Document:

Exhibit 10.17

Exhibit 10.17

Employment Agreement

This Agreement is entered into as of December 30, 2008, by and between Daniel Rizer
(the “Executive”) and Synchronoss Technologies, Inc., a Delaware corporation (the “Company”).
Executive and the Company agree that the Employment Agreement dated as of November 21, 2008 between
the Company and the Executive shall be terminated as of December 31, 2008.

1. Duties and Scope of Employment.

(a) Position. For the term of his employment under this Agreement (the “Employment”), the
Company agrees to employ the Executive in the position of Executive Vice President of Business
Development. The Executive shall report to the Company’s President or Chief Executive Officer.

(b) Obligations to the Company. During his Employment, the Executive (i) shall devote his
full business efforts and time to the Company, (ii) shall not engage in any other employment,
consulting or other business activity that would create a conflict of interest with the Company,
(iii) shall not assist any person or entity in competing with the Company or in preparing to
compete with the Company and (iv) shall comply with the Company’s policies and rules, as they may
be in effect from time to time.

(c) No Conflicting Obligations. The Executive represents and warrants to the Company that he
is under no obligations or commitments, whether contractual or otherwise, that are inconsistent
with his obligations under this Agreement. The Executive represents and warrants that he will not
use or disclose, in connection with his Employment, any trade secrets or other proprietary
information or intellectual property in which the Executive or any other person has any right,
title or interest and that his Employment will not infringe or violate the rights of any other
person. The Executive represents and warrants to the Company that he has returned all property and
confidential information belonging to any prior employer.

(d) Commencement Date. The Executive previously commenced full-time Employment. This
Agreement shall govern the terms of Executive’s Employment effective as of January 1, 2009 (the
“Commencement Date”) through the Term.

2. Compensation

(a) Salary. The Company shall pay the Executive as compensation for his services a base
salary at a gross annual rate of not less than $275,000. Such salary shall be payable in
accordance with the Company’s standard payroll procedures. (The annual compensation specified in
this Subsection (a), together with any increases in such compensation that the Company may grant
from time to time, is referred to in this Agreement as “Base Salary.”).

 

 

 

(b) Incentive Bonuses. The Executive shall be eligible for an annual incentive bonus with a
target amount equal to 50% of his Base Salary (the “Target Bonus”). The
Executive’s bonus (if any) shall be awarded based on criteria established by the Company’s Board of
Directors (the “Board”) or its Compensation Committee. The determinations of the Board or its
Compensation Committee with respect to such bonus shall be final and binding. The Executive shall
not be entitled to an incentive bonus if he is not employed by the Company on the last day of the
fiscal year for which such bonus is payable.

3. Vacation and Employee Benefits. During his Employment, the Executive shall be eligible for paid
vacations in accordance with the Company’s vacation policy, as it may be amended from time to time,
with a minimum of 20 vacation days per year. During his Employment, the Executive shall be
eligible to participate in the employee benefit plans maintained by the Company, subject in each
case to the generally applicable terms and conditions of the plan in question and to the
determinations of any person or committee administering such plan.

4. Business Expenses. During his Employment, the Executive shall be authorized to incur necessary
and reasonable travel, entertainment and other business expenses in connection with his duties
hereunder. The Company shall reimburse the Executive for such expenses upon presentation of an
itemized account and appropriate supporting documentation, all in accordance with the Company’s
generally applicable policies.

5. Term of Employment.

(a) Employment Term. The Company hereby employs Executive to render services to the Company
in the position and with the duties and responsibilities described in Section 1 for the period
commencing on the Commencement Date and ending upon the earlier of (i) three (3) years from such
date, and (ii) the date Executive’s Employment is terminated in accordance with Subsection 5(b)
through the Term. After the initial three-year term of this Agreement Executive’s Employment shall
be “at will” and either Executive or the Company shall be entitled to terminate Executive’s
Employment at any time and for any reason, with or without cause. However, this Agreement will not
govern the terms of Executive’s employment after the Term.

(b) Termination of Employment. The Company may terminate the Executive’s Employment at any
time and for any reason (or no reason), and with or without Cause (as defined below), by giving the
Executive 30 days’ advance notice in writing. The Executive may terminate his Employment by giving
the Company 30 days’ advance notice in writing. The Executive’s Employment shall terminate
automatically in the event of his death. The termination of the Executive’s Employment shall not
limit or otherwise affect his obligations under Section 7.

(c) Rights Upon Termination. Upon Executive’s voluntary termination of Employment or the
Company’s termination of Executive’s Employment for Cause, Executive shall only be entitled to the
compensation, benefits and reimbursements described in Sections 1 2, and 3 for the period preceding
the effective date of the termination and no other benefits. Upon the Company’s termination of
Executive’s Employment other than for Cause, Executive shall only be entitled to the compensation,
benefits and reimbursements described in Sections 1, 2, and 3 for the period preceding the
effective date of the termination and the severance pay
benefits described in Section 6. The payments under this Agreement shall fully discharge all
responsibilities of the Company to Executive. This Agreement shall terminate when all obligations
of the parties hereunder have been satisfied.

 

2

 

(d) Rights Upon Death or Disability. If Executive’s Employment ends due to death, Executive’s
estate shall be entitled to receive an amount equal to his target bonus for the fiscal year in
which his death occurred, prorated based on the number of days he was employed by the Company
during that fiscal year. If Executive’s Employment ends due to Permanent Disability (as such term
is defined below), Executive shall be entitled to receive an amount equal to his Target Bonus for
the fiscal year in which his Employment ended, prorated based on the number of days he was employed
by the Company during that fiscal year. and the Consolidated Omnibus Budget Reconciliation Act
(“COBRA”) benefits described in the next sentence. If Executive or his personal representative
elects to continue health insurance coverage under COBRA for Executive and his dependents following
the termination of his Employment due to Permanent Disability, then the Company will pay the
monthly premium under COBRA until the earliest of (a) the close of the 24-month period following
the termination of his Employment, (b) the expiration of his continuation coverage under COBRA or
(c) the date he becomes eligible for substantially equivalent health insurance coverage in
connection with new employment

6. Termination Benefits.

(a) Preconditions. Any other provision of this Agreement notwithstanding, Subsections (b) and
(c) below shall not apply unless the Executive:

(i) Has executed a general release of all claims (substantially in the form
attached hereto as Exhibit A) (the “Release”);

(ii) Has returned all property of the Company in the Executive’s possession;
and

(iii) If requested by the Board, has resigned as a member of the Board and as a
member of the boards of directors of all subsidiaries of the Company, to the extent
applicable.

The Executive must execute and return the Release within the period of time set forth in the
Release.

(b) Severance Pay in the Absence of a Change in Control. If, during the term of this
Agreement and prior to the occurrence of a Change in Control or more than 12 months following a
Change in Control, the Company terminates the Executive’s Employment with the Company for a reason
other than Cause or Permanent Disability and a Separation occurs (as such terms are defined below),
then the Company shall pay the Executive a lump sum severance payment equal to (i) one and one-half
times his Base Salary in effect at the time of the termination of Employment and (ii) his average
annual bonus based on the actual amounts received in the immediately preceding two years. If,
during the term of this Agreement and prior to the occurrence of a Change in Control or more than
12 months following a Change in Control, Executive resigns his Employment for Good Reason and a
Separation occurs (as such term is
defined below), then the Company shall pay the Executive a lump sum

 

3

 

severance
payment equal to
(i) one times his Base Salary in effect at the time of the termination of Employment and (ii) his
average annual bonus based on the actual amounts received in the immediately preceding two years.
Notwithstanding anything herein to the contrary, in the event that the Executive Employment is
terminated for a reason other than Cause or Permanent Disability or the Executive resigns his
Employment for Good Reason under this subsection (b) within the initial two years of this
Agreement, then in lieu of using the average bonus received in the immediately preceding two years
for the above calculation, such calculation shall use his Target Bonus Amount if such termination
under this Subsection (b) occurs in the first year of the Agreement and the actual bonus the
Executive received during the initial year of the Agreement if such termination under this
Subsection (b) occurs in the second year of the Agreement. However, the amount of the severance
payment under this Subsection (b) shall be reduced by the amount of any severance pay or pay in
lieu of notice that the Executive receives from the Company under a federal or state statute
(including, without limitation, the Worker Adjustment and Retraining Notification Act).

(c) Severance Pay in Connection with a Change in Control. If, during the term of this
Agreement and within 12 months following a Change in Control, the Company terminates the
Executive’s Employment with the Company for a reason other than Cause or Permanent Disability or
the Executive resigns his Employment for Good Reason and a Separation occurs, then the Company
shall pay the Executive a lump sum severance payment equal to two times his Base Salary in effect
at the time of the termination of Employment plus two times the Executive’s average bonus received
in the immediately preceding two years. Notwithstanding anything herein to the contrary, in the
event that the Executive is terminated or resigns his Employment for Good Reason under this
subsection (b) within the initial two years of this Agreement, then in lieu of using the average
bonus received in the immediately preceding two years for the above calculation, such calculation
shall use his Target Bonus Amount if such termination under this Subsection (b) occurs in the first
year of the Agreement and the actual bonus the Executive received during the initial year of the
Agreement if such termination under this Subsection (b) occurs in the second year of the Agreement.
However, the amount of the severance payment under this Subsection (c) shall be reduced by the
amount of any severance pay or pay in lieu of notice that the Executive receives from the Company
under a federal or state statute (including, without limitation, the Worker Adjustment and
Retraining Notification Act).

(d) Parachute Taxes. If amounts paid or payable or distributed or distributable pursuant to
the terms of this Agreement (the “Total Payments”) would be subject to the excise tax imposed by
section 4999 of the Code, and the regulations thereunder or any interest or penalties with respect
to such excise tax (such excise tax and any such interest or penalties are collectively referred to
as the “Excise Tax”), then the Total Payments shall be reduced to ensure that the Total Payments
are not subject to Excise Tax. In determining whether to cap the Total Payments, compensation or
other amounts that the Executive is entitled to receive other than pursuant to this Agreement shall
be disregarded. All determinations and calculations required to be made under this provision will
be made by an independent accounting firm selected by Executive from among the largest eight
accounting firms in the United States (the “Accounting Firm”). If the Accounting Firm determines
that the Total Payments are to be reduced under the preceding sentences, then the Company will
promptly give Executive notice to
that effect and a copy of the detailed calculation thereof. If a reduction in payments or
benefits constituting “parachute payments” is necessary so that the Total Payments equal the
reduced amount determined by the Accounting Firm, then the reduction shall occur in the following
order: (1) reduction of cash severance payments and (2) reduction of other benefits paid to the
Executive under this Agreement. All determinations made by the Accounting Firm under this
Subsection 6(d) shall be binding upon the Company and the Executive and shall be made within 10
business days of the date when an amount becomes payable or transferable. As promptly as
practicable following such determination, the Company shall pay or transfer to or for the benefit
of the Executive such amounts as are then due to him. The fees of the Accounting Firm shall be
paid by the Company.

 

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(e) Definition of “Cause.” For all purposes under this Agreement, “Cause” shall mean:

(i) An unauthorized use or disclosure by the Executive of the Company’s
confidential information or trade secrets, which use or disclosure causes material
harm to the Company;

(ii) A material breach by the Executive of any material agreement between the
Executive and the Company;

(iii) A material failure by the Executive to comply with the Company’s written
policies or rules;

(iv) The Executive’s conviction of, or plea of “guilty” or “no contest” to, a
felony under the laws of the United States or any State thereof;

(v) The Executive’s gross negligence or willful misconduct which causes
material harm to the Company;

(vi) A continued failure by the Executive to perform reasonably assigned duties
after receiving written notification of such failure from the Board; or

(vii) A failure by the Executive to cooperate in good faith with a governmental
or internal investigation of the Company or its directors, officers or employees, if
the Company has requested the Executive’s cooperation

(f) Definition of “Code.” For all purposes under this Agreement, “Code” means the Internal
Revenue Code of 1986, as amended.

(g) Definition of “Good Reason.” For all purposes under this Agreement, “Good Reason” exists
upon:

(i) a change in the Executive’s position with the Company that materially
reduces his level of authority or responsibility;

(ii) a reduction in the Executive’s base salary by more than
10% unless pursuant to a Company-wide salary reduction affecting all Executives
proportionately;

 

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(iii) relocation of the Executive’s principal workplace by more than 50 miles;

(iv) a substantial reduction, without good business reasons, of the facilities
and perquisites (including office space and location) available to the Executive
immediately prior to such reduction; or

(v) a material reduction in the kind or level of employee benefits to which the
Executive is entitled immediately prior to such reduction with the result that the
Executive’s overall benefits package is significantly reduced, unless such reduction
is made in connection with a reduction in the kind or level of employee benefits of
employees of the Company generally.

A condition shall not be considered “Good Reason” unless the Executive gives the Company written
notice of such condition within 90 days after such condition comes into existence and the Company
fails to remedy such condition within 30 days after receiving the Executive’s written notice. In
addition, the Executive’s resignation must occur within 12 months after the condition comes into
existence.

(h) Definition of “Permanent Disability.” For all purposes under this Agreement, “Permanent
Disability” shall mean the Executive’s inability to perform the essential functions of the
Executive’s position, with or without reasonable accommodation, for a period of at least 120
consecutive days because of a physical or mental impairment.

(i) Commencement of Severance Payments. Payment of the severance pay provided for under this
Agreement will be made on the first regularly scheduled payroll date that occurs on or after 45
days after the Executive’s Separation, but only if the Executive has complied with the release and
other preconditions set forth in Subsection (a) (to the extent applicable). If the Company
determines that the Executive is a “specified employee” under Section 409A(a)(2)(B)(i) of the Code
and the regulations thereunder at the time of his Separation, then (i) the severance payments under
Section 6, to the extent not exempt from Section 409A of the Code, shall be paid during the seventh
month after the Executive’s Separation and (ii) the amounts that otherwise would have been paid
during the first six months following the Executive’s Separation shall be paid in a lump sum when
such payments commence.

(j) Definition of “Separation”. For all purposes under this Employment Agreement,
“Separation” means a “separation from service,” as defined in the regulations under Section 409A of
the Code.

7. Non-Solicitation and Non-Disclosure.

(a) Non-Solicitation. During the period commencing on the date of this Agreement and
continuing until the second anniversary of the date the Executive’s Employment terminated for any
reason, the Executive shall not directly or indirectly, personally or through
others, solicit or attempt to solicit (on the Executive’s own behalf or on behalf of any other
person or entity) either (i) the employment of any employee or consultant of the Company or any of
the Company’s affiliates or (ii) the business of any customer of the Company or any of the
Company’s affiliates in a manner that could constitute engaging in sale of goods or services in or
for a Restricted Business (as defined below) or otherwise interferes with Company’s relationship
with such customer.

 

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(b) Non-Competition. As one of the Company’s executive and management personnel and officer,
Executive has obtained extensive and valuable knowledge and confidential information concerning the
business of the Company, including certain trade secrets the Company wishes to protect. Executive
further acknowledges that during his Employment he will have access to and knowledge of Proprietary
Information (as defined below). To protect the Company’s Proprietary Information, Executives
agrees that during his Employment with the Company, whether full-time or half-time and for a period
of 24 months after his last day of Employment with the Company, he will not directly or indirectly
engage in (whether as an employee, consultant, proprietor, partner, director or otherwise), or have
any ownership interest in, or participate in the financing, operation, management or control of,
any person, firm, corporation or business that engages in a “Restricted Business” in a “Restricted
Territory” as defined below. It is agreed that ownership of (i) no more than one percent (1%) of
the outstanding voting stock of a publicly traded corporation, or (ii) any stock he presently owns
shall not constitute a violation of this provision.

(c) Definitions. The term “Proprietary Information” shall mean any and all confidential
and/or proprietary knowledge, data or information of the Company. By way of illustration but not
limitation, Proprietary Information includes (a) trade secrets, inventions, mask works, ideas,
processes, formulas, source and object codes, data, programs, other works of authorship, know-how,
improvements, discoveries, developments, designs and techniques; and (b) information regarding
plans for research, development, new products, marketing and selling, business plans, budgets and
unpublished financial statements, licenses, prices and costs, suppliers and customers; and (c)
information regarding the skills and compensation of other employees of the Company. “Restricted
Business” shall mean the design, development, marketing or sales of software, or any other process,
system, product, or service marketed, sold or under development by the Company at the time
Executive’s Employment with the Company ends. “Restricted Territory” shall mean any state, county,
or locality in the United States in which the Company conducts business.

(d) Reasonable. Executive agrees and acknowledges that the time limitation on the
restrictions in this Section 7, combined with the geographic scope, is reasonable. Executive also
acknowledges and agrees that this provision is reasonably necessary for the protection of
Proprietary Information, that through his Employment he shall receive adequate consideration for
any loss of opportunity associated with the provisions herein, and that these provisions provide a
reasonable way of protecting the Company’s business value which will be imparted to him. If any
restriction set forth in this Section 7 is found by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of time or over too great a range of
activities or in too broad a geographic area, it shall be interpreted to extend only over
the maximum period of time, range of activities or geographic area as to which it may be
enforceable.

(e) Non-Disclosure. The Executive has entered into a Proprietary Information and Inventions
Agreement with the Company, which is incorporated herein by this reference.

 

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8. Successors.

(a) Company’s Successors. This Agreement shall be binding upon any successor (whether direct
or indirect and whether by purchase, lease, merger, consolidation, liquidation or otherwise) to all
or substantially all of the Company’s business and/or assets. For all purposes under this
Agreement, the term “Company” shall include any successor to the Company’s business and/or assets
which becomes bound by this Agreement.

