target of this Agreement and the
performance by Target of the transactions contemplated hereby.
	 
	18.	 	Incumbency Certificates. Incumbency certificates from the officers of Target
authorized to execute and deliver on behalf of Target this Agreement.
	 
	19.	 	Resignations. Written resignations, in form and substance satisfactory to Purchaser,
effective as of the Closing Date, of (a) all of the directors of each Company, (b) all of the
officers of each Company, and (c) if requested by Purchaser, trustees and administrators of
any Employee Plan; provided that each written resignation of a director or officer of each
Company shall provide such individual’s acknowledgement that such individual’s rights to
exculpation and indemnification for acts or omissions occurring prior to the Effective Time
pursuant to the Organizational Documents of either Company, or any director indemnification
agreement to which such individual and either Company are parties, are subject to the terms
and conditions set forth in Section 7.5(b).
	 
	20.	 	Approvals. All required consents, waivers, authorizations and approvals, if any,
from Governmental Authorities or any other Person in connection with the execution, delivery
and performance by Target of this Agreement and the transactions contemplated hereby.
	 
	21.	 	Search Results. Copies of Uniform Commercial Code financing statement, judgment, tax
lien and pending litigation searches for each Company where such searches are customarily
performed, in form and substance reasonably satisfactory to Purchaser, and dated no earlier
than 45 days prior to the Closing Date.
	 
	22.	 	Payoff Letters. Letters from any financial institution or other Person, if
applicable, setting forth, as of the Closing Date, the amount of principal and interest
necessary to pay in full all Indebtedness for Borrowed Funds of each Company to such Person or
any other amounts requiring payment to release Liens other than Permitted Liens.

2

 

	23.	 	UCC Releases. UCC termination statements releasing each of the Liens upon the
Company Assets other than Permitted Liens.
	 
	24.	 	Landlord Estoppel. For each of the Real Property Leases, a landlord’s estoppel
certificate and consent to assignment in form and substance satisfactory to Purchaser from the
applicable landlord.
	 
	25.	 	FIRPTA Certificate. The Purchaser shall have received a properly executed Foreign
Investment and Real Property Tax Act of 1980 Notification Letter, which states that shares of
Target capital stock do not constitute “United States real property interests” under Section
897(c) of the Code, for purposes of satisfying Purchaser’s obligations under Treasury
Regulations Section 1.1445-2(c)(3) and a form of notice to the Internal Revenue Service in
accordance with the requirements of Treasury Regulations Section 1.897-2(h)(2), along with
written authorization for Purchaser to deliver such notice form to the Internal Revenue
Service on behalf of Target.
	 
	26.	 	Opinion of Target’s Counsel. An opinion of Morrison & Foerster LLP, counsel to
Target, addressed to Purchaser dated the Closing Date and in the form attached hereto as
Exhibit N.
	 
	27.	 	Additional Agreements. All such other documents and instruments as Purchaser or its
counsel shall reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.

3

 

SCHEDULE 3.3

PURCHASER’S DELIVERIES

	1.	 	Certificates. Certificates evidencing the Purchaser Common Stock deliverable to
Sellers pursuant to Section 1.6(a).
	 
	2.	 	Amendment to Stockholders Agreement. The Stockholders Agreement Amendment, duly
executed by Purchaser and the number of stockholders of Purchaser required to make such
Stockholders Agreement Amendment effective.
	 
	3.	 	Amendment to Investor Rights Agreement. The Investor Rights Agreement Amendment,
duly executed by Purchaser and the number of stockholders of Purchaser required to make such
Investor Rights Agreement Amendment effective.
	 
	4.	 	Confidentiality Agreements. The Confidentiality Agreements, duly executed by
Purchaser.
	 
	5.	 	Organizational Documents. Copies of the Organizational Documents of Purchaser
certified by the Secretary of State of the State of Delaware no earlier than twenty (20) days
prior to the Closing Date, or the Secretary of Target as of the Closing Date, as appropriate.
	 
	6.	 	Resolutions. A copy of directors’ resolutions for Purchaser, certified as of the
Closing Date by Purchaser’s secretary or assistant secretary as having been duly and validly
adopted and as being in full force and effect on the Closing Date, approving the Merger and
authorizing the execution and delivery by Purchaser of this Agreement and the performance by
Purchaser of the transactions contemplated hereby.
	 
	7.	 	Incumbency Certificates. Incumbency certificates from the officers of Purchaser
authorized to execute and deliver on behalf of Purchaser this Agreement.
	 
	8.	 	Opinion of Purchaser’s Counsel. An opinion of Kaye Scholer LLP, counsel to
Purchaser, addressed to Target dated the Closing Date and in the form attached hereto as
Exhibit O.
	 
	9.	 	Additional Agreements. All such other documents and instruments as Target or its
counsel shall reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.
	 
	10.	 	Organizational Documents of Merger Sub. Copies of the Organizational Documents of
Merger Sub certified by the Secretary of State of the State of Delaware no earlier than twenty
(20) days prior to the Closing Date, or the Secretary of Merger Sub as of the Closing Date, as
appropriate.
	 
	11.	 	Resolutions of Merger Sub. A copy of directors’ and stockholders’ resolutions for
Merger Sub, certified as of the Closing Date by Merger Sub’s secretary or assistant secretary
as having been duly and validly adopted and as being in full force and effect on the Closing
Date, approving the Merger and authorizing the execution and delivery by

 

 

	 	 	Merger Sub of this Agreement and the performance by Merger Sub of the transactions
contemplated hereby.

5

 

SCHEDULE 11.5

NOTICE ADDRESSES

	(a)	 	 If to Purchaser (or Target following the Closing):

TrustWave Holdings, Inc.

70 West Madison Street, Suite 1050

Chicago, Illinois 60602

Attn: Chief Executive Officer

FAX: (312) 669-1234

With a copy to:

Kaye Scholer LLP

70 West Madison Street, Suite 4100

Chicago, Illinois 60602

Attn: Eric R. Decator, Esq.

FAX: (312) 583-2541

	(b)	 	 If to Target (prior to the Closing):

Intellitactics Inc.

1800 Alexander Bell Drive, Suite 500

Reston, Virginia 20191

Attention: Chief Executive Officer

FAX: (703) 620-3850

With a copy to:

Morrison & Foerster LLP

1650 Tysons Boulevard, Suite 400

McLean, Virginia 22102

Attn: Charles W. Katz, Esq.

FAX: (703) 760-7319

	(c)	 	 If to the Agent or any Seller:

JMI Associates IV, LLC

c/o JMI Management, Inc.

1119 St. Paul Street

Baltimore, MD 21202

FAX: (410) 385-2641

With a copy to:

Morrison & Foerster LLP

1650 Tysons Boulevard, Suite 400

McLean, Virginia 22102

Attn: Charles W. Katz, Esq.

FAX: (703) 760-7319exv10w35

Exhibit 10.35

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

BY AND AMONG

TRUSTWAVE HOLDINGS, INC.,

TRUSTWAVE ACQUISITION CORP.,

BREACH SECURITY, INC.

AND

CERTAIN STOCKHOLDERS OF BREACH SECURITY, INC.

June 18, 2010

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. THE MERGER
	 	 	2	 
	1.1. The Merger
	 	 	2	 
	1.2. Effect of the Merger
	 	 	2	 
	1.3. Certificate of Incorporation; Bylaws
	 	 	2	 
	1.4. Directors and Officers
	 	 	2	 
	1.5. Effect on Capital Stock
	 	 	2	 
	1.6. Exchange Procedures
	 	 	3	 
	1.7. No Further Ownership Rights in Target Preferred Stock
	 	 	4	 
	1.8. Lost, Stolen or Destroyed Preferred Certificates
	 	 	5	 
	1.9. Tax Consequences
	 	 	5	 
	1.10. Withholding Rights
	 	 	5	 
	1.11. Target Stock Options
	 	 	5	 
	1.12. Target Warrants
	 	 	6	 
	1.13. Dissenting Shares
	 	 	6	 
	1.14. Taking of Necessary Action; Further Action
	 	 	7	 
	1.15. The Agent
	 	 	7	 
	1.16. Transfer Restrictions
	 	 	8	 
	1.17. Put Right
	 	 	8	 
	1.18. Repayment of Debt
	 	 	10	 
	 
	 	 	 	 
	ARTICLE II. CLOSING NET ASSET POSITION
	 	 	10	 
	2.1. Closing Net Asset Position Reconciliation
	 	 	10	 
	2.2. Closing Date Balance Sheet
	 	 	10	 
	2.3. Closing Net Asset Position
	 	 	12	 
	 
	 	 	 	 
	ARTICLE III. CLOSING
	 	 	12	 
	3.1. Closing; Effective Time
	 	 	12	 
	3.2. Target’s Deliveries
	 	 	12	 
	3.3. Purchaser’s and Merger Sub’s Deliveries
	 	 	12	 
	 
	 	 	 	 
	ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF TARGET
	 	 	12	 
	4.1. Organization of the Companies; Capitalization
	 	 	12	 
	4.2. Authority Relative to Agreement
	 	 	15	 
	4.3. Absence of Conflicts
	 	 	15	 
	4.4. Books and Records
	 	 	15	 
	4.5. Financial Statements
	 	 	16	 
	4.6. Accounts Receivable
	 	 	16	 
	4.7. Intentionally Omitted
	 	 	17	 
	4.8. Absence of Certain Changes or Events
	 	 	17	 
	4.9. Taxes
	 	 	18	 
	4.10. Title to Properties
	 	 	21	 
	4.11. Contracts; Defaults
	 	 	21	 
	4.12. Compliance With Laws
	 	 	22	 

i

 

	 	 	 	 	 
	 	 	Page	 
	4.13. Real Property
	 	 	22	 
	4.14. Condition of Properties
	 	 	22	 
	4.15. Litigation
	 	 	23	 
	4.16. Labor and Employee Matters
	 	 	23	 
	4.17. Employee Plans
	 	 	24	 
	4.18. Environmental Matters
	 	 	26	 
	4.19. Inventory
	 	 	26	 
	4.20. Intellectual Property
	 	 	26	 
	4.21. Licenses
	 	 	27	 
	4.22. Insurance
	 	 	27	 
	4.23. Customers
	 	 	27	 
	4.24. Transactions with Related Parties
	 	 	28	 
	4.25. Absence of Certain Commercial Practices
	 	 	28	 
	4.26. Name
	 	 	29	 
	4.27. Brokers or Finders
	 	 	29	 
	4.28. Indebtedness
	 	 	29	 
	4.29. Bank Accounts, Etc
	 	 	29	 
	4.30. Quotas; Foreign Trade Zones
	 	 	29	 
	4.31. Board Approval
	 	 	29	 
	4.32. Required Stockholder Vote
	 	 	29	 
	4.33. Rights Agreements
	 	 	30	 
	4.34. Sufficiency of Assets
	 	 	30	 
	4.35. Subsidiaries
	 	 	30	 
	4.36. Full Disclosure
	 	 	30	 
	4.37. Documents
	 	 	30	 
	 
	 	 	 	 
	ARTICLE V. REPRESENTATIONS AND WARRANTIES OF THE SELLERS
	 	 	31	 
	5.1. Ownership of Stock
	 	 	31	 
	5.2. Authority Relative to Agreement
	 	 	31	 
	5.3. Absence of Conflicts
	 	 	31	 
	5.4. Litigation
	 	 	31	 
	5.5. Accredited Investor
	 	 	32	 
	5.6. Information and Opportunity to Inquire
	 	 	32	 
	 
	 	 	 	 
	ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER
	 	 	32	 
	6.1. Organization, Ownership and Qualification
	 	 	33	 
	6.2. Authority Relative to Agreement
	 	 	33	 
	6.3. Absence of Conflicts
	 	 	33	 
	6.4. Capitalization
	 	 	33	 
	6.5. Financial Statements
	 	 	34	 
	6.6. Compliance With Laws
	 	 	34	 
	6.7. Litigation
	 	 	35	 
	6.8. Brokers or Finders
	 	 	35	 
	6.9. Absence of Undisclosed Liabilities
	 	 	35	 
	6.10. Intellectual Property
	 	 	35	 
	6.11. Insurance
	 	 	36	 

ii.

 

	 	 	 	 	 
	 	 	Page	 
	6.12. Transactions with Related Parties
	 	 	36	 
	6.13. Absence of Certain Commercial Practices
	 	 	36	 
	6.14. Merger Sub
	 	 	37	 
	6.15. Absence of Certain Changes or Events
	 	 	37	 
	 
	 	 	 	 
	ARTICLE VII. COVENANTS
	 	 	37	 
	7.1. Confidentiality; Public Announcements
	 	 	37	 
	7.2. Stockholders Consent
	 	 	38	 
	7.3. All Reasonable Efforts
	 	 	38	 
	7.4. Employee Plans
	 	 	38	 
	7.5. Directors’ and Officers’ Insurance
	 	 	39	 
	7.6. Tax Covenants
	 	 	40	 
	7.7. Section 368(a) Reorganization Covenants
	 	 	43	 
	7.8. Certain Post-Closing Obligations
	 	 	44	 
	 
	 	 	 	 
	ARTICLE VIII. INDEMNIFICATION
	 	 	44	 
	8.1. Survival of Representations, Warranties and Covenants
	 	 	44	 
	8.2. No Implied Representations
	 	 	45	 
	8.3. Indemnification by Sellers
	 	 	45	 
	8.4. Indemnification by Purchaser
	 	 	47	 
	8.5. Certain Rights
	 	 	47	 
	8.6. Limitations
	 	 	47	 
	8.7. Cooperation
	 	 	49	 
	8.8. Indemnification Procedure for Third Party Claims
	 	 	49	 
	8.9. Nature of Other Liabilities
	 	 	51	 
	8.10. Rights of Recoupment and Set-Off
	 	 	52	 
	8.11. Payment of Losses
	 	 	52	 
	8.12. Exclusive Remedy
	 	 	53	 
	8.13. Contract Intent and Construction; Avoidance of Ambiguity
	 	 	53	 
	 
	 	 	 	 
	ARTICLE IX. CONDITIONS TO CLOSING
	 	 	53	 
	9.1. Conditions to Obligations of Purchaser and Merger Sub
	 	 	53	 
	9.2. Conditions to Obligations of Target and Sellers
	 	 	54	 
	 
	 	 	 	 
	ARTICLE X. TERMINATION AND ABANDONMENT
	 	 	54	 
	10.1. Methods of Termination
	 	 	54	 
	10.2. Procedure Upon Termination
	 	 	54	 
	 
	 	 	 	 
	ARTICLE XI. MISCELLANEOUS
	 	 	54	 
	11.1. Right to Equitable Relief
	 	 	54	 
	11.2. Expenses
	 	 	55	 
	11.3. Entire Agreement
	 	 	55	 
	11.4. Benefit
	 	 	55	 
	11.5. Notices
	 	 	55	 
	11.6. Further Assurances
	 	 	55	 
	11.7. Governing Law
	 	 	55	 

iii.

 

	 	 	 	 	 
	 	 	Page	 
	11.8. Captions and Schedules
	 	 	56	 
	11.9. Severability
	 	 	56	 
	11.10. Non-Assignability
	 	 	56	 
	11.11. Counterparts; Terms; Knowledge
	 	 	56	 
	11.12. Documentation
	 	 	57	 
	11.13. Intentionally Omitted
	 	 	57	 
	11.14. Facsimile/Federal Express
	 	 	57	 

LIST OF EXHIBITS AND SCHEDULES

	 	 	 

	EXHIBIT

	 	DESCRIPTION
	 
	 	 
	A

	 	Defined Terms
	B

	 	Certificate of Merger
	C

	 	Form of Stock Power
	D

	 	Form of Letter of Transmittal
	E

	 	Form of Stockholders Agreement Amendment
	F

	 	Form of Investor Rights Agreement Amendment
	G

	 	Intentionally Omitted
	H

	 	Form of Restrictive Covenant Agreement
	I

	 	Form of General Release
	J

	 	Form of Opinion of Target’s Counsel
	K

	 	Form of Bonus Release
	L

	 	Total Consideration Pro-Rata Percentages
	 
	 	 
	SCHEDULE

	 	DESCRIPTION
	 
	 	 
	A

	 	Stockholders
	B

	 	Permitted Liens
	C

	 	The Software
	1.5(a)

	 	Pro-Rata Percentages
	1.11

	 	Covered Employee and Israeli Employee Stock Options
	1.16

	 	Transfer Restrictions
	1.18

	 	Debt Repayment Shares
	2.2(a)

	 	Certain Accounting Principles
	3.2

	 	Target’s Deliveries
	3.2-1

	 	Certain Consents
	3.3

	 	Purchaser’s Deliveries
	4.1(a)

	 	Target Foreign Qualifications
	4.1(e)

	 	Certain Obligations
	4.1(f)

	 	Target Options
	4.1(g)

	 	Disqualified Individuals
	4.1(h)

	 	Warrants
	4.1(i)

	 	Certain Rights
	4.1(j)

	 	Certain Obligations
	4.3

	 	Target Conflicts
	4.4

	 	Books and Records

iv.

 

	 	 	 

	4.5

	 	Financial Statements
	4.8

	 	Certain Events
	4.9

	 	Taxes
	4.10

	 	Certain Liens; Tangible Personal Property
	4.11

	 	Contracts
	4.12

	 	Compliance with Laws
	4.13

	 	Leased Real Property
	4.15

	 	Litigation
	4.16(a)

	 	Labor Agreements
	4.16(b)

	 	Certain Contracts
	4.16(c)

	 	Employee Matters
	4.16(d)

	 	Personnel Documents
	4.17(a)

	 	US Employee Plans
	4.17(b)

	 	Israeli Employees
	4.20(a)

	 	Intellectual Property
	4.20(b)

	 	Intellectual Property Exceptions
	4.20(c)

	 	Royalties
	4.20(d)

	 	Patent Applications
	4.21

	 	Licenses
	4.22

	 	Insurance
	4.23

	 	Customers
	4.24

	 	Related Party Transactions
	4.26

	 	Corporate Names
	4.28

	 	Indebtedness for Borrowed Funds
	4.29

	 	Bank Accounts
	4.35(a)

	 	BSI Assets and Business
	4.35(b)

	 	BSUK Assets and Business
	4.37

	 	Documents
	5.1

	 	Seller Commitments
	5.3

	 	Seller Conflicts
	5.4

	 	Seller Litigation
	6.1

	 	Purchaser Subsidiaries
	6.3

	 	Purchaser Conflicts
	6.4

	 	Purchaser Obligations
	6.5

	 	Purchaser Financial Statements
	6.7

	 	Purchaser Litigation
	6.9

	 	Purchaser Undisclosed Liabilities
	6.10

	 	Purchaser Intellectual Property
	6.12

	 	Purchaser Related Party Transactions
	6.15

	 	Certain Events
	7.6(a)

	 	Tax Return Principles
	8.3(b)

	 	Undisclosed Liabilities
	11.5

	 	Notice Addresses
	11.11

	 	Knowledge Persons

v.

 

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

     This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “Agreement”) is made and entered
into as of June 18, 2010, by and among TrustWave Holdings, Inc., a Delaware corporation
(“Purchaser”), TrustWave Acquisition Corp., a Delaware corporation and wholly-owned subsidiary of
Purchaser (“Merger Sub”), Breach Security, Inc., a Delaware corporation (“Target”), SRBA #5, L.P.
(“SRBA”), Evergreen Partners US Direct Fund III, L.P. (“Fund III”), Evergreen Partners Direct Fund
III (Israel) L.P. (“Evergreen”) and Evergreen Partners Direct Fund III (Israel 1) L.P. (“Evergreen
1” and, together with SRBA, Fund III and Evergreen, the “Sellers”). Capitalized terms used in this
Agreement are referenced in the attached Exhibit A.

RECITALS

     A. Target owns all of the issued and outstanding capital stock of Breach Security LTD, an
Israel corporation (“BSI”), and Breach Security (UK) LTD, a United Kingdom corporation (“BSUK” and,
together with Target and BSI, individually a “Company” and, collectively, the “Companies”).

     B. The Companies are engaged in the business of providing its customers web application
integrity, security and Payment Card Industry (PCI) compliance products and services (as conducted
during the six months ending on the date hereof, the “Business”).

     C. The stockholders of Target listed on the attached Schedule A (individually a
“Stockholder” and collectively, the “Stockholders”), in the aggregate, own all of the issued and
outstanding capital stock of Target.

     D. The Sellers own, in the aggregate, over ninety-four percent (94%) of the issued and
outstanding capital stock of Target, on a fully-diluted basis, and one hundred percent (100%) of
the Target Preferred Stock, in each case as of the date hereof.

     E. The Boards of Directors of Target and Purchaser believe it is in the best interests of
their respective companies and the stockholders of their respective companies that Purchaser
acquire Target by the merger of Merger Sub with and into Target (the “Merger”), with Target being
the surviving corporation and a wholly-owned subsidiary of Purchaser in accordance with the
Delaware General Corporation Law (the “Delaware Law”), and that Target, Merger Sub, Purchaser and
Sellers enter into this Agreement and consummate the Merger and the other transactions contemplated
hereby on the terms and subject to the conditions provided for in this Agreement.

     F. Pursuant to the Merger, among other things, all of the issued and outstanding shares of
Target Preferred Stock shall be converted into shares of the Class A Voting Common Stock, $0.0001
par value, of Purchaser (the “Purchaser Common Stock”), as set forth herein.

     G. Target, Merger Sub, Purchaser and Sellers desire to make certain representations and
warranties and other agreements in connection with the Merger.

 

 

     NOW, THEREFORE, in consideration of the covenants and representations set forth herein, and
for other good and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:

ARTICLE I.

THE MERGER

     1.1. The Merger. At the Effective Time and subject to and upon the terms and
conditions of this Agreement, the Certificate of Merger attached hereto as Exhibit B (the
“Certificate of Merger”), and in accordance with the applicable provisions of the 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 Purchaser. Target as the surviving corporation after the Merger is hereinafter sometimes
referred to as the “Surviving Corporation.”

     1.2. 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 the
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 shall vest in
the Surviving Corporation, and all debts, liabilities and duties of Target shall become the debts,
liabilities and duties of the Surviving Corporation.

     1.3. Certificate of Incorporation; Bylaws.

     (a) At the Effective Time, Target shall amend its Certificate of Incorporation so as to
be in the form attached to the Certificate of Merger and, as so amended, such certificate of
incorporation shall be the certificate of incorporation of the Surviving Corporation until
thereafter amended as provided by Delaware Law and such certificate of incorporation.

     (b) At the Effective Time, the bylaws of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter
amended.

     1.4. Directors and Officers. The directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation, in each case until
their successors are elected or appointed and qualified or until their earlier resignation or
removal. The officers of Merger Sub immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation.

     1.5. Effect on Capital Stock. By virtue of the Merger and without any action on the
part of Purchaser, Merger Sub, Target, Sellers or the holders of any of the following securities:

     (a) Conversion of Target Preferred Stock. At the Effective Time, all of the
 shares of Target Preferred Stock issued and outstanding immediately prior to the Effective
Time will be canceled and extinguished and be converted automatically into the right to
receive, in the aggregate, the Base Number of shares of Purchaser Common Stock

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(the “Merger Payment”). The Merger Payment shall be allocated among Sellers such that
each Seller receives his, her or its Pro-Rata Percentage of the Merger Payment.

     (i) The “Base Number” shall be 247,288.

     (ii) The “Pro-Rata Percentage” for each Seller shall be the percentage set
forth to the right of such Seller’s name under the column labeled Pro-Rata
Percentage on the attached Schedule 1.5(a).

     (b) Cancellation of Target Common Stock. At the Effective Time, all shares of
Target Common Stock issued and outstanding immediately prior to the Effective Time,
including those owned by Target as treasury stock, shall be canceled and extinguished
without any conversion thereof and without payment of any consideration therefor. Promptly
following the Effective Time, Purchaser or the Surviving Corporation shall request that each
Stockholder deliver to Purchaser the certificate or certificates which immediately prior to
the Effective Time represented all of the outstanding shares of Target Common Stock owned by
such Stockholder, together in each case with a duly completed and validly executed stock
power, in the form attached hereto as Exhibit C (each, a “Stock Power”).

     (c) Target Stock Option Plan. Immediately after the Effective Time, all
options to purchase Target Capital Stock then outstanding under the Target Stock Option Plan
shall be cancelled in accordance with Section 1.11.

     (d) Target Warrants. At the Effective Time, all warrants to purchase Target
Capital Stock then outstanding shall be cancelled in accordance with Section 1.12.

     (e) Conversion of Merger Sub Common Stock. Each issued and outstanding share
of common stock, $0.0001 par value, of Merger Sub outstanding immediately prior to the
Effective Time shall be converted into and become one share of common stock of the Surviving
Corporation with the same rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving Corporation.

     (f) No Fractional Shares. Notwithstanding any other provision in this
Agreement to the contrary, no fraction of a share of Purchaser Common Stock will be issued
and all issuances of Purchaser Common Stock will be rounded down to the nearest whole number
of shares of Purchaser Common Stock.

     1.6. Exchange Procedures.

     (a) Surrender of Target Preferred Stock. No later than the Effective
Time, each Seller shall deliver to Purchaser a duly completed and validly executed
letter of transmittal, in the form attached hereto as Exhibit D (each, a
“Letter of Transmittal”), together with the certificate or certificates (the
“Preferred Certificates”) which immediately prior to the Effective Time represented
all of the outstanding shares of Target Preferred Stock owned by such Seller
(subject to Section 1.8) and a duly completed and validly executed Stock

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Power with respect to such shares. Until so surrendered, each outstanding
Preferred Certificate will be deemed from and after the Effective Time, for all
corporate purposes, to evidence the ownership of the number of full shares of
Purchaser Common Stock into which the shares of Target Preferred Stock evidenced
thereby shall have been so converted in accordance with Section 1.5.

     (b) Delivery of Merger Consideration. No later than ten (10) Business
Days after the receipt by Purchaser of the last item delivered pursuant to Item 1 on
Schedule 3.2, Purchaser shall deliver to each Seller, in exchange for the
Target Preferred Stock surrendered by such Seller, a certificate representing the
number of whole shares of Purchaser Common Stock equal to the Base Number multiplied
by the Pro-Rata Percentage for each such Seller.

     (c) Distributions With Respect to Unexchanged Target Preferred Stock.
No dividends or other distributions with respect to Purchaser Common Stock with a
record date after the Effective Time will be paid to the holder of any unsurrendered
Target Preferred Stock with respect to the shares of Purchaser Common Stock
represented thereby until the holder of record of such Target Preferred Stock shall
surrender such Target Preferred Stock. Subject to applicable Rules, following
surrender of any such Target Preferred Stock, there shall be paid to the record
holder of the certificates representing whole shares of Purchaser Common Stock
issued in exchange therefor, without interest, at the time of such surrender, the
amount of any such dividends or other distributions with a record date after the
Effective Time theretofore payable (but for the provisions of this Section 1.6(c))
with respect to such shares of Purchaser Common Stock.