(b) Employee’s Successors. This Agreement and all rights of the Executive hereunder shall
inure to the benefit of, and be enforceable by, the Executive’s personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and legatees.

9. Miscellaneous Provisions.

(a) Notice. Notices and all other communications contemplated by this Agreement shall be in
writing and shall be deemed to have been duly given when personally delivered, when delivered by
FedEx with delivery charges prepaid, or when mailed by U.S. registered or certified mail, return
receipt requested and postage prepaid. In the case of the Executive, mailed notices shall be
addressed to him at the home address that he most recently communicated to the Company in writing.
In the case of the Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.

(b) Modifications and Waivers. No provision of this Agreement shall be modified, waived or
discharged unless the modification, waiver or discharge is agreed to in writing and signed by the
Executive and by an authorized officer of the Company (other than the Executive). No waiver by
either party of any breach of, or of compliance with, any condition or provision of this Agreement
by the other party shall be considered a waiver of any other condition or provision or of the same
condition or provision at another time.

(c) Whole Agreement. No other agreements, representations or understandings (whether oral or
written and whether express or implied) that are not expressly set forth in this Agreement have
been made or entered into by either party with respect to the subject matter hereof. This
Agreement and the Proprietary Information and Inventions Agreement contain the entire understanding
of the parties with respect to the subject matter hereof.

(d) Taxes. All payments made under this Agreement shall be subject to reduction to reflect
taxes or other charges required to be withheld by law. The Company shall not have a duty to design
its compensation policies in a manner that minimizes the Executive’s
tax liabilities, and the Executive shall not make any claim against the Company or the Board
related to tax liabilities arising from the Executive’s compensation.

 

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(e) Choice of Law and Severability. This Agreement shall be interpreted in accordance with
the laws of the State of New Jersey (except their provisions governing the choice of law). If any
provision of this Agreement becomes or is deemed invalid, illegal or unenforceable in any
applicable jurisdiction by reason of the scope, extent or duration of its coverage, then such
provision shall be deemed amended to the minimum extent necessary to conform to applicable law so
as to be valid and enforceable or, if such provision cannot be so amended without materially
altering the intention of the parties, then such provision shall be stricken and the remainder of
this Agreement shall continue in full force and effect. If any provision of this Agreement is
rendered illegal by any present or future statute, law, ordinance or regulation (collectively the
“Law”), then such provision shall be curtailed or limited only to the minimum extent necessary to
bring such provision into compliance with the Law. All the other terms and provisions of this
Agreement shall continue in full force and effect without impairment or limitation.

(f) No Assignment. This Agreement and all rights and obligations of the Executive hereunder
are personal to the Executive and may not be transferred or assigned by the Executive at any time.
The Company may assign its rights under this Agreement to any entity that assumes the Company’s
obligations hereunder in connection with any sale or transfer of all or a substantial portion of
the Company’s assets to such entity.

(g) Counterparts. This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and the same
instrument.

IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the
Company by its duly authorized officer, as of the day and year first above written.

	 	 	 	 	 	 	 
	 	 	 	 	 
	 

	 	Daniel Rizer
	 	 
	 
	 	 	 	 	 	 
	 	 	Synchronoss Technologies, Inc.	 	 
	 
	 
	 	By	 	 	 	 
	 

	 	
	 	 

Stephen G. Waldis

President and Chief Executive Officer
	 	 

 

9Exhibit 10.18

Exhibit 10.18

EXECUTION COPY

 

AGREEMENT AND PLAN OF MERGER

among

SYNCHRONOSS TECHNOLOGIES, INC.,

ECHO MERGER SUB, INC.,

FUSIONONE, INC.

and

JOHN MALLOY, as

STOCKHOLDERS’ REPRESENTATIVE

Dated as of July 6, 2010

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE I THE MERGER
	 	 	2	 
	 
	 	 	 	 
	SECTION 1.01 The Merger
	 	 	2	 
	SECTION 1.02 Effective Time; Closing
	 	 	2	 
	SECTION 1.03 Effect of the Merger
	 	 	2	 
	SECTION 1.04 Certificate of Incorporation and Bylaws of the Surviving Corporation
	 	 	2	 
	SECTION 1.05 Directors and Officers
	 	 	3	 
	 
	 	 	 	 
	ARTICLE II TRANSACTION CONSIDERATION; EXCHANGE OF CERTIFICATES
	 	 	3	 
	 
	 	 	 	 
	SECTION 2.01 Transaction Consideration
	 	 	3	 
	SECTION 2.02 Post-Closing Payments
	 	 	13	 
	SECTION 2.03 Exchange of Certificates; Closing Payments
	 	 	23	 
	SECTION 2.04 Stock Transfer Books
	 	 	26	 
	SECTION 2.05 Dissenting Shares
	 	 	26	 
	SECTION 2.06 Notices
	 	 	27	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
	 	 	28	 
	 
	 	 	 	 
	SECTION 3.01 Organization and Qualification
	 	 	28	 
	SECTION 3.02 Certificate of Incorporation and Bylaws
	 	 	29	 
	SECTION 3.03 Subsidiaries
	 	 	29	 
	SECTION 3.04 Capitalization
	 	 	30	 
	SECTION 3.05 Authority Relative to This Agreement
	 	 	33	 
	SECTION 3.06 No Conflict; Required Filings and Consents
	 	 	33	 
	SECTION 3.07 Permits; Compliance
	 	 	34	 
	SECTION 3.08 Financial Statements
	 	 	35	 
	SECTION 3.09 Absence of Certain Changes or Events
	 	 	36	 
	SECTION 3.10 Absence of Litigation
	 	 	37	 
	SECTION 3.11 Employee Benefit Plans; Labor Matters
	 	 	37	 
	SECTION 3.12 Contracts
	 	 	42	 
	SECTION 3.13 Environmental Matters
	 	 	44	 
	SECTION 3.14 Intellectual Property
	 	 	45	 
	SECTION 3.15 Taxes
	 	 	50	 
	SECTION 3.16 Vote Required
	 	 	53	 
	SECTION 3.17 Assets; Absence of Liens and Encumbrances
	 	 	53	 
	SECTION 3.18 Real Property
	 	 	54	 
	SECTION 3.19 Certain Interests
	 	 	54	 
	SECTION 3.20 Insurance Policies
	 	 	55	 
	SECTION 3.21 Restrictions on Business Activities
	 	 	55	 
	SECTION 3.22 Brokers
	 	 	56	 
	SECTION 3.23 State Takeover Statutes
	 	 	56	 
	SECTION 3.24 Customers and Suppliers
	 	 	56	 
	SECTION 3.25 Accounts Receivable; Bank Accounts
	 	 	56	 

 

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	 	 	Page	 
	 
	 	 	 	 
	SECTION 3.26 Powers of Attorney
	 	 	57	 
	SECTION 3.27 Warranties
	 	 	57	 
	SECTION 3.28 Books and Records
	 	 	57	 
	SECTION 3.29 Foreign Corrupt Practices Act
	 	 	57	 
	SECTION 3.30 Debt
	 	 	57	 
	SECTION 3.31 No Misstatements
	 	 	58	 
	SECTION 3.32 Reliance
	 	 	58	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
	 	 	58	 
	 
	 	 	 	 
	SECTION 4.01 Organization and Qualification
	 	 	58	 
	SECTION 4.02 Authority Relative to This Agreement
	 	 	59	 
	SECTION 4.03 No Conflict; Required Filings and Consents
	 	 	59	 
	SECTION 4.04 SEC Filings; Financial Statements
	 	 	60	 
	SECTION 4.05 Interim Operations of Merger Sub
	 	 	60	 
	SECTION 4.06 Valid Issuance of Parent Shares
	 	 	60	 
	SECTION 4.07 Required Financing
	 	 	60	 
	SECTION 4.08 Brokers and Finders
	 	 	60	 
	SECTION 4.09 Litigation
	 	 	60	 
	SECTION 4.10 Reliance
	 	 	60	 
	 
	 	 	 	 
	ARTICLE V CONDUCT OF BUSINESSES PENDING THE MERGER
	 	 	61	 
	 
	 	 	 	 
	SECTION 5.01 Conduct of Business by the Company and the Subsidiaries Pending the
Merger
	 	 	61	 
	SECTION 5.02 Litigation
	 	 	64	 
	SECTION 5.03 Notification of Certain Matters
	 	 	64	 
	 
	 	 	 	 
	ARTICLE VI ADDITIONAL AGREEMENTS
	 	 	65	 
	 
	 	 	 	 
	SECTION 6.01 Access to Information; Confidentiality
	 	 	65	 
	SECTION 6.02 No Solicitation of Transactions
	 	 	65	 
	SECTION 6.03 Employee Benefits Matters
	 	 	66	 
	SECTION 6.04 Further Action; Consents; Filings
	 	 	67	 
	SECTION 6.05 Transfer Taxes
	 	 	68	 
	SECTION 6.06 Satisfaction of Conditions Precedent
	 	 	68	 
	SECTION 6.07 No Public Announcement
	 	 	69	 
	SECTION 6.08 Expenses
	 	 	69	 
	SECTION 6.09 Preliminary Closing Consideration Schedule
	 	 	69	 
	SECTION 6.10 State Takeover Statutes
	 	 	69	 
	SECTION 6.11 Termination of the Company’s Agreements
	 	 	69	 
	SECTION 6.12 Securities Laws
	 	 	70	 
	SECTION 6.13 Officers’ and Directors’ Indemnification
	 	 	71	 
	SECTION 6.14 Provision Respecting Legal Representation
	 	 	72	 
	 
	 	 	 	 
	ARTICLE VII CONDITIONS TO THE MERGER
	 	 	72	 
	 
	 	 	 	 
	SECTION 7.01 Conditions to the Obligations of Each Party
	 	 	72	 
	SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub
	 	 	73	 
	SECTION 7.03 Conditions to the Obligations of the Company
	 	 	74	 

 

ii

 

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER
	 	 	75	 
	 
	SECTION 8.01 Termination
	 	 	75	 
	SECTION 8.02 Effect of Termination
	 	 	76	 
	SECTION 8.03 Waiver
	 	 	76	 
	 
	 	 	 	 
	ARTICLE IX INDEMNIFICATION
	 	 	76	 
	 
	 	 	 	 
	SECTION 9.01 Survival of Representations and Warranties
	 	 	76	 
	SECTION 9.02 Indemnification by the Company Participants
	 	 	77	 
	SECTION 9.03 Indemnification of Stockholder Indemnified Parties
	 	 	80	 
	SECTION 9.04 Calculation of Losses
	 	 	80	 
	SECTION 9.05 Indemnification Procedures
	 	 	81	 
	SECTION 9.06 Stockholders’ Representative
	 	 	83	 
	SECTION 9.07 Setoff
	 	 	84	 
	SECTION 9.08 Remedies Exclusive
	 	 	84	 
	 
	 	 	 	 
	ARTICLE X GENERAL PROVISIONS
	 	 	85	 
	 
	 	 	 	 
	SECTION 10.01 Notices
	 	 	85	 
	SECTION 10.02 Certain Definitions
	 	 	86	 
	SECTION 10.03 Severability
	 	 	87	 
	SECTION 10.04 Assignment; Binding Effect; Benefit
	 	 	87	 
	SECTION 10.05 Incorporation of Exhibits
	 	 	88	 
	SECTION 10.06 Specific Performance
	 	 	88	 
	SECTION 10.07 Governing Law; Forum
	 	 	88	 
	SECTION 10.08 Time of the Essence
	 	 	88	 
	SECTION 10.09 Waiver of Jury Trial
	 	 	88	 
	SECTION 10.10 Construction and Interpretation
	 	 	88	 
	SECTION 10.11 Further Assurances
	 	 	89	 
	SECTION 10.12 Headings
	 	 	89	 
	SECTION 10.13 Counterparts
	 	 	89	 
	SECTION 10.14 Entire Agreement; Amendment
	 	 	89	 

 

iii

 

DEFINED TERMS

	 	 	 
	Term	 	Section
	 
	401(k) Plan
	 	6.03(d)
	Accredited Investor
	 	2.01(b)(i)(B)
	Accredited Stockholder
	 	2.01(b)(i)(B)
	Acquisition Documents
	 	9.01
	Act
	 	6.12(c)
	Additional Earn-Out Amount
	 	2.02(c)
	Advisor
	 	3.22
	affiliate
	 	10.02(a)
	Aggregate Earn-Out Amount
	 	2.02(f)(i)
	Aggregate Option Exercise Price
	 	2.01(a)(i)
	Aggregate Preference Amount
	 	2.01(a)(xix)
	Aggregate Warrant Exercise Price
	 	2.01(a)(ii)
	Agreement
	 	Preamble
	Antitrust Laws
	 	6.04(b)
	Applicable Per Share Closing Equity Consideration
	 	2.01(a)(iii)
	Assets
	 	3.17
	Audited Financial Statements
	 	3.08(a)
	business day
	 	10.02(b)
	Business of the Company
	 	2.02(d)(i)
	Bylaws
	 	Recitals
	CEO
	 	2.02(h)
	CERCLA
	 	3.13(d)
	Certificate of Incorporation
	 	Recitals
	Certificate of Merger
	 	1.02
	Claim
	 	6.13(a)
	Closing
	 	1.02
	Closing Cash Consideration
	 	2.01(c)(v)
	Closing Consideration Recipients
	 	2.01(a)(iv)
	Closing Consideration Schedule
	 	2.03(a)(ii)
	Closing Date
	 	1.02
	Closing Date Warrant Cancellation Payment
	 	2.01(b)(iii)(A)
	Closing Equityholder Consideration
	 	2.01(c)(v)
	Closing Payments
	 	2.03(a)(iii)
	Closing Shares
	 	2.01(c)
	COBRA
	 	3.11(d)
	Code
	 	2.03(g)
	Common Control
	 	3.06(c)
	Common Stock
	 	Recitals
	Common Stock Equivalent Earn-Out Amount
	 	2.01(a)(v)
	Company
	 	Preamble
	Company Confidential Information
	 	3.14(f)
	Company Disclosure Schedule
	 	Article III

 

iv

 

	 	 	 
	Term	 	Section
	 
	 	 
	Company Equityholders
	 	2.01(a)(vi)
	Company Intellectual Property
	 	3.14(a)
	Company Leases
	 	3.18
	Company Material Adverse Effect
	 	3.01
	Company Optionholders
	 	2.01(a)(vii)
	Company Options
	 	2.01(a)(viii)
	Company Participant
	 	2.01(a)(ix)
	Company Permits
	 	3.07(a)
	Company Preferred Stock
	 	Recitals
	Company Products
	 	2.02(d)(ii)
	Company Products and Services
	 	2.02(d)(iv)
	Company Services
	 	2.02(d)(iii)
	Company Share Certificates
	 	2.03(a)(i)
	Company Stock
	 	Recitals
	Company Stockholder
	 	2.01(b)(i)(A)
	Company Transaction Expenses
	 	2.01(a)(x)
	Company Warrantholder
	 	2.01(b)(iii)
	Company Warrants
	 	2.01(a)(xi)
	Competing Transaction
	 	6.02(b)
	Consent Request Document
	 	6.12(b)
	Control
	 	3.06(c)
	Copyrights
	 	3.14(a)
	Current Assets
	 	2.01(c)(iv)(F)
	Current Liabilities
	 	2.01(c)(iv)(F)
	D&O Indemnified Parties
	 	6.13(a)
	D&O Tail Policy
	 	6.13(b)
	Debt
	 	3.30
	DGCL
	 	Recitals
	Dissenting Shares
	 	2.05(a)
	Divestiture
	 	2.02(g)
	Domain Names
	 	3.14(a)
	Earn-Out Consideration Recipients
	 	2.02(a)
	Earn-Out Consideration Schedule
	 	2.02(f)(iv)(A)
	Earn-Out Eligible Employees
	 	2.02(a)
	Earn-Out Payment Date
	 	2.02(f)(iv)(A)
	Earn-Out Period
	 	2.02(b)
	Earn-Out Shares
	 	2.02(f)(iv)(D)
	Effective Time
	 	1.02
	Employee Earn-Out Percentage
	 	2.01(a)(xii)
	Employee Obligation
	 	3.14(i)
	Employee Residual Sharing Percentage
	 	2.02(f)(iv)(H)
	Employment Arrangement
	 	6.03(b)
	Entity Representatives
	 	10.02(d)
	Environmental Laws
	 	3.13(d)
	Environmental Permits
	 	3.13(d)
	Equityholder Earn-Out Percentage
	 	2.01(a)(xiii)

 

v

 