     (d) Transfers of Ownership. If any certificate for shares of Purchaser
Common Stock is to be issued in a name other than that in which the Preferred
Certificate(s) surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that the Preferred Certificate(s) so surrendered
will be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Purchaser or any agent designated
by it any transfer or other Taxes required by reason of the issuance of a
certificate for shares of Purchaser Common Stock in any name other than that of the
registered holder of the Preferred Certificate(s) surrendered, or established to the
reasonable satisfaction of Purchaser or any agent designated by it that such Tax has
been paid or is not payable.

     (e) No Liability. Notwithstanding anything to the contrary in this
Section 1.6, none of the Surviving Corporation, Purchaser or any party hereto shall
be liable to any person for any amount properly paid to a Governmental Authority
pursuant to any applicable abandoned property, escheat or similar Rule.

     1.7. No Further Ownership Rights in Target Preferred Stock. All shares of Purchaser
Common Stock issued upon the surrender for exchange of Target Preferred Stock in accordance with
the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining
to such Target Preferred Stock, and there shall be no further registration of transfers

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on the records of the Surviving Corporation of Target Preferred Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, shares of Target Preferred
Stock are presented to the Surviving Corporation for any reason, they shall be canceled and
exchanged as provided in this Article I.

     1.8. Lost, Stolen or Destroyed Preferred Certificates. In the event any Preferred
Certificate shall have been lost, stolen or destroyed, Purchaser shall issue in exchange for such
lost, stolen or destroyed Preferred Certificate, upon the making of an affidavit of that fact by
the holder thereof, such shares of Purchaser Common Stock as may be required pursuant to Section
1.5; provided, however, that Purchaser may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed Preferred Certificate to
deliver to Purchaser a lost certificate affidavit, in form and substance reasonably satisfactory to
Purchaser, which includes an indemnity against any Claim that may be made against Purchaser or the
Surviving Corporation with respect to the Preferred Certificate alleged to have been lost, stolen
or destroyed.

     1.9. Tax Consequences. It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The parties hereto
hereby adopt this Agreement as a “plan of reorganization” within the meaning of Section 1.368-2(g)
and 1.368-3(a) of the Treasury Regulations.

     1.10. Withholding Rights. Purchaser shall be entitled to deduct and withhold from the
number of shares of Purchaser Common Stock otherwise deliverable under this Agreement, such amounts
as Purchaser is required to deduct and withhold with respect to such delivery and payment under the
Code or any provision of state, local, provincial or foreign Tax Rule. To the extent that amounts
are so withheld, such withheld amounts shall be treated for all purposes of this Agreement as
having been delivered and paid to each Seller in respect of which such deduction and withholding
was made by Purchaser. To the extent Purchaser determines that withholding would otherwise be
required with respect to certain amounts of the number of shares of Purchaser Common Stock,
Purchaser shall provide reasonable advance notification to Sellers of such potential withholding
and Sellers shall use reasonable efforts to provide Purchaser with withholding certificates or
other required certifications that would permit such withholding to be reduced or eliminated.

     1.11. Target Stock Options. Immediately after the Effective Time, each outstanding
option to purchase shares of Target Common Stock under the Target Stock Option Plan, whether vested
or unvested, will be cancelled. At or prior to the Closing, Target shall take all actions required
to cancel each outstanding option to purchase shares of Target Capital Stock under the Target Stock
Option Plan effective immediately after the Effective Time. Within the later of (a) 60 calendar
days after the Effective Time, and (b) 10 calendar days after Purchaser’s Board of Directors adopts
an independent, third party valuation of Purchaser Common Stock as of the Closing Date, but in any
event as soon as reasonably practicable, Purchaser will issue options to purchase Purchaser Common
Stock under the Purchaser Stock Option Plan to those of the Covered Employees and the Israeli
Employees, on such terms, as is set forth on the attached Schedule 1.11. At or prior to
the Effective Time, Purchaser shall take all corporate action necessary to reserve for future
issuance, and shall maintain such reservation for so long as 

any of

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the issued options remain outstanding, a sufficient number of shares of Purchaser Common Stock
for delivery upon the exercise of such options.

     1.12. Target Warrants. At the Effective Time, each outstanding warrant to purchase
shares of Target Capital Stock, whether vested or unvested, will be cancelled. At or prior to the
Closing, Target shall take all actions required to cancel each outstanding warrant to purchase
shares of Target Capital Stock effective prior to the closing of the Merger or the transactions
contemplated hereby.

     1.13. Dissenting Shares. Notwithstanding anything to the contrary herein, shares of
Target Capital Stock issued and outstanding immediately prior to the Effective Time and held by a
Stockholder who is entitled to and has properly exercised and perfected appraisal rights pursuant
to Section 262 of the Delaware Law (collectively, the “Dissenting Shares”) shall not be converted
as of the Effective Time into the right to receive any of the Merger Consideration, if applicable,
but instead shall have such rights as may be available under the Delaware Law. At the Effective
Time, all Dissenting Shares shall no longer be outstanding and shall be cancelled and each holder
of Dissenting Shares shall cease to have any rights with respect thereto, except the right to
receive the fair value of such Dissenting Shares in accordance with Section 262 of the Delaware
Law; provided, however, that if any such Stockholder shall have failed to perfect
or shall effectively withdraw or lose its right to appraisal and payment under the Delaware Law, or
a court of competent jurisdiction shall determine that such holder is not entitled to the relief
provided by Section 262, such Stockholder’s shares of Target Capital Stock shall thereupon be
deemed to have been converted as of the Effective Time into the right to receive the applicable
portion of the Merger Consideration pursuant to Section 1.5, if any, and such shares of Target
Capital Stock shall no longer be Dissenting Shares. Target shall give Purchaser prompt notice
identifying those Stockholders who did not vote in favor of the Merger or consent thereto in
writing. Promptly following Stockholder approval of the Merger, Purchaser shall prepare and
deliver to the Stockholders all written notices required to be delivered in accordance with
Sections 228, 251 and 262 of the Delaware Law, in forms reasonably acceptable to the Agent. Prior
to the Effective Time, (i) Target shall have the right to control the negotiations, proceedings and
any settlement of any such demands, (ii) Target shall give Purchaser prompt notice of any demands
received by Target for appraisal of shares of Target Capital Stock and (iii) Purchaser shall have
the right to participate in all negotiations, proceedings and settlements with respect to such
demands. On and after the Effective Time, (a) Purchaser shall give the Agent prompt notice of any
demands for appraisal received by the Surviving Corporation, (b) so long as (I) the Agent can
demonstrate that it has sufficient amounts which may be used in connection with such demand for
appraisal to (A) defend such demand for appraisal, and (B) defend all other demands for appraisal
then pending which the Agent is defending pursuant to this Section 1.13 and defend all Third Party
Claims then pending which the Agent is defending pursuant to Section 8.8, and (II) the Agent has
acknowledged in writing to Purchaser the Sellers’ unconditional obligation to indemnify Purchaser
for such demand for appraisal, subject to the limitations set forth in Article VIII, the Agent
shall have the right to control the negotiations, proceedings and any settlement of any such
demands for appraisal; provided that the Agent shall not settle or compromise any such demand for
appraisal without the prior written consent of Purchaser if pursuant to or as a result of such
settlement, such settlement would lead to Liability or create any financial or other obligation on
the part of any Purchaser Protected Party for which such Purchaser Protected Party is not entitled
to be indemnified pursuant to Section 8.3 and (c)

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Purchaser shall have the right (for purposes of clarification, at Purchaser’s expense) to
participate in all negotiations, proceedings and settlements with respect to such demands.

     1.14. Taking of Necessary Action; Further Action. If, at any time after the Effective
Time, any further action is necessary or desirable to carry out the purposes of this Agreement and
to vest the Surviving Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Target, the officers and directors of Target and
Purchaser are fully authorized in the name of their respective corporations or otherwise to take,
and will take, all such lawful and necessary action (at the sole cost and expense of Purchaser
except to the extent that such action is required as a result of a breach of a representation and
warranty or covenant of a Seller or, prior to the Closing, any Company, which for purposes of
clarity shall be handled pursuant to the provisions of Article VIII hereof), so long as such action
is not inconsistent with this Agreement.

     1.15. The Agent.

     (a) For purposes of this Agreement and all actions and decisions to be made by the
Agent pursuant to this Agreement, SRBA (the “Agent”), shall be the representative and agent
of Sellers to act on their behalf, and Purchaser and its Affiliates shall be entitled to
rely exclusively on the acts and omissions of the Agent with respect to actions to be taken
by, or inferences from omissions of, any Seller. Sellers may (or if SRBA should at any time
choose not to serve, or be unable to serve, as the Agent, shall), at any time and from time
to time, by written notice delivered to Purchaser executed by Sellers who held Target Series
B Preferred Stock representing, in the aggregate, at least a majority of the Total
Consideration Pro-Rata Percentages immediately prior to the Closing, appoint a replacement
Agent; provided, however, that such new person shall not be deemed the Agent for purposes of
this Agreement until Purchaser has received such written notice. The Agent shall act at the
direction of Sellers who held Target Series B Preferred Stock representing, in the
aggregate, at least a majority of the Total Consideration Pro-Rata Percentages held by all
of the Sellers who held Target Series B Preferred Stock immediately prior to the Closing.

     (b) Sellers hereby irrevocably nominate, constitute and appoint SRBA as the agent and
true and lawful attorney-in-fact of Sellers, with full power of substitution and authority
to execute, deliver, acknowledge, certify, file and record on behalf of Sellers and Target
(in the name of any or all of the Stockholders, Sellers or otherwise) any and all documents
that the Agent may, in its sole discretion, determine to be appropriate, in such forms and
containing such provisions as the Agent may, in its sole discretion, determine to be
appropriate (including any amendment to or waiver of rights under this Agreement or any
agreement or document contemplated herein or therein). Sellers recognize and intend that
the power of attorney granted in Section 1.15(a): (i) is coupled with an interest and is
irrevocable; (ii) may be delegated by the Agent; and (iii) shall survive any dissolution of
any Seller.

     (c) The Agent shall not be responsible for, and the Sellers shall indemnify the Agent
(in proportion to their respective Total Consideration Pro-Rata Percentages) against, any
loss suffered by, or Liability of any kind to, Sellers arising out of any act

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done or omitted by the Agent in connection with the acceptance or administration of the
Agent’s duties hereunder, unless such act or omission involves gross negligence or willful
misconduct. All reasonable expenses incurred by the Agent in connection with the
performance of its duties as the Agent shall be borne and paid by Sellers (in proportion to
their respective Total Consideration Pro-Rata Percentages) and the Agent shall be
indemnified by the Sellers (in proportion to their respective Total Consideration Pro-Rata
Percentages) against any such expenses.

     1.16. Transfer Restrictions. In addition to any restrictions contained in the
Purchaser Stockholder Agreement, without the prior written consent of Purchaser:

     (a) during the period commencing on the Closing Date and ending on the first to occur
of (i) the eighteen (18) month anniversary of the Closing Date, (ii) the six (6) month
anniversary of the consummation of a Purchaser Capital Transaction, and (iii) the six (6)
month anniversary of the consummation of a Change of Control, no Seller may sell, assign,
transfer, pledge, hypothecate or otherwise dispose of (a “Transfer”), by operation of law or
otherwise, to any Person the shares of Purchaser Common Stock owned or held by such Seller;
provided that the prohibitions contained in this Section 1.16(a) shall not apply to (1)
Permitted Transfers, so long as the transferee assumes all of the obligations of the
transferring Seller pursuant to this Agreement, including the obligations pursuant to
Article VIII and this Section 1.16, and (2) any shares of Purchaser Common Stock owned or
held by such Seller so long as immediately following such transfer Seller retains its Total
Consideration Pro-Rata Percentage of $5,000,000 in Purchaser Common Stock (valued as of the
Closing Date as determined by the valuation contemplated by Section 1.11); and

     (b) during the period commencing on the Closing Date and ending on the consummation of
a Purchaser Capital Transaction, no Seller may Transfer, by operation of law or otherwise,
to any Person any of the shares of Purchaser Common Stock owned or held by such Seller if,
as a result of such Transfer, the shares of Purchaser Common Stock which constitute the
Merger Consideration are held of record by more than fifteen (15) Persons in the aggregate;
provided, however that, as among the Sellers, the restriction contained in this Section
1.16(b) shall prohibit a Seller from making a Transfer of shares of Purchaser Common Stock
to any Person if, as a result of such Transfer, the shares of Purchaser Common Stock which
constitute the Merger Consideration are held of record by more than such Seller’s Total
Consideration Pro-Rata Percentage of fifteen (15) Persons in the aggregate, as set forth on
Schedule 1.16. Purchaser shall respond in a reasonably prompt manner to any request
by any Seller to confirm the then number of record holders of the shares of Purchaser Common
Stock which constitute the Merger Consideration. Prior to any Seller requesting any
Transfers of Purchaser Common Stock made in compliance with this Section 1.16, such Seller
shall provide the Agent with written notice of such intended Transfer.

     1.17. Put Right.

     (a) Purchaser hereby grants to each Seller the following option to sell all or any
portion of such Seller’s Stockholder Securities, free and clear of all Liens, to

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Purchaser (the “Put Option”), on the terms and conditions set forth herein.
“Stockholder Securities” means, with respect to each Seller, the shares of Purchaser Common
Stock acquired by such Seller as part of the Merger Consideration (including any other
securities of Purchaser into which such Purchaser Common Stock is converted or for which it
is otherwise exchanged). Such securities shall continue to be Stockholder Securities in the
hands of any holder, and except as otherwise provided herein, each such other holder of
Stockholder Securities shall succeed to all rights and obligations attributable to the
transferring Seller as a holder of Stockholder Securities hereunder. The Put Option shall
terminate upon the consummation of a Purchaser Capital Transaction.

     (b) The Put Option shall be exercised by the holder or holders of the Stockholder
Securities by providing written notice to Purchaser (each such notice, an “Exercise
Notice”), at any time during the ninety (90) day period commencing on the third anniversary
of the Closing Date. Each Exercise Notice shall include the number of shares of Stockholder
Securities as to which each such holder is exercising the Put Option.

     (c) The purchase price for each share of Stockholder Securities as to which the Put
Option is exercised (the “Option Price”) shall be equal to $1.00 (as adjusted for any stock
splits, stock dividends, recapitalizations or the like, with respect to such Purchaser
Common Stock) plus interest on such amount at a rate equal to 8% per annum, compounded
annually, from the Closing Date through the Option Closing.

     (d) The closing with respect to the exercise of the Put Option (the “Option Closing”)
shall take place at the offices of Purchaser, on the 20th day following the delivery of the
applicable Exercise Notice (unless otherwise mutually agreed upon by such holder or holders
and Purchaser) in accordance with the terms hereof. At the Option Closing, the holder of
each share of Stockholder Securities as to which the Put Option has been exercised shall
deliver to Purchaser or its designees stock certificates representing the Stockholder
Securities being purchased (or a lost certificate affidavit reasonably acceptable to
Purchaser), free and clear of all Liens (other than Liens set forth in Purchaser’s
certificate of incorporation, bylaws or the Purchaser Investor Rights Agreement or Purchaser
Stockholder Agreement, each as then in effect) and duly endorsed in blank for transfer or
accompanied by appropriate stock powers duly executed in blank, with all taxes, direct or
indirect if any, attributable to the transfer of the Stockholder Securities paid or provided
for by such holder.

     (e) Notwithstanding anything to the contrary contained in this Section 1.17, all
repurchases of Stockholder Securities by Purchaser pursuant to the Put Option shall be
subject to applicable restrictions contained in the Delaware Law. Notwithstanding anything
to the contrary contained in this Section 1.17, Sellers hereby further agree for the benefit
of the holders of any Indebtedness for Borrowed Funds incurred by Purchaser (each such
holder being hereinafter referred to as a “Lender”) that all repurchases of Stockholder
Securities by Purchaser pursuant to the Put Option shall be subject to applicable
restrictions contained in the Delaware Law and any debt financing agreements entered into
between Purchaser and any Lender. If any such restrictions prohibit the

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repurchase of Stockholder Securities pursuant to the Put Option which Purchaser is
otherwise required to make, Purchaser shall make such repurchases or payments as soon as it
is permitted to do so under such restrictions (such time from the date of the Exercise
Notice to the date that Purchaser is so permitted to purchase the Stockholder Securities
shall be deemed the “Default Period”); provided, however, if Purchaser is so prohibited by
such restrictions from complying with its obligations under this Section 1.17 at the time of
the exercise of the Put Option, then the Option Price for any Stockholder Securities which
were not able to be purchased by Purchaser because of such restrictions shall be equal to
$1.00 (as adjusted for any stock splits, stock dividends, recapitalizations or the like,
with respect to such Purchaser Common Stock) plus interest on such amount at a rate equal to
8% per annum, compounded annually, from the Closing Date through the date of the Option
Closing; provided, however, the interest payable during the Default Period shall be twelve
percent (12%) per annum, compounded annually.

     1.18. Repayment of Debt. As additional consideration for the Merger, Purchaser shall,
immediately prior to the Effective Time, issue to each of the Sellers the number of shares of
Purchaser Common Stock set forth next to each such creditor’s name on Schedule 1.18
(collectively, the “Debt Repayment Shares” and, together with the Merger Payment, the “Merger
Consideration”), in each case as payment in full in of the obligations of Target pursuant to the
Convertible Promissory Notes.

ARTICLE II.

CLOSING NET ASSET POSITION.

     2.1. Closing Net Asset Position Reconciliation. No later than three (3) Business Days
prior to the Closing, Target will deliver to Purchaser a preliminary balance sheet, reflecting
Target’s good faith estimate of the Closing Net Asset Position of the Companies, on a consolidated
basis, as of the Closing Date (“Preliminary Balance Sheet”). On the date (the “True-Up Date”)
which is the fifteenth day following the date on which Purchaser and the Agent have either agreed
to the Closing Net Asset Position or completed the dispute resolution procedure described in
Section 2.2 below, (a) if the Closing Net Asset Position is less than $9,982,078, then each Seller
shall be obligated to deliver to Purchaser an amount of cash equal to such Seller’s Total
Consideration Pro-Rata Percentage of such deficit, and (b) if the Closing Net Asset Position is
more than $9,982,078, then Purchaser shall deliver to each Seller an amount of cash equal to such
Seller’s Total Consideration Pro-Rata Percentage of such excess.

     2.2. Closing Date Balance Sheet.

     (a) As soon as reasonably practical after the Closing (but in any event no later than
120 calendar days after the Closing), Purchaser, at its cost and expense, shall prepare and
close the financial books and records of the Companies as of the close of business, Chicago
time, on the Closing Date, and, based on such books and records, shall prepare and deliver,
or cause to be prepared and delivered, to the Agent, a balance sheet, dated as of the
effective date of the Closing (the “Closing Date Balance Sheet”). The Closing Date Balance
Sheet shall be prepared in accordance with United States generally accepted accounting
principles (“GAAP”), consistently applied in accordance with past practices of the Companies
(except for the absence of footnotes), and shall present fairly

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the financial condition of the Companies, on a consolidated basis, as of the close of
business, Chicago time, on the Closing Date, except that the Closing Date Balance Sheet
shall be prepared in accordance with the principles set forth on the attached Schedule
2.2(a).

     (b) Purchaser shall deliver to the Agent the Closing Date Balance Sheet and include
therein Purchaser’s calculation of the Closing Net Asset Position. If the Agent objects to
the Closing Date Balance Sheet, including the Closing Net Asset Position calculation,
provided to it by Purchaser, then within 30 calendar days of its receipt of the Closing Date
Balance Sheet, the Agent shall give written notice in reasonable detail (the “Notice”) of
its objections to Purchaser. During such 30-day period, Purchaser and Purchaser’s
accountants shall give the Agent and its accountants access, upon reasonable notice and
during normal business hours, to all books, records and work papers of the Companies,
Purchaser and its accountants related to the preparation of the Closing Date Balance Sheet
and calculation of the Closing Net Asset Position. If Purchaser has not received the Notice
within such 30-day period, Sellers shall be deemed to have no objection to the Closing Date
Balance Sheet and the Closing Date Balance Sheet shall become final and binding on the
parties hereto for all purposes of this Agreement. The parties shall negotiate in good
faith to resolve any disputes as promptly as practicable. If the parties are unable to
resolve all disputes within twenty calendar days of receipt by Purchaser of the Notice, then
only the unresolved disputes shall be submitted to the Chicago office of Grant Thornton, LLP
or, if that firm declines such engagement or if Purchaser, Target, Sellers or the Agent has
(or, within the past two years, had) any material engagement with Grant Thornton, LLP,
another independent certified public accounting firm mutually agreed to by the parties, in
each case utilizing partners that have not represented and have no relationship with either
party (the “Independent Accountant”). The parties shall be entitled to provide the
Independent Accountant with supporting documentation in connection with resolution of such
disputes. The Independent Accountant shall, within 30 calendar days of its engagement,
provide a final and conclusive resolution of all unresolved disputes and shall conform the
Closing Date Balance Sheet, including the Closing Net Asset Position, accordingly. All
references in this Agreement to the Closing Date Balance Sheet shall mean the Closing Date
Balance Sheet as modified pursuant to this resolution procedure, and the resolution of the
Independent Accountant shall be binding on the parties hereto, except that the foregoing
shall not limit or prohibit a party from asserting a Claim and obtaining relief on account
of any breach of a representation, warranty or covenant contained in this Agreement. If the
Closing Net Asset Position determined by the Independent Accountant exceeds the Closing Net
Asset Position set forth on the Closing Date Balance Sheet delivered to Agent by Purchaser
by more than fifteen percent (15%), then the fees and expenses of the Independent Accountant
shall be borne by Purchaser, and if the Closing Net Asset Position determined by the
Independent Accountant does not exceed the Closing Net Asset Position set forth on the
Closing Date Balance Sheet delivered to Agent by Purchaser by more than fifteen percent
(15%), then the fees and expenses of the Independent Accountant shall be borne by Sellers
(based on each Seller’s Total Consideration Pro-Rata Percentage of such fees and expenses).

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     2.3. Closing Net Asset Position. As used herein, the term “Closing Net Asset
Position” shall mean the amount by which the current assets of the Companies exceed the total
liabilities of the Companies (excluding deferred revenues), in each case on a consolidated basis as
reflected on the Closing Date Balance Sheet.

ARTICLE III.

CLOSING.

     3.1. Closing; Effective Time. The closing of the transactions contemplated hereby
(the “Closing”) shall take place by electronic exchange of executed documents, with Target’s and
Sellers’ documents being transmitted from Cooley LLP in San Diego, California, and Purchaser’s and
Merger Sub’s documents being transmitted from Kaye Scholer LLP in Chicago, Illinois, at 12:00 noon
(CST), on the date hereof, or such other time or date agreed upon by the parties (the “Closing
Date”). In connection with the Closing, the parties hereto shall cause the Merger to be
consummated by filing the Certificate of Merger with the Secretary of State of the State of
Delaware, in accordance with the relevant provisions of Delaware Law (the time of such filing being
the “Effective Time”).

     3.2. Target’s Deliveries. Subject to the conditions set forth in this Agreement, at
the Closing, simultaneous with Purchaser’s deliveries hereunder, Target shall deliver to Purchaser
the documents, certificates and instruments listed in Schedule 3.2, all in form and
substance reasonably satisfactory to Purchaser and its counsel.

     3.3. Purchaser’s and Merger Sub’s Deliveries. Subject to the conditions set forth in
this Agreement, at the Closing, simultaneous with Target’s deliveries hereunder, Purchaser and
Merger Sub shall deliver to the Agent the documents, certificates and instruments listed in
Schedule 3.3, all in form and substance reasonably satisfactory to Target and its counsel.

ARTICLE IV.

REPRESENTATIONS AND WARRANTIES OF TARGET.

     Target represents and warrants to Purchaser and Merger Sub as follows as of the Effective
Time. The following representations and warranties are qualified by the exceptions set forth in
the Schedules to this Article IV only to the extent an exception expressly refers to the specific
representations and warranties which it qualifies or to the extent it is reasonably apparent by
reading such exception the other specific representations and warranties which it qualifies,
regardless of whether or not such exception contains an express cross-reference to any such other
representations and warranties. The inclusion of any item in the Schedules does not constitute an
admission of liability with respect to any Claims or an admission that any breach, violation,
default or event of default exists with respect to any Contract.

     4.1. Organization of the Companies; Capitalization.

     (a) Target is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, with all requisite corporate power and authority to own,
operate and lease its properties and assets, to carry on the Business and to execute this
Agreement and to perform the transactions contemplated herein. Target has qualified as a
foreign corporation and is in good standing under the laws of all

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jurisdictions where the nature of the Business or the nature and location of its assets
requires such qualification except where the absence of such qualification would not have a
material adverse effect on the business, financial condition or operations of Target, all as
set forth in Schedule 4.1(a). Except for BSI and BSUK, Target does not have any
subsidiary or any other equity interest or investment in any Person.

     (b) BSI is a corporation duly organized and validly existing under the laws of the
State of Israel, with all requisite corporate power and authority to own, operate and lease
its properties and assets and to carry on its business as is currently conducted. Neither
the nature of the Business nor the nature and location of its assets requires BSI to qualify
as a foreign corporation under the laws of any jurisdictions other than those where the
absence of such qualification would not have a material adverse effect on the business,
financial condition or operations of BSI. BSI does not have any subsidiary or any other
equity interest or investment in any Person. The authorized capital stock of BSI consists
of 100,000 shares of Ordinary Shares, NIS1.00 par value, of which there are 100 shares
issued and outstanding. Target is the record and beneficial owner and holder of all of the
issued and outstanding capital stock of BSI, free and clear of all Liens, there are no other
outstanding shares of capital stock or voting securities, and no outstanding commitments to
issue any shares of capital stock or voting securities, of BSI and there are no other
options, warrants, calls, rights, commitments or agreements of any character to which any
Company is a party or by which any Company is bound obligating any Company to, after the
date hereof, issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered,
sold, repurchased or redeemed, any shares of capital stock of BSI or obligating BSI to
grant, extend, accelerate the vesting and/or repurchase rights of, change the price of, or
otherwise amend or enter into any such option, warrant, call, right, commitment or
agreement.

     (c) BSUK is a corporation duly organized, validly existing and in good standing under
the laws of England and Wales, with all requisite corporate power and authority to own,
operate and lease its properties and assets and to carry on its business as is currently
conducted. Neither the nature of the Business nor the nature and location of its assets
requires BSUK to qualify as a foreign corporation under the laws of any jurisdictions other
than those where the absence of such qualification would not have a material adverse effect
on the business, financial condition or operations of BSUK. BSUK does not have any
subsidiary or any other equity interest or investment in any Person. The authorized capital
stock of BSUK consists of 100 Ordinary Shares, £1 par value, of which there are 100 Ordinary
Shares issued and outstanding. Target is the record and beneficial owner and holder of all
of the issued and outstanding capital stock of BSUK, free and clear of all Liens, there are
no other outstanding shares of capital stock or voting securities, and no outstanding
commitments to issue any shares of capital stock or voting securities, of BSUK and there are
no other options, warrants, calls, rights, commitments or agreements of any character to
which any Company is a party or by which any Company is bound obligating any Company to,
after the date hereof, issue, deliver, sell, repurchase or redeem, or cause to be issued,
delivered, sold, repurchased or redeemed, any shares of capital stock of BSUK or obligating
BSUK to grant, extend, accelerate the vesting and/or repurchase rights of, change the price
of, or otherwise amend or enter into any such option, warrant, call, right, commitment or
agreement.

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     (d) The authorized capital stock of Target consists of (i) 66,450,000 shares of Target
Common Stock, of which there are 2,717,467 shares issued and outstanding, (ii) 9,714,594
shares of Target Series A Preferred Stock, of which there are 9,687,094 shares issued and
outstanding, and (iii) 38,558,333 shares of Target Series B Preferred Stock, of which there
are 38,125,000 shares issued and outstanding. The Stockholders are the record and
beneficial owners and holders of the Target Common Stock and the Target Preferred Stock, in
the amounts shown on Schedule A, free and clear of all Liens.

     (e) Except as listed on Schedule A, there are no outstanding shares of capital
stock or voting securities, and no outstanding commitments to issue any shares of capital
stock or voting securities, in each case of Target other than (i) pursuant to the exercise
of options outstanding under the 2004 Stock Option and Incentive Plan and the 2004 Israeli
Stock Option Plan (collectively, the “Target Stock Option Plan”), (ii) pursuant to the
Warrants, or (iii) pursuant to the Convertible Promissory Notes. Except for the rights
created pursuant to this Agreement, the Target Stock Option Plan, the Warrants and the
Convertible Promissory Notes, Target’s rights to repurchase any unvested shares under the
Target Stock Option Plan or the stock option agreements thereunder and as set forth in
Schedule 4.1(e), 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, after the date hereof, issue, deliver, sell, repurchase or redeem, or cause to be
issued, delivered, sold, repurchased or redeemed, any shares of capital stock of Target or
obligating Target to grant, extend, accelerate the vesting and/or repurchase rights of,
change the price of, or otherwise amend or enter into any such option, warrant, call, right,
commitment or agreement. At or prior to the Effective Time, all outstanding, unexercised
options and all of the Warrants will have been cancelled or otherwise terminated.

     (f) Schedule 4.1(f) hereto sets forth a true and complete list of all holders
of outstanding options under the Target Stock Option Plan, including the number of shares of
Target Common Stock subject to each such option, the exercise or vesting schedule, the
exercise price per share and the term of each such option. No shares of Target Preferred
Stock have been issued pursuant to, or are subject to any outstanding options under, the
Target Stock Option Plan. As of the date hereof, (i) Target has reserved 13,057,204 shares
of Target Common Stock for issuance to employees, consultants and directors pursuant to the
Target Stock Option Plan, of which 1,487,178 shares of Target Common Stock have been issued
pursuant to option exercises and 5,612,908 shares of Target Common Stock are subject to
outstanding, unexercised options.

     (g) Schedule 4.1(g) contains a list of all persons whom Target reasonably
believes are, with respect to the Target and as of the date of this Agreement, “disqualified
individuals” (within the meaning of Section 280G of the Code and the regulations promulgated
thereunder).

     (h) Schedule 4.1(h) sets forth a true and complete list of all outstanding
warrants to purchase any Target Capital Stock (collectively, the “Warrants”), including the
holders thereof, number of shares of Target Capital Stock subject to each such warrant, the
exercise price per share and the term of each such warrant.

- 14 -

 

     (i) Except as set forth in Schedule 4.1(i), all outstanding shares of Target
Capital Stock are, or will be, duly authorized, validly issued, fully paid and
non-assessable and are not subject to preemptive rights or rights of first refusal created
by statute, the Organizational Documents of Target or any agreement to which Target is a
party or by which it is bound.

     (j) Except as set forth in Schedule 4.1(j), there are no contracts, commitments
or agreements relating to voting, purchase or sale of Target’s capital stock between or
among Target and any of its stockholders and, to the best of Target’s knowledge, between or
among any of Target’s stockholders, in any such case which will be in effect after the
Effective Time. The shares of Target Common Stock issued under the Target Stock Option
Plan, as amended and under all prior versions thereof, have either been registered under the
Securities Act or were issued in transactions which qualified for exemptions under, either
Section 4(2) of, or Rule 701 under, the Securities Act for stock issuances under
compensatory benefit plans. At or prior to the Effective Time, the Stockholders’ Agreement
and the Investors’ Rights Agreement (as those terms are defined in Items 1 and 2 on
Schedule 4.1(i)) will have been cancelled or otherwise terminated.

     4.2. Authority Relative to Agreement. Target has the corporate power and authority to
enter into this Agreement and to carry out its obligations hereunder. The execution and delivery
of this Agreement and the performance by Target of its obligations hereunder have been duly
authorized by its Board of Directors, and no other proceedings on the part of Target are necessary
to authorize such execution, delivery and performance other than the approval and adoption of this
Agreement and approval of the Merger by the Stockholders. This Agreement has been duly executed by
Target and constitutes the valid and legally binding obligation of Target enforceable against
Target in accordance with its terms, except as enforceability may be limited by bankruptcy and
other similar laws and general principles of equity.

     4.3. Absence of Conflicts. Except as set forth in Schedule 4.3, the execution
and delivery of this Agreement, the performance by Target of its obligations hereunder and the
consummation of the transactions contemplated hereby do not and will not (a) violate, or constitute
a breach or default under, any provisions of any Company’s Organizational Documents, (b) require
the consent of any third party (including any Governmental Authority), (c) result in the creation
or imposition of any Lien upon the Target Capital Stock or any of the Company Assets, (d) violate
any Rule or Judgment to which any Company or any of the Company Assets may be subject, or (e)
result in the breach of any of the terms or conditions of, or constitute a default under, or in any
manner release any party thereto from any obligation under, any material mortgage, note, bond,
indenture, contract, agreement, license or other instrument or obligation of any kind or nature by
which any Company or any of the Company Assets may be bound or affected.

     4.4. Books and Records. The Companies’ books and records, customer lists and records,
vendor lists and records, Tax Returns and other Tax records, wherever located (collectively, the
“Designated Books and Records”), are accurate and complete (to the extent not otherwise destroyed
in compliance with the Companies’ policies or applicable Rules) and have been maintained in the
Companies’ usual, regular and ordinary manner and all transactions of the Companies are properly
reflected therein. The Companies’ customer files, vendor files, cost files

- 15 -

 

and records, credit information, distribution records, business records and plans, studies,
surveys, reports, material correspondence, form sales and promotional literature and materials,
form advertising and advertising copy, and other similar materials, microfilm, microfiche, computer
and other records, and all computer software, and all similar data, documents and items, wherever
located (collectively, the “Other Books and Records” and, together with the Designated Books and
Records, the “Books and Records”), have been maintained in the Companies’ usual, regular and
ordinary manner, consistent with past practices. The minute books of the Companies contain
accurate and complete records of all material actions taken by the stockholders, board of directors
and committees of the board of directors of each Company. Except as set forth in Schedule
4.4, all Designated Books and Records are located at the Leased Real Property.

     4.5. Financial Statements. Except as set forth in Schedule 4.5, Target has
delivered to Purchaser accurate and complete (i) copies of the audited consolidated and
consolidating balance sheets of the Companies as of the last day of each of the two fiscal years of
the Companies for the periods ended December 31, 2008 and 2007, respectively, together with the
related consolidated and consolidating statements of income, stockholders’ equity and changes in
cash flow for such fiscal years, and the notes thereto, in each case accompanied by the unqualified
opinion thereon of Target’s independent public accountants (“Historical Statements”), and (ii)
copies of the unaudited consolidated and consolidating balance sheets of the Companies as of
December 31, 2009 and March 31, 2010 (the balance sheet of the Companies as of March 31, 2010 being
referred to as the “Balance Sheet”), together with the related unaudited consolidated and
consolidating statements of income, stockholders’ equity and changes in cash flow for the 12-month
or 3-month period, as applicable, ended on such dates (“Interim Statements” and, together with the
Historical Statements, the “Financial Statements”). Except as set forth in Schedule 4.5,
the Financial Statements, including the notes to the Historical Statements, (a) were prepared in
accordance with GAAP (except, in the case of the Interim Statements, for immaterial year-end and
audit adjustments and the absence of notes thereto), (b) present fairly the consolidated and
consolidating financial position, results of operations and changes in cash flows of the Companies
as of such dates and for the periods then ended, and (c) can be reconciled with the financial
statements and the financial records maintained and the accounting methods applied by the Companies
for United States federal income Tax purposes.

     4.6. Accounts Receivable. All outstanding accounts receivable and other receivables,
billed and unbilled, and all negotiable instruments or other instruments and chattel paper, as are
payable to the Companies as of the Closing Date (collectively the “Accounts Receivable”), (a) have
arisen in bona fide transactions, (b) are valid claims against account debtors for goods or
services delivered or rendered, subject to no defenses, offsets or counterclaims, except for the
reserves related thereto reflected on the Balance Sheet in accordance with GAAP (the “Reserves”),
and (c) subject to the Reserves, are collectible and will be collected in the ordinary course. All
Accounts Receivables arose in the ordinary course of business and none of the obligors of such
receivables have refused or given written or, to Target’s knowledge, oral notice that they refuse
to pay the full amount thereof. No receivables are subject to prior assignment, claim or other
Lien (other than Permitted Liens). No Company has any Liability for any refunds, allowances,
returns or discounts in respect of products or services manufactured, processed, distributed,
shipped, rendered, provided or sold by it or for its account, in each case except to the extent of
the Reserves. Where receivables arose out of secured transactions, all financing statements and
other instruments required to be filed or recorded to perfect the title or security

- 16 -

 

interest of the applicable Company have been properly filed and recorded. After the Closing
Date, neither the Surviving Corporation, BSI nor BSUK will have any obligation (whether in
bankruptcy or insolvency proceedings or otherwise) to repay any receivables collected by any
Company prior to the Closing Date or, to Target’s knowledge, any receivables reflected on the
Closing Date Balance Sheet which the Surviving Corporation, BSI or BSUK collects after the Closing
Date.

     4.7. Intentionally Omitted.

     4.8. Absence of Certain Changes or Events. Since the Measuring Date, there has not
been, nor does Target have reason to know of, any Material Adverse Effect on any Company. Except
as set forth on Schedule 4.8 hereto or as expressly contemplated by this Agreement, since
the Measuring Date, each Company has operated the Business only in the ordinary course and has not:

     (a) redeemed or repurchased, directly or indirectly, any shares of capital stock or
other equity security or declared, set aside or paid any dividends or made any other
distributions (whether in cash or in kind) with respect to any shares of its capital stock
or other equity security;

     (b) issued, granted, sold or transferred any equity securities, any securities
convertible, exchangeable or exercisable into shares of its capital stock or other equity
securities, or warrants, options or other rights to acquire shares of its capital stock or
other of its equity securities (other than Target Common Stock in connection with an
exercise of an option issued under the Target Stock Option Plan);

     (c) incurred any material indebtedness, obligation, lease or other Liability
(contingent or otherwise);

     (d) intentionally omitted;

     (e) created, permitted or suffered any Lien with respect to any of the Company Assets;

     (f) sold, transferred, leased or removed from its premises any of its tangible assets
except inventory in the ordinary course of business or sold, assigned, transferred or
granted any rights under or with respect to any of the Company Intellectual Property, other
than licenses of the Software to Target’s customers in the ordinary course of business,
consistent with past practices;

     (g) executed, amended, or terminated (or committed to do such) any material agreement
by which the Company Assets or any Company are or were bound or affected;

     (h) increased the compensation or benefits payable or to become payable to any officers
or directors of any Company, or increased the compensation or benefits payable or to become
payable to any other employee, independent contractor or agent of any Company by more than
$10,000 in the aggregate;

- 17 -

 

     (i) made any material change in the operation or nature of any aspect of the Business
whether made in the ordinary course of business or not;

     (j) induced any employee or independent contractor of any Company to leave his or her
employment or retention, or acted to otherwise adversely affect the relations of any Company
with any employee or independent contractor;

     (k) prepaid or accelerated payment of indebtedness, delayed payment of payables in a
manner inconsistent with past practices, changed credit practices or done anything to
materially and adversely affect the relationship of any Company to any of its customers or
suppliers;

     (l) failed to replenish its inventories and supplies in a manner consistent with its
prior practice, or made any purchase commitment in excess of the normal ordinary and usual
requirements of the Business or at any price in excess of the then-current market price or
upon terms and conditions more onerous than those usual and customary in the industry or
made any change in its selling, pricing, advertising or personnel practices inconsistent
with its prior practice and prudent business practices prevailing in the industry;

     (m) made any change in any method of accounting or accounting practice;

     (n) waived any material rights relating to the Business or arising under or in
connection with any of the Company Assets;

     (o) acquired any assets or properties in an aggregate amount greater than $10,000;

     (p) entered into any transaction, agreement, contract or understanding with any Seller
Related Party affecting any Company or the Company Assets or altered the terms of any
transaction, agreement, contract or understanding with any Seller Related Party;

     (q) suffered any adverse labor dispute or controversy other than the termination of any
of the Companies’ employees at the express direction of Purchaser;

     (r) without limiting the foregoing, entered into any material transaction affecting any
of the Company Assets or the operations or financial condition of any Company, other than in
the usual and ordinary course of business; or

     (s) entered into any oral or written agreement, contract, commitment, arrangement or
understanding with respect to any of the matters described in clauses (a) through (r) above.

     4.9. Taxes. Except as set forth on Schedule 4.9:

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     (a) Each Company has accurately prepared and timely filed all required Tax Returns
required to have been filed by such Company and each such Tax Return is true, correct,
accurate and complete in all respects.

     (b) Each Company has paid all Taxes required to be have been paid by it, and has
withheld with respect to its employees all Taxes, required to have been withheld by it under
the Federal Insurance Contributions Act, as amended, the Federal Unemployment Tax Act, as
amended, and other Taxes it is required to have withheld from amounts paid or owing to any
employee, stockholder, creditor, director, officer, agent or other third party and, to the
extent required, has remitted the same to the applicable Governmental Authority.

     (c) Since the Balance Sheet Date, no Company has incurred liability for Taxes other
than in the usual and ordinary course of business consistent with past practice, other than
Tax liabilities arising connection with the transactions contemplated by this Agreement.

     (d) No Company has executed any waiver of any statute of limitations nor extended the
period for the assessment or collection of any Tax.

     (e) No Company has received any written notice since December 31, 2004 (or to its
knowledge, any other notice) from a Taxing Authority that (a) its Tax Returns relating to
income, sales, payroll, real and personal property Taxes have been audited by any Taxing
Authority, or (b) any audit or other examination of any Tax Return of any Company is
presently in progress. No Company has received any notice from a Taxing Authority
indicating an intent to open any such audit or other examination or to assess any additional
Tax against such Company.

     (f) No Company is (nor has either ever been) required to join with any other Person in
the filing of a consolidated income Tax return for federal or foreign Tax purposes or a
consolidated or combined return or report for state or provincial Tax purposes, other than
any such return that includes only two or more of the Companies. No Company is a party to
or bound by any Tax indemnity, Tax sharing or Tax allocation agreement under which it may be
required to pay or reimburse any other Person for Tax liabilities incurred by such other
Person, except for agreements not dealing principally with the sharing, allocation, or
indemnification of Taxes and in which the provisions dealing with Taxes are of a type
typically included in such agreements (such as acquisition agreements, employment
agreements, leases and loan agreements).

     (g) Target has no knowledge of any existing circumstances that reasonably may be
expected to result in the assertion of a claim by any Taxing Authority that any Company has
unsatisfied obligations with respect to any period for which Tax Returns are required to
have been filed or Tax is required to have been paid by any Company. There are no Liens with
respect to Taxes upon any of the Company Assets (except for Taxes not yet due).

- 19 -

 

     (h) No property owned by any Company is property that the Purchaser, any Company or the
Surviving Corporation is or will be required to treat as being owned by another person
pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before the enactment of the Tax Reform Act of 1986, or is
“tax-exempt use property” within the meaning of Section 168(h) of the Code.

     (i) No Company has (a) agreed to nor is required to make any change in method of
accounting previously used by it in any Tax Return filed by it, which change in method would
require such Company to make a positive adjustment to its income pursuant to Section 481(a)
of the Code on any Tax Return for any taxable period for which such Company has not yet
filed a Tax Return; (b) knowledge that the IRS has proposed any such adjustment or change in
accounting method with respect to such Company, or (c) an application pending with any
Taxing Authority requesting permission for any change in accounting method.

     (j) There is no contract, agreement, plan or arrangement covering any Person that,
individually or collectively, as a consequence of the transactions contemplated by this
Agreement, could give rise to the payment of any amount the deduction of which would be
prohibited or that would not be deductible by Purchaser, any Company or the Surviving
Corporation by reason of Section 280G of the Code or (i) with respect to BSI, under any
similar provision of Israeli law, and (ii) with respect to BSUK, under any similar provision
of English law.

     (k) No Company owns an interest in any (i) domestic international sales corporation,
(ii) controlled foreign corporation, or (iii) passive foreign investment company.

     (l) No Company is a party (other than as an investor) to any industrial development
bond.

     (m) During the previous two years, no Company has engaged in any exchange under which
the gain realized on such exchange was not recognized due to Section 1031 of the Code.

     (n) None of the property owned or used by any Company is subject to a lease other than
a “true” lease for federal income Tax purposes.

     (o) Since January 1, 2004, no claim has been made by a Taxing Authority in a
jurisdiction in which any Company does not currently file Tax Returns that such Company is
or may be subject to taxation by that jurisdiction.

     (p) During the past eight (8) years, no Company has been a “distributing corporation”
or a “controlled corporation” within the meaning of Section 355(a)(1)(A) of the Code in a
distribution qualifying (or intended to qualify) under Section 355 of the Code (or so much
of Section 356 as relates to Section 355).

- 20 -

 

     (q) No Company has been a beneficiary of or participated in any “reportable
transaction” within the meaning of Treasury Regulations Section 1.6011-4(b)(1) that is, was
or, to the knowledge of Target, will be required to be disclosed under Treasury Regulations
Section 1.6011-4. No Tax Return filed by or on behalf of Target within the last six (6)
years has contained a disclosure statement under Section 6662 of the Code (or any similar
provision of law), and no Tax Return has been filed by or on behalf of Target with respect
to which the preparer of such Tax Return advised consideration of inclusion of such a
disclosure, which disclosure was not made.

     (r) Any and all transactions and dealings between or among any of the Companies and any
other Persons directly or indirectly related to the Companies have at all times occurred on
arm’s-length terms, as if between and among unrelated parties. Each of the Companies has at
all times fully complied with any and all Tax-related requirements that the arm’s-length
nature of the terms of such transactions and dealings be documented.

     (s) No Company has taken or has any intention to take any action, either before or
after the Closing, which could cause the Merger to fail to qualify as a reorganization
within the meaning of Section 368(a) of the Code.

     (t) Notwithstanding anything to the contrary herein, no Company makes any
representation as to the amounts or possible limitations on the use of its tax attributes to
offset income or taxes arising in any periods after the Effective Time as a result of
Sections 382, 383 or 384 of the Code.

     4.10. Title to Properties. The Companies have, in the aggregate, good and marketable
title to all of the Company Assets, free and clear of any Lien except for Permitted Liens and Liens
set forth in Schedule 4.10, all of which Liens, except for Permitted Liens, shall be fully
released at or prior to Closing. None of the directors, officers, employees, agents or Affiliates
of any Company owns any of the Company Assets. Other than property subject to the Personal
Property Leases and the Real Property Leases, no Company holds or uses any asset or property in
connection with the Business which is not owned by such Company. Schedule 4.10 sets forth
an accurate and complete list of all tangible personal property (other than Inventory) with a book
value in excess of $1,000.00, including the location and owner thereof, owned by any Company or
which is used in the operations of the Business.

     4.11. Contracts; Defaults. Schedule 4.11 contains an accurate and complete
list of all of the contracts, agreements and commitments of whatever nature or description, whether
oral or written, to which any Company is a party or by which any Company or the Company Assets are
bound (collectively, the “Contracts”) except for (a) those set forth in another Schedule hereto,
(b) those Contracts or groups of related Contracts with the same party which involve aggregate
payments to or expenditures by the Companies of less than $10,000 and can be terminated by any
Company at any time on thirty days’ written notice or less without Liability to, or any further
obligation on the part of, any Company, and (c) those Contracts with customers of Target which are
substantially in the form of the standard agreement attached hereto as Exhibit A to Schedule
4.11 which involve aggregate payments to the Companies of less than $30,000. Schedule
4.11 further sets forth all such contracts and agreements which would be required to be
disclosed in

- 21 -

 

Schedule 4.11 if they had been executed prior to the Closing Date currently in
negotiation or proposed by any Company. Each Contract is a valid, binding and enforceable
obligation of one of the Companies and, to Target’s knowledge, the other party or parties thereto
and each Contract is in full force and effect, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. Except as set forth on
Schedule 4.11, no Company, nor, to Target’s knowledge, any other party thereto, is in
default under any Contract and, to Target’s knowledge, there has not occurred any event that with
the lapse of time or the giving of notice or both would constitute such an event of default
thereunder.

     4.12. Compliance With Laws. Except as set forth on Schedule 4.12, each
Company (a) has been during the past three (3) years and is in compliance with all federal, state,
municipal, foreign and other laws, regulations, orders and other legal requirements applicable
thereto (collectively, “Rules”) and, to Target’s knowledge, no condition exists which, with or
without notice or passage of time or both, shall cause it not to remain in such compliance; and (b)
has received no written or, to Target’s knowledge, oral notification and Target has no knowledge or
reason to believe that any notification could be forthcoming from any Governmental Authority: (i)
asserting that such Company is not in compliance with any Rule; (ii) threatening to revoke any
License; or (iii) notifying such Company of any investigation or product recall by any such
Governmental Authority. No Company is subject to any agreement or written understanding with any
Governmental Authority with respect to the Company Assets or the Business.

     4.13. Real Property. No Company owns any real property. Schedule 4.13 sets
forth an accurate and complete list of all real property leased or subleased by any Company (the
“Leased Real Property”), including identification of the lease or sublease to which any Company is
a party or by which any of its interests in real property is bound (the “Real Property Leases”).
No Company has any Liability with respect to any Real Property Lease except as expressly set forth
therein. One of the Companies is in peaceable possession of each parcel of the Leased Real
Property. None of such Leased Real Property is subject to any easements, rights of way, licenses,
grants, building or use restrictions, exceptions, reservations, limitations or other impediments
which materially and adversely affect the value to the Companies of the leasehold interest therein
or which materially interfere with or impair the present and continued use thereof in the usual and
normal conduct of the Business. To Target’s knowledge, except as disclosed on Schedule
4.13, none of the Leased Real Property is subject to any mortgage, deed of trust or other Lien
(except the Lien of current Taxes not yet due and payable) which could, by foreclosure, enforcement
or deed-in-lieu transfer, terminate or otherwise adversely affect any of the Real Property Leases.
The Leased Real Property is subject to no leases or tenancies (including ground leases and other
underlying leases) except the Real Property Leases. Neither the whole nor any portion of any
Leased Real Property has been condemned, requisitioned or otherwise taken by any public authority,
no notice of any such condemnation, requisition or taking has been received and, to the knowledge
of Target, no such condemnation, requisition or taking the Leased Real Property is threatened. To
Target’s knowledge, there are no public improvements pending or threatened which may result in
special assessments against or otherwise affecting the Leased Real Property.

     4.14. Condition of Properties. The tangible Company Assets are in good operating
condition, normal wear and tear excepted, and are fit for their intended purpose. To Target’s
knowledge, there are no structural or other material physical defects or deficiencies in the

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condition of any Leased Real Property or improvements thereon. The buildings, structures and
improvements comprising the Leased Real Property are in good condition (subject to normal wear and
tear), and as such are adequate to conduct the Business.

     4.15. Litigation. Except as set forth in Schedule 4.15, there are no pending
or, to the knowledge of Target, threatened Claims, legal actions, proceedings, investigations or
outstanding orders, rulings, decrees or stipulations to which any Company is a party, by which any
Company, the Business or the Company Assets are bound or affected or which affect or relate to the
transactions contemplated hereby. To Target’s knowledge, there is no reasonable basis for any such
legal action, proceeding or investigation. None of any Company, the Business nor any Company Asset
is subject to any Judgment.

     4.16. Labor and Employee Matters.

     (a) Labor Agreements. No Company is a party to or otherwise bound by any
collective bargaining agreement or any other agreement with any labor organization
applicable to employees of or Persons providing services to any Company. No current union
representation questions involving employees of or Persons providing services to any Company
are outstanding. Target has no knowledge of any actual or threatened activity or proceeding
of any labor organization (or representative thereof) to organize any unorganized employees
of any Company. Except as set forth on Schedule 4.16(a), during the past three (3)
years, no Company has experienced any material work stoppage, and no labor dispute,
grievance, slowdown, lockout, strike, work stoppage or other collective labor action is in
effect, pending or, to the knowledge of Target, threatened against or affecting the
Business. No Company is engaged in any unfair labor practice. There has been no mass
lay-off, plant closure, employment loss or other event covered by the Worker Adjustment and
Retraining Notification Act within the last year. During the past year Target has
terminated no more than 10 employees and BSI has terminated no more than 9 employees
(excluding any employees terminated for cause within the meaning of applicable law).

     (b) Agreements. Except as set forth on Schedule 4.16(b), no Company is
currently a party to or bound by any Contract for the employment of any director, officer or
employee or for the performance by any independent contractor of services. Except as set
forth on Schedule 4.16(b), there are no agreements, arrangements or understandings
that would restrict the ability of any Company to terminate the employment of any of its
employees at any time, at will, without Liability (except for Liabilities arising under
applicable Rules, including COBRA). Except as set forth on Schedule 4.16(b), there
are no agreements, arrangements or understandings that would restrict the ability of any
Company to terminate at will, at any time upon thirty days’ notice or less, without
Liability, the agency, distributorship, consultancy or other contract or arrangement of any
employee or independent contractor, except to the extent longer notice periods are expressly
required pursuant to the terms of the Contracts disclosed in a Schedule to this Agreement,
accurate and complete copies of which have been provided to Purchaser. No Company is a
party, directly or indirectly, to any Contract with any Governmental Authority which would
require it to maintain an affirmative action plan or similar program or arrangement. To
Target’s knowledge, no employee of any Company has any

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plan or intention to terminate employment with such Company or not to accept an offer
of employment by Purchaser, if made.

     (c) Compensation. Schedule 4.16(c) sets forth an accurate and complete
(i) list of directors, officers, employees and independent contractors who perform services
for any Company, (ii) summary description, for each such Person, of the current rate of
compensation payable to such Person (including the date of the most recent increase thereof
if such increase occurred during the twelve months prior to the date hereof), whether such
Person is an active employee or on leave, whether such Person is employed on a full-time or
part-time basis and any severance pay, lump sum or other payment, compensation or other
remuneration that such Person is or would be eligible to receive upon termination of
employment or service or as a result of any of the transactions contemplated by this
Agreement (except for Liabilities arising under applicable Rules, including COBRA), and
(iii) list of all former directors, officers, employees and independent contractors to whom
any Company is currently obligated to pay any severance, compensation or other remuneration
or benefit. Except as expressly set forth in Schedules 4.16(b) and 4.16(c),
no Company has any severance policy or other severance obligation. Schedules
4.16(b) and 4.16(c) also contain a complete and accurate list of any bonus,
severance payment, change of control payment, payment triggered by termination of any
employment agreement to which any Company is a party or other payments owed by any Company
at Closing on account of any Employee Plan or other Contract, or owed at any other time and
which would not be payable but for, individually or among other things, the consummation of
the transactions contemplated by this Agreement.