	 	 	 
	Term	 	Section
	 
	 	 
	ERISA
	 	3.11(a)
	ERISA Affiliate
	 	3.11(e)
	Escrow Agent
	 	2.03(b)
	Escrow Agreement
	 	2.03(b)
	Escrow Amount
	 	2.01(a)(xiv)
	Escrow Fund
	 	2.01(c)(vi)
	Escrow Materials
	 	3.14(c)
	Escrow Percentage
	 	2.01(a)(xv)
	Estimated Deficiency Amount
	 	2.01(c)(iv)(A)
	Estimated Net Working Capital
	 	2.01(c)(iv)(A)
	Exchange Agent
	 	2.03(a)(i)
	Existing Investment Documents
	 	6.11
	Extraordinary Matters
	 	2.01(a)(x)
	Final Deficiency Amount
	 	2.01(c)(iv)(E)
	Final Earn-Out Statement
	 	2.02(f)(i)
	Final Net Working Capital Schedule
	 	2.01(c)(iv)(B)
	FIRPTA
	 	7.02(k)
	Fundamental Representations
	 	9.01(a)
	GM
	 	2.02(h)
	Governmental Entity
	 	3.06(b)
	Gross Closing Consideration
	 	2.01(c)
	Hazardous Materials
	 	3.13(d)
	Holder Group
	 	6.14
	HSR Act
	 	3.06(b)
	Indemnified Party
	 	9.05(a)
	Indemnifying Party
	 	9.05(a)
	Independent CPA
	 	2.01(c)(iv)(F)
	Infringement
	 	3.14(a)
	Intellectual Property
	 	3.14(a)
	Interim Financial Statements
	 	3.08(a)
	Investment Representation Letter
	 	2.01(b)(i)(B)
	IP Rights
	 	3.14(a)
	Item of Earn-Out Dispute
	 	2.02(f)(ii)
	Item of Working Capital Dispute
	 	2.01(c)(iv)(C)
	Junior Preferred Stock
	 	2.01(b)(i)(A)
	knowledge
	 	10.02(d)
	Law
	 	3.06(a)
	Leased Real Property
	 	3.17
	Legal Proceeding
	 	3.10
	Letter of Transmittal
	 	2.03(a)(i)
	Liabilities
	 	3.08(b)
	Liens
	 	3.17
	Losses
	 	9.04(a)
	made available
	 	10.02(e)
	Material Contracts
	 	3.12(a)
	Merger
	 	Recitals

 

vi

 

	 	 	 
	Term	 	Section
	 
	 	 
	Merger Sub
	 	Preamble
	Mooreland
	 	2.01(a)(xvi)
	Mooreland Earn-Out Payment
	 	2.02(f)(iv)(C)
	Mooreland Earn-Out Percentage
	 	2.01(a)(xvii)
	Multi-employer Plan
	 	3.11(c)
	Multiple Employer Plan
	 	3.11(c)
	Net Closing Consideration
	 	2.01(c)(v)
	Net Earn-Out Amount
	 	2.02(f)(iv)(C)
	Net Earn-Out Cash Amount
	 	2.02(f)(iv)(D)
	Net Earn-Out Share Number
	 	2.02(e)
	Net Working Capital
	 	2.01(c)(iv)(F)
	Non-Disclosure Agreement
	 	6.01(b)
	Open Source Materials
	 	3.14(n)
	Operating Margin
	 	2.02(d)(v)
	Order
	 	7.01(a)
	Out-of-the-Money Warrant
	 	2.01(b)(iii)(D)
	Outside Date
	 	8.01(b)
	Owned Company Intellectual Property
	 	3.14(q)
	Parent
	 	Preamble
	Parent Common Stock
	 	2.01(a)(xviii)
	Parent Disclosure Schedule
	 	Article IV
	Parent Indemnified Parties
	 	9.02(a)(i)
	Parent Material Adverse Effect
	 	4.01(a)
	Parent SEC Reports
	 	4.04
	Patents
	 	3.14(a)
	Per Share Closing Common Amount
	 	2.01(a)(xix)
	Permitted Liens
	 	3.17
	Person
	 	10.02(f)
	Plan
	 	3.11(a)
	Plans
	 	3.11(a)
	Preference Amount
	 	2.01(b)(i)(A)
	Preliminary Closing Consideration Schedule
	 	6.09
	Principal Stockholders
	 	Recitals
	Prior Merger Agreements
	 	3.12(a)(xvii)
	Pro Rata Percentage
	 	10.02(g)
	Quarterly Earn-Out Amount
	 	2.02(b)
	Quarterly Estimate
	 	2.02(e)
	Quarterly Operating Margin
	 	2.02(b)(iii)
	Quarterly Revenue
	 	2.02(b)(i)
	Quarterly Target Revenue
	 	2.02(b)(i)
	Quarterly Target Transaction-Related Revenue
	 	2.02(b)(ii)
	Quarterly Transaction-Related Revenue
	 	2.02(b)(ii)
	Reference Balance Sheet
	 	3.08(a)
	Remaining Preference Amount
	 	2.01(a)(xx)
	Representatives
	 	6.01(a)
	SEC
	 	4.04

 

vii

 

	 	 	 
	Term	 	Section
	 
	 	 
	Section 262 Notice
	 	2.06(d)
	Securities Act
	 	2.01(b)(i)(B)
	Series A Preference Amount
	 	2.01(a)(xxii)
	Series A-1 Preference Amount
	 	2.01(a)(xxi)
	Series A Preferred Stock
	 	Recitals
	Series A-1 Preferred Stock
	 	Recitals
	Series A-1 Warrant
	 	2.01(b)(iii)
	Series B Preference Amount
	 	2.01(a)(xxiii)
	Series B Preferred Stock
	 	Recitals
	Series C Cap
	 	2.02(f)(iv)(E)
	Series C Preference Amount
	 	2.01(a)(xxiv)
	Series C Preferred Stock
	 	Recitals
	Series D Cap
	 	2.02(f)(iv)(E)
	Series D Preference Amount
	 	2.01(a)(xxv)
	Series D Preferred Stock
	 	Recitals
	Signing Price
	 	2.01(a)(xxvi)
	Software
	 	3.14(a)
	Source Materials
	 	3.12(a)(xviii)
	Special Losses
	 	9.02(c)
	Special Payment
	 	2.01(a)(x)
	Statement No. 5
	 	3.08(c)
	Stock Plans
	 	3.04(b)
	Stockholder Closing Consideration
	 	2.01(c)(v)
	Stockholder Indemnified Parties
	 	9.03
	Stockholder Notices
	 	2.06(c)
	Stockholders’ Representative
	 	9.06(a)
	Subsidiary
	 	3.03(a)
	Subsidiaries
	 	3.03(a)
	subsidiary
	 	10.02(h)
	Surviving Corporation
	 	1.01
	Target Operating Margin
	 	2.02(d)(vi)
	Target Revenue
	 	2.02(d)(vii)
	Target Transaction-Related Revenue
	 	2.02(d)(viii)
	Tax
	 	3.15(bb)
	Tax Benefit
	 	9.04(b)
	Taxes
	 	3.15(bb)
	Taxable
	 	3.15(bb)
	Tax Authority
	 	3.15(bb)
	Tax Return
	 	3.15(a)
	Tax Returns
	 	3.15(a)
	Terminating Company Breach
	 	8.01(d)
	Terminating Parent Breach
	 	8.01(e)
	Termination for Cause
	 	10.02(c)
	Termination Payments
	 	2.01(a)(x)
	Third Party Claims
	 	9.05(b)
	Threshold Amount
	 	2.01(a)(xxvii)

 

viii

 

	 	 	 
	Term	 	Section
	 
	 	 
	Total Revenue
	 	2.02(d)(ix)
	Trademarks
	 	3.14(a)
	Trade Secrets
	 	3.14(a)
	Transaction Consideration
	 	2.01(a)(xxviii)
	Transaction-Related Revenue
	 	2.02(d)(x)
	Transfer Taxes
	 	6.05
	Ultimate Parent
	 	3.06(c)
	U.S. GAAP
	 	3.08(a)
	Use(d)
	 	3.14(a)
	Verizon
	 	2.01(a)(xxix)
	Verizon Consent Agreement
	 	2.01(c)(ii)
	Verizon Earn-Out Payment
	 	2.02(f)(iv)(B)
	Verizon Earn-Out Percentage
	 	2.01(a)(xxx)
	Verizon Warrant Cancellation Payment
	 	2.01(c)(ii)
	Written Consent
	 	Recitals

 

ix

 

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of July 6, 2010 (this “Agreement”), among
Synchronoss Technologies, Inc., a Delaware corporation (“Parent”), Echo Merger Sub, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), fusionOne,
Inc., a Delaware corporation (the “Company”), and John Malloy, as Stockholders’
Representative (as defined in Section 9.06(a) hereof).

W I T N E S S E T H

WHEREAS, upon the terms and subject to the conditions of this Agreement and in accordance with
the Delaware General Corporation Law (the “DGCL”), Parent and the Company will enter into a
business combination transaction pursuant to which Merger Sub will merge with and into the Company
(the “Merger”);

WHEREAS, the Board of Directors of the Company has (i) determined that the Merger is fair to,
and in the best interests of, the Company and its stockholders, (ii) unanimously approved and
adopted this Agreement, the Merger, and the other transactions contemplated by this Agreement, and
(iii) determined to unanimously recommend that the stockholders of the Company approve and adopt
this Agreement and the Merger;

WHEREAS, the Boards of Directors of each of Parent and Merger Sub have (i) determined that the
Merger is in the best interests of Parent, Merger Sub and their respective stockholders and (ii)
approved and adopted this Agreement, the Merger, and the other transactions contemplated by this
Agreement;

WHEREAS, certain stockholders of the Company own such number of shares of common stock, $0.001
par value, of the Company (the “Common Stock”), such number
of shares of Series A Preferred Stock, par value $0.001 per share, of the Company (the
“Series A Preferred Stock”), such number of shares of Series A-1 Preferred Stock, par value
$0.001 per share, of the Company (the “Series A-1 Preferred Stock”) such number of shares
of Series B Preferred Stock, par value $0.001 per share, of the Company (the “Series B
Preferred Stock”), such number of shares of Series C Preferred Stock, par value $0.001 per
share, of the Company (the “Series C Preferred Stock”), such number of shares of Series D
Preferred Stock, par value $0.001 per share, of the Company (the “Series D Preferred
Stock”, and together with the Series A Preferred Stock, Series A-1 Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock, the “Company Preferred Stock,” and, the
Common Stock together with the Company Preferred Stock, the “Company Stock”) as is set
forth opposite such stockholder’s name in Schedule 1.01 (such stockholders being referred
to herein as the “Principal Stockholders”); and

WHEREAS, as an inducement to the willingness of Parent to enter into this Agreement, the
Principal Stockholders have indicated that they expect to deliver, following the approval and
adoption of this Agreement by the Board of Directors of the Company and within one (1) day
following the execution of this Agreement, their irrevocable approval and adoption of this
Agreement, the Merger and the other transactions contemplated thereby pursuant to a written
consent, in the form attached hereto as Exhibit A, signed by the Principal Stockholders,
pursuant to and in accordance with the applicable provisions of the DGCL, the Certificate of
Incorporation of the Company (the “Certificate of Incorporation”) and the bylaws of the
Company (the “Bylaws”) (such consent, the “Written Consent”).

 

 

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, Parent, Merger Sub, the Company, and
the Stockholders’ Representative hereby agree as follows:

ARTICLE I

THE MERGER

SECTION 1.01 The Merger. Upon the terms of this Agreement and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, at the Effective Time (as
defined in Section 1.02), Merger Sub shall be merged with and into the Company. As a
result of the Merger, the separate corporate existence of Merger Sub shall cease, and the Company
shall continue as the surviving corporation of the Merger (the “Surviving Corporation”).

SECTION 1.02 Effective Time; Closing. As promptly as practicable following the
satisfaction or, if permissible by the express terms of this Agreement, waiver of the conditions
set forth in Article VII (but in no event more than three (3) business days thereafter) (or
such other date as may be agreed by each of the parties hereto), the parties hereto shall cause the
Merger to be
consummated by (i) filing a certificate of merger (the “Certificate of Merger”) with
the Secretary of State of the State of Delaware in such form as is required by, and executed in
accordance with, the relevant provisions of the DGCL and (ii) making all other filings and
recordings required under the DGCL. The term “Effective Time” means the date and time of
the filing of the Certificate of Merger (or such later time as may be agreed by each of the parties
hereto and specified in the Certificate of Merger). Immediately prior to the filing of the
Certificate of Merger, a closing (the “Closing”) will be held at the offices of Gunderson
Dettmer Stough Villeneuve Franklin & Hachigian, LLP at 850 Winter Street, Waltham, MA 02451 (or
such other place as the parties may agree). The date on which the Closing shall occur is referred
to herein as the “Closing Date.”

SECTION 1.03 Effect of the Merger. At and after the Effective Time, the Merger shall
have the effects as set forth in the applicable provisions of the DGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights,
privileges, powers and franchises of each of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of each
of the Company and Merger Sub shall become the debts, liabilities, obligations, restrictions,
disabilities and duties of the Surviving Corporation.

SECTION 1.04 Certificate of Incorporation and Bylaws of the Surviving Corporation.

(a) At the Effective Time, the Certificate of Incorporation of the Company as the Surviving
Corporation shall be amended and restated to read the same as the Certificate of Incorporation of
Merger Sub as in effect immediately prior to the Effective Time, except that Section 1 of
the amended and restated Certificate of Incorporation of the Surviving Corporation, rather than
reading the same as Section 1 of the Certificate of Incorporation of Merger Sub, shall read
as follows: “The name of this corporation is fusionOne, Inc.”

 

2

 

(b) At the Effective Time, the Bylaws of the Company as the Surviving Corporation shall be
amended to read the same as the Bylaws of Merger Sub as in effect immediately prior to the
Effective Time, except that all references to Merger Sub in the Bylaws of the Surviving Corporation
shall be changed to refer to fusionOne, Inc.

SECTION 1.05 Directors and Officers. The directors of Merger Sub immediately prior to the Effective Time shall be the initial
directors of the Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and the officers of Merger Sub immediately
prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each
case until their respective successors are duly elected or appointed and qualified.

ARTICLE II

TRANSACTION CONSIDERATION; EXCHANGE OF CERTIFICATES

SECTION 2.01 Transaction Consideration.

(a) Definitions. As used in this Section 2.01 and elsewhere in this
Agreement, the following terms have the following meanings:

(i) “Aggregate Option Exercise Price” means the sum of the exercise prices of
all Company Options, in each case, that are outstanding immediately prior to the Effective
Time to the extent unexercised as of immediately prior to the Effective Time.

(ii) “Aggregate Warrant Exercise Price” means the sum of the exercise prices
of all Series A-1 Warrants, in each case, that are outstanding immediately prior to the
Effective Time to the extent unexercised as of immediately prior to the Effective Time.

(iii) “Applicable Per Share Closing Equityholder Consideration” shall mean,
(A) with respect to a share of Series A-1 Preferred Stock, the Series A-1 Preference Amount
plus the Per Share Closing Common Amount, (B) with respect to a share of Series A
Preferred Stock, the Series A Preference Amount, (C) with respect to a share of Series B
Preferred Stock, the Series B Preference Amount, (D) with respect to a share of Series C
Preferred Stock, the lesser of (x) Series C Preference Amount plus the Per Share
Closing Common Amount, and (y) $0.4912, (E) with respect to a share of Series D Preferred
Stock, the lesser of (x) Series D Preference Amount plus the Per Share Closing
Common Amount, and (y) $0.7430, (F) with respect to a share of Common Stock, the Per Share
Closing Common Amount.

(iv) “Closing Consideration Recipients” shall mean, collectively, each Company
Stockholder, each Company Warrantholder and Verizon.

 

3

 

(v) “Common Stock Equivalent Earn-Out Amount” means the sum of (A) the
quotient of (x) the value of the cash and Earn-Out Shares (valued at the Signing Price)
payable or issuable pursuant to Section 2.02(f)(iv)(E) plus the Aggregate
Option Exercise Price, divided by (y) the number of shares of
Series A-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Common Stock outstanding immediately prior to the Effective Time (assuming that all Series
A-1 Warrants have been converted into shares of Series A-1 Preferred Stock and all Company
Options have been exercised for shares of Common Stock, in each case as of immediately
prior to the Effective Time), plus (B) the Per Share Closing Common Amount, if any.

(vi) “Company Equityholders” shall mean, collectively, each Company
Stockholder, Company Warrantholder and Company Optionholder.

(vii) “Company Optionholder” shall mean each holder of a Company Option
outstanding immediately prior to the Effective Time to the extent unexercised as of
immediately prior to the Effective Time.

(viii) “Company Options” shall mean each option to purchase shares of Company
Stock (or exercisable for cash) outstanding under the Stock Plans or otherwise, other than
any Company Warrant.

(ix) “Company Participant” shall mean, collectively, each Company Stockholder,
Company Warrantholder, Company Optionholder and Earn-Out Eligible Employee.

(x) “Company Transaction Expenses” means (i) all fees and expenses incurred by
the Company in connection with this Agreement and the transactions contemplated hereby or,
to the extent such fees or expenses are incurred before the Closing and remain unpaid, any
actual or contemplated underwriting, equity or debt financing, refinancing,
recapitalization, change in control transaction, business combination transaction, sale of
assets or similar matter (“Extraordinary Matters”), including all legal,
accounting, brokerage, finder’s, commission, financial advisory, consulting and all other
fees and expenses of third parties incurred by the Company in connection with the
negotiation or effectuation of the terms and conditions of this Agreement or any
Extraordinary Matter, or the transactions contemplated hereby or any Extraordinary Matter,
including any payments made or anticipated to be made by the Company as a brokerage or
finders’ fee, agents’ commission or any similar charge, in connection therewith, (ii)
payments set forth on the attached Schedule 2.01(a)(ix) under the heading
“Termination Payments” to be made to the recipients set forth thereon (the “Termination
Payments”), (iii) payroll Taxes of the Company and its Subsidiaries (whether or not
accrued) resulting from the payment of the Termination Payments, (iv) payments set forth on
the attached Schedule 2.01(a)(ix) under the heading “Special Payments” to be made
to the recipients described thereon (such payments, the “Special Payments”), (v)
payroll Taxes of the Company and its Subsidiaries (whether or not accrued) resulting from
the payment of the Special Payments, (vi) bonuses or other compensatory payments required
to be made to employees or directors of the Company or its Subsidiaries (other than in
connection with the Special Payments) as a result of the transactions contemplated by this
Agreement (provided that any right to
severance or similar amounts upon the termination of employment, whether or not
arising as a result of the consummation of the transactions contemplated by the Agreement,
or quarterly, management or similar bonuses previously disclosed to Parent shall not be
considered “Company Transaction Expenses” pursuant to this clause (vi)). All items
comprising Company Transaction Expenses and the parties to which such items are payable are
set forth on Schedule 2.01(a)(ix); provided, however, that items marked on such
schedule with an “*” are acknowledged to be estimated amounts.