     (d) Manuals. Set forth in Schedule 4.16(d) is an accurate and complete
list of all of each Company’s current published or formal written employee manuals,
brochures, publications, policies, procedures or similar documents regarding compensation,
benefits, perquisites, office administration, personnel matters and hiring, evaluation,
supervision, training, termination and promotion of employees of any Company and all
material, written communications to employees concerning such matters.

     4.17. Employee Plans.

     (a) Schedule 4.17(a) contains a list of all (i) employee welfare benefit plans
(as defined in Section 3(1) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), (ii) plans, policies or arrangements which provide non-qualified deferred
compensation, bonus or retirement benefits, severance or “change of control” (as set forth
in Section 280G of the Code) benefits, or life, disability, accident, vacation, tuition
reimbursement or other material fringe benefits, and (iii) employee pension benefit plans
(as defined in Section 3(2) of ERISA), in each case maintained with respect to any employees
of any Company and those employees on lay-off, disability or leave of absence, former
employees, and retired employees other than employees employed in Israel or the United
Kingdom (collectively, the “US Employee Plans”). Each of the US Employee Plans and, with
respect to each US Employee Plan, each Company, is and has been maintained in compliance, in
form and operation, with the requirements provided by any and all applicable Rules,
including ERISA, and the Code. All required reports and

- 24 -

 

descriptions of the US Employee Plans have been timely filed with the appropriate
Governmental Authority and distributed. No Company maintains, contributes to, or has any
Liability or obligations with respect to any multiemployer plan” (within the meaning of
Section 3(37) of ERISA), any plan that is subject to the provisions of Title IV of ERISA or
Section 412 of the Code, or any plan, program, arrangement, or agreement providing for
medical, health, life or other welfare benefits for present or future terminated employees
(other than any welfare benefits provided in compliance with the Consolidated Omnibus Budget
Reconciliation Act of 1985 or other similar law (“COBRA”)). Each Company is in compliance
with Section 4980B of the Code.

     (b) With respect to the employees of BSI (the “Israeli Employees”), except as set forth
in Part I of Schedule 4.17(b):

     (i) the employment of each Israeli Employee is subject to termination upon not
more than 30 days prior written notice under the termination notice provisions
included in the employment agreement with such Israeli Employee or applicable Rules;

     (ii) all obligations of BSI to provide statutory severance pay to all Israeli
Employees pursuant to the Severance Pay Law (5723-1963) are fully funded or accrued
on the Balance Sheet;

     (iii) all amounts that BSI is legally or contractually required either (x) to
deduct from Israeli Employees’ salaries or to transfer to such Israeli Employees’
managers insurance, pension or provident fund, life insurance, incapacity insurance,
education fund or other similar funds or (y) to withhold from the Israeli Employees’
salaries and benefits and to pay to any Governmental Authority as required by the
Tax Ordinance and the National Insurance Law of Israel or otherwise, have, in each
case, been duly deducted, transferred, withheld and paid, and BSI had no overdue
outstanding obligation to make any such deduction, transfer, withholding or payment;

     (iv) BSI is in compliance with all applicable Rules and Contracts relating to
employment, employment practices, wages, bonuses, pension benefits and other
compensation matters and terms and conditions of employment related to Israeli
Employees; and

     (v) Part II of Schedule 4.17(b) contains an accurate and complete
English translation of the exhibit to each Contract pursuant to which an Israeli
Employee is employed by BSI entitled “Order and Confirmation Regarding Payments of
Employers to Pension Funds and Insurance Funds Instead of Severance Pay”.

BSI is not subject to, and no Israeli Employee benefits from, any extension order (‘tzavei
harchava’) other than extension orders applicable to employees generally in Israel or
generally in BSI’s industry.

- 25 -

 

     4.18. Environmental Matters. The operations of the Business have been at all time and
are in compliance with all Rules relating to pollution or protection of the environment, including,
but not limited to, any statutes, rules or regulations relating primarily to emissions, discharges,
release of pollutants, contaminants or hazardous or toxic materials or wastes into ambient air,
surface water, groundwater or land or otherwise relating to the manufacture, process, distribution,
use, treatment, storage, disposal, transport, or handling of chemical substances, pollutants,
contaminants or hazardous toxic materials or water (the “Environmental Laws”). No written or, to
Target’s knowledge, oral notice or Claim has been received by any Company within the past two (2)
years with respect to violations of any such Environmental Laws and Target does not know of any
obligation or Liability relating to violations of any such Environmental Laws. Each Company
possesses all required permits, licenses, certifications and approvals and has filed all notices or
applications relating or pertaining to such Environmental Laws.

     4.19. Inventory. All items of inventory, including raw materials, work-in-process,
finished goods and packing supplies (collectively, the “Inventory”) (a) have been acquired in the
ordinary course of business, and (b) are (and will be as of the Closing Date ) of a good and
merchantable quality, usable or, with respect to finished goods, saleable in the ordinary course
except for obsolete, slow moving, defective or below-standard quality items for which a reserve has
been established on the Books and Records in compliance with GAAP.

     4.20. Intellectual Property.

     (a) Schedule 4.20(a) sets forth an accurate and complete list (together with a
summary description of each item (as appropriate) and, where applicable, of the date granted
or applied for, and the expiration date and status thereof) of all United States and foreign
Patents, Trademarks, Trade Names, service marks, web sites, domain names, logos and
copyrights (i) licensed to or from any third party by any Company as described thereon, (ii)
owned by, or registered or applied for by, or in the name of, any Company, (iii) in which
any Company has any rights, or (iv) which are utilized in the operation of the Business, in
each case other than Shrink-Wrap Software.

     (b) Except as expressly set forth in Schedule 4.20(b), (i) Target owns, on an
exclusive basis, free and clear of all Liens, all right, title and interest in, or possesses
sufficient rights to use, all of the Intellectual Property utilized in the operation of the
Business (the “Company Intellectual Property”), including the Intellectual Property
identified in Schedule 4.20(a); provided that BSUK owns, on an exclusive basis, free
and clear of all Liens, all right, title and interest in, or possesses sufficient rights to
use, all of the Intellectual Property identified in Items 3 and 4 of Schedule
4.35(b); and (ii) without limiting clause (i) hereof, Target owns, on an exclusive
basis, free and clear of all Liens, all right, title and interest in all provisional and
nonprovisional U.S. and non-U.S. patent applications upon which priority is claimed by such
patent applications, and the inventions and non-public subject matter described therein.
None of the Company Intellectual Property, nor the operations of the Business, infringe the
proprietary rights of any third party. Any breach of the immediately preceding sentence
shall not be deemed to be a breach of the representations and warranties made in Section
4.10 of this Agreement. The first sentence of this Section 4.20(b) shall not be deemed a

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representation as to the sufficiency of any Company Intellectual Property, which shall
be addressed solely by Section 4.34. The representations and warranties contained in this
Section 4.20(b) do not apply to any commercially available software products under standard
end-user license agreements (“Shrink-Wrap Software”) used by any Company.

     (c) Except as set forth in Schedule 4.20(c), no Company pays any royalty to
anyone with respect to any of the Company Intellectual Property. Except as set forth in
Schedule 4.3, consummation of the transactions contemplated by this Agreement will
not adversely affect the right, title and interest of any Company in and to the Company
Intellectual Property. To the knowledge of Target, none of the Company Intellectual
Property is being infringed by any Person. Each Company has sufficient software licenses
for all of the Shrink-Wrap Software which it uses in the operation of the Business without
violating the terms or provisions of any such software license.

     (d) Except as set forth in Schedule 4.20(d), the patent applications listed on
Schedule 4.20(a) were duly filed and Target has no knowledge of any information or
facts that should prevent the applications to issue as Patents, or would render such Patents
invalid or unenforceable.

     4.21. Licenses. Set forth in Schedule 4.21 is a true and complete list of all
of each Company’s licenses, permits, quotas, authorizations, franchises, registrations and other
approvals from any Governmental Authority (collectively, “Licenses”). Each of the Licenses has
been duly obtained, is valid and in full force and effect, and is not subject to any Liens or any
pending or, to Target’s knowledge, threatened administrative or judicial proceeding to revoke,
cancel or declare such License invalid in any respect. Except as set forth in Schedule
4.3, consummation of the transactions contemplated by this Agreement will not adversely affect
the rights of any Company in and to the Licenses. The Licenses are sufficient in all respects to
permit the lawful conduct by the Companies of the Business in the manner now conducted by the
Companies. No Company is in default or in violation with respect to any of the Licenses, and no
event has occurred which constitutes, or with due notice or lapse of time or both may constitute, a
default by any Company under or violation of any License.

     4.22. Insurance. Each Company maintains commercially reasonable amounts of insurance
to protect such Company and the Company Assets against the types of liabilities customarily insured
against by Persons in connection with the operation of similar businesses with similar financial
resources and operations, an accurate and complete list of which are set forth in Schedule
4.22, and all premiums due and payable on such policies have been paid. Each Company has
complied with the provisions of all such policies. Such policies are in full force and effect and
no Company is in default under any of them. No Company has received any written notice of
cancellation or intent to cancel or increase premiums with respect to such insurance policies, nor,
to Target’s knowledge, is there any basis for any such action. Schedule 4.22 also contains
a list of all claims or asserted claims reported to insurers under such policies, including all
claims, actions or proceedings asserted against any Company at any time within the past three (3)
years.

     4.23. Customers. Set forth in Schedule 4.23 is an accurate and complete list
of (a) all of the current customers of the Companies whose purchases from the Companies during the
last

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twelve months exceeded $15,000, and (b) customers of the Companies from 2009 or 2008 who are
no longer customers and whose annual purchases during any calendar year exceeded $15,000. (i) No
customer of any Company set forth on Schedule 4.23 in response to clause (a) of this
Section 4.23 (each, a “Major Customer”), has threatened in writing or, to Target’s knowledge,
orally, to Target within the last twelve months to cancel or otherwise terminate, or to the
knowledge of Target, intends to cancel or otherwise terminate, the relationship of such Person with
any Company, (ii) no such Major Customer has during the last twelve months decreased materially or
threatened in writing or, to Target’s knowledge, orally, to Target to decrease or limit materially
its usage or purchase of services or products of any Company, or to the knowledge of Target,
intends to modify materially its relationship with any Company, and (iii) to the knowledge of
Target, assuming Purchaser or one of its Affiliates continues to operate the Business, the purchase
of the Business by Purchaser will not materially and adversely affect the relationship of the
Business with any Major Customer. No Company has offered to any Person, and Target has no
knowledge of any Person entitled to claim, any cash discount, profit participation, stock
adjustment or other rebate or premium in connection with or on account of the purchase of products
or services of any Company.

     4.24. Transactions with Related Parties. For purposes of this Agreement, the term
“Seller Related Party” shall mean (a) each Seller, (b) each past or present director or officer of
any Company, (c) each current employee of any Company, and (d) each Immediate Family Member of any
persons referred to in (a), (b) or (c). Except as set forth in Schedule 4.24, during the
past three years no Seller Related Party has been a member, manager, director or officer of, or has
had any direct or indirect interest in, any person or entity which during such period has been a
supplier or customer of products or services of any Company, or has competed with or been engaged
in any business similar to the Business. Except as set forth in Schedule 4.24, no Seller
Related Party owns, directly or indirectly, in whole or in part, any tangible or intangible
property of any Company or that any Company uses in the conduct of the Business. Except as set
forth in Schedule 4.24, no Seller Related Party owes any money or other amounts to, nor is
any Seller Related Party owed any money or other amounts by any Company other than compensation
paid for services actually performed, or reimbursement of expenses, in each case in amounts in
keeping with past practice and in the ordinary course of business and not in violation of any other
provision of this Agreement. For purposes of this Section 4.24, the beneficial ownership of no
more than three percent of the outstanding voting stock of a publicly traded corporation shall not
be deemed to be a “direct or indirect economic interest” in any Person, so long such beneficial
ownership does not include any management authority or control.

     4.25. Absence of Certain Commercial Practices. No Company nor any of its respective
officers or directors or, to Target’s knowledge, any other Representatives of any Company (or, to
Target’s knowledge, any Person (other than an officer or director of any Company) acting on behalf
of any of the foregoing) has given or agreed to give (a) any gift or similar benefit of more than
nominal value to any supplier, Governmental Authority (including any governmental employee or
official) or any other Person who is or may be in a position to help, hinder or assist any Company,
the Business or the Person giving such gift or benefit in connection with any actual or proposed
transaction relating to the Business, which gifts or similar benefits would individually or in the
aggregate subject any Company or any such officer, director, employee or agent to any fine,
penalty, cost or expense or to any criminal sanctions, (b) receipts from or payments to any
governmental officials or employees, (c) commercial bribes or kick-backs, (d)

- 28 -

 

political contributions, or (e) any receipts or disbursements in connection with any unlawful
boycott, in each case in violation of any Rule. No such gift or benefit is required in connection
with the operation of the Business to avoid any fine, penalty, cost, expense or any material
adverse effect on the financial condition, net worth, assets, Liabilities, personnel or operations
(including relationships with suppliers, employees, customers and others) of the Business.

     4.26. Name. Except as set forth on Schedule 4.26, no Company has ever
operated during the past five years under, or used, any corporate name other than “Breach Security,
Inc.”, “Breach Security LTD” or “Breach Security (UK) LTD”.

     4.27. Brokers or Finders. Other than America’s Growth Capital, no Company has
employed or engaged any firm, corporation, agency or other person to act as a broker, finder or
investment banker in connection with the transactions contemplated by this Agreement.

     4.28. Indebtedness. All of the Liabilities of the Companies for accounts payable as
of the Closing Date (a) have arisen in bona fide transactions, and (b) arose in the ordinary course
of business, consistent with past practice. No Company has experienced or suffered any material
delay in the payment of its Liabilities to its trade creditors (including suppliers) or with
respect to its trade debt. No Company has outstanding any Indebtedness for Borrowed Funds other
than as set forth on Schedule 4.28 and no Company has agreed to create or incur any
additional or other Indebtedness for Borrowed Funds. No Company has any Liability to any
Stockholder other than compensation paid for services actually performed or reimbursement of
expenses in each case in amounts in keeping with past practice and in the ordinary course of
business and not in violation of any other provision of this Agreement.

     4.29. Bank Accounts, Etc. Schedule 4.29 sets forth an accurate and complete
list of each financial institution in or with which any Company has an account, credit line or
safety deposit box, and a brief description thereof including amounts and the names of all persons
currently authorized to draw thereon or having access thereto.

     4.30. Quotas; Foreign Trade Zones. Each Company has obtained and is in compliance
with all approvals and permits necessary for the operation of the import and export operations of
the Business.

     4.31. Board Approval. The Board of Directors of Target has (a) approved this
Agreement and the Merger, (b) determined that this Agreement and the Merger are advisable and in
the best interests of the stockholders of Target and are on terms that are fair to such
stockholders and (c) recommended that the Stockholders approve this Agreement and consummation of
the Merger.

     4.32. Required Stockholder Vote. The only votes, consents or approvals of the
stockholders of Target required pursuant to Target’s Organizational Documents, Delaware Law, or any
agreement between Target and holders of Target Capital Stock to adopt and approve the terms of this
Agreement, the Merger and the transactions contemplated hereby (the “Target Required Stockholder
Approvals”) are the vote (at a duly called meeting of stockholders of Target for such purpose) or
written consent of the holders of (a) a majority of the Target Capital

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Stock outstanding on the record date, voting together on an as converted basis, and (b) a
majority of the Target Preferred Stock, voting together on an as converted basis.

     4.33. Rights Agreements. No Company has any “Rights Agreement” or similar instruments
or plans which will be triggered on account of the execution of this Agreement by Target.

     4.34. Sufficiency of Assets. The assets and properties owned by the Companies, or
which the Companies have the right to use pursuant to a binding and legally enforceable Contract,
constitute all of the assets and properties, tangible and intangible, (a) which are used (whether
or not owned) by the Companies in the operation of the Business, or (b) which are necessary for the
operation of the Business in the ordinary course consistent with past practice.

     4.35. Subsidiaries.

     (a) BSI has no assets, and has never operated any business, other than as set forth on
Schedule 4.35(a).

     (b) BSUK has no assets, and has never operated any business, other than as set forth on
Schedule 4.35(b). Except as set forth on Schedule 4.35(b), BSUK has never
had any employees.

     4.36. Full Disclosure. No representation, warranty or covenant of Target contained in
this Agreement, nor any certificates, Schedules or Exhibits furnished to Purchaser by Target
pursuant hereto, or in connection with the transactions contemplated hereby, contains any untrue
statement of a material fact, or omits to state a material fact necessary to make the statements
contained therein, in the light of the circumstances under which they were or are to be made, not
misleading.

     4.37. Documents. Except as set forth in Schedule 4.37, complete and accurate
copies of the following have been furnished or Made Available to Purchaser, none of the following
have been amended, modified or supplemented, except as has been Made Available to Purchaser and
there are no agreements to amend, modify or supplement any of the following from the form Made
Available to Purchaser:

     (a) All documents listed or referred to in the Schedules to this Article IV, except as
notated therein;

     (b) Each Company’s Organizational Documents as currently in effect;

     (c) All form agreements and instruments relating to or issued under the Target Stock
Option Plan and all of the Warrants;

     (d) With respect to each Employee Plan, to the extent applicable, (i) all plan
documents, (ii) the most recent determination or opinion letters received from the IRS,
(iii) the most recent application for determination filed with the IRS, (iv) the latest
actuarial valuations, (v) the latest financial statements, (vi) Form 5500 Annual Reports and
Schedule A and Schedule SB thereto for the last three years, (vii) all related trust

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agreements, insurance contracts or other funding arrangements which implement any of
such Employee Plans, and (viii) all Summary Plan Descriptions and summaries of modifications
thereto communicated to employees;

     (e) All insurance policies referred to in Section 4.22, together with all riders and
amendments thereto; and

     (f) A correct and complete summary of the Israeli Employees’ salaries, including any
components which are not included in the basis for calculation of amounts set aside for
purposes of statutory severance pay and pension.

ARTICLE V.

REPRESENTATIONS AND WARRANTIES OF THE SELLERS.

     Each Seller, solely on behalf of itself and not on behalf of any other Seller, hereby
represents and warrants to Purchaser as follows as of the Effective Time:

     5.1. Ownership of Stock. Such Seller is the record and beneficial owner and holder of
the Target Common Stock and the Target Preferred Stock in the amounts shown next to such Seller’s
name on Schedule A, free and clear of all Liens, and, except as set forth in Schedule
5.1, such Seller is not a party to any contract, commitment or agreement relating to voting,
purchase or sale of the Target’s Capital Stock.

     5.2. Authority Relative to Agreement. Such Seller has the power and authority to
enter into this Agreement and to carry out his, her or its obligations hereunder. The execution
and delivery of this Agreement and the performance by such Seller of his, her or its obligations
hereunder have been duly authorized, and no other proceedings on the part of such Seller are
necessary to authorize such execution, delivery and performance. This Agreement has been duly
executed by such Seller and constitutes the valid and legally binding obligation of such Seller
enforceable against such Seller in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.

     5.3. Absence of Conflicts. Except as set forth in Schedule 5.3, the execution
and delivery of this Agreement, the performance by such Seller of his, her or its obligations
hereunder and the consummation of the transactions contemplated hereby will not (a) violate, or
constitute a breach or default under, any provisions of such Seller’s Organizational Documents, (b)
require the consent of any third party (including any Governmental Authority), (c) result in the
creation or imposition of any Lien upon the Target Common Stock or the Target Preferred Stock owned
by such Seller, (d) violate any Rule or Judgment to which such Seller or the Target Common Stock or
the Target Preferred Stock owned by such Seller may be subject, or (e) result in the breach of any
of the terms or conditions of, or constitute a default under, or in any manner release any party
thereto from any obligation under, any mortgage, note, bond, indenture, contract, agreement,
license or other instrument or obligation of any kind or nature by which such Seller or the Target
Common Stock or the Target Preferred Stock owned by such Seller may be bound or affected.

     5.4. Litigation. Except as set forth in Schedule 5.4, there are no pending
or, to the knowledge of such Seller, threatened Claims, legal actions, proceedings, investigations
or

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outstanding orders, rulings, decrees or stipulations to which such Seller is a party either by
which the Target Capital Stock owned by such Seller is bound or affected or which affect or relate
to the transactions contemplated hereby. To such Seller’s knowledge, there is no reasonable basis
for any such legal action, proceeding or investigation. None of the Target Capital Stock owned by
such Seller is subject to any Judgment.

     5.5. Accredited Investor. Such Seller is an “accredited investor” as that term is
defined in Regulation D promulgated by the Securities and Exchange Commission under the Securities
Act of 1933, as amended (the “Securities Act”).

     5.6. Information and Opportunity to Inquire.

     (a) Such Seller has been given access to all documents and information he, she or it
has requested in connection with making a decision to invest in the Purchaser Common Stock
and, if applicable, in the sole discretion of such Seller, has been advised by counsel.
Such Seller has had the opportunity to ask questions of Representatives of Purchaser and has
had all of its questions answered to its satisfaction. Such Seller has received and had a
chance to review all of the information (both financial and otherwise) which it has
requested to review in connection with its decision to invest in the Purchaser Common Stock.

     (b) Such Seller has such knowledge and experience in business and financial matters
that he, she or it is capable of evaluating the merits and risk of his, her or its
investment in the Purchaser Common Stock and protecting his, her or its own interests in
connection with the transactions contemplated by this Agreement.

     (c) Such Seller is acquiring the Purchaser Common Stock solely for its own account and
beneficial interest for investment and not with a view to or for sale in connection with any
distribution of any part thereof, has no present intention of selling, granting any
participation in or otherwise distributing the same, and does not presently have reason to
anticipate a change in such intention. The entire legal and beneficial interest of the
Purchaser Common Stock which such Seller is acquiring is being acquired for its own account
only and not in whole nor in part for any other person. Any transfer of the Purchaser
Common Stock by such Seller will be made in compliance with all applicable federal and state
securities laws.

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES OF PURCHASER.

     Purchaser represents and warrants to Target and Sellers as follows as of the Effective Time.
The following representations and warranties are qualified by the exceptions set forth in the
Schedules to this Article VI only to the extent an exception expressly refers to the specific
representations and warranties which it qualifies or to the extent it is reasonably apparent by
reading such exception the other specific representations and warranties which it qualifies,
regardless of whether or not such exception contains an express cross-reference to any such other
representations and warranties. The inclusion of any item in the Schedules does not constitute an
admission of liability with respect to any Claims or an admission that any breach, violation,

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default or event of default exists with respect to any contract or agreement to which
Purchaser is a party.

     6.1. Organization, Ownership and Qualification. Each of Purchaser and Merger Sub is a
corporation duly organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to own, operate and lease its properties
and assets, to carry on its business as is currently conducted, and to execute this Agreement and
to perform the transactions contemplated herein. Purchaser has qualified as a foreign corporation
and is in good standing under the laws of all jurisdictions where the nature of its business or the
nature and location of its assets requires such qualification except where the absence of such
qualification would not have a material adverse effect on the business, financial condition or
operations of Purchaser. Purchaser has delivered to the Company complete and accurate copies of
its and Merger Sub’s Organizational Documents as currently in effect, the Purchaser Stockholder
Agreement and the Purchaser Investor Rights Agreement, together with all amendments and
modifications thereto as currently in effect. Purchaser does not have any subsidiary or own any
other equity interest or investment in any Person except as set forth on Schedule 6.1 and
Merger Sub and each subsidiary identified in Schedule 6.1 is, directly or indirectly,
wholly owned by Purchaser.

     6.2. Authority Relative to Agreement. Each of Purchaser and Merger Sub has the
corporate power and authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the performance by Purchaser and
Merger Sub of its obligations hereunder have been duly authorized, and no other proceedings on the
part of Purchaser or Merger Sub are necessary to authorize such execution, delivery and
performance. This Agreement has been duly executed by Purchaser and Merger Sub and constitutes the
valid and legally binding obligation of Purchaser and Merger Sub enforceable against Purchaser and
Merger Sub in accordance with its terms, except as enforceability may be limited by bankruptcy and
other similar laws and general principles of equity.

     6.3. Absence of Conflicts. Except as set forth in Schedule 6.3, the execution
and delivery of this Agreement, the performance by each of Purchaser and Merger Sub of its
obligations hereunder and the consummation of the transactions contemplated hereby do not and will
not (a) violate, or constitute a breach or default under, any provisions of the Organizational
Documents of Purchaser or Merger Sub, (b) require the consent of any third party (including any
Governmental Authority), (c) result in the creation or imposition of any Lien upon Purchaser’s
assets, (d) violate any Rule or Judgment to which Purchaser or its assets may be subject, or (e)
result in the breach of any of the terms or conditions of, or constitute a default under, or in any
manner release any party thereto from any obligation under, any material mortgage, note, bond,
indenture, contract, agreement, license or other instrument or obligation of any kind or nature by
which Purchaser or any assets of Purchaser may be bound or affected.

     6.4. Capitalization. The authorized capital stock of Purchaser as of May 31, 2010
consists of (a) 136,775,210 (which, by no later than the Closing Date, shall be increased to
144,175,210) shares of Class A Voting Common Stock, par value $0.0001 per share, of which 83,675,
284 shares were issued and outstanding as of May 31, 2010, (b) 6,174,654 shares of Class B
Non-Voting Common Stock, par value $0.0001 per share, of which 2,965,752 shares were issued and
outstanding as of May 31, 2010, (c) 10,952,633 shares of Series A-1 Preferred

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Stock, par value $0.0001 per share, of which 10,952,633 shares are issued and outstanding as
of the date hereof, (d) 11,505,258 shares of Series A-2 Preferred Stock, par value $0.0001 per
share, of which 11,505,258 shares are issued and outstanding as of the date hereof, and (e)
5,882,353 shares of Series B Preferred Stock, par value $0.0001 per share, of which 5,882,351
shares are issued and outstanding as of the date hereof. Except as set forth in Schedule
6.4, there are no other outstanding shares of capital stock or voting securities and no
outstanding commitments to issue any shares of capital stock or voting securities after the date
hereof, other than pursuant to the exercise of options outstanding as of such date under the
Purchaser Stock Option Plan. As of May 31, 2010, 16,773,805 shares of Purchaser Common Stock (net
of previously exercised options issued under the Purchaser Stock Option Plan) are reserved for
issuance under the Purchaser Stock Option Plan. The shares of Purchaser Common Stock to be issued
pursuant to this Agreement will be duly authorized, validly issued, fully paid, and non-assessable,
free of any Liens imposed by Purchaser. The designations, powers, preferences and rights of
Purchaser Common Stock to be issued pursuant to this Agreement are set forth in the Organizational
Documents of Purchaser.

     6.5. Financial Statements. Purchaser has delivered to Target accurate and complete
(a) copies of the audited balance sheets of Purchaser as of the last day of each of the two fiscal
years of Purchaser for the periods ended December 31, 2008 and 2007, respectively, together with
the related statements of income, stockholders’ equity and changes in cash flow for such fiscal
years, and the notes thereto, together with the report thereon of Purchaser’s independent auditors
(“Purchaser Historical Statements”), and (b) copies of the unaudited balance sheet of Purchaser as
of December 31, 2009, together with the related unaudited statement of income for the twelve-month
period ended on such date (“Purchaser Unaudited Statements”), and (c) copies of the unaudited
balance sheet of Purchaser as of March 31, 2010 (“Purchaser Balance Sheet”), together with the
related unaudited statement of income for the three-month period ended on such date, (“Purchaser
Interim Statements” and, together with the Purchaser Historical Statements and the Purchaser
Unaudited Statements, the “Purchaser Financial Statements”). Except as set forth on Schedule
6.5, the Purchaser Financial Statements (i) were prepared in accordance with GAAP (except, with
respect to Purchaser Unaudited Statement and the Purchaser Interim Statements, for immaterial
year-end and audit adjustments and the absence of notes thereto), (ii) present fairly the financial
position, results of operations and changes in cash flows of Purchaser as of such dates and for the
periods then ended, and (iii) can be reconciled with the financial statements and the financial
records maintained and the accounting methods applied by Purchaser for United States federal income
Tax purposes.

     6.6. Compliance With Laws. Purchaser (a) is in material compliance with all Rules
and, to the knowledge of Purchaser, no condition exists which, with or without notice or passage of
time or both, shall cause it not to remain in compliance; and (b) has received no written or, to
Purchaser’s knowledge, oral notification and Purchaser has no knowledge or reason to believe that
any notification could be forthcoming from any Governmental Authority: (i) asserting that Purchaser
is not in compliance with any Rule; (ii) threatening to revoke any licenses (including licenses to
use computer software), permits, quotas, authorizations, franchises, registrations and other
approvals from any Governmental Authority or from any private party; or (iii) notifying Purchaser
of any investigation or product recall by any such Governmental Authority. Assuming the truth and
accuracy of the representations and warranties made by the Sellers in Article V of this Agreement,
and subject to the timely filing of a Form D pursuant to Regulation D under the

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Securities Act by Purchaser, the offer and sale to the Sellers of the Purchaser Common Stock
as contemplated by this Agreement will be exempt from the registration requirements of Section 5 of
the Securities Act.

     6.7. Litigation. Except as set forth in Schedule 6.7, there are no pending
or, to the knowledge of Purchaser, threatened Claims, legal actions, proceedings, investigations or
outstanding orders, rulings, decrees or stipulations to which Purchaser is a party, by which
Purchaser is bound or affected or which affect or relate to the transactions contemplated hereby.
None of the Purchaser, the Purchaser’s business nor any material asset of Purchaser, is subject to
any Judgment which remains unsatisfied or unsettled.

     6.8. Brokers or Finders. Purchaser has not employed or engaged any firm, corporation,
agency or other person to act as a broker, finder or investment banker in connection with the
transactions contemplated by this Agreement.

     6.9. Absence of Undisclosed Liabilities. Except as set forth on Schedule 6.9,
Purchaser does not have any Liability, including, without limitation, deferred Tax liabilities,
vacation time or pay, severance pay, future amounts payable arising out of prior transactions, and
any other Liabilities relating to or arising out of any act, omission, transaction, circumstance,
sale of goods or services, or other condition which occurred or existed on or before the Closing
Date, which is not fully shown or provided for in the Purchaser Balance Sheet, except: (a) under
the executory portion of any contract or agreement (i) by which Purchaser or any of its
subsidiaries is bound on the Closing Date, and (ii) the existence of which does not otherwise
constitute or result from a breach of any representation, warranty or covenant of this Agreement,
(b) Liabilities incurred in the usual and ordinary course of business subsequent to the Balance
Sheet Date consistent with past practice, (c) Liabilities incurred in connection with the
transactions contemplated by this Agreement, and (d) Liabilities not required by GAAP, consistently
applied in accordance with past practices of Purchaser and its subsidiaries, to be reflected on a
balance sheet of Purchaser or any of its subsidiaries.

     6.10. Intellectual Property.

     (a) Except as expressly set forth in Schedule 6.10, one of Purchaser or its
subsidiaries owns, on an exclusive basis, all right, title and interest in, or possesses
sufficient rights to use, all of the Intellectual Property utilized in the operation of the
Purchaser’s and its subsidiaries’ business (the “Purchaser Intellectual Property”). None of
the items of Purchaser Intellectual Property, nor the operation of the businesses of
Purchaser or any of its subsidiaries, in each case other than the Acquired IP, infringe the
proprietary rights of any third party and, to the knowledge of Purchaser, none of the
Acquired IP infringes the proprietary rights of any third party. Any breach of the
immediately preceding sentence shall not be deemed to be a breach of the representations and
warranties made in the first sentence of this Section 6.10(a).

     (b) To the knowledge of Purchaser, none of the Purchaser Intellectual Property is being
infringed by any Person.

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     (c) The representations and warranties contained in this Section 6.10 do not apply to
any Shrink-Wrap Software.

     6.11. Insurance. Purchaser maintains commercially reasonable amounts of insurance to
protect Purchaser and the assets of Purchaser and its subsidiaries against the types of liabilities
customarily insured against by Persons in connection with the operation of similar businesses with
similar financial resources and operations, and all premiums due and payable on such policies have
been paid.

     6.12. Transactions with Related Parties. For purposes of this Agreement, the term
“Purchaser Related Party” shall mean (a) each past or present director or executive officer of
Purchaser or any of its subsidiaries (but, with respect to such subsidiaries, only directors or
executive officers thereof during the time that such subsidiaries were subsidiaries of Purchaser),
and (b) to the knowledge of any person referred to in (a), each Immediate Family Member of such
person. Except as set forth in Schedule 6.12, during the past three years no Purchaser
Related Party has been a member, manager, director or officer of, or has had any direct or indirect
economic interest in, any person or entity which during such period has been a supplier or customer
of products or services of Purchaser or any of its subsidiaries, or has competed with or been
engaged in any business similar to the Purchaser’s business. Except as set forth in Schedule
6.12, no Purchaser Related Party owns, directly or indirectly, in whole or in part, any
tangible or intangible property of Purchaser or any of its subsidiaries or that Purchaser or any of
its subsidiaries uses in the conduct of its business (other than by reason of ownership of equity
securities of Purchaser). Except as set forth in Schedule 6.12, no Purchaser Related Party
owes any money or other amounts to, nor is any Purchaser Related Party owed any money or other
amounts by Purchaser or any of its subsidiaries other than compensation paid for services actually
performed or reimbursement of expenses in each case in amounts in keeping with past practice and in
the ordinary course of business. For purposes of this Section 6.12, the beneficial ownership of no
more than three percent (3%) of the outstanding voting stock of a publicly traded corporation shall
not be deemed to be a “direct or indirect economic interest” in any Person, so long such beneficial
ownership does not include any management authority or control.

     6.13. Absence of Certain Commercial Practices. Neither Purchaser nor, to Purchaser’s
knowledge, any of its Representatives (or any Person acting on behalf of any of the foregoing) has
given or agreed to give (a) any gift or similar benefit of more than nominal value to any supplier,
Governmental Authority (including any governmental employee or official) or any other Person who is
or may be in a position to help, hinder or assist Purchaser, Purchaser’s business as currently
conducted or the Person giving such gift or benefit in connection with any actual or proposed
transaction relating to Purchaser’s business as currently conducted, which gifts or similar
benefits would individually or in the aggregate subject any Purchaser or any such officer,
director, employee or agent to any fine, penalty, cost or expense or to any criminal sanctions, (b)
receipts from or payments to any governmental officials or employees, (c) commercial bribes or
kick-backs, (d) political contributions, or (e) any receipts or disbursements in connection with
any unlawful boycott, in each case in violation of any Rule. No such gift or benefit is required
in connection with the operation of Purchaser’s business as currently conducted to avoid any fine,
penalty, cost, expense or any material adverse effect on the financial condition, net worth,
assets, Liabilities, personnel or operations (including relationships with suppliers, employees,
customers and others) of Purchaser’s business as currently conducted.

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     6.14. Merger Sub. Merger Sub was formed solely for the purposes of engaging in the
transactions contemplated by this Agreement and has not engaged in any business or activity, or
conducted any operations, of any kind.

     6.15. Absence of Certain Changes or Events. Since the Measuring Date, there has not
been, nor does Purchaser have reason to know of, any Material Adverse Effect on Purchaser. Except
as set forth on Schedule 6.15 or arising or contemplated under this Agreement (and the
prior negotiations related hereto), since the Measuring Date, Purchaser has operated its business
only in the ordinary course and has not:

     (a) created, permitted or suffered any Lien with respect to any of the material assets
of Purchaser;

     (b) made any material change in the operation or nature of any aspect of Purchaser’s
business other than in the ordinary course of business;

     (c) prepaid or accelerated payment of indebtedness, delayed payment of payables in a
manner inconsistent with past practices, changed credit practices or done anything to
materially and adversely affect the relationship of Purchaser to any of its customers or
suppliers, in each case other than in the ordinary course of business;

     (d) made any change in any method of accounting or accounting practice, except as
required by GAAP, consistently applied in accordance with past practices of Purchaser, or
any applicable Rules;

     (e) waived any material rights relating to Purchaser’s business as currently conducted
or arising under or in connection with any of the assets of Purchaser;

     (f) entered into any transaction, agreement, contract or understanding with any
Purchaser Related Party affecting Purchaser or the assets of Purchaser or altered the terms
of any transaction, agreement, contract or understanding with any Purchaser Related Party;

     (g) suffered any adverse labor dispute or controversy;

     (h) without limiting the foregoing, entered into any material transaction affecting any
of the assets of Purchaser or the operations or financial condition of Purchaser, other than
in the usual and ordinary course of business; or

     (i) entered into any oral or written agreement, contract, commitment, arrangement or
understanding with respect to any of the matters described in clauses (a) through (h) above.

ARTICLE VII.

COVENANTS

     7.1. Confidentiality; Public Announcements. This Agreement and the terms hereof are
confidential and no party or signatory hereto shall disclose any of the terms of this

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Agreement, or the transaction contemplated hereby, without the prior approval of the other
parties. Purchaser and Target shall consult with each other on the desirability, timing and
substance of any press release or public announcement, publicity statement or other public
disclosure relating to the transaction contemplated hereby. Purchaser, Target and each Seller
agree not to make any such public disclosures without the prior consent of the other as to the
content and timing of such disclosure. The parties acknowledge that the obligations of Purchaser
pursuant to this Section 7.1 shall terminate at the Closing; provided that Purchaser shall not make
any press release or public announcement, publicity statement or other public disclosure of the
transactions contemplated by this Agreement which (a) intentionally disparage, with the intent to
harm, any Seller or any of their respective Affiliates, or (b) unless required by applicable Rules
or in connection with an initial public offering (or similar transaction), the amount of the Merger
Payment or Merger Consideration.

     7.2. Stockholders Consent. Target will as promptly as practicable following the date
of this Agreement, use its reasonable best efforts to obtain a written consent of the Stockholders
approving this Agreement and the transactions contemplated hereby to the extent required by the
Delaware Law and the Organizational Documents of Target.

     7.3. All Reasonable Efforts. Subject to the terms and conditions herein provided,
each of the parties hereto agrees to use all reasonable efforts to take, or cause to be taken, all
action and to do, or cause to be done as promptly as practicable, all things necessary, proper and
advisable under applicable laws and regulations to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement. Each party hereto shall use
reasonable efforts to obtain all necessary permits, consents, waivers, approvals, agreements,
orders and authorizations of all Governmental Authorities and other persons or entities required to
be obtained by such party hereto in connection with the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby or thereby by such party.

     7.4. Employee Plans.

     (a) Target shall duly adopt appropriate resolutions to terminate, effective no later
than the Effective Time, any 401(k) plan sponsored by Target. Target shall provide evidence
reasonably satisfactory to Purchaser to ensure that all liabilities of Target under all
Employee Plans which relate to periods prior to the Closing Date (including any liability
relating to services performed prior to the Closing Date) shall be, effective as of the
Effective Time, either fully extinguished with no liability to Purchaser, the Surviving
Corporation, BSI or BSUK, or accurately accounted for on Target’s financial statements and
the Closing Date Balance Sheet.

     (b) As of and subsequent to the Effective Time, Purchaser shall: (i) provide Target’s
and BSI’s employees as of immediately prior to the Effective Time who continue to be
employed by the Purchaser or the Surviving Corporation (or one of their Affiliates) on and
after the Effective Time (the “Covered Employees”) with employee benefits and compensation
plans, programs and arrangements that are no less favorable, in the aggregate, to the
employee benefits and compensation plans, programs and arrangements provided by the
Purchaser to similarly situated employees of the Purchaser;

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(ii) provide all Covered Employees with service credit for purposes of eligibility and
participation (but not vesting) under any employee benefit or compensation plan, program or
arrangement adopted, maintained or contributed to by Purchaser in which Covered Employees
are eligible to participate (other than the Purchaser Stock Option Plan), for all periods of
employment with Target or its subsidiaries (or any predecessor entities) prior to the
Effective Time and with the Purchaser and any of its Affiliates on and after the Effective
Time; (iii) cause any pre-existing conditions or limitations, eligibility waiting periods or
required physical examinations under any welfare benefit plans of Purchaser to be waived
with respect to the Covered Employees and their eligible dependents, to the extent waived
under the corresponding plan in which the applicable Covered Employee participated
immediately prior to the Effective Time and to the extent permitted by Purchaser’s plans;
and (iv) give the Covered Employees and their eligible dependents credit for the plan year
in which the Effective Time (or commencement of participation in a plan of Purchaser) occurs
towards applicable deductibles and annual out-of-pocket limits for expenses incurred prior
to the Effective Time (or the date of commencement of participation in a plan of Purchaser)
to the extent permitted by Purchaser’s plans with no unreasonable additional cost to
Purchaser.

     7.5. Directors’ and Officers’ Insurance.

     (a) Prior to the Effective Time, Target shall purchase (i) an extended reporting period
endorsement under Target’s existing directors’ and officers’ liability insurance coverage
for Target’s current and former directors, officers, employees and agents in a form
acceptable to Target that shall provide such directors, officers, employees and agents with
coverage for six (6) years following the Effective Time of not less than the existing
coverage and have other terms not materially less favorable to, the insured persons than the
directors’ and officers’ liability insurance coverage presently maintained by Target, and
(ii) an E&O tail policy with coverage for two (2) years. Purchaser shall maintain such
policies in full force and effect, and continue to honor the obligations thereunder.

     (b) Purchaser agrees, and shall cause the Surviving Corporation to agree, that for a
period of six (6) years following the Effective Time, all rights to exculpation and
indemnification for acts or omissions occurring prior to the Effective Time now existing in
favor of the current or former directors, officers, employees or agents of Target as
provided in Target’s Organizational Documents and indemnification agreements shall become
the obligations of the Surviving Corporation and shall survive the Merger and shall continue
in full force and effect in accordance with their terms; provided that Purchaser’s
obligations under this Section 7.5(b) shall not exceed the amounts paid to the Surviving
Corporation by the insurance policy or policies referred to in Section 7.5(a).

     (c) The provisions of this Section 7.5 are intended to be for the benefit of, and shall
be enforceable by, each Target current and former director, officer, employee and agent and
the heirs and Representatives of such person.

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     7.6. Tax Covenants.

     (a) Post-Closing Tax Returns.

     (i) Purchaser shall prepare and timely file (or cause to be prepared and timely
filed) with the appropriate Taxing Authorities all Tax Returns required to be filed
by the Companies with respect to any taxable period beginning before the Closing
Date that become due after the Closing Date (each a “Purchaser Prepared Return”).
Each such Tax Return shall be prepared in a manner consistent with the prior
practice of the Companies unless otherwise required by applicable Tax Rules or
specified in Schedule 7.6(a).

     (ii) Purchaser shall provide the Agent with a copy of each Purchaser Prepared
Return for review and comment at least fifty (50) days prior to the filing of such
Tax Return (or, if required to be filed within fifty (50) days after the Closing or
the end of the taxable period to which such Purchaser Prepared Return relates, as
soon as reasonably possible following the Closing or the end of such taxable period,
as the case may be), accompanied by a statement (an “Indemnified Tax Statement”)
setting forth and calculating in reasonable detail the Taxes that are shown as due
on such Tax Return and claimed to be indemnifiable pursuant to Section 8.3(b)(iii).
The Agent shall have the right to review and approve (which approval shall not be
unreasonably withheld or delayed) each Purchaser Prepared Return. For this purpose,
the Agent’s withholding of approval of a Purchaser Prepared Return based upon
Purchaser’s failure to adopt in such Tax Return an alternative reporting position
suggested by the Agent shall be deemed reasonable if the reporting position proposed
by the Agent on such Tax Return is more likely than not to be sustained if
challenged by a relevant Taxing Authority.

     (iii) If the Agent disagrees with the manner of preparation of a Purchaser
Prepared Return or the amount of indemnified Taxes calculated in any Indemnified Tax
Statement, within twenty (20) days of the receipt of a Purchaser Prepared Return or
any Indemnified Tax Statement, the Agent shall provide to Purchaser a notice of such
dispute (a “Tax Statement Dispute”). If the Agent does not provide a notice of Tax
Statement Dispute within such 20-day period, the Agent shall be deemed to have
accepted the Tax Return and, for purposes of Article VIII, the Indemnified Tax
Statement relating thereto. If the Agent provides Purchaser with a notice of a Tax
Statement Dispute, the Agent shall also provide Purchaser with a written explanation
of the reasons for its disagreement and its proposed changes. Purchaser and the
Agent shall attempt to resolve their disagreement with respect to any Purchaser
Prepared Return and any Indemnified Tax Statement. If the Agent and Purchaser
cannot reach complete agreement within fifteen (15) days after receipt of a Tax
Statement Dispute, the dispute shall be submitted to an arbitrator (the “Tax
Arbitrator”) pursuant to the procedures described with respect to the Independent
Accountant in Section 2.2(b) for resolution within fifteen (15) days after such
submission. The decision of the Tax Arbitrator with respect to such dispute shall
be binding upon the parties. Purchaser shall, subject to any indemnification
pursuant to Section 8.3(b)(iii),

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timely file any Purchaser Prepared Return as finally determined under this
Section 7.6, and shall pay or cause to be paid the Tax shown as due on each such Tax
Return.

     (iv) The amount of the Losses attributable to Taxes shown in any Indemnified
Tax Statement as accepted or finally determined pursuant to the preceding paragraph,
shall be treated as a Loss that is indemnifiable by the Sellers pursuant to Section
8.3(b)(iii).

     (b) Payment or Reimbursement for Indemnified Taxes. The Agent on behalf of the
Sellers shall either remit the amount of any Taxes shown in any Indemnified Tax Statement as
accepted or finally determined in accordance with Section 7.6(a) to the relevant Taxing
Authority by electronic funds transfer or wire transfer or pay to Purchaser, pursuant to
Section 8.11, such amount either by delivery of a certified check drawn payable to the
relevant Taxing Authority or Purchaser Common Stock or wire transfer of immediately
available funds to such account as directed in writing by the Purchaser, not later than the
latest of (i) fifteen (15) days after provision to Agent of the Indemnified Tax Statement,
(ii) three (3) business days before the required payment date of such Tax, or (iii) in the
case of a disputed amount, three (3) business days after final resolution pursuant to
Section 7.6(a)(iii) of any dispute regarding the amount shown on the Indemnified Tax
Statement.

     (c) Taxable Year Closing; Allocation of Taxes. Purchaser shall, unless
prohibited by applicable law, cause the taxable periods of the Companies to end as of the
close of the Closing Date. Purchaser shall not permit the Companies to take any actions
after Closing on the Closing Date that are out of the ordinary course of business, except as
required by applicable Rules, this Agreement or consented to by the Agent. For purposes of
this Agreement, Taxes incurred by the Companies with respect to a taxable period that
includes but does not end on the Closing Date, shall be allocated to the portion of the
taxable period ending on the Closing Date: (i) except as provided in (ii) and (iii) below,
to the extent feasible, on a specific identification basis, according to the date of the
event or transaction giving rise to the Tax, and (ii) except as provided in (iii) below,
with respect to periodically assessed ad valorem Taxes and Taxes not otherwise reasonably
allocable to specific transactions or events, in proportion to the number of days in such
period occurring through the Closing Date compared to the total number of days in such
taxable period, and (iii) in the case of any Tax based upon or related to income or
receipts, in an amount equal to the Tax which would be payable if the relevant taxable
period ended on the Closing Date. Any credits relating to a taxable period that begins
before and ends after the Closing Date shall be taken into account as though the relevant
taxable period ended on the Closing Date. All determinations necessary to give effect to
the foregoing allocations shall be made in a manner consistent with prior practices of the
Companies.

     (d) Amended Returns. Except as required by applicable Rules or in connection
with an audit resolved pursuant to Section 7.6(f) (including consistent correlative
adjustments to Tax Returns for non-audited taxable periods), no party or affiliate of a
party may amend or cause the amendment of a Tax Return of the

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Companies, or file or amend any Tax election, or file a Tax Return after the due date
thereof, concerning the Companies, in each case, with respect to any taxable period
beginning on or before the Closing Date that would affect the amount of any indemnity
liability under Section 8.3 without the written consent of the Agent, which consent shall
not be unreasonably withheld or delayed. Purchaser shall, upon request by the Agent, and at
the expense of Sellers, cooperate in the preparation of and submission to the proper Taxing
Authority of any amended Tax Return with respect to the Companies for any taxable period
ending before the Closing Date to the extent appropriate to reduce or prevent indemnity
liability under Section 8.3.

     (e) Overpayments and Overaccruals Related to Indemnified Taxes. To the extent
that any determination of Tax liability, whether as the result of an audit or examination, a
claim for refund, the filing of an amended Tax Return or otherwise, results in a
determination of an overpayment of Taxes for any period, or portion thereof, ending on or
before the Closing Date that are related to Taxes that were indemnified by Sellers under
Section 8.3(b)(iii), Purchaser shall offset the amount of such overpayment against any
unpaid indemnity obligation of Sellers in respect of Taxes for which indemnity would be owed
under Section 8.3(b)(iii), and shall promptly pay to the Agent for the benefit of the
Sellers an amount equal to the lesser of (a) the portion of such overpayment that has not
been so offset and (b) any net indemnity obligations previously satisfied by Sellers in
respect of Taxes of the Companies pursuant to Section 8.3(b)(iii). Such offset or payment
shall be made by Purchaser promptly after receipt by (or crediting for the benefit of)
Purchaser or its Affiliates.

     (f) Audits and Contests Regarding Taxes. Any party who receives, or whose
Affiliate receives, any notice of a pending or threatened Tax audit, assessment, or
adjustment against or with respect to any of the Companies which may give rise to a right to
indemnification pursuant to the terms of Article VIII shall promptly notify the Agent and
Purchaser within five (5) Business Days of the receipt of such notice. Purchaser and the
Agent each agree to consult with and to keep the other informed on a regular basis regarding
the status of any Tax audit or proceeding to the extent that such audit or proceeding could
affect a liability of the parties hereto (including indemnity obligations hereunder). The
Agent shall have the right to represent any of the Companies’ interests in any Tax audit or
administrative or judicial proceeding pertaining to taxable periods ending on or before the
Closing Date and to employ counsel of his choice, but reasonably satisfactory to Purchaser,
at his expense, and shall control the disposition of any issue involved in such proceeding;
provided that Purchaser shall have the right to participate in such proceeding at its own
expense, and shall be entitled to control the disposition of any issue involved in such
proceeding which does not affect a potential claim for indemnity under Section 8.3.
Notwithstanding the foregoing provisions of this Section 7.6(f), the Agent shall not,
without the Purchaser’s consent, agree to any settlement with respect to any Tax if such
settlement could adversely affect any Tax liability of the Purchaser, its Affiliates or
(with respect to any taxable period or portion thereof beginning after the Closing Date) any
Company. Both Purchaser and the Sellers (through the Agent) shall be entitled to represent
their own interests in light of their responsibilities (including indemnity obligations) for
the related Taxes, at their own expense, in any audit or administrative or judicial
proceedings involving a taxable period of the Companies that

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includes but does not end on the Closing Date or involving both a taxable period of any
of the Companies ending on or before the Closing Date and a taxable period ending after the
Closing Date and no such audit or proceeding may be settled or compromised by the Agent or
Purchaser without the consent of both the Agent and Purchaser, which consent shall not be
unreasonably withheld or delayed. Except as otherwise provided in this Section 7.6(f), the
provisions of Article VIII shall govern the conduct of any Tax audit or administrative or
judicial proceedings with respect to which an Indemnity Claim may be made.

     (g) Cooperation, Access to Information and Records Retention. The Agent and
Purchaser shall cooperate, and cause their Representatives and Affiliates to cooperate, as
and to the extent reasonably requested by the other in connection with the preparation and
filing of Tax Returns as provided herein and any audit, litigation or other proceeding with
respect to Taxes relating to the Companies. Such cooperation shall include the provision of
records and information which are reasonably relevant to any such Tax Return, 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.
Purchaser agrees (i) to retain all books and records relevant to Taxes of the Companies
(including Tax Returns) relating to any taxable period beginning before the Closing Date
until the expiration of the statute of limitations for assessment of Taxes for such
respective taxable period, and (ii) to give the Agent reasonable written notice prior to
transferring, destroying or discarding any such books and records and, if the Agent so
requests, Purchaser shall allow the Agent to take possession or copy of such books and
records.

     (h) Tax Certificates. Purchaser and the Agent agree, upon request of the
other, to use all reasonable efforts to obtain any certificate or other document from any
Governmental Authority as may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including with respect to the transactions contemplated by this
Agreement).

     (i) Characterization of Indemnity Payments. The parties agree to treat any
payment made by Sellers to Purchaser as an adjustment to the Merger Consideration, to the
extent it may properly be so treated for income Tax purposes.

     7.7. Section 368(a) Reorganization Covenants.

     (a) Prior to the Effective Time, each party will use its best efforts to cause the
Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code and,
either before or after the Merger, no party will take any action reasonably likely to cause
the Merger not to qualify as such reorganization. Pursuant to the foregoing, each party
agrees to make such commercially reasonable additions or modifications to the terms of this
Agreement as may be reasonably necessary to permit the Merger so to qualify.

     (b) The Purchaser will cause the Surviving Corporation or other members of the
Purchaser “qualified group” (within the meaning of Treasury Regulations Section

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1.368-1(d)(4)(ii)) to either continue the historic business of Target or use a
significant portion of Target’s historic business assets in a business, both within the
meaning of Treasury Regulation Section 1.368-1(d).

     (c) The parties hereto agree that, unless otherwise required by law, they (i) will
report in their respective federal income Tax Returns for the taxable period including the
Closing Date that the Merger qualified as a reorganization under Section 368(a) of the Code,
(ii) will not take any Tax reporting position inconsistent with the characterization of the
Merger as a reorganization within the meaning of Section 368(a) of the Code, and (iii) will
properly file with their federal income Tax Returns all information required by Treasury
Regulations Section 1.368-3. If either party determines that it is required by law to take
any actions contrary to those contemplated by the immediately preceding sentence, it will,
prior to taking any such action, notify the other party and work in good faith to modify the
terms, if possible, of this Agreement so that it will not be required by law to take any
actions contrary to those contemplated by the immediately preceding sentence.