 

4

 

(xi) “Company Warrants” shall mean each warrant to purchase shares of Company
Stock (or exercisable for cash), including the Series A-1 Warrants.

(xii) “Equityholder Earn-Out Percentage” means, with respect to any Company
Equityholder, a fraction expressed as a percentage equal to (A) Seventy-Seven and Four One
Hundredths (77.04%), multiplied by (B) the quotient of (x) the number of shares of
Series A-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Common
Stock held by such Company Participant immediately prior to the Effective Time (assuming
that all Series A-1 Warrants have been converted into shares of Series A-1 Preferred Stock
and all Company Options with a Threshold Amount less than the applicable Common Stock
Equivalent Earn-Out Amount have been exercised for shares of Common Stock, in each case as
of immediately prior to the Effective Time), divided by (y) the number of shares of
Series A-1 Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Common
Stock outstanding immediately prior to the Effective Time (assuming that all Series A-1
Warrants have been converted into shares of Series A-1 Preferred Stock and all Company
Options with a Threshold Amount less than the applicable Common Stock Equivalent Earn-Out
Amount have been exercised for shares of Common Stock, in each case as of immediately prior
to the Effective Time).

(xiii) “Employee Earn-Out Percentage” means, with respect to any Earn-Out
Eligible Employee, a fraction expressed as a percentage equal to (A) Twenty-Two and
Ninety-Six One Hundredths (22.96%), multiplied by (B) the percentage set forth
opposite the name of such Earn-Out Eligible Employee on Schedule 2.02(a).

(xiv) “Escrow Amount” means an amount in cash equal to $4,000,000.

(xv) “Escrow Percentage” means, with respect to each Closing Consideration
Recipient, the percentage set forth opposite the name of such Closing Consideration
Recipient under the heading “Escrow Percentage” on the Closing Consideration Schedule,
which percentages shall equal 100%.

(xvi) “Mooreland” means Mooreland Partners, LLC.

(xvii) “Mooreland Earn-Out Percentage” means one and five tenths percent
(1.5%).

(xviii) “Parent Common Stock” shall mean Parent’s authorized Common Stock, par
value $0.0001 per share.

 

5

 

(xix) “Per Share Closing Common Amount” shall mean an amount equal to the
quotient of (A) the Closing Equityholder Consideration, (u) plus the Aggregate
Warrant Exercise Price, less (v) the Series A-1 Preference Amount multiplied
by the number of shares of Series A-1 Preferred Stock outstanding immediately prior to
the Effective Time (assuming that all Series A-1 Warrants have been converted into shares
of Series A-1 Preferred Stock as of immediately prior to the Effective Time), less
(w) the Series A Preference Amount multiplied by the number of shares of Series A
Preferred Stock outstanding immediately prior to the Effective Time, less (x) the
Series B Preference Amount multiplied by the number of shares of Series B Preferred
Stock outstanding immediately prior to the Effective Time, less (y) the Series C
Preference Amount multiplied by the number of shares of Series C Preferred Stock
outstanding immediately prior to the Effective Time, less (z) the Series D
Preference Amount multiplied by the number of shares of Series D Preferred Stock
outstanding immediately prior to the Effective Time (the sum of (v) through (z), the
“Aggregate Preference Amount”), divided by (B) the number of shares of
Series A-1 Preferred Stock (assuming that all Series A-1 Warrants have been converted into
 shares of Series A-1 Preferred Stock as of immediately prior to the Effective Time), Series
C Preferred Stock, Series D Preferred Stock and Common Stock outstanding immediately prior
to the Effective Time; provided, however, that the Per Share Closing Common Amount shall
not be less than zero.

(xx) “Remaining Preference Amount” means the amount, if any, by which the
Aggregate Preference Amount exceeds the amount of Closing Equityholder Consideration paid
at the Closing in respect of shares of Company Preferred Stock (without regard to any
reduction in such amount on account of the Escrow Amount).

(xxi) “Series A-1 Preference Amount” shall mean $0.284 per share of Series A-1
Preferred Stock.

(xxii) “Series A Preference Amount” shall mean $0.0322 per share of Series A
Preferred Stock.

(xxiii) “Series B Preference Amount” shall mean $0.0930 per share of Series B
Preferred Stock.

(xxiv) “Series C Preference Amount” shall mean $0.2456 per share of Series C
Preferred Stock.

(xxv) “Series D Preference Amount” shall mean $0.3715 per share of Series D
Preferred Stock.

(xxvi) “Signing Price” shall mean the weighted average trading price per share
of the Parent Common Stock during the thirty (30) trading days immediately up to and
including the day prior to the date of this Agreement.

(xxvii) “Threshold Amount” means, with respect to any Company Option
outstanding immediately prior to the Effective Time, the exercise price per share of Common
Stock attributable to such Company Option immediately prior to the Effective Time at set
forth on Section 3.04(b) of the Company Disclosure Schedule.

 

6

 

(xxviii) “Transaction Consideration” means, collectively, the Net Closing
Consideration and the Aggregate Earn-Out Amount.

(xxix) “Verizon” means Cellco Partnership d/b/a Verizon Wireless.

(xxx) “Verizon Earn-Out Percentage” means eleven and four tenths percent
(11.4%).

(b) Treatment of Capital Stock; Company Options and Company Warrants.

(i) Company Stock.

(A) Subject to Section 2.05, at the Effective Time, by virtue of the
Merger, without any action on the part of Parent, Merger Sub, the Company or the
holders of Company Stock (each such holder, a “Company Stockholder”), in
accordance with the Certificate of Incorporation, each share of Company Stock held
by a Company Stockholder and issued and outstanding immediately prior to the
Effective Time shall be canceled and extinguished and automatically converted into
the right to receive, without interest, (i) the aggregate Applicable Per Share
Closing Equityholder Consideration payable on account of such shares of Company
Stock held by a Company Stockholder and issued and outstanding immediately prior to
the Effective Time less an amount in cash equal to the amount of such
Company Stockholder’s Escrow Percentage of the Escrow Amount, (ii) the right to
receive such Company Stockholder’s Equityholder Earn-Out Percentage of the
payments, if any, pursuant to Section 2.02 (subject to the provisions
thereof), and (iii) the right to receive such Company Stockholder’s Escrow
Percentage of any cash disbursements made from the Escrow Fund in accordance with
the terms of this Agreement and the Escrow Agreement, as and when such
disbursements are made. Notwithstanding the foregoing, in the event that the
holders of any Company Preferred Stock would, on account of each share of Company
Preferred Stock held by such Company Stockholders immediately prior to the
Effective Time, receive an amount per share pursuant to Section
2.01(b)(i)(A)(i) (without taking into account any
reduction on account of such Company Stockholder’s Escrow Percentage of the
Escrow Amount) less than the applicable Preference Amount for such series of
Company Preferred Stock set forth above, then, (i) if such Company Preferred Stock
is Series A-1 Preferred Stock, no payments shall be made in respect of any shares
of Company Stock other than Series A-1 Preferred Stock, and such amounts shall be
paid ratably to the holders of Series A-1 Preferred Stock in proportion to the
number of shares of Series A-1 Preferred Stock held by each such Company
Stockholder immediately prior to the Effective Time and (ii) if such Company
Preferred Stock is Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock, or Series D Preferred Stock (collectively, the “Junior
Preferred Stock”), subsequent to the payment in full of the Series A-1
Preference Amount to the holders of Series A-1 Preferred Stock, the remaining
proceeds available for distribution shall be paid ratably to the holders of Junior
Preferred Stock on a per share basis in proportion to the applicable Preference
Amount of each such series (and, for the avoidance of doubt, no payments shall be
made in respect of any shares of Common Stock, including any shares of Company
Preferred Stock which have converted to Common Stock prior to the Effective Time).
For purposes hereof, “Preference Amount” means, with respect to any share
of Company Preferred Stock, the Series A-1 Preference Amount, the Series A
Preference Amount, the Series B Preference Amount, the Series C Preference Amount
or the Series D Preference Amount, as applicable.

 

7

 

(B) The aggregate Applicable Per Share Closing Equityholder Consideration
payable at Closing to each Company Stockholder shall be payable in cash and Closing
Shares as follows: each Company Stockholder (i) receiving Closing Equityholder
Consideration on account of shares of Preferred Stock (unless Parent determines
that such Company Stockholder is not an Accredited Investor (as defined below)), or
(ii) that has executed and delivered to Parent, no later than two (2) days prior to
the Closing, an investment representation letter in form and substance reasonably
satisfactory to Parent (an “Investment Representation Letter”) representing
to such party’s status as an “accredited investor” (an “Accredited
Investor”) within the meaning of Rule 501 of the Securities Act of 1933, as
amended (the “Securities Act”) ((i) and (ii), collectively, the
“Accredited Stockholders”), shall receive (x) that number of Closing Shares
equal to the product of (a) the aggregate number of Closing Shares and (b) the
quotient of (i) the aggregate Applicable Per Share Closing Equityholder
Consideration payable at Closing to such Accredited Stockholder divided by
(ii) the aggregate Applicable Per Share Closing Equityholder Consideration payable
at Closing to all Accredited Stockholders, rounded down to the nearest whole share
and (y) that amount of cash equal to the aggregate Applicable Per Share Closing
Equityholder Consideration payable at Closing to such Accredited Stockholder
less the product of (i) the number of Closing Shares to be issued
to such Accredited Stockholder and (ii) the Signing
Price. Notwithstanding the foregoing, if the aggregate Applicable Per Share
Closing Equityholder Consideration payable at Closing to all Accredited
Stockholders is less than $8,000,000 (taking into account any reduction on account
of such Company Stockholder’s Escrow Percentage of the Escrow Amount), each
Accredited Stockholder shall receive Closing Shares with an aggregate value, valued
at the Signing Price, equal to the aggregate Applicable Per Share Closing
Equityholder Consideration payable at Closing to such Accredited Stockholder;
provided that in no event shall the aggregate value of all such Closing Shares,
valued at the Signing Price, exceed $8,000,000. The aggregate Applicable Per Share
Closing Equityholder Consideration payable at Closing to each Company Stockholder
that is not an Accredited Stockholder shall be paid in cash.

 

8

 

(ii) Company Options. At or before the Effective Time, the Company shall have
taken all necessary action, including, if necessary, obtaining the consent of any holder of
Company Options and the adoption of resolutions by the Board of Directors, to: (A)
terminate, as of the Effective Time, the Stock Plans, and (B) cancel, as of the Effective
Time, each Company Option that is outstanding and unexercised or unconverted, whether
vested (including Company Options that become vested as a result of the consummation of the
transactions contemplated by this Agreement) or unvested, in exchange for the right to
receive the payments described in Section 2.02(f)(iv)(F), subject to the terms and
conditions set forth therein. The amounts payable with respect to each Company Option
hereunder shall be paid on the same schedule and under the same terms and conditions as
apply to payments to Company Stockholders hereunder generally (taking into account
reductions on account of the Threshold Amount), and shall be paid in no event later than
five (5) years after the Effective Time.

(iii) Company Warrants. Each holder of a warrant to purchase shares of Series
A-1 Preferred Stock (a “Series A-1 Warrant”) that is outstanding as immediately
prior to the Effective Time (each, a “Company Warrantholder” and, collectively with
the Company Stockholders and the Company Optionholders, the “Company
Equityholders”) shall be entitled to receive, in full consideration of the cancellation
of all Series A-1 Warrants held by such holder:

(A) a lump-sum cash payment on the Closing Date equal to (x) the product of
(1) the number of shares of Series A-1 Preferred Stock the holder of each Series
A-1 Warrant would be entitled to purchase upon the exercise of such Series A-1
Warrant and (2) the Applicable Per Share Closing Equityholder Consideration
applicable to a share of Series A-1 Preferred Stock, less (y) the product
of (1) the number of shares of Series A-1 Preferred Stock the holder of each Series
A-1 Warrant would be entitled to purchase upon the exercise of such Series A-1
Warrant and (2) the per share exercise price of such Series A-1 Warrant,
less (z) the amount of such Company Warrantholder’s Escrow Percentage of
the Escrow Amount (a “Closing Date Warrant Cancellation Payment” and
collectively, the “Closing Date Warrant Cancellation Payments”);

(B) the right to receive such Company Warrantholder’s Equityholder Earn-Out
Percentage of the payments, if any, pursuant to Section 2.02 (subject to
the provisions thereof); and

(C) the right to receive such Company Warrantholder’s Escrow Percentage of any
cash disbursements made from the Escrow Fund in accordance with the terms of this
Agreement and the Escrow Agreement, as and when such disbursements are made.

At or before the Effective Time, the Company shall have taken all necessary action,
including, if necessary, obtaining the consent of any holder of any Company Warrants other
than Series A-1 Warrants (each, a “Out-of-the-Money Warrant”), to terminate, as of
or prior to the Effective Time all Out-of-the-Money Warrants.

(iv) Each share of Company Stock held in the treasury of the Company and each share of
Company Stock owned by Parent or any direct or indirect wholly owned subsidiary of Parent
or of the Company immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment or distribution shall be made
with respect thereto.

 

9

 

(v) Each share of common stock, par value $0.001 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and exchanged
for one validly issued, fully paid and nonassessable share of common stock, par value
$0.001 per share, of the Surviving Corporation. The stock certificate evidencing shares of
common stock of Merger Sub shall then evidence ownership of the outstanding share of common
stock of the Surviving Corporation.

(c) Adjustment and Distribution of Gross Closing Consideration. The “Gross
Closing Consideration” shall consist of (x) $32,172,000.00 in cash and (y) 397,990 shares of
Parent Common Stock (such amount to be adjusted appropriately for any reclassification,
recapitalization, stock split or combination, exchange or readjustment of shares of Parent Common
Stock, or any stock dividend thereon, the “Closing Shares”). The Gross Closing
Consideration shall be adjusted and distributed in accordance with the terms of this Section
2.01(c).

(i) Company Transaction Expenses. Any Company Transaction Expenses incurred
or accrued by the Company in connection with the Merger on or prior to the Closing Date
shall be paid in cash from the Gross Closing Consideration on the Closing Date.

(ii) Verizon Payment. $3,500,000 of the Gross Closing Consideration
less the amount of Verizon’s Escrow Percentage of the Escrow Amount, in the form of
cash (the “Verizon Warrant Cancellation Payment”), shall be paid in cash on the
Closing Date to Verizon pursuant to the terms of the Warrant Cancellation Agreement dated
as of June 30, 2010 in the form attached
hereto as Exhibit 2.01(c)(ii) (the “Verizon Consent Agreement”) by and
between the Company and Verizon. In addition to the foregoing, Verizon shall also have the
right to receive its Escrow Percentage of any cash disbursements made from the Escrow Fund
in accordance with the terms of this Agreement and the Escrow Agreement, as and when such
disbursements are made. For the avoidance of doubt, for all purposes under this Agreement
(i) the warrant held by Verizon to be cancelled pursuant to the terms of the Verizon
Consent Agreement shall not constitute a Company Warrant or Series A-1 Warrant and (ii)
Verizon shall not be a Company Warrantholder.

(iii) Warrant Cancellation Payments. Each Company Warrantholder shall be paid
from the Gross Closing Consideration, in the form of cash, the Closing Date Warrant
Cancellation Payments to which such Company Warrantholder is entitled under Section
2.01(b)(iii) from the Gross Closing Consideration on the Closing Date.

(iv) Working Capital.

(A) At least three (3) business days preceding the Closing Date, the Company
shall prepare and deliver to Parent a consolidated calculation of the estimated Net
Working Capital of the Company and its Subsidiaries as of the Closing (the
“Estimated Net Working Capital”). The amount, if any, by which the
Estimated Net Working Capital is less than zero shall be referred to herein as the
“Estimated Deficiency Amount”. The Estimated Deficiency Amount shall
reduce the amount of Closing Equityholder Consideration in accordance with Section
2.01(c)(v) below.

 

10

 

(B) Within sixty (60) days following the Closing, Parent shall prepare and
deliver to the Stockholders’ Representative a balance sheet and a schedule (the
“Final Net Working Capital Schedule”) which includes a consolidated
calculation of the Net Working Capital of the Company and its Subsidiaries as of
the Closing.

(C) During the thirty (30) day period after the receipt of the Final Net
Working Capital Schedule, the Stockholders’ Representative may notify Parent in
writing, of any objections to such Final Net Working Capital Schedule, setting
forth a reasonably specific and detailed description of the objections (each, an
“Item of Working Capital Dispute”); provided, however, that the only basis
on which the Stockholders’ Representative shall be permitted to submit an Item of
Working Capital Dispute is that such Item of Working Capital Dispute was not
prepared in accordance with this Section 2.01(c)(iv) or contains
mathematical or clerical errors. If the Stockholders’ Representative does not
deliver such notice within such thirty (30) day period, the Final Net Working
Capital Schedule shall be final, binding and conclusive upon
Parent, the Company, the Stockholders’ Representative, the Earn-Out
Consideration Recipients and the Closing Consideration Recipients.

(D) If the Stockholders’ Representative provides a timely notice of objection
to the proposed Final Net Working Capital Schedule pursuant to subsection (C)
above, Parent and the Stockholders’ Representative shall attempt to amicably
resolve any Item of Working Capital Dispute by the end of a thirty (30) day review
period but in no event later than thirty (30) days thereafter. If the parties are
unable to resolve any difference within such period, they shall promptly (within
fifteen (15) days thereafter) and jointly appoint an Independent CPA to resolve
each Item of Working Capital Dispute and make any resulting adjustments to the
Final Net Working Capital Schedule. The scope of the work assignment for the
Independent CPA shall be limited to the resolution of any Item of Working Capital
Dispute not previously resolved by the parties and be based solely on whether each
such unresolved Item of Working Capital Dispute was prepared in accordance with the
terms of this Agreement or whether each such Item of Working Capital Dispute
contains a mathematical or clerical error or errors. No Item of Working Capital
Dispute shall be resolved such that the final amount determined by the Independent
CPA is more favorable to the Parent than the calculation(s) presented in the Final
Net Working Capital Schedule delivered by the Parent to the Stockholders’
Representative or more favorable to the Closing Consideration Recipients than the
calculation(s) presented in any unresolved Item of Working Capital Dispute
delivered by the Stockholders’ Representative. The resolution of each Item of
Working Capital Dispute by the Independent CPA and corresponding adjustments to the
Final Net Working Capital Schedule shall be final, binding and conclusive upon
Parent, the Company, the Stockholders’ Representative and the Closing Consideration
Recipients. The costs, fees and expenses of the Independent CPA will be allocated
by the Independent CPA, in its sole discretion, between Parent, on the one hand,
and Closing Consideration Recipients, on the other hand, taking into account the
extent to which each Item of Working Capital Dispute was, or was not, resolved in
favor of the Closing Consideration Recipients.

 

11

 

(E) If the Final Net Working Capital (as finally determined in accordance with
subsection (D) above) is less than zero (the amount of such deficiency, the
“Final Deficiency Amount”) and the absolute value of the Final Deficiency
Amount exceeds the absolute value of the Estimated Deficiency Amount, then Parent
shall be entitled to immediate recovery from the Escrow Fund in an amount equal to
(x) the difference between the Final Deficiency Amount and the Estimated Deficiency
Amount or (y) if the Estimated Net Working Capital is greater than zero, the Final
Deficiency Amount.

(F) As used in this Section 2.01(c)(iv) and elsewhere in this
Agreement, the following terms have the following meanings:

a. “Current Assets” shall mean all current assets of the
Company and its Subsidiaries, in each case, as determined in accordance
with U.S. GAAP.

b. “Current Liabilities” means all current liabilities of the
Company and its Subsidiaries, in each case, as determined in accordance
with U.S. GAAP, including all quarterly, management or similar bonuses but
specifically excluding deferred revenue (or liabilities in respect
thereof), those items set forth on Schedule 2.01(c)(iv) (the
“Verizon Items”), Company Transaction Expenses and any severance
or similar amounts paid or payable upon the termination of the employment
of any employee of the Company and its Subsidiaries, whether or not
arising as a result of the consummation of the transactions contemplated
by the Agreement.

c. “Independent CPA” shall mean an independent, nationally
recognized accounting firm jointly selected by the Stockholders’
Representative and Parent.

d. “Net Working Capital” means, as of the time of any
determination, (A) Current Assets less (B) Current Liabilities.

 

12

 

(v) Closing Equityholder Consideration; Net Closing Consideration. The amount
equal to (A) the Gross Closing Consideration, less (B) the aggregate amount of
Company Transaction Expenses paid pursuant to subsection (c)(i) above, less (C) the
Estimated Deficiency Amount, if any, less (D) the Verizon Warrant Cancellation
Payment, shall be referred to herein as the “Closing Equityholder Consideration”.
The Closing Equityholder Consideration less the aggregate amount of the Closing
Date Warrant Cancellation Payments is referred to herein as the “Stockholder Closing
Consideration,” which shall be paid, in accordance with Section 2.01(b)(i)(B)
in the form of cash (the “Closing Cash Consideration”) and Closing Shares. The sum
of the Stockholder Closing Consideration plus the amount of the Verizon Warrant
Cancellation Payment plus the aggregate amount of the Closing Date Warrant
Cancellation Payments is referred to herein as the “Net Closing Consideration.”

(vi) Escrow Amount. An amount of the Net Closing Consideration in cash equal
to the Escrow Amount shall, on the Closing Date, be deposited by the Parent with the Escrow
Agent in an escrow fund (with any interest earned thereupon, the “Escrow Fund”) for
the purpose of satisfying claims by Parent and Parent Indemnified Parties under Section
2.01(c)(iv)(E) or Article IX, as applicable, to be held and disbursed by the Escrow
Agent in accordance
with the terms of this Agreement and the Escrow Agreement. The portion of the Escrow
Amount contributed by the Parent with respect to each Closing Consideration Recipient shall
be made in accordance with the each Closing Consideration Recipient’s Escrow Percentage.

(vii) Changes in Parent Capital Stock. If, during the period between the date
hereof and the Effective Time, any change in the capital stock of Parent shall occur by
reason of reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during such period
or any similar event, the Signing Price shall be correspondingly equitably adjusted to the
extent appropriate to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange or readjustment of shares.

SECTION 2.02 Post-Closing Payments.

(a) Subject to, and in accordance with, the terms of this Section 2.02, Parent shall pay or
cause to be paid to Verizon, Mooreland, the Company Equityholders and those certain employees of
the Company listed on Schedule 2.02(a) (the “Earn-Out Eligible Employees” and, with
the Company Equityholders, Verizon and Mooreland, the “Earn-Out Consideration Recipients”)
an additional payment in an amount not greater than $35,000,000, calculated as provided herein.

(b) Subject to the terms of this Section 2.02, the “Quarterly Earn-Out Amount”
in respect of each fiscal quarter of the Surviving Corporation during the consecutive six (6)
fiscal quarter period beginning on July 1, 2010 (the “Earn-Out Period”), shall be an amount
equal to:

(i) $1,000,000 multiplied by (A) if the Total Revenue for such fiscal quarter (the
“Quarterly Revenue”) is greater than or equal to 100% of the Target Revenue for
such fiscal quarter (the “Quarterly Target Revenue”), 1, (B) if the Quarterly
Revenue is greater than or equal to 90%, but less than 100%, of the Quarterly Target
Revenue, 0.4, (C) if the Quarterly Revenue is greater than or equal to 85%, but less than
90%, of the Quarterly Target Revenue, 0.15, or (D) if the Quarterly Revenue is less than
85% of the Quarterly Target Revenue, zero; plus

 

13

 

(ii) $3,250,000 multiplied by (A) if the Transaction-Related Revenue for such fiscal
quarter (the “Quarterly Transaction-Related Revenue”) is greater than or equal to
100% of the Target Transaction-Related Revenue for such fiscal quarter (the “Quarterly
Target Transaction-Related Revenue”), 1, (B) if the Quarterly Transaction-Related
Revenue is greater than or equal to 90%, but less than 100%, of the Quarterly Target
Transaction-Related Revenue, 0.4, (C) if the Quarterly Transaction-Related Revenue is
greater than or equal to 85%, but less than 90%, of the Quarterly Target
Transaction-Related Revenue, 0.15, or (D) if
the Quarterly Transaction-Related Revenue is less than 85% of the Quarterly Target
Transaction-Related Revenue, zero; plus

(iii) $750,000 multiplied by (A) if the Operating Margin for such fiscal quarter (the
“Quarterly Operating Margin”) is greater than or equal to the Target Operating
Margin, 1, (B) if the Quarterly Operating Margin is greater than or equal to 90% of the
Target Operating Margin, but less than 100% of the Target Operating Margin, 0.4, (C) if the
Quarterly Operating Margin is greater than or equal to 85% of the Target Operating Margin,
but less than 90% of the Target Operating Margin, 0.15, or (D) if the Quarterly Operating
Margin is less than 85% of the Target Operating Margin, zero. Notwithstanding the
foregoing, if the Quarterly Revenue in respect of any fiscal quarter is less than 85% of
the Quarterly Target Revenue for such fiscal quarter, than the amount payable pursuant to
this subsection (iii) in respect of the Quarterly Earn-Out Amount for such fiscal quarter
shall be zero.

(c) Subject to the terms of this Section 2.02, the “Additional Earn-Out Amount” in
respect of the calendar year ended December 31, 2011, shall be an amount equal to the product of
(i) .25, multiplied by (ii) the amount by which Total Revenue in respect of such calendar year
exceeds $48,000,000 (calculated without giving effect to any adjustments associated with FAS 141R);
provided (x) in no event shall the Additional Earn-Out Amount exceed $5,000,000, and (y) no
Additional Earn-Out Amount shall be payable unless Operating Margin in respect of the calendar year
ended December 31, 2011 equals or exceeds the Target Operating Margin.

(d) Applicable Definitions. As used in this Section 2.02 and elsewhere in the
Agreement, the following terms shall have the following meanings:

(i) “Business of the Company” shall mean the researching, developing,
manufacturing, marketing, distributing and selling of the Company Products and Services.

(ii) “Company Products” shall mean the Company’s Mighty Back-up product, the
Company’s Network Address Book product, the Company’s Social Address Book product, the
Company’s See Me Ring product and the Company’s Handset Transfer System product.

(iii) “Company Services” shall mean support, maintenance and professional
services provided in respect of the Company Products.

 

14

 

(iv) “Company Products and Services” shall mean, collectively, the Company
Products and the Company Services.

(v) “Operating Margin” shall mean, in respect of any fiscal quarter, the
pre-interest, pre-tax profit earned in such fiscal quarter by Parent (or any subsidiary
thereof) from the operation of the Business of the Company, calculated in accordance with
U.S. GAAP (but without giving effect to any adjustments associated with FAS 141R) and
expressed as a percentage of Total
Revenue for such fiscal quarter; provided, however, (x) any
compensation or similar expense associated with any Company Transaction Expenses or any
other payments made to the Earn-Out Consideration Recipients pursuant to this Section
2.02, and (y) any severance or similar amounts paid or payable upon the termination of
the employment of any employee of the Surviving Corporation or the Company and its
Subsidiaries, whether or not arising as a result of the consummation of the transactions
contemplated by the Agreement, shall not be taken into account for purposes of calculating
Operating Margin.

(vi) “Target Operating Margin” shall mean the percentage set forth on
Schedule 2.02(d) hereto under the heading “Target Operating Margin.”

(vii) “Target Revenue” shall mean, in respect of any fiscal quarter, the
amount set forth under the heading “Target Revenue” for such fiscal quarter as set forth on
Schedule 2.02(d) hereto, provided that the “Target Revenue” for any
particular fiscal quarter shall be reduced on a dollar-for-dollar basis by the amount of
any deferred revenue of the Company that would otherwise have been earned in such fiscal
quarter but cannot be recognized by Parent on account of any adjustments associated with
FAS 141R.

(viii) “Target Transaction-Related Revenue” shall mean, in respect of any
fiscal quarter, the amount set forth under the heading “Target Transaction-Related Revenue”
for such fiscal quarter as set forth on Schedule 2.02(d) hereto, provided
that the “Target Transaction-Related Revenue” for any particular fiscal quarter shall be
reduced on a dollar-for-dollar basis by the amount of any deferred revenue of the Company
that would otherwise have been earned in such fiscal quarter but cannot be recognized by
Parent on account of any adjustments associated with FAS 141R.

(ix) “Total Revenue” shall mean, in respect of any fiscal quarter, the
aggregate revenue, calculated in accordance with U.S. GAAP, earned in such fiscal quarter
by Parent (or any subsidiary thereof) from the sale of the Company Products and Services to
Verizon, Nextel International, Portugal Telecom, Qualcomm, Bell Mobility, Telus and/or
Embarq/CenturyTel (in the case of Embaq/CenturyTel, specifically excluding any revenue
arising from contracts entered into with Embarq/CenturyTel prior to the Effective Time).

 

15

 

(x) “Transaction-Related Revenue” shall mean, in respect of any fiscal
quarter, (i) the aggregate amount of transaction revenue, subscription revenue and
application revenue relating to the Company’s Products from agreements with Verizon, Nextel
International, Portugal Telecom, Qualcomm, Bell Mobility, Telus and/or Embarq/CenturyTel
(in the case of Embaq/CenturyTel, specifically excluding any revenue arising from contracts
entered into with Embarq/CenturyTel prior to the Effective Time), and (ii) maintenance and
support revenue under the Company’s agreements with Verizon with respect to the Company’s
Network Address Book product, calculated in
accordance with U.S. GAAP, for such fiscal quarter by the Parent (or any subsidiary
thereof).

(e) Interim Estimates; Inspection. Within sixty (60) days following the end of each
fiscal quarter during the Earn-Out Period, Parent or its representatives shall prepare and deliver
to the Stockholders’ Representative a non-binding estimate of the Quarterly Earn-Out Amount for
such fiscal quarter (each, a “Quarterly Estimate”), together with a statement setting forth
the calculation of Quarterly Revenue, Quarterly Transaction-Related Revenue and Quarterly Operating
Margin for such fiscal quarter. During the Earn-Out Period, and the period of any dispute with
respect thereto within the contemplation of Section 2.02(f), Parent and the Surviving
Corporation shall on a timely basis (but, during the Earn-Out Period, not more than once per fiscal
quarter), provide to the Stockholders’ Representative and its Representatives, upon reasonable
notice, reasonable access to all records, and on terms reasonably determined by Parent, the
Surviving Corporation’s outside accountants, utilized in preparing the applicable Quarterly
Estimates and the Final Earn-Out Statement; provided, however, that no such access shall be granted
unless and until the Stockholders’ Representative and such Representatives enter into a
confidentiality agreement with respect to such information in a form reasonably acceptable to
Parent.

(f) Final Calculation and Payment.

(i) Within sixty (60) days following the end of the Earn-Out Period, the Parent shall
determine, in accordance with this Section 2.02, the sum of the Quarterly Earn-Out
Amounts earned in respect of each fiscal quarter during the Earn-Out Period and the
Additional Earn-Out Amount earned in respect of the calendar year ended December 31, 2011
(such sum, less any setoff to the extent provided in Article IX of this Agreement,
the “Aggregate Earn-Out Amount”) and deliver to the Stockholders’ Representative a
statement setting forth such Aggregate Earn-Out Amount and the calculation thereof (the
“Final Earn-Out Statement”).

(ii) Within thirty (30) days after delivery by Parent of the Final Earn-Out Statement
pursuant to subsection (f)(i) above, the Stockholders’ Representative may notify the Parent
in writing of any objections to the Final Earn-Out Statement setting forth a reasonably
specific and detailed description of the objections, including the amount disputed (each,
an “Item of Earn-Out Dispute”). If the Stockholders’ Representative does not
deliver such notice within such period provided for in this subsection, the Final Earn-Out
Statement and the Aggregate Earn-Out Amount set forth thereon shall be final, binding and
conclusive upon the Stockholders’ Representative and the Earn-Out Consideration Recipients.

 

16

 

(iii) If the Stockholders’ Representative provides a notice of objection to the Final
Earn-Out Statement within the time periods specified in subsection (f)(ii) above, Parent
and the Stockholders’ Representative shall attempt to amicably resolve any such Item of
Earn-Out Dispute by the end of such period
but in no event later than fifteen (15) days thereafter. If the parties are unable to
resolve any difference within such period, they shall promptly and jointly appoint an
Independent CPA to resolve each such Item of Earn-Out Dispute and make any resulting
adjustments to the Final Earn-Out Statement. The scope of the work assignment for the
Independent CPA shall be limited to the resolution of any unresolved Item of Earn-Out
Dispute and shall be based solely on whether each such unresolved Item of Earn-Out Dispute
was prepared in accordance with the terms of this Section 2.02 or whether each such
Item of Earn-Out Dispute contains a mathematical or clerical error or errors. No Item of
Earn-Out Dispute shall be resolved such that the final amount determined by the Independent
CPA is more favorable to the Parent than the calculation(s) presented in the Final Earn-Out
Statement delivered by the Parent to the Stockholders’ Representative or more favorable to
the Earn-Out Consideration Recipients than the calculation(s) presented in any unresolved
Item of Earn-Out Dispute delivered by the Stockholders’ Representative. The resolution of
each Item of Earn-Out Dispute by the Independent CPA and the corresponding adjustments to
the Final Earn-Out Statement shall be final, binding and conclusive upon Parent, the
Company, the Stockholders’ Representative and the Earn-Out Consideration Recipients. The
costs, fees and expenses of the Independent CPA will be allocated by the Independent CPA,
in its sole discretion, between Parent, on the one hand, and Earn-Out Consideration
Recipients, on the other hand, taking into account the extent to which each Item of
Earn-Out Dispute was, or was not, resolved in favor of the Earn-Out Consideration
Recipients.

(iv) Payment of the Aggregate Earn-Out Amount.