     7.8. Certain Post-Closing Obligations. Sellers shall provide Purchaser with copies of
the results of pending state and federal litigation searches regarding Target in the following
counties: McHenry County, Illinois; Norfolk County, Massachusetts; Monmouth County, New Jersey;
Bennington County, Vermont; and Falls Church County, Virginia, as such results are received by the
Sellers, but in no event later than 21 days after the Closing.

ARTICLE VIII.

INDEMNIFICATION.

     8.1. Survival of Representations, Warranties and Covenants.

     (a) The respective representations, warranties and covenants of each of the parties to
this Agreement shall be deemed to be material and to have been relied upon by the parties
hereto, and shall survive the Closing and the consummation of the transactions contemplated
hereby.

     (b) No party or other Person entitled to indemnification under this Article VIII shall
commence any suit or proceeding alleging an Indemnity Claim due to a breach of any
representation or warranty in Article IV, V or VI of this Agreement or pursuant to Section
8.3 or 8.4 after the eighteen (18) month anniversary of the Closing (the eighteen (18) month
anniversary of the Closing Date being called the “Cut-Off Date”). Notwithstanding the
foregoing, the prohibition contained in the first sentence of this Section 8.1(b) shall not
apply to:

     (i) any Indemnity Claim under Section 8.3(a)(i), 8.3(b)(i) or 8.4(a) relating
to Sections 4.9 (taxes), 4.17 (employee plans), 4.18 (environmental matters),
4.20(b) (intellectual property) or 6.10(a) (intellectual property), it being agreed
that the representations and warranties of those Sections and any Indemnity Claim
arising under Sections 8.3(b)(ii), (iii), (vi) or (ix) shall continue until the
forty-eight (48) month anniversary of the Closing (regardless of whether

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the facts giving rise to such Claim are also the subject of any expired
representation and warranty);

     (ii) any Indemnity Claim under Section 8.3(a)(i), 8.3(b)(i) or 8.4(a) relating
to Sections 4.1 (organization; capitalization), 4.2 (authority), 4.10 (but only the
first sentence thereof) (title), 5.1 (ownership), 5.2 (authority), 6.1
(organization), 6.2 (authority) or 6.4 (capitalization), it being agreed that the
representations and warranties of those Sections and any Indemnity Claim arising
under Sections 8.3(a)(ii) or 8.4(b) shall continue indefinitely beyond the Cut-Off
Date (regardless of whether the facts giving rise to such Claim are also the subject
of any expired representation and warranty); and

     (iii) any party or other Person entitled to indemnification under this Article
VIII to the extent that such party or Person asserted in writing a specific
Indemnity Claim prior to the date by which an Indemnity Claim relating to the
representations and warranties in question must be commenced pursuant to this
Section 8.1(b), in which event the relevant representations and warranties shall
continue in effect and remain a basis for indemnity with respect to each such
Indemnity Claim that was asserted prior to the applicable expiration date until such
Indemnity Claim is finally resolved (pursuant to a non-appealable order by a court
of competent jurisdiction or agreement of Agent and Purchaser).

     (c) Notwithstanding anything contained in this Article VIII to the contrary, no party
or other Person shall be entitled to bring any Indemnity Claim under this Article VIII after
the earlier of (i) the date that is 180 days after the closing of a transaction or series of
transactions pursuant to which Purchaser (or any Person who acquires all or substantially
all of Purchaser’s assets or all or substantially all of the Purchaser Common Stock, in
either such case in exchange for securities of such Person or any successor to Purchaser by
merger) becomes subject to Section 13 or Section 15 of the Exchange Act, and (ii) the
consummation of a Change of Control.

     8.2. No Implied Representations. Except in the case of any claims for actual fraud,
Purchaser, Merger Sub, Target and Sellers acknowledge that, except as expressly provided in
Articles IV, V and VI of this Agreement, no party hereto, and none of the Representatives of any
party hereto, has made or is making any representations or warranties whatsoever, implied or
otherwise.

     8.3. Indemnification by Sellers.

     (a) Subject to the terms and conditions herein, including the limitations set forth in
Sections 8.1 and 8.6, after the Closing, each Seller, solely as to himself, herself or
itself, shall indemnify and hold harmless the Purchaser Protected Parties from and against
and in respect of any and all Losses resulting from, in connection with or arising out of,
or any Claim relating to (i) any breach of any representation or warranty made by such
Seller in Article V of this Agreement, or (ii) any breach by such Seller of any of the
covenants of this Agreement.

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     (b) Subject to the terms and conditions herein, including the limitations set forth in
Sections 8.1 and 8.6, each Seller, severally and not jointly, shall indemnify and hold
harmless the Purchaser Protected Parties from and against and in respect of such Seller’s
Total Consideration Pro-Rata Percentage of any and all Losses incurred by the Purchaser
Protected Parties resulting from, in connection with or arising out of, or any Claim
relating to, any of the following:

     (i) any breach of any representation or warranty made by Target in this
Agreement;

     (ii) any breach by Target or Agent of any of the covenants of this Agreement;

     (iii) notwithstanding any disclosure in this Agreement (including in the
Schedules), any Liability for Taxes (A) of the Companies for all taxable periods, or
portions thereof (determined in accordance with the allocation provisions of Section
7.6(c)(i) — (iii)), ending on or before the Closing Date, or (B) owing by any
Person (other than the Companies) for which any Company is liable as a result of
transactions or circumstances occurring or existing on or before the Closing Date,
including without limitation, under any agreement or arrangements with respect to
payment of any Tax in effect on or before the Closing Date, in each case, except to
the extent accrued on the Closing Date Balance Sheet;

     (iv) notwithstanding any disclosure in this Agreement (including in the
Schedules), any Liability for (A) Transaction Expenses, or (B) vacation pay or sick
pay, in each case, except to the extent accrued on the Closing Date Balance Sheet;

     (v) any Claim relating to any Dissenting Shares;

     (vi) the matters disclosed on Schedule 4.15 and as Items 2 and 3 on
Schedule 4.20(b), in each case except to the extent accrued on the Closing
Date Balance Sheet;

     (vii) the exercise of any option to purchase shares of Target Common Stock
under the Target Stock Option Plan at any time after immediately prior to the
Effective Time;

     (viii) notwithstanding any representation or warranty contained herein, or any
limitations or qualifications of, or exceptions to (whether in a Schedule attached
hereto or otherwise), any such representation and warranty, except as set forth on
Schedule 8.3(b), any obligation or liability (including accounts payable),
absolute or contingent, known or unknown, liquidated or unliquidated, whether due or
to become due and regardless of when or by whom asserted (a “Liability”) including,
without limitation, deferred Tax liabilities, vacation time or pay, severance pay,
future amounts payable arising out of prior transactions, and any other Liabilities
relating to or arising out of any act, omission, transaction, circumstance, sale of
goods or services, or other condition which occurred or

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existed on or before the Closing Date, which is not fully shown or provided for
in the Closing Date Balance Sheet, except under the executory portion of any
Contract (A) by which any Company is bound on the Closing Date, (B) which, if
required by this Agreement, is disclosed in a Schedule hereto, and (C) the existence
of which does not otherwise constitute or result from a breach of any
representation, warranty or covenant of this Agreement or a breach or default by
either Company under any Contract; and

     (ix) notwithstanding any disclosure in this Agreement (including in the
Schedules), any Liability relating to the cancellation of options to purchase shares
of Target Common Stock pursuant to the 2004 Israeli Stock Option Plan as
contemplated by Section 1.11.

     8.4. Indemnification by Purchaser. Subject to the terms and conditions herein,
including the limitations set forth in Sections 8.1 and 8.6, Purchaser shall indemnify and hold
harmless Seller Protected Parties from and against and in respect of any and all Losses incurred by
such Persons resulting from, in connection with or arising out of, or any Claim relating to (a) any
breach of any representation or warranty made by Purchaser in this Agreement, or (b) any breach by
Purchaser or Merger Sub of any of the covenants of this Agreement.

     8.5. Certain Rights. Notwithstanding the provisions of any representation or warranty
that includes, or requires disclosure of matters above, a specific monetary threshold, if any party
hereto breaches any of such representations and warranties due to the monetary thresholds contained
therein having been exceeded, then Losses for each such breached representation and warranty shall
include the full amount of the Losses incurred by the Purchaser Protected Parties or Seller
Protected Parties, as applicable, relating to any such matter notwithstanding the monetary
thresholds listed in such representations or warranties. Nothing in this Agreement shall limit any
obligation of Sellers by virtue of the fact that Target has no obligation or Liability after the
Closing for any breach of any representation, warranty or covenant made by Target, and there shall
be no obligation on the part of Purchaser to seek recourse against Target with respect to any such
claim or demand.

     8.6. Limitations.

     (a) Notwithstanding the foregoing, (a) the amount of any Losses for which
indemnification is to be provided pursuant to the provisions of this Article VIII shall be
reduced by (i) any amounts recovered or recoverable by the Indemnified Party under insurance
policies with respect to such Loss, net of any increased premiums or self retention payments
related thereto, and (ii) the amount of any actual reduction in Taxes of an Indemnified
Party or its Affiliates, which are attributable to such Losses and (b) Losses shall not
include any specific liability or reserve to the extent accrued for on the Closing Date
Balance Sheet (as finally determined in accordance with Section 2.2). Any amounts payable
by the Indemnifying Party to or on behalf of an Indemnified Party pursuant to this Agreement
shall be reduced to the extent that, taking into account the effect of the payment itself,
the Indemnified Party actually realizes a Tax reduction attributable to a Loss; provided,
that, if a Tax reduction has not been realized in the taxable period during which an
Indemnifying Party makes an indemnification payment or

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the Indemnified Party incurs or pays any loss, the Indemnified Party shall thereafter
make payments to the Indemnifying Party at the end of each subsequent taxable period to
reflect the net Tax reductions subsequently realized by the Indemnified Party.

     (b) Notwithstanding anything to the contrary contained herein, in no event will any
Seller be liable for and pay the Purchaser Protected Parties (i) under clause (a)(i) or
(b)(i) of Section 8.3 on account of any breach of representations or warranties under this
Agreement (except for a breach of any of the representations and warranties contained in
Sections 4.1 (organization; capitalization), 4.2 (authority), 4.9 (taxes), 4.10 (but only
the first sentence thereof) (title), 4.17 (employee plans), 4.18 (environmental matters),
4.20(b) (intellectual property), 5.1 (ownership) or 5.2 (authority) as to which this clause
(i) shall not apply) or under clause (b)(viii) of Section 8.3, in any such case to the
extent the aggregate Losses for Indemnity Claims under such Sections exceed such Seller’s
Total Consideration Pro-Rata Percentage of $2,400,000, (ii) with respect to Losses on
account of any breach of any of the representations or warranties contained in Section
4.20(b) (intellectual property) to the extent the aggregate Losses for Indemnity Claims
under such Section exceed such Seller’s Total Consideration Pro-Rata Percentage of
$10,000,000, and (iii) with respect to Losses resulting from fraud by Target or any Seller
or on account of any breach of any of the representations or warranties contained in
Sections 4.1 (organization; capitalization), 4.2 (authority), 4.9 (taxes), 4.10 (but only
the first sentence thereof) (title), 4.17 (employee plans), 4.18 (environmental matters),
5.1 (ownership) or 5.2 (authority) to the extent the aggregate Losses for Indemnity Claims
under such Sections, together with all other Indemnity Claims under Section 8.3, exceed such
Seller’s Total Consideration Pro-Rata Percentage of the Merger Consideration.
Notwithstanding anything contained herein to the contrary, the parties hereto agree that in
no event will any Seller be liable for or pay the Purchaser Protected Parties pursuant to
Section 8.3 in excess of such Seller’s Total Consideration Pro-Rata Percentage of the Merger
Consideration.

     (c) Notwithstanding anything to the contrary contained herein, in no event will
Purchaser be liable for and pay the Seller Protected Parties, in the aggregate, (i) under
clause (a) of Section 8.4 on account of any breach of representations or warranties under
this Agreement (except for a breach of any of the representations and warranties contained
in Sections 6.1 (organization), 6.2 (authority), 6.4 (capitalization) or 6.10(a)
(intellectual property) as to which this clause (i) shall not apply) to the extent the
aggregate Losses for Indemnity Claims under such Sections exceed $2,400,000, (ii) with
respect to Losses on account of any breach of any of the representations or warranties
contained in Section 6.10(a) to the extent the aggregate Losses for Indemnity Claims under
such Section exceed $10,000,000, and (iii) with respect to Losses resulting from fraud by
Purchaser or on account of any breach of any of the representations or warranties contained
in Sections 6.1 (organization), 6.2 (authority) or 6.4 (capitalization) to the extent the
aggregate Losses for Indemnity Claims under such Sections, together with all other Indemnity
Claims under Section 8.4, exceed the Merger Consideration. Notwithstanding anything
contained herein to the contrary, the parties hereto agree that in no event will Purchaser
be liable for or pay Seller Protected Parties pursuant to Section 8.4 in excess of the
Merger Consideration.

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     (d) Notwithstanding anything to the contrary contained herein, no claim for
indemnification may be made under Section 8.3(a)(i) or 8.3(b)(i) on account of any breach of
representations or warranties under this Agreement (except for a breach of any of the
representations and warranties contained in Sections 4.1 (organization; capitalization), 4.2
(authority), 5.1 (ownership) or 5.2 (authority) as to which the Purchaser Deductible Amount
shall not apply) or under clause (b)(viii) of Section 8.3 in any such case unless and until
the Purchaser Protected Parties have incurred aggregate Losses for which the Purchaser
Protected Parties are entitled to indemnification pursuant to this Agreement in excess of
$150,000 in the aggregate (the “Purchaser Deductible Amount”) and then only to the extent
that such aggregate amount of Losses exceeds the Purchaser Deductible Amount.

     (e) Notwithstanding anything to the contrary contained herein, no claim for
indemnification may be made under Section 8.4(a) on account of any breach of representations
or warranties under this Agreement (except for a breach of any of the representations and
warranties contained in Sections 6.1 (organization), 6.2 (authority) or 6.4 (capitalization)
as to which the Seller Deductible Amount shall not apply) unless and until the Seller
Protected Parties have incurred aggregate Losses for which the Seller Protected Parties are
entitled to indemnification pursuant to this Agreement in excess of $150,000 in the
aggregate (the “Seller Deductible Amount”) and then only to the extent that such aggregate
amount of Losses exceeds the Seller Deductible Amount.

     8.7. Cooperation. Subject to the provisions of Section 8.8, a party or parties
against whom an Indemnity Claim has been asserted (individually and collectively, “Indemnifying
Party”) shall have the right, at its own expense, to participate in the defense of any action or
proceeding brought by a third party which resulted in such Indemnity Claim, and if such right is
exercised, the party or parties entitled to indemnification (individually and collectively,
“Indemnified Party”) and the Indemnifying Party shall reasonably cooperate in the defense of such
action or proceeding.

     8.8. Indemnification Procedure for Third Party Claims.

     (a) In the event that subsequent to the Closing Date any Indemnified Party becomes
aware of an Indemnity Claim on account of or in connection with any Claim or the
commencement of any action or proceeding against such Indemnified Party by any Person who is
not a party to this Agreement (including any Governmental Authority) (a “Third Party
Claim”), as to which such Indemnified Party would be entitled to assert an Indemnity Claim,
such Indemnified Party shall promptly give written notice thereof together with a statement
of any available information regarding such Third Party Claim, including, to the extent
known by such Indemnified Party, the alleged factual basis for the Third Party Claim and the
Losses claimed and referring to the provision of this Agreement pursuant to which
indemnification is sought (the “Notice of Claim”) to the Indemnifying Party promptly after
learning of such Third Party Claim. Failure by the Indemnified Party to provide notice on a
timely basis of a Third Party Claim shall not affect the right of the Indemnified Party to
obtain indemnification as a result of such Third Party Claim, except to the extent of any
direct damages caused by such delay. If (i) the Indemnifying Party is any Seller and (A)
such Third Party Claim does not seek

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injunctive or other equitable relief involving Purchaser or its Affiliates, (B) a
Purchaser Protected Party’s insurance carrier does not require, as a condition to such
Purchaser Protected Party’s eligibility to recover insurance proceeds on account of such
Third Party Claim, that such carrier control the defense of any such Third Party Claim, (C)
such Third Party Claim does not seek recourse which could reasonably be expected to
adversely affect the ongoing business or operations (including customer, supplier or
employee relationships) of a Purchaser Protected Party or any of its Affiliates (including
their rights to use the Company Intellectual Property) or otherwise have a Material Adverse
Effect on Purchaser or its Affiliates, (D) the Agent can demonstrate that it has sufficient
amounts which may be used in connection with such Third Party Claim to (I) defend such Third
Party Claim, and (II) defend all other Third Party Claims then pending which the Agent is
defending pursuant to this Section 8.8, and (E) the Indemnifying Party has acknowledged in
writing to the Indemnified Party its unconditional obligation to indemnify the Indemnified
Party for such Third Party Claim (subject to the limitations and conditions set forth
herein), or (ii) if the Indemnifying Party is Purchaser, then in any such case, except in
the case of Claims described in Section 7.6(f), the Indemnifying Party shall have the right,
upon written notice to the Indemnified Party (the “Defense Notice”) within fifteen (15) days
of its receipt from the Indemnified Party of the Notice of Claim, to conduct at its expense
the defense against such Claim in its own name, or, if necessary, in the name of the
Indemnified Party; provided, however, that the Indemnified Party shall have the right to
approve the defense counsel representing the Indemnifying Party in such defense, which
approval shall not be unreasonably withheld or delayed, and in the event the Indemnifying
Party and the Indemnified Party cannot agree upon such counsel within ten (10) days after
the Defense Notice is provided, then the Indemnifying Party shall propose an alternate
defense counsel, which shall be subject again to the Indemnified Party’s approval, which
approval shall not be unreasonably withheld or delayed.

     (b) In the event that the Indemnifying Party shall fail to give the Defense Notice
within the time and as prescribed by Section 8.8(a), or if the Indemnifying Party does not
have the right to defend such Third Party Claim pursuant to Section 8.8(a), then, except in
the case of Claims described in Section 7.6(f), in either such event the Indemnified Party
shall have the right to conduct such defense in good faith with counsel reasonably
acceptable to the Indemnifying Party, but the Indemnified Party (or any insurance carrier
defending such Third Party Claim on the Indemnified Party’s behalf) shall be prohibited from
compromising or settling the Third Party Claim without the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.

     (c) In the event that the Indemnifying Party does deliver a Defense Notice and thereby
elects to conduct the defense of such Third Party Claim in accordance with Section 8.8(a),
the Indemnified Party will cooperate with and make available to the Indemnifying Party such
assistance and materials as it may reasonably request, and such cooperation shall be at the
expense of the Indemnifying Party. Without the prior written consent of the Indemnified
Party, the Indemnifying Party (and any insurance carrier defending such Third Party Claim on
the Indemnifying Party’s behalf) will not enter into any settlement of any Third Party Claim
if pursuant to or as a result of such settlement,

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such settlement would lead to Liability or create any financial or other obligation on
the part of any Indemnified Party for which such Indemnified Party is not entitled to be
indemnified hereunder. If a firm offer is made to settle a Third Party Claim, which offer
the Indemnifying Party is permitted to settle under this Section 8.8, and the Indemnifying
Party desires to accept and agree to such offer, the Indemnifying Party will give written
notice to the Indemnified Party to that effect. If the Indemnified Party objects to such
firm offer within fifteen days after its receipt of such notice, the Indemnified Party may
continue to contest or defend such Third Party Claim and, in such event, the maximum amount
for which the Indemnifying Party shall be liable in connection with such Third Party Claim
will not exceed the amount of such settlement offer, plus costs and expenses paid or
incurred up to the point such notice had been delivered. Failure at any time of the
Indemnifying Party to use commercially reasonable efforts to defend a Third Party Claim as
required herein shall entitle the Indemnified Party to assume the defense and settlement of
such Third Party Claim as if the Indemnifying Party had never elected to do so as provided
in this Section.

     (d) Any judgment entered or settlement agreed upon in the manner provided herein shall
be binding upon the Indemnifying Party, and shall be conclusively deemed to be an obligation
with respect to which the Indemnifying Party shall be obligated to indemnify the Indemnified
Party, in each case subject to the Indemnifying Party’s right to appeal an appealable
judgment or order and, in all cases, subject to the limitations set forth in this Article
VIII.

     8.9. Nature of Other Liabilities.

     (a) In the event any Indemnified Party should have an Indemnity Claim which does not
involve a Third Party Claim, the Indemnified Party shall transmit to the Indemnifying Party
a written notice (the “Indemnity Notice”) describing in detail the nature of the Indemnity
Claim and the basis of the Indemnified Party’s request for indemnification and, if known by
the Indemnified Party, a calculation of Losses attributable to such Indemnity Claim
(“Asserted Damages Amount”).

     (b) Within thirty (30) days after delivery of an Indemnity Notice to the Indemnifying
Party a written response (the “Response”) in which the Indemnifying Party shall: (i) agree
that the Indemnified Party is entitled to receive all of the Asserted Damages Amount, in
which event the Indemnifying Party shall promptly pay to the Indemnified Party the Asserted
Damages Amount; (ii) agree that the Indemnified Party is entitled to receive part, but not
all, of the Asserted Damages Amount (such portion, the “Agreed Portion”), in which event the
Indemnifying Party shall promptly pay to the Indemnified Party the Agreed Portion; or (iii)
dispute that the Indemnified Party is entitled to receive any of the Asserted Damages
Amount. If the Indemnifying Party does not deliver the Response within thirty (30) days
after delivery of the Indemnity Notice, the Indemnity Claim specified by the Indemnified
Party in the Indemnity Notice shall become the obligation of the Indemnifying Party.

     (c) In the event that the Indemnifying Party shall (i) dispute that the Indemnified
Party is entitled to receive any of the Asserted Damages Amount, or (ii)

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agree that the Indemnified Party is entitled to only the Agreed Portion of the Asserted
Damages Amount, the Agent and Purchaser shall attempt in good faith to agree upon the rights
of the respective parties with respect to each of the indemnification claims that comprise
the Asserted Damages Amount (or the portion of the Asserted Damages Amount not comprising
the Agreed Portion). If the Agent and Purchaser should so agree, a memorandum setting forth
such agreement shall be prepared and signed by both such parties. If no such agreement can
be reached after good faith negotiation within sixty (60) days after delivery of a Response,
either Purchaser or the Agent may commence litigation of any matter set forth in the
applicable Indemnity Notice.

     8.10. Rights of Recoupment and Set-Off. Purchaser shall have the right to recoup and
set off any amounts owing to it or any other Purchaser Protected Party from a Seller for any
Indemnity Claims against any and all amounts due or to become due to such Seller from Purchaser
under this Agreement or otherwise; provided that if there has not been a final determination that
such amounts are payable to Purchaser or any other Purchaser Protected Party from a Seller (as
evidenced either by the agreement of Purchaser and the Agent, or by entry of a final, nonappealable
order by a court of competent jurisdiction), then Purchaser shall deposit such amounts with an
escrow agent pursuant to an escrow agreement reasonably acceptable to Purchaser and the Agent, to
be held by such escrow agent and then distributed only pursuant to the agreement of Purchaser and
the Agent, or a final, nonappealable order by a court of competent jurisdiction. The parties
acknowledge and agree that the rights of recoupment and set off set forth in this Section 8.10 are
a condition to Purchaser agreeing to enter into and perform this Agreement and that the rights of
Sellers under this Agreement are subject to such rights.

     8.11. Payment of Losses.

     (a) All Losses in respect of any Indemnity Claim payable by any Seller shall be paid,
at such Seller’s option, either in cash or by such Seller delivering to Purchaser a number
of shares of Purchaser Common Stock having a Current Value equal to the amount of such
Losses. If any Losses owed by a Seller are not paid to Purchaser by one of the methods
described in the first sentence of this Section 8.11(a) within ten (10) days of a final
determination that such Losses are payable (as evidenced either by the agreement of
Purchaser and the Agent, or by entry of a final, nonappealable order by a court of competent
jurisdiction), and Purchaser is unable or unwilling to recover such Losses pursuant to
Section 8.10, such Seller (and its transferees, if any) shall be deemed to have forfeited,
and Purchaser shall reduce, on its books and records and for all purposes, the number of
            shares of Purchaser Common Stock which were owned by such Seller immediately after the
Effective Time by a number of shares of Purchaser Common Stock having a Current Value equal
to such unpaid Losses.

     (b) All Losses in respect of any Indemnity Claim against Purchaser may be paid, at
Purchaser’s option, either in cash or by Purchaser delivering to the applicable Seller a
number of shares of Purchaser Common Stock having a Current Value as of the date such
Indemnity Claim is payable equal to the amount of such Losses within ten (10) days of a
final determination that such Losses are payable (as evidenced either by the agreement of
Purchaser and the Agent, or by entry of a final, nonappealable order by a court of competent
jurisdiction).

- 52 -

 

     8.12. Exclusive Remedy. Except with respect to any Claim based on actual and
intentional fraud made against the Person committing such fraud or seeking injunctive or other
equitable relief for breach of this Agreement, the rights and obligations of the parties under this
Article VIII shall be the sole and exclusive rights and obligations of the parties with respect to
any breach of any representation, warranty, covenant or agreement in this Agreement and shall be in
lieu of any other rights or remedies to which the party entitled to indemnification hereunder would
otherwise be entitled as a result of such breach.

     8.13. Contract Intent and Construction; Avoidance of Ambiguity. The rights and
remedies of any Person based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this Agreement shall in
no way be limited by the fact that the act, omission, occurrence or other state of facts upon which
any Claim of any such inaccuracy, breach or indemnity is based may also be the subject matter of
any representation, warranty, covenant or agreement contained in this Agreement as to which there
is no inaccuracy or breach. BY WAY OF EXAMPLE AND TO REFLECT THE INTENT, AGREEMENT AND
UNDERSTANDING OF THE PARTIES, THE EXISTENCE OF ANY FACTS OR CIRCUMSTANCES WHICH WOULD CONSTITUTE A
BREACH OF SECTION 4.5 WILL CONSTITUTE A BREACH OF SECTION 4.5 (AS TO WHICH PURCHASER IS ENTITLED TO
INDEMNIFICATION IN ACCORDANCE WITH THE TERMS OF THIS ARTICLE VIII) EVEN THOUGH THE EXISTENCE OF
SUCH FACTS OR CIRCUMSTANCES MIGHT NOT CONSTITUTE A BREACH OF A MORE SPECIFIC REPRESENTATION AND
WARRANTY OR ANOTHER REPRESENTATION AND WARRANTY THAT IS QUALIFIED BY KNOWLEDGE OR OTHERWISE.

ARTICLE IX.

CONDITIONS TO CLOSING

     9.1. Conditions to Obligations of Purchaser and Merger Sub. All obligations of
Purchaser and Merger Sub under this Agreement are subject to the fulfillment, at or prior to the
Closing, of the following conditions, any one or more of which may be waived by Purchaser:

     (a) Performance of Target’s and Sellers’ Obligations. Target and Sellers shall
have delivered all documents and agreements described in Schedule 3.2 and Target and
Sellers shall have otherwise performed in all respects all obligations required under this
Agreement to be performed by them on or prior to the Closing Date.