(A) Payment of the Aggregate Earn-Out Amount, if any, shall be made by Parent
within later of (i) thirty (30) days following such time as the Final Earn-Out
Statement becomes binding, final and conclusive and (ii) five (5) days following
the delivery by the Stockholders’ Representative to Parent of the Earn-Out
Consideration Schedule (the date of such payment, the “Earn-Out Payment
Date”) and shall be paid to the Earn-Out Consideration Recipients, at Parent’s
election, directly by Parent or by the Exchange Agent, and in either case, in
accordance with a schedule of payments (the “Earn-Out Consideration
Schedule”) prepared by the Stockholders’ Representative in accordance with the
Final Earn-Out Statement and this Section 2.02(f)(iv) and delivered to
Parent prior to the Earn-Out Payment Date. The Earn-Out Consideration Schedule
shall set forth the name of each Earn-Out Consideration Recipient, that portion of
the Aggregate Earn-Out Amount payable to such party in cash and that number of
Earn-Out Shares to be issued to such party (subject to subsection (H)(iii) below).
For the purposes of the indemnification obligations of the Company Participants
under Article IX hereof, the delivery of the Earn-Out Consideration
Schedule to Parent shall constitute a representation (deemed made by the Company
under Section 3.04 hereof) that the allocation of the type and amount of
the Aggregate Earn-Out Amount among the Earn-Out
Consideration Recipients conforms with this Section 2.02(f)(iv), the
requirements of applicable Law, including the DGCL and the Company’s Certificate of
Incorporation as in effect immediately prior to the Effective Time. Payment of
the Aggregate Earn-Out Amount is subject to Parent’s right of setoff to the extent
provided in Article IX of this Agreement.

 

17

 

(B) Parent shall pay to Verizon, in cash, an amount equal to (i) the Verizon
Earn-Out Percentage, multiplied by (ii) the Aggregate Earn-Out Amount (the
“Verizon Earn-Out Payment”).

(C) Parent shall pay to Mooreland, in cash, an amount equal to (i) the
Mooreland Earn-Out Percentage multiplied by (ii) the Aggregate Earn-Out Amount (the
“Mooreland Earn-Out Payment”, and the Aggregate Earn-Out Amount less the
Mooreland Earn-Out Payment less the Verizon Earn-Out Payment being referred to
herein as the “Net Earn-Out Amount”).

(D) The Net Earn-Out Amount shall be paid by Parent to the Earn-Out
Consideration Recipients other than Verizon and Mooreland in the form of cash and
 shares of Parent Common Stock, valued at the Signing Price, in amounts as follows:

a. that number of shares of Parent Common Stock equal to (A) the
product of 0.5 multiplied by the Net Earn-Out Amount, divided
by (B) the Signing Price, rounded to the nearest whole share (such
number, the “Net Earn-Out Share Number” and such shares, the
“Earn-Out Shares”).

b. that amount of cash equal to (A) the Net Earn-Out Amount less (B)
the product of the Net Earn-Out Share Number multiplied by the
Signing Price (such cash amount, the “Net Earn-Out Cash Amount”).

c. If, during the period between the date hereof and the Earn-Out
Payment Date, any change in the capital stock of Parent shall occur by
reason of reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or any stock dividend thereon with a
record date during such period or any similar event, the Signing Price
shall be correspondingly equitably adjusted to the extent appropriate to
reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination, exchange or readjustment of shares.

 

18

 

(E) Subject to this subsection (E), subsection (F) and subsection (H) below,
each Company Equityholder shall receive (x) that number of Earn-Out Shares equal to
(i) the Net Earn-Out Share Number, multiplied by (ii) such Company Equityholder’s
Equityholder Earn-Out
Percentage, rounded to the nearest whole share, and (y) that amount of cash
equal to (i) the Net Earn-Out Cash Amount, multiplied by (ii) such Company
Equityholder’s Equityholder Earn-Out Percentage, rounded to the nearest whole cent;
provided, however, in the event that the Remaining Preference
Amount is greater than zero, Parent shall first pay to the holders of shares of
Company Preferred Stock, 50% in cash and 50% in Earn-Out Shares (valued at the
Signing Price, and rounded to the nearest whole share), an amount equal to the
Remaining Preference Amount as follows:

a. Parent shall pay to each holder of a share of Series D Preferred
Stock (determined as of immediately prior to the Effective Time) a per
share amount equal to the Series D Preference Amount less the
Applicable Per Share Closing Equityholder Consideration paid to such
Company Equityholder on account of such share of Series D Preferred Stock
pursuant to Section 2.01(b)(i)(A)(i) (without regard to any
reduction in such amount on account of the Escrow Amount);

b. Parent shall pay to each holder of a share of Series C Preferred
Stock (determined as of immediately prior to the Effective Time) a per
share amount equal to the Series C Preference Amount less the
Applicable Per Share Closing Equityholder Consideration paid to such
Company Equityholder on account of such share of Series C Preferred Stock
pursuant to Section 2.01(b)(i)(A)(i) (without regard to any
reduction in such amount on account of the Escrow Amount);

c. Parent shall pay to each holder of a share of Series B Preferred
Stock (determined as of immediately prior to the Effective Time) a per
share amount equal to the Series B Preference Amount less the
Applicable Per Share Closing Equityholder Consideration paid to such
Company Equityholder on account of such share of Series B Preferred Stock
pursuant to Section 2.01(b)(i)(A)(i) (without regard to any
reduction in such amount on account of the Escrow Amount); and

d. Parent shall pay to each holder of a share of Series A Preferred
Stock (determined as of immediately prior to the Effective Time) a per
share amount equal to the Series A Preference Amount less the
Applicable Per Share Closing Equityholder Consideration paid to such
Company Equityholder on account of such share of Series A Preferred Stock
pursuant to Section 2.01(b)(i)(A)(i) (without regard to any
reduction in such amount on account of the Escrow Amount).

In the event that the value of the cash and Earn-Out Shares (valued at the
Signing Price) payable or issuable pursuant to Section 2.02(f)(iv)(E) are
less than the Remaining Preference Amount, the payments described in the foregoing
proviso shall be made to the holders of Company Preferred Stock ratably in
proportion to the applicable Preference Amounts of such series of Company Preferred
Stock. Any payments on account of the Remaining Preference Amount pursuant to this
subsection 2.02(f)(iv)(E) shall reduce the amount of cash payable and
Earn-Out Shares issuable to each Company Equityholder pursuant to subsection
2.02(f)(iv)(E) ratably in proportion to such Company Equityholder’s
Equityholder Earn-Out Percentage.

 

19

 

Notwithstanding anything herein to the contrary, in no event shall any holder
of a share of Series C Preferred Stock (determined as of immediately prior to the
Effective Time) receive from the Net Earn-Out Amount more than (i) $0.4912 per
share of Series C Preferred Stock less (ii) the amount paid at the Closing
(including any amount comprising a portion of the Escrow Amount) in respect of each
share of Series C Preferred Stock (the “Series C Cap”), and in no event
shall any holder of a share of Series D Preferred Stock (determined as of
immediately prior to the Effective Time) receive from the Net Earn-Out Amount more
than (i) $0.7430 per share of Series D Preferred Stock less (ii) the amount
paid at the Closing (including any amount comprising a portion of the Escrow
Amount) in respect of each share of Series D Preferred Stock (the “Series D
Cap”). If the Equityholder Earn-Out Percentage of the Net Earn-Out Amount
otherwise payable to each holder of a share of Series C Preferred Stock or each
holder of Series D Preferred Stock, in each case, on account of such shares of
Series C Preferred Stock and Series D Preferred Stock, would exceed the Series C
Cap or the Series D Cap, as applicable, then such amount, in each case, solely on
account of such shares of Series C Preferred Stock and Series D Preferred Stock, in
excess of the Series C Cap or the Series D Cap, as applicable, shall be
redistributed to the Company Equityholders in proportion to the amount their
respective Equityholder Earn-Out Percentages bears to the Equityholder Earn-Out
Percentages of all Company Equityholders (excluding for this purpose the portion of
any Equityholder Earn-Out Percentage attributable to shares of Series C Preferred
Stock or Series D Preferred Stock that have received an amount of the Net Earn-Out
Amount equal to their Series C Cap or Series D Cap, respectively).

(F) Notwithstanding anything herein to the contrary, no Company Optionholder
shall be entitled to receive any payments, Earn-Out Shares or other amounts
pursuant to Section 2.02(f)(iv)(E) on account of Company Options held by
such Company Optionholder immediately prior to the Effective Time unless and until
such time as the Common Stock Equivalent Earn-Out Amount exceeds the Threshold
Amount attributable to the Company Options held by such Company Optionholder
immediately prior to the Effective Time, at which point such Company
Optionholder shall only be entitled to receive an amount equal to (i) the number of
 shares of Common Stock issuable upon the exercise of Company Options held by such
Company Optionholder immediately prior to the Effective Time, multiplied by
(ii) the amount by which the Common Stock Equivalent Earn-Out Amount exceeds the
Threshold Amount attributable to such Company Options outstanding immediately prior
to the Effective Time. To the extent that a Company Optionholder held Company
Options with more than one associated Threshold Amount, the foregoing calculations
shall be made on a Company Option-by-Company Option basis. The difference between
each Company Optionholder’s Equityholder Earn-Out Percentage of the Net Earn-Out
Amount and the amount of cash or value of Earn-Out Shares payable or issuable under
this Section 2.02(f)(iv)(F) shall be redistributed to the Company
Stockholders and Company Warrantholders in proportion to the amount their
respective Equityholder Earn-Out Percentages bears to the Equityholder Earn-Out
Percentages of all Company Stockholders and Company Warrantholders.

 

20

 

(G) Subject to subsection (H) below, each Earn-Out Eligible Employee shall
receive (x) that number of Earn-Out Shares equal to (i) the Net Earn-Out Share
Number, multiplied by (ii) such Earn-Out Eligible Employee’s Employee Earn-Out
Percentage, rounded to the nearest whole share, and (y) that amount of cash equal
to (i) the Net Earn-Out Cash Amount, multiplied by (ii) such Earn-Out Eligible
Employee’s Employee Earn-Out, rounded to the nearest whole cent.

(H) Notwithstanding anything herein to the contrary, (i) any Earn-Out Eligible
Employee that is no longer an employee of the Parent or any subsidiary thereof as
of the Earn-Out Payment Date as a result of his or her voluntary resignation or
Termination for Cause shall not be entitled to receive any payments pursuant to
this Section 2.02 and, in lieu thereof, such payments shall be paid by
Parent to the Earn-Out Eligible Employees who remain employees of the Parent or any
subsidiary thereof as of the Earn-Out Payment Date in proportion to the amount
their respective Employee Earn-Out Percentage bears to the Employee Earn-Out
Percentage of all Earn-Out Eligible Employees who remain employees of the Parent or
any subsidiary thereof as of the Earn-Out Payment Date (“Employee Residual
Sharing Percentage”), (ii) any Earn-Out Eligible Employee that is no longer an
employee of the Parent or any subsidiary thereof as of the Earn-Out Payment Date as
a result of his or her termination by the Company other than a Termination for
Cause shall only be entitled to receive a pro rated portion of the Aggregate
Earn-Out Amount otherwise payable to such Earn-Out Eligible Employee based upon the
actual number of calendar days that such Earn-Out Eligible Employee was an employee
of the Parent or any subsidiary during the Earn-Out Period (and the remainder of
such amount shall be distributed to the Earn-Out Eligible Employees who remain
employees of the Parent or
any subsidiary thereof as of the Earn-Out Payment Date in proportion to their
respective Employee Residual Sharing Percentages), and (iii) any Earn-Out
Consideration Recipient that (x) is not an Accredited Investor or (y) has not
executed and delivered to Parent, no later than ninety (90) days subsequent to the
Effective Time (or such other time as requested by Parent following any change to
the legal qualifications for being an Accredited Investor), an Investment
Representation Letter representing to such party’s status as an Accredited
Investor, shall not be issued any Earn-Out Shares and, in lieu thereof, shall
receive that amount of cash equal to such number of Earn-Out Shares such person was
otherwise entitled to receive, multiplied by the Signing Price.

(g) Continuity of Obligations. In the event that, during the Earn-Out Period, there
is consummated a transaction or series of related transactions pursuant to which (i) all or
substantially all of the assets used in the Business of the Company are sold or transferred to a
non-affiliate of Parent, or (ii) Parent, together with the affiliates thereof, ceases to hold,
directly or indirectly, a majority of the equity interests of the Surviving Corporation (whether by
merger, consolidation, acquisition of equity interests or all or substantially all of the assets of
the Surviving Corporation or otherwise, a “Divestiture”), proper provision shall be made so
that the successors and assigns of the Surviving Corporation, as the case may be, assume the
obligations set forth in this Section 2.02 and agree to be bound by the terms hereof to the
same extent as Parent.

 

21

 

(h) Conduct of Business. Parent acknowledges that the possibility of receiving all or
a portion of the amount provided for in this Section 2.02 comprises a material inducement
for the Company and Earn-Out Consideration Recipients to enter into this Agreement and consummate
the transactions contemplated hereby. During the Earn-Out Period, Parent agrees and covenants that
Parent shall (A) maintain true, complete and accurate books and records relating to the subject
matter of this Section 2.02, which it shall make available for review by the Stockholders’
Representative and its Representatives to the extent provided for, and on the terms and conditions
set forth in, Section 2.02(e) hereof, (B) operate the Business of the Company in good faith
and not in a manner intended to reduce the amount of the Aggregate Earn-Out Amount and (C) operate
the Business of the Company in the ordinary course of business designed to achieve an Operating
Margin of at least the Target Operating Margin; provided, however, that if the Operating Margin for
any individual fiscal quarter is below the Target Operating Margin, or is reasonably forecasted
(such reasonableness to be evaluated in the context of the prior results of the operation of the
Business of the Company by Parent and by the Company prior to the Effective Time, and the accuracy
of prospective forecasts of such results) by the general manager in charge of the operation of the
Business of the Company (the “GM”, it being agreed that the individual indicated with a “†”
on Schedule 7.02(f) shall be the GM for so long as such individual is employed by Parent)
to  be below the Target Operating Margin, Parent’s chief executive officer and/or
president (the “CEO”) and the GM will work together to identify cost (or revenue)
adjustments anticipated to result in an Operating Margin of at least the Target Operating Margin
for future fiscal quarters unless such parties collectively agree that not making any such
adjustments is in the best interest of Parent; provided, further that if such parties are
unable to agree upon such adjustments after three (3) days of good faith discussions, Parent
shall no longer be obligated to operate the Business of the Company in the ordinary course of
business and the CEO shall be able to make any adjustments with respect to the Business of the
Company as reasonably determined by the CEO to be necessary or desirable to accomplish the goal of
achieving an Operating Margin of at least the Target Operating Margin. Notwithstanding the
foregoing, during any one fiscal quarter during the Earn-Out Period in which the Operating Margin
is below the Target Operating Margin, the CEO and the GM will work together to identify cost (or
revenue) adjustments anticipated to result in an Operating Margin of the Target Operating Margin or
greater and, provided that the Operating Margin for such fiscal quarter is at least equal to the
product of 0.6 and the Target Operating Margin, the Stockholders’ Representative may request in
writing to Parent that the fact that the Operating Margin for such fiscal quarter is below the
Target Operating Margin shall not release Parent from the obligations to operate the Business of
the Company in the ordinary course of business pursuant to clause (C) above (it being understood
that such request may only be made in respect of a single fiscal quarter during the Earn-Out
Period).

 

22

 

SECTION 2.03 Exchange of Certificates; Closing Payments.

(a) Exchange Procedures.

(i) From and after the Effective Time, a bank or trust company designated by Parent,
and reasonably acceptable to the Stockholders’ Representative, shall act as exchange agent
(the “Exchange Agent”) in effecting the exchange of the certificates which
immediately prior to the Effective Time represented outstanding shares of Company Stock
(“Company Share Certificates”) and which were converted into the right to receive
Closing Cash Consideration or Closing Shares comprising the Transaction Consideration
described in Section 2.01(b)(i). Parent shall instruct the Exchange Agent to make
available to the Stockholders’ Representative, at least five (5) days prior to the Closing
Date, a letter of transmittal (the “Letter of Transmittal”) in a form approved by
Parent and the Company, including instructions for use in surrendering such Company Share
Certificates and receiving the applicable portion of the Transaction Consideration. As
promptly as practicable after the Effective Time, but in no event later than three (3)
business days following the Effective Time, the Exchange Agent shall mail a Letter of
Transmittal to each record holder of Company Stock who has not previously submitted a
Letter of Transmittal to the Exchange Agent.

(ii) On the Closing Date, the Company shall deliver to Parent a schedule of payments
(the “Closing Consideration Schedule”) prepared in accordance with Section
2.01 above and setting forth the name of each Closing Consideration Recipient, the
amount of Net Closing Consideration payable on the Closing Date to such party in the form
of cash, the number of Closing Shares to be issued to such party and such party’s Escrow
Percentage.

(iii) At or prior to the Effective Time, Parent shall transfer to the Exchange Agent
by direct wire transfer of immediately available funds an amount equal to the portion of
the Gross Closing Consideration to be paid in cash less the Estimated Deficiency Amount and
shall cause to be made by the Exchange Agent, the following payments (collectively, the
“Closing Payments”) by direct wire transfer of immediately available funds: (A) to
the Escrow Agent, an amount equal to the Escrow Amount, to be held in an escrow account, in
accordance with the terms of this Agreement and the Escrow Agreement, (B) to the payees
thereof, the Company Transaction Expenses to be paid as of the Closing Date, as set forth
on Schedule 2.01(a)(ix) hereof (as updated to include final amounts for previously
estimated items and additional items constituting Company Transaction Expenses and not set
forth on such schedule), (C) to Verizon, the Verizon Warrant Cancellation Payment, as set
forth on the Closing Consideration Schedule and (D) to the Company Warrantholders, the
Closing Date Warrant Cancellation Payments (less the Company Warrantholders’ aggregate
Escrow Percentage of the Escrow Amount), as set forth on the Closing Consideration
Schedule. The balance of such funds transferred by Parent to the Exchange Agent shall be
distributed by the Exchange Agent to the holders of Company Stock as the cash portion of
Stockholder Closing Consideration (less the Company Stockholders’ aggregate Escrow
Percentage of the Escrow Amount) in accordance with the terms hereof as set forth on the
Closing Consideration Schedule.

 

23

 

(iv) Upon the surrender of each Company Share Certificate for cancellation to the
Exchange Agent, together with a properly completed Letter of Transmittal, (A) Parent shall
cause to be issued to the holder of such Company Share Certificate in exchange therefor a
separate stock certificate representing the number of Closing Shares, if any, to be issued
to such Company Stockholder and (B) the Exchange Agent shall pay to the holder of such
Company Share Certificate in exchange therefor the amount of Stockholder Closing
Consideration to be paid to such Company Stockholder in cash in accordance with Section
2.01(b)(i)(A)(i), and the Company Share Certificates so surrendered shall forthwith be
cancelled. Notwithstanding the foregoing, with respect to any holder of Company Stock who
has surrendered each of its Company Share Certificates for cancellation to the Exchange
Agent, together with a properly completed Letter of Transmittal, at least two (2) days
prior to the Closing Date, within two (2) business days following the Closing Date, (X)
Parent shall cause to be issued to the holder of such Company Share Certificate in exchange
therefor a separate stock certificate or evidence representing the number of Closing
Shares, if any, to be issued to such Company Stockholder and (Y) the Exchange Agent shall
pay to the holder of such Company Share Certificate in exchange therefor the amount of
Stockholder Closing Consideration to be paid to such Company Stockholder in cash in
accordance with Section 2.01(b)(i)(A)(i).

(v) In the event of a transfer of ownership of shares of Company Stock that is not
registered in the transfer records of the Company, the applicable Closing Shares may be
issued to a person other than the person in
whose name the Company Share Certificate so surrendered is registered, if the Company
Share Certificate representing such shares of Company Stock is presented to Parent or the
Exchange Agent, accompanied by all documents required to evidence and effect such transfer
and evidence that (A) the shares are transferable and (B) any applicable stock transfer
taxes have been paid.

(vi) Until surrendered as contemplated by this Article II, each Company Share
Certificate shall, subject to appraisal rights under the DGCL (and if the Company is
subject to Section 2115 of the California Corporations Code, Chapter 13 of the
California Corporations Code) and Section 2.05, be deemed at any time after the
Effective Time to represent only the right to receive upon surrender the portion of the
Transaction Consideration payable in respect of the Company Stock represented by such
Company Share Certificate pursuant to Section 2.01(b)(i) hereof, in accordance with
the terms of this Agreement and the Escrow Agreement.

(b) Escrow Fund. Prior to or simultaneously with the Closing, the Stockholders’
Representative and Parent shall enter into an escrow agreement in a form reasonably acceptable to
Parent, Company and the Stockholders’ Representative (the “Escrow Agreement”) with an
escrow agent jointly selected by Parent and the Company (the “Escrow Agent”). At the
Effective Time, pursuant to the terms of the Escrow Agreement, Parent shall deposit the Escrow
Amount into an escrow account, which account is to be managed by the Escrow Agent. Distributions
of any Escrow Amount from the Escrow Fund shall be governed by the terms and conditions of the
Escrow Agreement. The adoption of this Agreement and the approval of the Merger by the Company
Stockholders shall constitute approval of the Escrow Agreement and of all the arrangements relating
thereto, including, without limitation, the placement of the Escrow Amount in escrow and the
appointment of the Stockholders’ Representative. Parent shall be treated as the owner of the
Escrow Fund, and all interest and earnings earned from the investment and reinvestment of the
Escrow Fund, or any portion thereof, shall be allocable to Parent pursuant to Section
468B(g) of the

 

24

 

Code
and Proposed Treasury Regulation Section 1.468B-8. If and to the extent
any amount of the Escrow Fund is actually distributed to the holders of Company Stock immediately
prior to the Closing, interest may be imputed on such amount, as required by Section 483 or
1274 of the Code. In no event shall the total amount of the Escrow Fund and any interest
and earnings earned thereon paid to the Company Equityholders immediately prior to the Closing
under this Agreement exceed $4,500,000. The preceding sentence is intended to ensure that the
right of the Company Equityholders immediately prior to the Closing to the Escrow Fund and any
interest and earnings earned thereon is not treated as a contingent payment without a stated
maximum selling price under Section 453 of the Code and the Treasury Regulations promulgated
thereunder. All parties hereto shall file all Tax Returns consistently with the foregoing
provisions of this Section 2.03 (b)(i).

(c) Distributions with Respect to Unexchanged Parent Shares. No dividends or other
distributions declared or made after the Effective Time with respect to Closing Shares with a
record date after the Effective Time shall be paid to the holder of any unsurrendered Company Share
Certificate with respect to the Closing Shares
represented thereby until the holder of such Company Share Certificate shall surrender such
Company Share Certificate in accordance with this Section 2.03.

(d) No Further Rights in Company Stock. The Transaction Consideration provided for in
Section 2.01(b)(i) upon the conversion of shares of Company Stock in accordance with the
terms hereof shall be deemed to have been issued or payable in full satisfaction of all rights
pertaining to such shares of Company Stock.

(e) No Fractional Shares. Notwithstanding any other provision of this Agreement, no
fractional shares of Parent Common Stock shall be issued upon the conversion and exchange of
Company Share Certificates, and no holder of Company Share Certificates shall be entitled to
receive a fractional share of Parent Common Stock.

(f) No Liability. Neither Parent nor the Surviving Corporation shall be liable to any
holder of shares of Company Stock for any such shares of Parent Common Stock (or dividends or
distributions with respect thereto) or cash properly and legally delivered to a public official
pursuant to any abandoned property, escheat or similar Law (as defined in Section 3.06(a)).

(g) Withholding Rights. Each of the Exchange Agent, the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant
to this Agreement to any Company Participants such amounts as it is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the
“Code”), or any provision of state, local or foreign Tax (as defined in Section
3.15(bb)) Law. To the extent that amounts are so withheld by the Exchange Agent, the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the person to whom such amounts would otherwise have been
paid. The parties make no representations or warranties to any Company Participant regarding the
tax treatment of the Merger, or any of the tax consequences to the Company or any Company
Participant of this Agreement, the Merger or any of the other transactions contemplated hereby.

 

25

 

(h) Lost Certificates. If any Company Share Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the person claiming such Company
Share Certificate to be lost, stolen or destroyed and, if required by the Exchange Agent, the
execution by such person of an indemnity agreement against any claim that may be made against it or
Parent with respect to such Company Share Certificate, Parent or the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Company Share Certificate, the applicable Closing Cash
Consideration or Closing Shares (and dividends or other distributions on Closing Shares pursuant to
Section 2.03(c)) to which such person is entitled pursuant to the provisions of this
Article II.

(i) Return of Transaction Consideration. Any portion of the Transaction Consideration
that remains unclaimed by the former stockholders of the Company for nine (9) months after the end
of the Earn-Out Period shall be delivered to
Parent. Any former stockholder of the Company that has not complied with this Section
2.03 prior to the end of such nine (9) month period shall thereafter look only to the Parent
(subject to abandoned property, escheat or other similar Laws) but only as a general creditor
thereof for payment of its claim for the Transaction Consideration. If any Company Share
Certificates shall not have been surrendered immediately prior to the date that such unclaimed
Transaction Consideration would otherwise become subject to any abandoned property, escheat or
similar Law, any unclaimed Transaction Consideration payable with respect to such Company Share
Certificates shall, to the extent permitted by applicable Law, become the property of Parent, free
and clear of all claims or interest of any Person previously entitled thereto.

SECTION 2.04 Stock Transfer Books. At the Effective Time, the stock transfer books of
the Company shall be closed and there shall be no further registration of transfers of shares of
Company Stock thereafter on the records of the Company. From and after the Effective Time, the
holders of certificates representing shares of Company Stock outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to such shares of Company Stock, except
as otherwise provided in this Agreement or by Law.

SECTION 2.05 Dissenting Shares.

(a) Notwithstanding any provision of this Agreement to the contrary, shares of Company Stock
that are outstanding immediately prior to the Effective Time and which are held by stockholders who
have exercised and perfected appraisal rights for such shares of Company Stock in accordance with
the DGCL (and, if the Company is subject to Section 2115 of the California Corporations
Code, such rights as may be granted to such persons in Chapter 13 of the California Corporations
Code) (collectively, the “Dissenting Shares”) shall not be converted into or represent the
right to receive the applicable portion of the Transaction Consideration under Sections
2.01 or 2.02. Such stockholders shall be entitled only to such rights as are granted
by the DGCL (and, if the Company is subject to Section 2115 of the California Corporations
Code, such rights as may be granted to such persons in Chapter 13 of the California Corporations
Code) to a holder of Dissenting Shares, unless and until such stockholders fail to perfect or
effectively withdraw or otherwise lose their appraisal rights under the DGCL (or, if applicable,
Chapter 13 of the California Corporations Code). All Dissenting Shares held by stockholders who
shall have failed to perfect or who effectively shall have withdrawn or lost their right to
appraisal of such shares of Company Stock under the DGCL (or, if applicable, Chapter 13 of the
California Corporations Code) shall thereupon be deemed to have been converted into and to have
become exchangeable for, as of the Effective Time, the right to receive the applicable portion of
the Transaction Consideration, without any interest thereon, upon the surrender, in the manner
provided in Section 2.03, of the corresponding Company Share Certificate, assuming the full
amount of Closing Equityholder Consideration due in respect of such Company Share Certificate was
comprised of Closing Cash Consideration.

 

26

 

(b) The Company shall give Parent (i) prompt notice of any demands for appraisal received by
the Company, withdrawals of such demands, and any other related instruments served pursuant to the
DGCL (or, if applicable, Chapter 13 of the California Corporations Code) and received by the
Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to
demands for appraisal under the DGCL (or, if applicable, Chapter 13 of the California Corporations
Code). The Company shall not, except with the prior written consent of Parent, make any payment
with respect to any demands for appraisal or offer to settle or settle any such demands.

SECTION 2.06 Notices.

(a) The Company shall use its reasonable best efforts to secure, promptly after the execution
and delivery of this Agreement, the delivery of the Written Consent, which shall constitute all
requisite approvals by holders of Company Stock of the Agreement and the Merger.

(b) The Company shall deliver the Preliminary Closing Consideration Schedule no less than
three (3) days prior to the Closing Date.

(c) Promptly, but in no event later than three (3) business days after the date of the Written
Consent, the Company shall mail notice to the Company Stockholders of the approval by the Company
Stockholders of this Agreement, the Merger and the other transactions contemplated thereby,
pursuant to and in accordance with the applicable provisions of the DGCL, including Section
228(e), and the Certificate of Incorporation and the Bylaws (the “Stockholder
Notices”).

(d) Promptly, but in no event later than seven (7) business days after the date of the Written
Consent, the Company shall provide to each Company Stockholder whose consent was not obtained a
copy of the notice required pursuant to Section 262 of the DGCL (and, if applicable,
Chapter 13 of the California Corporations Code) informing them that appraisal rights are available
for their shares pursuant to Section 262 of the DGCL (and, if applicable, Chapter 13 of the
California Corporations Code) along with such other information as required by Section 262
of the DGCL and applicable Law (the “Section 262 Notice”).

(e) The Section 262 Notice, including any amendments or supplements thereto, shall be subject
to review and approval by Parent.

(f) Each party shall provide to the other any information for inclusion in preparation for any
Written Consent or Stockholder Notices that may be required by Law and that is reasonably requested
by the other party.

 

27

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub that the statements
contained in this Article III are true and correct as of the date of this Agreement (except
for any such representation and warranty that expressly is made as of a specific date, which such
representation and warranty shall be true and correct as of such date), subject to such
qualifications as set forth in the disclosure schedule delivered by the Company to Parent and
Merger Sub concurrently with the execution of this Agreement (the “Company Disclosure
Schedule”). The Company Disclosure Schedule shall be arranged according to specific sections
in this Article III and shall provide exceptions to, or otherwise qualify in reasonable
detail, the corresponding section in this Article III and any other section hereof where it
is clear and readily apparent, upon a reading of such disclosure without any independent knowledge
on the part of the reader regarding the matter disclosed, that the disclosure would apply to such
other section.

SECTION 3.01 Organization and Qualification. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to own, lease and otherwise hold and operate its
properties and other assets and to carry on its business as it is now being conducted. The Company
is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except where the failure to
be so qualified or licensed and in good standing has not had, and would not reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect (as defined below).
Section 3.01 of the Company Disclosure Schedule sets forth each jurisdiction where the
Company is qualified or licensed as a foreign corporation and each other jurisdiction in which the
Company owns, uses, licenses or leases real property or has employees or engages independent
contractors. The term “Company Material Adverse Effect” means any event, change,
circumstance or effect (regardless of whether or not such events, changes, circumstances or effects
are inconsistent with the representations or warranties made by the Company and its Subsidiaries in
this Agreement) that is, or would reasonably be expected to be, individually or in the aggregate,
materially adverse to the business, operations, financial condition, properties, assets (tangible
or intangible), liabilities, capitalization or results of operations of the Company and the
Subsidiaries taken as a whole, except for any such events, changes, circumstances or effects
resulting from or arising in connection with (i) any changes in general economic, market or
business conditions that do not disproportionately impact the Company relative to other
participants in the Company’s industry, (ii) any changes or events affecting the industry in which
the Company operates that do not disproportionately impact the Company relative to other
participants in the Company’s industry, (iii) changes in any applicable Law or U.S. GAAP or
international accounting standards that do not disproportionately impact the Company relative to
other participants in Company’s industry, (iv) changes caused by hostilities, acts of terrorism or
war, or any material escalation of any such hostilities, acts of terrorism or war existing on the
date hereof that do not disproportionately impact the Company relative to other participants in
Company’s industry, (v) the announcement, negotiation, existence or performance of this Agreement
or the transactions contemplated by this Agreement
(including the loss or departure of employees or adverse developments in relationships with
customers, suppliers, distributors, or other business partners), but not including, for the
avoidance of doubt, any breach or violation of a contract resulting from the Company’s execution,
delivery and performance of this Agreement or the consummation of the transactions contemplated
hereby, or (vi) the taking of any action required by this Agreement or that an authorized
representative of Parent has requested, or expressly consented to, in writing.

 

28

 

SECTION 3.02 Certificate of Incorporation and Bylaws. The Company has heretofore made
available to Parent a complete and correct copy of (a) the Certificate of Incorporation and the
Bylaws of the Company including all amendments thereto, (b) the minute books containing all
consents, actions and meeting of the stockholders of the Company, each Subsidiary of the Company,
and the Company’s Board of Directors and each committee thereof and each Subsidiary’s Board of
Directors and each committee thereof, and (c) the stock transfer books of the Company setting forth
all issuances or transfers of any capital stock of the Company. Such Certificate of Incorporation
and Bylaws are in full force and effect. The Company is not in violation of any of the provisions
of its Certificate of Incorporation or Bylaws. The corporate minute books, stock certificate
books, stock registers and other corporate records of the Company and each Subsidiary of the
Company are complete and accurate, and the signatures appearing on all documents contained therein
are the true or facsimile signatures of the persons purported to have signed the same.

SECTION 3.03 Subsidiaries.

(a) Section 3.03(a) of the Company Disclosure Schedule sets forth: (i) the name of
each corporation, partnership, limited liability company, joint venture or other entity in which
the Company has or has the right to acquire, directly or indirectly, an equity interest
representing 50% or more of the capital stock thereof or other equity interests therein or has
representation on or the right to designate members of the board of directors or similar governing
body that constitute or would constitute at least 50% of such members (individually, a
“Subsidiary” and, collectively, the “Subsidiaries”); (ii) the number and type of
outstanding equity securities of each Subsidiary and a list of the holders thereof; (iii) the
jurisdiction of organization of each Subsidiary; (iv) the name of the officers and directors of
each Subsidiary; (v) the jurisdictions in which each Subsidiary is qualified or holds licenses to
do business as a foreign corporation; and (vi) the primary purpose of such Subsidiary.

(b) Each Subsidiary is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. Each Subsidiary is duly qualified or
licensed to conduct business and is in good standing under the laws of each jurisdiction in which
the nature of its business or the ownership or leasing of its properties requires such
qualification or licensing. Each Subsidiary has all requisite power and authority to carry on its
business as it is now being conducted and as
currently proposed to be conducted and to own, lease and otherwise use the assets and
properties owned and used by it. The Company has made available to the Parent complete and
accurate copies of the charter, Bylaws or other organizational documents of each Subsidiary and
each such instrument is in full force and effect. No Subsidiary is in default under or in
violation of any provision of its charter, Bylaws or other organizational documents. All of the
issued and outstanding shares of capital stock of each Subsidiary are duly authorized, validly
issued, fully paid, nonassessable and free of preemptive rights. All shares of each Subsidiary are
held of record or owned beneficially by either the Company or another Subsidiary and are held or
owned free and clear of any restriction on transfer (other than restrictions under federal or state
securities laws), claim, security interest, option, warrant, right, lien, call, commitment, equity
or demand. There are no outstanding or authorized options, warrants, rights, agreements or
commitments to which the Company or any Subsidiary is a party or which are binding on any of them
providing for the issuance, disposition or acquisition of any capital stock of any Subsidiary.
There are no outstanding stock appreciation, phantom stock or similar rights with respect to any
Subsidiary. There are no voting trusts, proxies or other agreements or understandings with respect
to the voting of any capital stock of any Subsidiary.