     (b) Pending Proceedings. No action or proceeding shall be pending before any
court or governmental authority seeking to restrain or prohibit or obtain damages or other
relief in connection with this Agreement or the consummation of the transactions
contemplated hereby.

     (c) Closing Net Asset Position. The Closing Net Asset Position as shown on the
Preliminary Balance Sheet must be no less than $9,982,078.

     (d) No Claim Regarding Stock Ownership or Merger Consideration. There must not
have been made or threatened by any Person any Claim asserting that such Person (a) is the
holder or the beneficial owner of, or has the right to acquire or to obtain

- 53 -

 

beneficial ownership of, any stock of, or any other voting, equity, or ownership
interest in, Target, or (b) is entitled to all or any portion of the Merger Consideration
payable for the Target Preferred Stock.

     (e) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the Stockholders under Delaware Law.

     9.2. Conditions to Obligations of Target and Sellers. All obligations of Target and
Sellers under this Agreement are subject to the fulfillment, at or prior to the Closing, of the
following conditions, any one or more of which may be waived by Target:

     (a) Performance of Purchaser’s and Merger Sub’s Obligations. Purchaser and
Merger Sub shall have delivered all documents and agreements described in Schedule
3.3 and otherwise performed in all respects all obligations required under this
Agreement to be performed by it on or prior to the Closing Date.

     (b) Pending Proceedings. No action or proceeding against the Company shall be
pending before any court or governmental authority seeking to restrain or prohibit or obtain
damages or other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.

     (c) Stockholder Approval. This Agreement and the Merger shall have been
approved and adopted by the requisite vote of the Stockholders under Delaware Law.

ARTICLE X.

TERMINATION AND ABANDONMENT

     10.1. Methods of Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing:

     (a) by the mutual written consent of Purchaser and Target; or

     (b) by either party if the Closing does not occur on the date hereof.

     10.2. Procedure Upon Termination. In the event of termination of this Agreement by
Target or Purchaser pursuant to this Article X, written notice thereof shall forthwith be given to
the other parties and this Agreement shall terminate and the transactions contemplated hereby shall
be abandoned, without further action by any party to this Agreement. The agreements set forth in
Section 7.1, this Section 10.2, Article VIII and Article XI shall survive the termination of this
Agreement.

ARTICLE XI.

MISCELLANEOUS.

     11.1. Right to Equitable Relief. In the event Purchaser, Merger Sub, Target or any
Seller fails to perform any of his, her or its obligations hereunder, Purchaser, Merger Sub, Target
and any Seller, as applicable, shall have the right to require specific performance of the
obligations not performed, and in the event Purchaser, Merger Sub, Target or any Seller fails to

- 54 -

 

honor any of the covenants set forth in this Agreement, Purchaser, Merger Sub, Target and any
Seller, as applicable, shall have the right to obtain injunctive relief, without bond or other
security, to enforce such obligations.

     11.2. Expenses. Each of the parties hereto shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with this transaction, including fees and expenses of
its own financial or other consultants, accountants and counsel (such costs and expenses incurred
by Target or Sellers, the “Transaction Expenses”).

     11.3. Entire Agreement. This Agreement (including the Schedules hereto) contains the
entire agreement between the parties with respect to this transaction and supersedes all prior
arrangements or understandings with respect thereto, written or oral. This Agreement may not be
modified or changed except by an instrument or instruments in writing signed by Purchaser and the
Agent. The waiver by or on behalf of any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any subsequent breach.

     11.4. Benefit. The terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors, assigns, executors,
administrators or other Representatives. Except as otherwise set forth in Section 7.5, nothing in
this Agreement, expressed or implied, is intended to confer upon any party, other than the parties
and their respective successors in interest, any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided herein.

     11.5. Notices. All notices or other communications which are required or permitted
hereunder shall be in writing or by written telecommunication and will be deemed to be sufficient
if (i) delivered personally or sent by registered or certified mail, postage prepaid, (ii) sent by
confirmed electronic mail or facsimile if sent during normal business hours of the recipient, and
if not so confirmed, then on the next business day or facsimile (provided that a copy is
simultaneously sent by regular mail) or (iii) sent by overnight courier, to the persons and
addresses listed on Schedule 11.5, or to such other persons and addresses as may be
designated from time to time by the receiving party. Any such notices shall be deemed to have been
given as of the date so personally delivered or transmitted by electronic mail or facsimile if
receipt is confirmed, or one (1) day after sent by overnight courier or five (5) days after mailed.

     11.6. Further Assurances. After the Closing, the parties agree to execute all
additional documents and take all actions reasonably needed to accomplish the purposes of this
Agreement and to carry out the terms hereof.

     11.7. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF DELAWARE. ANY ACTION OR PROCEEDING SEEKING TO ENFORCE ANY PROVISION
OF OR BASED ON ANY RIGHT ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT AGAINST ANY OF THE PARTIES
ONLY IN COURTS OF THE STATE OF DELAWARE OR, IF IT CAN ACQUIRE JURISDICTION, ONLY IN ANY UNITED
STATES DISTRICT COURT FOR THE STATE OF DELAWARE. EACH OF THE PARTIES HEREBY WAIVES ANY RIGHT TO
JURY TRIAL.

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     11.8. Captions and Schedules. Paragraph titles or captions contained herein are
inserted as a matter of convenience and are for reference, and in no way define, limit, extend or
describe the scope of this Agreement or any provision hereof. All Schedules referred to in this
Agreement are incorporated herein and constitute a part of this Agreement. No information
contained in the Schedules shall be deemed to be an admission by any party hereto to any third
party of any matter whatsoever, including any violation of applicable law or breach of any
agreement. Disclosure of any item on any of the Schedules shall not constitute an admission that
such item is required to be so disclosed.

     11.9. Severability. If any term or provision of this Agreement shall to any extent be
invalid or unenforceable, the remainder of this Agreement shall not be affected thereby, and each
term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by
law.

     11.10. Non-Assignability. Except as provided in Sections 1.16 and 1.17, this
Agreement shall not be assignable by any party hereto without the prior written consent of the
other parties. Any attempted assignment or transfer hereof not permitted by the preceding sentence
shall be in breach of this Agreement and shall be null and void and of no force or effect.
Notwithstanding the foregoing, Purchaser shall have the unrestricted right to (a) assign any or all
of its rights, remedies and obligations under this Agreement to any of its Affiliates, so long as
Purchaser remains jointly and severally liable with such assignee for its obligations hereunder,
and (b) collaterally assign its rights and remedies under this Agreement to any lender or lenders
for Purchaser.

     11.11. Counterparts; Terms; Knowledge.

     (a) This Agreement may be executed in two or more counterparts, each of which shall be
deemed an original and all of which together shall be considered one and the same agreement.

     (b) All references herein to Articles, Sections, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise require. All
references to singular or plural or masculine or feminine shall include the other as the
context may require. The words “hereof,” “herein,” “hereunder” and words of similar import
shall refer to this Agreement as a whole and not to any particular Section or provision of
this Agreement, and reference to a particular Section of this Agreement shall include all
subsections thereof. The words “party” and “parties” shall refer, as applicable, to Target,
Sellers and Purchaser. Accounting terms used herein and not otherwise defined herein are
used herein as defined by GAAP in effect as of the date hereof, consistently applied. The
word “including” shall mean including without limitation.

     (c) All references to Target’s “knowledge”, or phrases of similar import, shall mean
the actual knowledge of the people identified on Schedule 11.11(c).

     (d) All references to Purchaser’s “knowledge”, or phrases of similar import, shall mean
the actual knowledge of the people identified on Schedule 11.11(d).

- 56 -

 

     11.12. Documentation. This Agreement was initially prepared by Purchaser’s legal
counsel as a matter of convenience only, and has been thoroughly reviewed by Target, Sellers and
their legal counsel and the input of Target, Sellers and their legal counsel was properly
considered and, therefore, the parties acknowledge and agree that no interpretation will be made in
favor of any of the parties or signatories with respect to this Agreement for the reason that such
document was prepared by Purchaser’s legal counsel.

     11.13. Intentionally Omitted

     11.14. Facsimile/Federal Express. This Agreement may be executed and delivered by
facsimile, electronic mail and/or overnight courier, and the parties agree that the receipt of an
executed facsimile copy or copy delivered by electronic transmission or overnight courier shall be
deemed to be an original.

(SIGNATURES IN NEXT PAGES)

- 57 -

 

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

	 	 	 	 	 	 	 	 	 

	TRUSTWAVE HOLDINGS, INC.	 	 	 	BREACH SECURITY, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Robert McCullen
	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Robert McCullen	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	Chief Executive Officer	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

	 	 	 	 	 	 	 	 	 	 	 

	TRUSTWAVE ACQUISITION CORP.	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	/s/ Robert McCullen	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	Robert McCullen	 	 	 	 	 	 
	 	 	Chief Executive Officer	 	 	 	 	 	 

	 	 	 	 	 	 

	SELLERS:
	 
	 	 	 	 	 	 
	SRBA #5, L.P.  
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Its 	 	 	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	EVERGREEN PARTNERS US DIRECT FUND III, L.P.
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Its 	 	 	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	EVERGREEN PARTNERS DIRECT FUND III (ISRAEL) L.P.
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Its 	 	 	 	 
	 

	 	 	 	 	 
	 
	 	 	 	 	 	 
	EVERGREEN PARTNERS DIRECT FUND III (ISRAEL 1) L.P.
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Its 	 	 	 	 
	 

	 	 	 	 	 

- 58 -

 

EXHIBIT A

Defined Terms

The following terms shall have the meanings as ascribed to them or referenced below:

Accounts Receivable shall have the meaning set forth in Section 4.6.

Acquired IP shall mean any of the Purchaser Intellectual Property, and any of portions of the
businesses of Purchaser or any of its subsidiaries, in each case which Purchaser or its
subsidiaries acquired through the acquisition of all or substantially all of the assets or capital
stock of a Person which was not, at the time of such acquisition, an Affiliate of Purchaser.

Affiliates shall mean a person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, another Person.

Agent shall have the meaning set forth in Section 1.15.

Agreed Portion shall have the meaning set forth in Section 8.9(b).

Agreement shall have the meaning set forth in the Preamble.

Asserted Damages Amount shall have the meaning set forth in Section 8.9(a).

Balance Sheet shall have the meaning set forth in Section 4.5.

Balance Sheet Date shall mean March 31, 2010.

Base Number shall have the meaning set forth in Section 1.5(a)(i).

Books and Records shall have the meaning set forth in Section 4.4.

BSI shall have the meaning set forth in the Recitals.

BSUK shall have the meaning set forth in the Recitals.

Business shall have the meaning set forth in the Recitals.

Business Day shall mean any day other than a Saturday, Sunday or a legal holiday on which banks are
authorized or required to be closed for the conduct of commercial banking business in Chicago,
Illinois.

Certificate of Incorporation shall mean the Amended and Restated Certificate of Incorporation of
Breach Security, Inc., as filed with the Delaware Secretary of State on May 18, 2006, as amended
through the date hereof.

Certificate of Merger shall have the meaning set forth in Section 1.1.

A-1

 

Change of Control shall mean (a) the sale, exchange or other disposition after the date hereof of
all or substantially all of the assets of Purchaser (or any successor to Purchaser) in one or a
series of related transactions in exchange for cash, debt or equity securities to any individual,
entity or group (as such term is used in Section 13(d)(3) of the Exchange Act) (other than an
individual, entity or group together with their Affiliates that owns more than fifty percent 50% of
the aggregate outstanding voting power of Purchaser or the aggregate outstanding stock of
Purchaser) or (b) the acquisition after the date hereof, directly or indirectly, including through
a merger, consolidation or other acquisitive transaction, by any individual, entity or group (as
such term is used in Section 13(d)(3) of the Exchange Act) (other than an individual, entity or
group together with their Affiliates that owns more than fifty percent 50% of the aggregate
outstanding voting power of Purchaser or the aggregate outstanding stock of Purchaser) of
beneficial ownership (as defined in Rule 13d 3 under the Exchange Act) of more than fifty percent
50% of the aggregate outstanding voting power of Purchaser or the aggregate outstanding stock of
Purchaser; provided that an underwritten sale of common equity securities of Purchaser pursuant to
an effective registration statement under the Securities Act of 1933 filed with the United States
Securities and Exchange Commission shall not be deemed to be a Change of Control.

Claims shall mean all claims, complaints, charges, actions, suits, proceedings, disputes and
investigations.

Closing shall have the meaning set forth in Section 3.1.

Closing Date shall have the meaning set forth in Section 3.1.

Closing Date Balance Sheet shall have the meaning set forth in Section 2.2(a).

Closing Net Asset Position shall have the meaning set forth in Section 2.3.

COBRA shall have the meaning set forth in Section 4.17(a).

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

Company or Companies shall have the meaning set forth in the Recitals.

Company Assets shall mean all of the assets and properties of every kind and nature, real and
personal, tangible and intangible, wherever situated, whether or not carried or reflected on the
books and records of any Company which are owned by any Company or used by any Company in
connection with the operation of the Business as currently conducted by the Companies including,
without limitation, the Accounts Receivable, the Inventory, the Books and Records, the Company
Intellectual Property and the Contracts.

Company Intellectual Property shall have the meaning set forth in Section 4.20(b).

Contract(s) shall have the meaning set forth in Section 4.11.

Convertible Promissory Notes shall mean (a) those certain outstanding Secured Convertible
Promissory Notes of the Company in the aggregate principal amount of $9,899,934 issued on December
30, 2008, January 14, 2009, February 2, 2009, May 8, 2009, October 2, 2009,

A-2

 

November 23, 2009, December 29, 2009, January 29, 2010, March 9, 2010, March 29, 2010 and April 28,
2010 and (b) those certain convertible promissory notes issued on or about the date hereof in the
aggregate principal amount of $14,065,413.

Covered Employees shall have the meaning set forth in Section 7.4(b).

Current Value, as of any date, shall mean the fair market value of a share of Purchaser Common
Stock (or such amount of any securities into which a share of Purchaser Common Stock has been
converted) as of such date, determined as follows:

     (a) the average of the closing prices of the sales of Purchaser Common Stock (or such
amount of any securities into which a share of Purchaser Common Stock has been converted) on
all securities exchanges on which such of Purchaser Common Stock (or such amount of any
securities into which a share of Purchaser Common Stock has been converted) may at the time
be listed, or, if there have been no sales on any such exchange on any day, the average of
the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such of Purchaser Common Stock (or such amount of any securities into which a
share of Purchaser Common Stock has been converted) is not so listed, the average of the
representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York
time, or, if on any day such Purchaser Common Stock is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau Incorporated, or any
similar successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Current Value is being determined and the 20
consecutive business days prior to such day.

     (b) If at any time Purchaser Common Stock (or such amount of any securities into which
a share of Purchaser Common Stock has been converted) is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the Current Value
will be the fair value of such Purchaser Common Stock (or such amount of any securities into
which a share of Purchaser Common Stock has been converted) as determined in good faith by
the Board of Directors of Purchaser (the “Board”). If the Agent reasonably disagrees with
such determination, the Agent shall deliver to the Board a written notice of objection
within ten days after delivery of a notice of such determination. Upon receipt of the
Agent’s written notice of objection, the Board and the Agent will negotiate in good faith to
agree on such Current Value. If such agreement is not reached within 30 days after the
delivery of the determination of the Board, Current Value shall be determined by an
appraiser jointly selected by the Board and the Agent, which appraiser shall submit to the
Board and the Agent a report within 30 days of its engagement setting forth such
determination. If the parties are unable to agree on an appraiser within 45 days after
delivery of the determination of the Board, within seven days, each party shall submit the
names of four nationally recognized investment banking firms, and each party shall be
entitled to strike two names from the other party’s list of firms, and the appraiser shall
be selected by lot from the remaining four investment banking firms. The expenses of such
appraiser shall be borne by the Agent unless the appraiser’s valuation is more than 15%
greater than the amount

A-3

 

determined by the Board, in which case, the expenses of the appraiser shall be borne by
Purchaser. The determination of such appraiser as to Current Value shall be final and
binding upon all parties.

Cut-Off Date shall have the meaning set forth in Section 8.1(b).

Debt Repayment Shares shall mean 7,152,712 shares of Purchaser Common Stock.

Default Period shall have the meaning set forth in Section 1.17(e).

Defense Notice shall have the meaning set forth in Section 8.8(a).

Delaware Law shall have the meaning set forth in the Recitals.

Designated Books and Records shall have the meaning set forth in Section 4.4.

Dissenting Shares shall have the meaning set forth in Section 1.13.

Effective Time shall have the meaning set forth in Section 3.1.

Employee Plans shall mean the US Employee Plans.

Environmental Laws shall have the meaning set forth in Section 4.18.

ERISA shall have the meaning set forth in Section 4.17(a).

Evergreen shall have the meaning set forth in the Preamble.

Evergreen 1 shall have the meaning set forth in the Preamble.

Exchange Act means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.

Exercise Notice shall have the meaning set forth in Section 1.17(b).

Financial Statements shall have the meaning set forth in Section 4.5.

Fund III shall have the meaning set forth in the Preamble.

GAAP shall have the meaning set forth in Section 2.2(a).

Governmental Authority shall mean any foreign, domestic, federal, territorial, state or local
governmental authority, quasi-governmental authority, instrumentality, court, government or
self-regulatory organization, commission, tribunal or organization or any regulatory,
administrative or other agency, or any political or other subdivision, department or branch of any
of the foregoing.

Historical Statements shall have the meaning set forth in Section 4.5.

A-4

 

Immediate Family Member shall mean a spouse; natural or adoptive parent, child, or sibling;
stepparent, stepchild, stepbrother, or stepsister; father-in-law, mother-in-law, son-in-law,
daughter-in-law, brother-in-law, or sister-in-law; grandparent or grandchild; and spouse of a
grandparent or grandchild.

Indebtedness for Borrowed Funds shall mean, as to any Person, without duplication, (i) all
obligations (whether interest, principal, fees, penalties or otherwise) of such Person for borrowed
money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or other similar
instruments, (iii) all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of business, (iv) all
obligations of such Person as lessee under leases which are required by GAAP to be classified as
capitalized leases, and (v) any of the foregoing guaranteed by such Person.

Indemnified Party shall have the meaning set forth in Section 8.7.

Indemnified Tax Statement shall have the meaning set forth in Section 7.6(a)(ii).

Indemnifying Party shall have the meaning set forth in Section 8.7.

Indemnity Claim shall mean a Claim for indemnification pursuant to Article VIII.

Indemnity Notice shall have the meaning set forth in Section 8.9.

Independent Accountant shall have the meaning set forth in Section 2.2(b).

Intellectual Property shall mean all (i) Patents, (ii) Trademarks, (iii) Trade Names, (iv)
Know-how, (v) proprietary rights in trade dress and packaging, and (vi) shop rights, mask works,
copyrights, inventions, trade secrets, service marks, web sites, domain names and all other
intellectual property rights, in each case whether registered or not and in each case wherever such
rights exist throughout the world, and including the right to recover for any past infringement
including, with respect to Target, the Software.

Interim Statements shall have the meaning set forth in Section 4.5.

Inventory shall have the meaning set forth in Section 4.19.

Investor Rights Agreement Amendment shall have the meaning set forth in Schedule 3.2.

IRS shall mean the United States Internal Revenue Service.

Israeli Employees shall have the meaning set forth in Section 4.17(b).

Judgment means any order, decree, writ, injunction, award or judgment or any court or other
Governmental Authority or any arbitrator.

Know-how shall mean specialized knowledge which is proprietary to a Person (including product
knowledge and use and application knowledge), formulae, product formulations, processes, product
designs, specifications, quality control, procedures, manufacturing, engineering and

A-5

 

other drawings, computer data bases and software, technology, other intangibles, technical
information, safety information, engineering data and design and engineering specifications,
research records, market surveys and all promotional literature, customer and supplier lists and
similar data.

knowledge shall have the meaning set forth in Section 11.11(c) and (d).

Leased Real Property shall have the meaning set forth in Section 4.13.

Lender shall have the meaning set forth in Section 1.17(e).

Letter of Transmittal shall have the meaning set forth in Section 1.6(a).

Liability shall have the meaning set forth in Section 8.3(b).

Licenses shall have the meaning set forth in Section 4.21.

Liens shall mean all liens, Claims, options, charges, security interests, pledges, mortgages or
other encumbrances whatsoever.

Losses shall mean all demands, Claims, causes of action, administrative orders and notices, losses,
diminution in value, costs, fines, Liabilities, penalties, damages (direct or indirect but
specifically excluding special, exemplary or punitive damages, other than special, exemplary or
punitive damages owed to an unrelated third party) and expenses (including reasonable legal,
paralegal, accounting and consultant fees and other expenses incurred in the investigation, defense
and enforcement of Claims and actions).

Made Available shall mean delivered to Purchaser or posted (without having been removed) to the
data room at <https://trustwave.sharefile.com/> at least two days prior to the date of this
Agreement.

Major Customer shall have the meaning set forth in Section 4.23.

Material Adverse Effect shall mean any development or threatened development of a nature which may
cause any material adverse change in (i) the financial condition, net worth, assets, liabilities,
personnel or operations (including any Person’s relationship with suppliers, employees, customers
and others) of a Person’s business as currently conducted, (ii) the ability of a Person to
consummate the Merger or any of the other transactions contemplated hereunder or to perform any of
its covenants or obligations under this Agreement, or (iii) a Person’s ability to vote, transfer,
receive dividends with respect to or otherwise exercise ownership rights with respect to the stock
of the Surviving Corporation or to exercise its rights under this Agreement, except that “Material
Adverse Effect” shall not include any developments arising from (a) conditions generally affecting
the industries in which a Person participates or the U.S. or global economy as a whole, to the
extent that such conditions do not have a disproportionate impact such Person, taken as a whole;
(b) general conditions in the financial markets, and any changes therein (including any changes
arising out of acts of terrorism, war, weather conditions or other force majeure events), to the
extent that such conditions do not have a disproportionate impact on such Person, taken as a whole;
(c) changes in GAAP (or any interpretations of GAAP) applicable

A-6

 

to such Person; (d) the failure to meet internal projections, forecasts or budgets of revenues,
earnings or other financial metrics, in and of itself; or (e) loss of employees, suppliers or
customers (including customer orders or contracts) resulting directly from the announcement or
pendency of this Agreement or the transactions contemplated hereunder.

Measuring Date shall mean January 1, 2010.

Merger shall have the meaning set forth in the Recitals.

Merger Consideration shall have the meaning set forth in Section 1.18.

Merger Payment shall have the meaning set forth in Section 1.5(a).

Merger Sub shall have the meaning set forth in the Preamble.

Notice shall have the meaning set forth in Section 2.2(b).

Notice of Claim shall have the meaning set forth in Section 8.8(a).

Option Closing shall have the meaning set forth in Section 1.17(d).

Option Price shall have the meaning set forth in Section 1.17(c).

Organizational Documents shall mean (a) the articles or certificate of incorporation and the bylaws
of a corporation; (b) the partnership agreement and any statement of partnership of a general
partnership; (c) the limited partnership agreement and the certificate of limited partnership of a
limited partnership; (d) the memorandum of association and articles of association of an English
corporation; (e) any charter or similar document adopted or filed in connection with the creation,
formation, or organization of a Person; and (f) any amendment to any of the foregoing.

Other Books and Records shall have the meaning set forth in Section 4.4.

Patents shall mean all applications for and the right to make applications for Letters Patent in
the United States and all other countries, all Letters Patents that issue therefrom and all
reissues, extensions, renewals, divisional applications and continuations (including
continuations-in-part) thereof, for the full term thereof.

Permitted Liens shall mean the Liens set forth on the attached Schedule B.

Permitted Transfers shall mean (a) a partnership transferring to its partners or former partners in
accordance with partnership interests, (b) a corporation transferring to a wholly-owned subsidiary
or a parent corporation that owns all of the capital stock of such transferor, (c) a corporation,
partnership or limited liability company transferring to an affiliate, subsidiary, parent, general
partner, limited partner, retired partner, member, retired member or stockholder, (d) a limited
liability company transferring to its members or former members in accordance with their interest
in the limited liability company, (e) an individual transferring to the transferor’s family member
or trust for the benefit of an individual transferor or to any limited

A-7

 

partnership of which the transferor, the transferor’s family member or any trust for the account of
such transferor or such transferor’s family member will be the general or limited partner(s) of
such partnership, (f) a venture capital fund and that is a partnership or limited partnership or
limited liability company, transferring to any partner or member of such entity and/or any
affiliated entity managed by the same management company or general partner or managing member of
such transferor, (g) an entity that is transferring to an entity affiliated by common control (or
other related entity) with the transferor (“control” in that respect shall mean the holding of at
least 50% of the voting power in a corporation or of the right to appoint at least half of the
directors or member of a similar body having a similar function in a corporation), or (h) a venture
capital fund, transferring to any entity that is purchasing from such transferor all or
substantially all of the portfolio of holdings of such transferor in technology companies.

Person shall mean any individual, corporation, association, partnership (general or limited), joint
venture, trust, estate, limited liability company or other legal entity or organization.

Personal Property Leases shall mean all Contacts pursuant to which the Company leases or subleases
tangible or intangible personal property from another Person.

Preferred Certificates shall have the meaning set forth in Section 1.6(a).

Preliminary Balance Sheet shall have the meaning set forth in Section 2.1.

Pro-Rata Percentage shall have the meaning set forth in Section 1.5(a)(ii).

Purchaser shall have the meaning set forth in the Preamble.

Purchaser Balance Sheet shall have the meaning set forth in Section 6.5.

Purchaser Capital Transaction shall mean (a) the sale, exchange or other disposition of all or
substantially all of the assets of Purchaser (or any successor to Purchaser) in one or a series of
related transactions in exchange for cash, debt or equity securities of an entity which is subject
to Sections 13 or 15 of the Exchange Act or a combination of cash and such securities, (b) any
Change of Control pursuant to which shares of Purchaser Common Stock (or any other securities into
which the Purchaser Common Stock has been converted) are converted into, exchanged for or purchased
for cash, debt or equity securities of an entity which is subject to Sections 13 or 15 of the
Exchange Act or a combination of cash and such securities, or (c) Purchaser (or any Person who
acquires all or substantially all of Purchaser’s assets or all or substantially all of the
Purchaser Common Stock, in either such case in exchange for securities of such Person or any
successor to Purchaser by merger) becoming subject to Sections 13 or 15 of the Exchange Act. For
purposes of this definition, the phrase “other disposition” includes a taking of all or
substantially all of a property by eminent domain or the damage or destruction of all or
substantially all of such property or any transaction not in the ordinary course of business which
results in the Purchaser’s receipt of cash or other consideration including condemnations,
recoveries of damage awards and insurance proceeds.

Purchaser Common Stock shall have the meaning set forth in the Recitals.

Purchaser Deductible Amount shall have the meaning set forth in Section 8.6(d).

A-8

 

Purchaser Financial Statements shall have the meaning set forth in Section 6.5.

Purchaser Historical Statements shall have the meaning set forth in Section 6.5.

Purchaser Intellectual Property shall have the meaning set forth in Section 6.10.

Purchaser Interim Statements shall have the meaning set forth in Section 6.5.

Purchaser Investor Rights Agreement shall mean that certain Investor Rights Agreement, dated as of
March 14, 2005, among Purchaser and certain of its stockholders, as amended.

Purchaser Prepared Return shall have the meaning set forth in Section 7.6(a)(i).

Purchaser Protected Parties shall mean Purchaser and its Affiliates and their respective
Representatives, successors and assigns.

Purchaser Related Party shall have the meaning set forth in Section 6.12.

Purchaser Stockholder Agreement shall mean that certain Stockholders’ Agreement, dated as of March
14, 2005, among Purchaser and its stockholders, as amended.

Purchaser Stock Option Plan shall mean the TrustWave Holdings, Inc. Stock Incentive Plan, as
amended from time to time.

Purchaser Unaudited Statements shall have the meaning set forth in Section 6.5.

Put Option shall have the meaning set forth in Section 1.17(a).

Real Property Leases shall have the meaning set forth in Section 4.13.

Representatives shall mean the directors, officers, stockholders, employees, representatives,
investment bankers, attorneys, accountants, advisors and agents of a Person.

Reserves shall have the meaning set forth in Section 4.6.

Response shall have the meaning set forth in Section 8.9(b).

Restrictive Covenant Agreements shall have the meaning set forth in Schedule 3.2.

Rules shall have the meaning set forth in Section 4.12.

SRBA shall have the meaning set forth in the Preamble.

Securities Act shall have the meaning set forth in Section 5.5.

Seller Deductible Amount shall have the meaning set forth in Section 8.6(e).

Seller Protected Parties shall mean Sellers and their respective Representatives, successors and
assigns.

A-9

 

Seller Related Parties shall have the meaning set forth in Section 4.24.

Sellers shall have the meaning set forth in the Preamble.

Shrink-Wrap Software shall have the meaning set forth in Section 4.20(b).

Software shall mean the software and related items listed on the attached Schedule C.

Stockholder or Stockholders shall have the meaning set forth in the Recitals.

Stockholder Securities shall have the meaning set forth in Section 1.17(a).

Stockholders Agreement Amendment shall have the meaning set forth in Schedule 3.2.

Stock Power shall have the meaning set forth in Section 1.5(b).

Surviving Corporation shall have the meaning set forth in Section 1.1.

Target shall have the meaning set forth in the Preamble.

Target Capital Stock shall mean, collectively, the Target Common Stock and the Target Preferred
Stock.

Target Common Stock shall mean the Common Stock, par value $0.001 per share, of Target.

Target Preferred Stock shall mean the Target Series A Preferred Stock and the Target Series B
Preferred Stock.

Target Required Stockholder Approvals shall have the meaning set forth in Section 4.32.

Target Series A Preferred Stock shall mean the Series A Preferred Stock, par value $0.001 per
share, of Target with the designations, powers, preferences and rights set forth in the Certificate
of Incorporation.

Target Series B Preferred Stock shall mean the Series B Preferred Stock, par value $0.001 per
share, of Target with the designations, powers, preferences and rights set forth in the Certificate
of Incorporation.

Target Stock Option Plan shall have the meaning set forth in Section 4.1(e).

Tax or Taxes shall mean (i) any and all taxes imposed of any nature (whether federal, provincial,
state, county, local or foreign) including income tax, alternative or add-on minimum tax, profits
or excess profits tax, franchise tax, gross income, adjusted gross income or gross receipts tax,
employment-related tax (including employee withholding or employer payroll tax, FICA or FUTA), real
or personal property tax or ad valorem tax, sales or use tax, excise tax, stamp tax or duty, any
withholding or back up withholding tax, value added tax, severance tax, prohibited transaction tax,
transfer tax, capital stock tax, license or customs duty, unemployment tax and insurer
contributions, disability insurance, registration taxes, estimated taxes, installments of taxes,
escheat, premiums tax or occupation tax, together with any charges, interest or any

A-10

 

penalty, addition to tax or additional assessment or other amount imposed by any Taxing Authority
responsible for the imposition of any such tax, and (ii) any obligations under any agreement or
arrangements with respect to any Tax described in clause (i) above.

Tax Arbitrator shall have the meaning set forth in Section 7.6(a)(iii).

Tax Return shall mean any return, declaration, report, claim for refund, information return or
statement in connection with the determination of or liability for any Tax that is required to be
filed or which is actually filed with a Taxing Authority, including any schedule or attachment
thereto, and including any amendment thereof.

Tax Statement Dispute shall have the meaning set forth in Section 7.6(a)(iii).

Taxing Authority shall mean any Governmental Authority responsible for the assessment,
determination, collection or administration of any Tax.

Third Party Claim shall have the meaning set forth in Section 8.8(a).

Total Consideration Pro-Rata Percentages shall have the meaning set forth in Exhibit L.

Trademarks shall mean trademarks, service marks, brand marks, registrations thereof, pending
applications for registration thereof, and such unregistered rights which are used in the Business
(with respect to Target) or the business of Purchaser and its subsidiaries (with respect to
Purchaser).

Trade Names shall mean (i) trade names, (ii) brand names, and (iii) logos and all other names and
slogans used in the Business (with respect to Target) or the business of Purchaser and its
subsidiaries (with respect to Purchaser).

Transaction Expenses shall have the meaning set forth in Section 11.2.

Transfer shall have the meaning set forth in Section 1.16(a).

Treasury Regulations shall mean all proposed, temporary and final regulations promulgated under the
Code.

True-Up Date shall have the meaning set forth in Section 2.1.

US Employee Plans shall have the meaning set forth in Section 4.17(a).

Warrants shall have the meaning set forth in Section 4.1(h).

A-11

 

EXHIBIT B

Certificate of Merger

 

 

EXHIBIT C

Stock Power

     FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto TrustWave
Holdings, Inc., a Delaware corporation, (a) _______ shares of Common Stock, par value $0.001 per
share, represented by Certificate No. __; (b) _______ shares of Series A Preferred Stock, par value
$0.001 per share, represented by Certificate No. __; and (c) _______ shares of Series B Preferred
Stock, par value $0.001 per share, represented by Certificate No. __, in each case of Breach
Security, Inc., a Delaware corporation, and does hereby constitute and appoint Phillip J. Smith
attorney to transfer such stock on the books of such corporation with full power of substitution.

     Executed this ___ day of June, 2010.

	 	 	 	 	 

	Name:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Title)	 	 

Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or by
person(s) authorized to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian, officer of a
corporation, attorney-in-fact or any other person acting in a fiduciary capacity, set forth full
title in such capacity.

 

 

EXHIBIT D

FORM OF

LETTER OF TRANSMITTAL

TO ACCOMPANY CERTIFICATE(S) FOR SHARES OF TARGET STOCK

     Reference is made to that certain AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the
“Agreement”), made as of June 18, 2010, by and among TrustWave Holdings, Inc., a Delaware
corporation (“Purchaser”), Trustwave Acquisition Corp. a Delaware corporation which is a
wholly-owned subsidiary of Purchaser (“Merger Sub”), Breach Security, Inc., a Delaware corporation
(“Target”), and certain stockholders of Target, including the undersigned. All capitalized terms
used in this Letter of Transmittal which are not defined herein shall have the respective meanings
assigned to them in the Agreement.

     This Letter of Transmittal is to accompany certificates for shares of Target Capital Stock to
receive shares of Purchaser Common Stock in connection with the Merger.

TrustWave Holdings, Inc.

70 West Madison Street, Suite 1050

Chicago, Illinois 60602

Attn: Chief Executive Officer

DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, DOES NOT
CONSTITUTE A VALID DELIVERY.

PLEASE READ CAREFULLY THE ACCOMPANYING INSTRUCTIONS

	 	 	 	 	 
	 	 	 	 	Total Number and Type of
	Name and Address of	 	 	 	Shares Represented by
	Registered Holder	 	Certificate Number	 	Certificate
	 
	 	 	 	 

Ladies and Gentlemen:

     In connection with the Merger, the undersigned hereby submits the certificate(s) for the
shares of Target Capital Stock listed above. Delivery of the enclosed certificates shall be
effected, and risk of loss of and title to such certificates shall pass, only upon delivery thereof
to you.

     It is understood that this Letter of Transmittal is subject to (i) the terms of the Agreement,
a conformed copy of which has been delivered to the undersigned, and (ii) the accompanying
Instructions.

 

 

     The undersigned will, upon request, execute any additional documents Purchaser considers
necessary or desirable to complete the surrender of such shares.

     Unless otherwise indicated under Special Instructions below, please issue the shares of
Purchaser Common Stock issuable in exchange for the Target Capital Stock represented by the
certificates submitted hereby in the name of the registered holder(s) of such Target Capital Stock.
Similarly, unless otherwise indicated under Special Delivery Instructions, please mail the
certificates the shares of Purchaser Common Stock issuable in exchange for the Target Capital Stock
represented by the certificates submitted hereby to the registered holder(s) of the Target Capital
Stock at the address or addresses shown above.

SPECIAL INSTRUCTIONS

If the shares of Purchaser Common Stock are to be issued in the name of someone other than the
registered holder(s) of the Target Capital Stock, please complete the following with respect to the
person or persons in whose names such shares of Purchaser Common Stock are to be issued:

	 	 	 	 	 

	Name:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Including Zip Code)	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Tax Identification or Social Security Number)
	 	 

- 2 -

 

SPECIAL DELIVERY INSTRUCTIONS

If the shares of Purchaser Common Stock are to be issued to the registered holder(s) of Target
Capital Stock, but are to be sent to someone other than the registered holder(s) or to an address
other than the address of the registered holder(s) set forth above, please complete the following:

	 	 	 	 	 

	Name:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)	 	 
	 
	 	 	 	 
	Address:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Including Zip Code)
	 	 

SIGN HERE

	 	 	 	 	 

	Name:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Please Print)
	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	(Signature)	 	 

Must be signed by registered holder(s) exactly as name(s) appear(s) on stock certificate(s) or by
person(s) authorized to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator, guardian, officer of a
corporation, attorney-in-fact or any other person acting in a fiduciary capacity, set forth full
title in such capacity.

- 3 -

 

EXHIBIT E

Form of Stockholders Agreement Amendment

 

 

EXHIBIT F

Form of Investors Rights Agreement Amendment

 

 

EXHIBIT G

Intentionally Omitted

 

 

EXHIBIT H

Form of Restrictive Covenant Agreement

 

 

EXHIBIT I

Form of General Release

RELEASE AND COVENANT NOT TO SUE

     This Release and Covenant Not to Sue is delivered by the undersigned (“Releasor”) to TrustWave
Holdings, Inc., a Delaware corporation (“Purchaser”), in connection with the Agreement referred to
below.

     Releasor acknowledges and agrees that:

(a)  On the date hereof, Trustwave Acquisition Corp. a Delaware corporation which is
a wholly-owned subsidiary of Purchaser (“Merger Sub”), is being merged with and into
Breach Security, Inc., a Delaware corporation (“Target”), pursuant to that certain
Agreement and Plan of Merger and Reorganization (the “Agreement”), made as of June 18,
2010, by and among Purchaser, Merger Sub, Target and certain stockholders of Target;

 

(b)  All capitalized terms used in this Release and Covenant Not to Sue which are
not defined herein shall have the respective meanings assigned to them in the
Agreement;

(c)  Nothing contained in this Release and Covenant Not to Sue shall be deemed to
supersede any of the covenants, agreements, representations or warranties made in the
Agreement; and

(d)  The execution and delivery of this Release and Covenant Not to Sue is a
condition to the consummation by Purchaser of the transactions contemplated by the
Agreement.

 

     NOW, THEREFORE, for good and valuable consideration (including, without limitation, the
payment to Releasor of his, her or its share of the Merger Consideration), the receipt and
sufficiency of which are hereby acknowledged):

     1. Releasor, for himself, herself or itself, his, her or its Affiliates and each of the
respective heirs, executors, beneficiaries, officers, directors, employees, agents, successors,
assigns and personal representatives of Releasor and his, her or its Affiliates (all of the
foregoing persons other than Releasor are sometimes referred to herein collectively as the
“Derivative Claimants”), knowingly and voluntarily, hereby unconditionally and irrevocably
releases, waives and forever discharges (collectively, the “Release”) Purchaser, each of its
Affiliates (including Target), and each of their respective successors, assigns, directors,
officers, shareholders, managers, members, partners, employees and agents (collectively, “Released
Parties”) from any and all claims, demands, damages, liabilities, obligations, manner of actions,
causes, causes of action, suits, debts, sums of money, accounts, reckonings, bonds, bills,
specialties, trespasses, judgments and executions, whatsoever, in law or in equity (collectively,
“Claims”) of any kind, nature or description whatever, whether known or unknown (and if unknown,
regardless of whether knowledge of the same may have affected the decision to make this Release),
which

 

 

now exist or which may hereafter arise based on any fact or circumstance arising or occurring
on or at any time prior to the date hereof related to (i) the Releasor’s ownership of capital stock
in the Target, (ii) the business or operations of the Target, or (iii) the acquisition of all of
the capital stock in the Target owned by Releasor pursuant to the transactions contemplated by the
Agreement, except that the Release shall not apply to (a) the right of Releasor to enforce the
provisions of the Agreement or the transactions or agreements contemplated thereunder, and (b) any
rights of individual Affiliates of Releasor who are employees or directors of Target with respect
to compensation and benefits or the right to receive indemnification (subject to Section 7.5 of the
Agreement), in each case arising from their employment with Target or service as a director,
officer, employee or agent of Target.

     2. In furtherance (but not in limitation) of the foregoing, Releasor also agrees on behalf of
himself, herself or itself and the Derivative Claimants not to sue or prosecute any action against
any of the Released Parties with respect to any of the matters within the scope of this Release and
agrees to defend, hold harmless and indemnify each of the Released Parties from, against and with
respect to any such suit or prosecution in contravention of this paragraph and all reasonable costs
or expenses (including reasonable attorneys’ fees and expenses) which any of the Released Parties
may actually pay or incur in connection therewith.

     3. Releasor represents and warrants that he, she or it has the full power and authority to
enter into this Release and Covenant Not to Sue and by doing so to bind himself, herself or itself
and the Derivative Claimants to the provisions hereof, and that he, she or it has not heretofore
assigned or transferred to any person or entity any claim or claims against the Released Parties.

     4. This instrument contains the entire agreement between Releasor and the Released Parties
with respect to the subject matter hereof, and supersedes and cancels all previous agreements,
commitments and writings with respect to such subject matter. This instrument shall be construed
as a whole and not strictly for or against any of the Released Parties. This instrument binds the
administrators, representatives, successors and assigns of Releasor and the Derivative Claimants
and will inure to the benefit of all Released Parties and their heirs, administrators,
representatives, executors, successors and assigns.

     5. Releasor acknowledges that he, she or it (a) has read this Release and Covenant Not to Sue;
(b) understands that this Release and Covenant Not to Sue constitutes a Release of Claims; (c) has
been, or has had the opportunity to have been, fully advised in the premises by his own legal
counsel of his, her or its choosing; (d) intends and expects to be bound personally and legally by
this document; and (e) fully understands that he, she or it cannot make any further Claims with
respect to any of the matters within the scope of this Release or seek any further recovery by
reason of any Claims with respect to any of the matters within the scope of this Release subsequent
to the date hereof.

     6. This Release and Covenant Not to Sue shall be construed and enforced in accordance with,
and all questions concerning the construction, validity, interpretation and performance of this
Release and Covenant Not to Sue shall be governed by, the laws of the State of Delaware, without
giving effect to the provisions thereof regarding conflict of laws.

3

 

     Executed as of this ___ day June, 2010.

RELEASOR:

                                                            

 

 

EXHIBIT J

Form of Opinion of Counsel to Target

 

 

EXHIBIT K

Form of Bonus Release

 

 

EXHIBIT L

Total Consideration Pro-Rata Percentages

	 	 	 	 	 
	Seller	 	Total Consideration Pro-Rata Percentage
	SRBA #5, L.P.
	 	 	98.211	%
	Evergreen Partners US Direct Fund III, L.P.
	 	 	1.536	%
	Evergreen Partners Direct Fund III (Israel) L.P.
	 	 	0.122	%
	Evergreen Partners Direct Fund III (Israel 1) L.P.
	 	 	0.131	%

 

 

SCHEDULE 1.16

TRANSFER RESTRICTIONS

	 	 	 	 	 
	 	 	Total Consideration Pro-Rata Percentage of
	Seller	 	15 Persons
	SRBA #5, L.P.
	 	 	14	 
	Evergreen Partners US Direct Fund III, L.P.
	 	 	1	 
	Evergreen Partners Direct Fund III (Israel) L.P.
	 	 	0	 
	Evergreen Partners Direct Fund III (Israel 1)
L.P.
	 	 	0	 

 

 

SCHEDULE 3.2

TARGET’S DELIVERIES

	1.	 	Preferred Certificates and Letters of Transmittal. All of the Preferred Certificates
and Convertible Promissory Notes, accompanied by duly completed and validly executed Letters
of Transmittal and Stock Powers, which shall be delivered within ten (10) business days after
the Closing Date.

	2.	 	Option Cancellations. Evidence reasonably satisfactory to Purchaser that all of the
options listed in Schedule 4.1(f) have been cancelled.

	3.	 	Warrant Cancellations. Evidence reasonably satisfactory to Purchaser that all of the
Warrants have been cancelled.

	4.	 	Amendment to Stockholders Agreement. An Amendment to Stockholders Agreement,
substantially in the form attached hereto as Exhibit E (the “Stockholders Agreement
Amendment”), duly executed by each Seller.

	5.	 	Amendment to Investor Rights Agreement. An Amendment to Investor Rights Agreement,
substantially in the form attached hereto as Exhibit F (the “Investor Rights Agreement
Amendment”), duly executed by each Seller.

	6.	 	Bonus Releases. A Bonus Release substantially in the form attached hereto as
Exhibit K, duly executed by each of Sanjay Mehta, Craig Kussman, Brett Wilson, William
G. Thompson and Doron Kolton.

	7.	 	Intentionally Omitted.

	8.	 	Restrictive Covenant Agreements. Restrictive Covenant Agreements, in substantially
the form attached hereto as Exhibit H (the “Restrictive Covenant Agreements”), duly
executed by each Seller.

	9.	 	Releases. A General Release and Covenant Not to Sue substantially in the form
attached hereto as Exhibit I, duly executed by each Seller.

	10.	 	Bank Documents. Signature and authorization cards for the bank accounts set forth on
Schedule 4.29.

	11.	 	Corporate Books and Records. Evidence that the minute books and stock records of
each Company that are in the possession of the Companies and their Representatives are located
at the Leased Real Property located in San Diego, California and under the control of Craig
Kussman.

	12.	 	Employee Plan Resolutions. Resolutions terminating certain Employee Plans as
contemplated by Section 7.4(a).

	13.	 	Merger Documents. The Certificate of Merger, duly executed by Target.

1

 

	14.	 	Organizational Documents. Copies of the Organizational Documents of Target certified
by the Secretary of State of the State of Delaware no earlier than twenty (20) days prior to
the Closing Date, or the Secretary of Target as of the Closing Date, as appropriate, copies of
the Organizational Documents of BSI certified by the appropriate Governmental Authority of
Israel no earlier than twenty (20) days prior to the Closing Date, or an officer of BSI as of
the Closing Date, as appropriate, and copies of the Organizational Documents of BSUK certified
by the appropriate Governmental Authority of the united Kingdom no earlier than twenty (20)
days prior to the Closing Date, or a director of BSUK as of the Closing Date, as appropriate.

	15.	 	Good Standing Certificates. Good standing certificates for each Company, issued no
earlier than twenty (20) days prior to the Closing Date, by the Secretary of State or other
appropriate Governmental Authority of each jurisdiction in which each Company (other than BSI)
is either organized or qualified or licensed to do business.

	16.	 	Resolutions. A copy of directors’ and stockholders’ resolutions for Target,
certified as of the Closing Date by an officer of Target as having been duly and validly
adopted and as being in full force and effect on the Closing Date, approving the Merger and
authorizing the execution and delivery by Target of this Agreement and the performance by
Target of the transactions contemplated hereby.

	17.	 	Incumbency Certificates. Incumbency certificates from the officers of Target
authorized to execute and deliver on behalf of Target this Agreement.

	18.	 	Resignations. Written resignations, in form and substance satisfactory to Purchaser,
effective as of the Closing Date, of (a) all of the directors of each Company, (b) all of the
officers of each Company (other than the resignation of Doron Kolton as an officer of BSI),
and (c) if requested by Purchaser, trustees and administrators of any Employee Plan; provided
that each written resignation of a director or officer of each Company shall provide such
individual’s acknowledgement that such individual’s rights to exculpation and indemnification
for acts or omissions occurring prior to the Effective Time pursuant to the Organizational
Documents of either Company, or any director indemnification agreement to which such
individual and either Company are parties, are subject to the terms and conditions set forth
in Section 7.5.

	19.	 	Approvals. The consents, waivers, authorizations and approvals listed in the
attached Schedule 3.2-1 in connection with the execution, delivery and performance by
Target of this Agreement and the transactions contemplated hereby.

	20.	 	Search Results. Copies of Uniform Commercial Code financing statement, judgment and
tax lien for each Company where such searches are customarily performed, in form and substance
reasonably satisfactory to Purchaser.

	21.	 	Payoff Letters. Letters from any financial institution or other Person, if
applicable, setting forth, as of the Closing Date, the amount of principal and interest
necessary to pay in full all Indebtedness for Borrowed Funds of each Company to such Person or
any other amounts requiring payment to release Liens other than Permitted Liens.

2

 

	22.	 	UCC Releases. UCC termination statements releasing each of the Liens upon the
Company Assets other than Permitted Liens.

	23.	 	FIRPTA Certificate. A properly executed Foreign Investment and Real Property Tax Act
of 1980 Notification Letter, which states that shares of Target capital stock do not
constitute “United States real property interests” under Section 897(c) of the Code, for
purposes of satisfying Purchaser’s obligations under Treasury Regulations Section
1.1445-2(c)(3) and a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulations Section 1.897-2(h)(2), along with written authorization
for Purchaser to deliver such notice form to the Internal Revenue Service on behalf of Target.

	24.	 	Opinion of Target’s Counsel. An opinion of Cooley LLP, counsel to Target, addressed
to Purchaser dated the Closing Date and in the form attached hereto as Exhibit J.

	25.	 	Additional Agreements. All such other documents and instruments as Purchaser or its
counsel shall reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.

3

 

SCHEDULE 3.3

PURCHASER’S DELIVERIES

	1.	 	Certificates. Certificates evidencing the Purchaser Common Stock deliverable to
Sellers pursuant to Section 1.6(a) (to be delivered no later than ten (10) Business Days after
the receipt by Purchaser of the last item delivered pursuant to Item 1 on Schedule
3.2).

	2.	 	Amendment to Stockholders Agreement. The Stockholders Agreement Amendment, duly
executed by Purchaser and the number of stockholders of Purchaser required to make such
Stockholders Agreement Amendment effective.

	3.	 	Amendment to Investor Rights Agreement. The Investor Rights Agreement Amendment,
duly executed by Purchaser and the number of stockholders of Purchaser required to make such
Investor Rights Agreement Amendment effective.

	4.	 	Organizational Documents. Copies of the Organizational Documents of Purchaser
certified by an officer of Purchaser.

	5.	 	Good Standing Certificates. Good standing certificates for Purchaser, issued no
earlier than twenty (20) days prior to the Closing Date, by the Secretary of State of each
jurisdiction in which Purchaser is organized.

	6.	 	Confidentiality Agreements. The Confidentiality Agreements, duly executed by
Purchaser.

	7.	 	Resolutions. A copy of directors’ resolutions for Purchaser, certified as of the
Closing Date by Purchaser’s secretary or assistant secretary as having been duly and validly
adopted and as being in full force and effect on the Closing Date, approving the Merger and
authorizing the execution and delivery by Purchaser of this Agreement and the performance by
Purchaser of the transactions contemplated hereby.

	8.	 	Incumbency Certificates. Incumbency certificates from the officers of Purchaser
authorized to execute and deliver on behalf of Purchaser this Agreement.

	9.	 	Additional Agreements. All such other documents and instruments as Target or its
counsel shall reasonably request in connection with the consummation of the transactions
contemplated by this Agreement.

	10.	 	Opinion. An opinion of Purchaser’s General Counsel in a form reasonably acceptable
to Sellers.

 

 

SCHEDULE 11.5

NOTICE ADDRESSES

	 	 	 

	(a)

	 	If to Purchaser or Merger Sub:
	 
	 	 
	 

	 	TrustWave Holdings, Inc.
	 

	 	70 West Madison Street, Suite 1050
	 

	 	Chicago, Illinois 60602
	 

	 	Attn: Chief Executive Officer
	 

	 	FAX: (312) 669-1234
	 
	 	 
	 

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

	 	Kaye Scholer LLP
	 

	 	70 West Madison Street, Suite 4100
	 

	 	Chicago, Illinois 60602
	 

	 	Attn: Eric R. Decator, Esq.
	 

	 	FAX: (312) 583-2541
	 
	 	 
	(b)

	 	If to Target:
	 
	 	 
	 

	 	Breach Security, Inc.
	 

	 	2141 Palomar Airport Road
	 

	 	Carlsbad, California 92011
	 

	 	Attention: Chief Executive Officer
	 

	 	FAX: (760) 454-1746
	 
	 	 
	 

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

	 	Cooley LLP
	 

	 	4401 Eastgate Mall
	 

	 	San Diego, California 92121
	 

	 	Attn: Jason L. Kent, Esq.
	 

	 	FAX: (858) 550-6420
	 
	 	 
	(c)

	 	If to the Agent or any Seller:
	 
	 	 
	 

	 	SRBA
	 

	 	201 Main Street, 32nd Floor
	 

	 	Fort Worth, TX 76102
	 

	 	Attn: Perse Faily
	 

	 	FAX: (817) 390-8408

 

 

	 	 	 

	 

	 	and
	 
	 	 
	 

	 	Perse Faily
	 

	 	10100 Santa Monica Blvd.
	 

	 	Suite 2525
	 

	 	Los Angeles, CA 90067
	 

	 	FAX: (310) 461-3301
	 
	 	 
	 

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

	 	Cooley LLP
	 

	 	4401 Eastgate Mall
	 

	 	San Diego, California 92121
	 

	 	Attn: Jason L. Kent, Esq.
	 

	 	FAX: (858) 550-6420
	 
	 	 
	 

	 	and
	 
	 	 
	 

	 	Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
	 

	 	3580 Carmel Mountain Road, Suite 300
	 

	 	San Diego, CA 92130
	 

	 	Attn: Jeremy D. Glaser
	 

	 	FAX: (858) 314-1501

- 6 -

 

SCHEDULE 11.11(c)

TARGET KNOWLEDGE PERSONS

1. Craig Kussman

2. Sanjay Mehta

3. Doron Kolton

4. Brett Wilson

 

 

SCHEDULE 11.11(d)

PURCHASER KNOWLEDGE PERSONS

1. Robert J. McCullen

2. March Iserloth

3. Phillip J. Smith

4. Larry Podmolik

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