 

29

 

(c) The Company does not control, directly or indirectly, or have any direct or indirect
equity participation or similar interest in any corporation, partnership, limited liability
company, joint venture, trust or other business association which is not a Subsidiary. There are
no contractual obligations of the Company to provide funds to, or make any investment in (whether
in the form of a loan, capital contribution or otherwise), any other person.

SECTION 3.04 Capitalization.

(a) The authorized capital stock of the Company consists of 165,000,000 shares of Company
Common Stock, 3,668,085 shares of Company Series A Preferred Stock, 5,493,617 shares of Company
Series B Preferred Stock, 14,059,814 shares of Company Series C Preferred Stock, 15,952,429 shares
of Company Series D Preferred Stock and 66,500,00 shares of Company Series A-1 Preferred Stock. As
of the date hereof, (i) 20,078,780 shares of Company Common Stock are issued and outstanding, all
of which are duly authorized, validly issued, fully paid and nonassessable, and (ii) no shares of
Company Common Stock are held in the treasury of the Company. As of the date hereof, (A) 3,638,298
shares of Company Series A Preferred Stock are issued and outstanding, (B) 5,453,176 shares of
Company Series B Preferred Stock are issued and outstanding, (C) 14,044,495 shares of Company
Series C Preferred Stock are issued and outstanding, (D) 15,952,429 shares of Company Series D
Preferred Stock are issued and outstanding and (E) 66,485,617 shares of Company Series A-1
Preferred Stock are issued and outstanding, all of which are duly authorized, validly issued, fully
paid and nonassessable. Each share of Company Series A-1 Preferred Stock, Company Series C
Preferred Stock and Company Series D Preferred Stock is convertible into one share of Company
Common Stock. Each share of Company Series A Preferred
Stock and Company Series B Preferred Stock is convertible into two shares of Company Common
Stock. There are no other shares of Company Preferred Stock outstanding. As of the date hereof,
the outstanding shares of Company Common Stock, Company Series A Preferred Stock, Company Series B
Preferred Stock, Company Series C Preferred Stock, Company Series D Preferred Stock and Company
Series A-1 Preferred Stock are owned of record as set forth in Section 3.04(a) of the
Company Disclosure Schedule, which sets forth for each such person or entity the number of shares
held of record by such person or entity and the number of the applicable certificates representing
such shares. No shares of Company Common Stock or Company Preferred Stock are issued or
outstanding as of the date hereof that are not set forth in Section 3.04(a) of the Company
Disclosure Schedule and no such shares will be issued or outstanding as of the Effective Time that
are not set forth in Section 3.04(a) of the Company Disclosure Schedule except for shares
of Company Common Stock issued pursuant to (A) the exercise of Company Options or Company Warrants
listed in Section 3.04(b) of the Company Disclosure Schedule, or (B) conversion of shares
of Company Preferred Stock to Common Stock, in each case, that are outstanding as of the date
hereof. To the Company’s knowledge, each stockholder has good and valid title to that number of
shares of Company Common Stock and/or Company Preferred Stock as set forth beside such Company
Stockholder’s name on Section 3.04(a) of the Company Disclosure Schedule, free and clear of
any encumbrance (other than restrictions on transfer that are, pursuant to their terms, not
applicable to the Merger or the transactions contemplated hereby) or any restrictions on voting.
The Company has not declared or paid any dividends or authorized or made any distribution upon or
with respect to any class or series of the Company’s capital stock. As of the date hereof, there
are no accrued and unpaid dividends on the Company Common Stock or Company Preferred Stock.

 

30

 

(b) The Company has reserved an aggregate of 46,701,150 shares of Company Common Stock for
issuance under the Company’s 1998 FusionOne Plan and 2008 Stock Incentive Plan (collectively, the
“Stock Plans”) of which options to purchase 28,777,262 shares of Company Common Stock are
outstanding as of the date of this Agreement. Section 3.04(b) of the Company Disclosure
Schedule accurately sets forth with respect to each Company Option that is outstanding as of the
date of this Agreement: (i) the name of the holder of such Company Option; (ii) the total number
of shares of Company Common Stock that was originally subject to such Company Option; (iii) the
number of shares of Company Common Stock that remain subject to such Company Option, (iv) the date
on which such Company Option was granted and the term of such Company Option; (v) the vesting
schedule and vesting commencement date for such Company Option; (vi) the exercise price per share
of Company Common Stock purchasable under such Company Option; and (vii) whether such Company
Option has been designated an “incentive stock option” as defined in Section 422 of the Code. No
Company Option will by its terms require an adjustment in connection with the Merger, except as
contemplated by this Agreement. Except as set forth in Section 3.04(b) of the Company
Disclosure Schedule, neither the consummation of transactions contemplated by this Agreement, nor
any action taken or to be taken by Company in connection with such transactions, will result in (y)
any acceleration of exercisability or vesting, whether or not contingent on the occurrence of any
event after consummation of the Merger, in favor of any optionee under any Company Option; or (z)
any additional benefits for any
optionee under any Company Option. Each Company Option outstanding as of immediately prior to
the Effective Time will be terminated, in accordance with the terms thereof, immediately prior to
the Effective Time.

(c) The Company has reserved 150,000 shares of Company Common Stock for future issuance
pursuant to the exercise of Company Warrants. Section 3.04(c) of the Company Disclosure
Schedule sets forth, with respect to each Company Warrant issued to any person: (i) the name of the
holder of such Company Warrant; (ii) the total number and type of shares of Company Stock that are
subject to such Company Warrant; (iii) the exercise price per share of Company Stock purchasable
under such Company Warrant; (iv) the total number of shares of Company Stock with respect to which
such warrant is immediately exercisable; (v) the vesting schedule for such Company Warrant; and
(vi) the term of such Company Warrant. Each Company Warrant will be terminated immediately prior
to the Effective Time.

 

31

 

(d) Except as described in Section 3.04(b) above or as set forth in Section
3.04(b) and 3.04(c) of the Company Disclosure Schedule, there are no options, warrants,
stock appreciation rights, phantom stock or other rights, agreements, arrangements or commitments
of any character, whether or not contingent, relating to the issued or unissued capital stock of
the Company or obligating the Company to issue or sell any share of capital stock of, or other
equity interest in, the Company. All shares of Company Stock so subject to issuance, upon issuance
in accordance with the terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable. The holders of
Company Options and Company Warrants have been or will be given, or shall have properly waived, any
required notice of the Merger prior to the Effective Time, and all such rights, if any, will
terminate at or prior to the Effective Time.

(e) The Company does not have outstanding any bonds, debentures, notes or other obligations
the holders of which have the right to vote (or which are convertible into or exercisable for
securities having the right to vote) with the stockholders of the Company on any matter.

(f) All of the securities offered, sold or issued by the Company (i) have been offered, sold
or issued in compliance with the requirements of the Federal securities laws and any applicable
state securities or “blue sky” laws and (ii) are not subject to any preemptive right, right of
first refusal, right of first offer or right of rescission.

(g) The Company has never repurchased, redeemed or otherwise reacquired any shares of capital
stock or other securities of the Company or any Subsidiary, other than unvested securities in the
ordinary course upon termination of employment or consultancy. There are no outstanding
contractual obligations of the Company to repurchase, redeem or otherwise acquire any share of
capital stock of, or other equity interest in, the Company. Except as provided in the Fourth
Amended and Restated Voting Agreement, dated March 30, 2006, as amended (which agreement will be
terminated prior to the Effective Time and have no further effect after the Effective
Time), the Certificate of Incorporation of the Company and as set forth in Section
3.04(g) of the Company Disclosure Schedule, there are no stockholder agreements, voting trusts
or other agreements or understandings to which the Company or any Subsidiary is a party, or of
which the Company has knowledge, that (i) relate to the voting, registration or disposition of any
securities of the Company, (ii) grant to any person or group of persons the right to elect, or
designate or nominate for election, a director to the Board of Directors of the Company, or (iii)
grant to any person or group of persons information rights.

(h) The allocation of the type and amount of the Net Closing Consideration among the Closing
Consideration Recipients as set forth on the Closing Consideration Schedule conforms with
Section 2.01 hereof, the requirements of applicable Law, including the DGCL and the
Company’s Certificate of Incorporation as in effect immediately prior to the Effective Time. The
amount payable to each Company Warrantholder in accordance with Section 2.01(b)(iii) shall
represent the full amount due to such Company Warrantholder in consideration of the cancellation at
the Effective Time of the Company Warrant held by such Company Warrantholder. No holder of an
Out-of-the-Money Warrant shall be entitled to receive any payment in respect of the cancellation
thereof as of the Effective Time.

 

32

 

SECTION 3.05 Authority Relative to This Agreement.

(a) The Company has all necessary corporate power and authority to execute and deliver this
Agreement and the other agreements contemplated herein and, subject to obtaining the Written
Consent, to perform its obligations hereunder and to consummate the Merger and the other
transactions contemplated by this Agreement and the other agreements contemplated herein. The
execution and delivery of this Agreement by the Company and the consummation by the Company of the
Merger and the other transactions contemplated by this Agreement have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the Merger and the other
transactions contemplated by this Agreement (other than obtaining the Written Consent and the
filing and recordation of appropriate merger documents as required by the DGCL). This Agreement
has been duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes a legal, valid and
binding obligation of the Company, enforceable against the Company in accordance with its terms,
subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar Laws (as defined below) affecting creditors’ rights generally and subject, as to
enforceability, to the effect of general principles of equity.

(b) Without limiting the generality of the foregoing, the Board of Directors of the Company,
at a meeting duly called and held, has unanimously (i) determined that the Merger and the other
transactions contemplated hereby are fair to, and in the best interests of, the Company and its
stockholders, (ii) adopted this
Agreement and approved the Merger and the other transactions contemplated hereby in accordance
with the provisions of the DGCL and the Company’s Certificate of Incorporation and Bylaws, (iii)
directed that this Agreement and the Merger be submitted to the Company Stockholders for their
approval and adoption and (iv) resolved to recommend that the Company Stockholders vote in favor of
the approval and adoption of this Agreement.

SECTION 3.06 No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement and the other agreements contemplated herein
by the Company do not, and the performance of this Agreement and the other agreements contemplated
herein by the Company will not, (i) conflict with or violate the Certificate of Incorporation or
Bylaws or other organizational documents of the Company or any Subsidiary, (ii) assuming that all
consents, approvals, authorizations and other actions described in Section 3.06(b) have
been obtained and all filings and obligations described in Section 3.06(b) have been made
or complied with, conflict with or violate in any material respect any foreign or domestic
(Federal, state, foreign, local or municipal) law, statute, ordinance, constitution, principle of
common law, resolution, franchise, permit, concession, license, writ, decree code, edict, decree,
rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Entity and any orders,
writs, injunctions, awards, judgments and decrees applicable to the Company or any Subsidiary, as
the case may be, or to any of their respective assets, properties or businesses (“Law”)
applicable to the Company or any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, or (iii) conflict with, result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a default) under,
require consent, approval or notice under, give to others any right of termination, amendment,
acceleration or cancellation of, require any payment under, or result in the creation of a lien or
other encumbrance on any property or asset of the Company or any Subsidiary pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any Subsidiary is a party or by which any property
or asset of the Company or any Subsidiary is bound or affected.

 

33

 

(b) The execution and delivery of this Agreement by the Company do not, and the performance of
this Agreement by the Company will not, require any consent, approval, order, permit, or
authorization from, or registration, notification or filing with, any domestic or foreign
governmental, regulatory or administrative authority, agency or commission, any court, tribunal or
arbitral body, or any quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental authority (a “Governmental Entity”), except (i) such
filings and notifications as may be required under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder (the “HSR Act”)
or applicable foreign antitrust laws to be made by Company, or by its “ultimate parent entity” as
that term is defined in the HSR Act, in connection with the Merger and the expiration or early
termination of applicable waiting periods under the HSR Act or applicable foreign antitrust
laws, and (ii) for the filing and recordation of the Certificate of Merger with the Secretary of
State of the State of Delaware.

(c) At the Closing, the Company will have less than $12.7 million in assets as determined in
accordance with 16 C.F.R. s. 801.11 and will not be “engaged in manufacturing” for purposes of the
HSR Act. There is no person, or group of persons under Common Control, who Control(s) the Company.
For the purposes of this Section, the term “Control” means either (a) holding beneficial
ownership, whether direct or indirect through fiduciaries, agents, controlled entities or other
means, of 50% or more of the outstanding voting securities of an issuer; (b) in the case of an
entity that has no outstanding voting securities, having the right to 50% or more of the profits of
the entity, or having the right in the event of dissolution to 50% or more of the assets of the
entity; or (c) having the contractual power presently to designate 50% or more of the directors of
a corporation, or in the case of unincorporated entities, of individuals exercising similar
functions. For the purposes of this Section, “Common Control” means sharing an Ultimate
Parent. For the purposes of this Section, “Ultimate Parent” means a person who is not
Controlled by any other entity.

SECTION 3.07 Permits; Compliance.

(a) Each of the Company and each Subsidiary is in possession of all material franchises,
grants, authorizations, licenses (including export licenses, exceptions and classifications),
permits, easements, variances, exceptions, consents, certificates, approvals and orders of any
Governmental Entity necessary for the Company and each Subsidiary to own, lease and otherwise hold
and operate its properties and other assets and to carry on its business as it is now being
conducted (the “Company Permits”). All Company Permits are in full force and effect and
will remain so after the Closing and no suspension or cancellation of any Company Permit is pending
or, to the knowledge of the Company, threatened. Neither the Company nor any Subsidiary has
received any notice, written or otherwise, or other communication from any Governmental Entity
regarding (i) any actual or possible violation of or failure to comply with any term or requirement
of any Company Permit, or (ii) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any Company Permit.

 

34

 

(b) Neither the Company nor any Subsidiary is in conflict with, or in material default or
violation of, (i) any Law (including, without limitation, any import or export control Laws)
applicable to the Company or any Subsidiary or by which any property or asset of the Company or any
Subsidiary is bound or affected, (ii) any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary or any property or asset of the
Company or any Subsidiary is bound or affected or (iii) any Company Permit.

SECTION 3.08 Financial Statements.

(a) True and complete copies of (i) the audited consolidated balance sheets of the Company and
the Subsidiaries as of December 31, 2007, 2008 and 2009, and the related audited statements of
operations, changes in stockholders’ equity and changes in cash flows for the years then ended,
together with all related notes and schedules thereto (collectively referred to herein as the
“Audited Financial Statements”) and (ii) the unaudited consolidated balance sheets of the
Company and the Subsidiaries as of May 31, 2010 (the “Reference Balance Sheet”), and the
related statements of operations and changes in cash flows for the five (5) months ended May 31,
2010 (collectively referred to herein as the “Interim Financial Statements”), are attached
as Section 3.08(a) of the Company Disclosure Schedule. The Audited Financial Statements
and the Interim Financial Statements were prepared in accordance with United States generally
accepted accounting principles (“U.S. GAAP”) applied on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by U.S. GAAP) and each present fairly and accurately in all material
respects, the consolidated financial position of the Company and the Subsidiaries as at the
respective dates thereof and results of operations and changes in cash flows of the Company and its
Subsidiaries for the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal year-end adjustments which were not, are
not and are not expected to be, individually or in the aggregate, material).

(b) Except as set forth in Section 3.08(b) of the Company Disclosure Schedule, the
Company and its Subsidiaries do not have any debts, liabilities or obligations of any nature
(whether known or unknown, accrued or fixed, absolute or contingent, matured or unmatured,
determined or determinable, or as a guarantor or otherwise) (“Liabilities”) whether or not
required to be set forth on a consolidated balance sheet of the Company and its Subsidiaries
prepared in accordance with U.S. GAAP (including the footnotes thereto), other than Liabilities (i)
reflected on the Reference Balance Sheet, (ii) incurred in the ordinary course of business after
the date of the Reference Balance Sheet which individually or in the aggregate, would not have a
Material Adverse Effect, (iii) in an amount less than $10,000 per individual Liability or group of
related Liabilities, or (iv) incurred pursuant to the terms of this Agreement. Except as set forth
in Section 3.08(b) of the Company Disclosure Schedule, there are no outstanding warranty
claims against the Company or any Subsidiary or rights to reimbursement or repayment of any funds
previously paid to the Company or any Subsidiary. Neither the Company or any of its Subsidiaries
has an off balance sheet Liability of any nature (matured or unmatured, fixed or contingent) to, or
any financial interest in, any third party or entities, the purpose or effect of which is to defer,
postpone, reduce or otherwise avoid or adjust the recording of debt expenses incurred by Company.
The Verizon Items are in the possession of the Company (or a Subsidiary), are available to be
promptly returned to Verizon upon Verizon’s request and, upon such return in the current state
thereof, neither the Company or any Subsidiary shall have any further liabilities in respect of the
Verizon Items.

 

35

 

(c) The Company has established and maintains a system of internal accounting controls
sufficient to provide reasonable assurances (i) that transactions, receipts and expenditures of the
Company and its Subsidiaries are being executed and made only in accordance with appropriate
authorizations of management and the Board of Directors of the Company, (ii) that transactions are
recorded as necessary (A) to permit preparation of financial statements in conformity with U.S.
GAAP and (B) to maintain accountability for assets, (iii) regarding prevention or timely detection
of unauthorized acquisition, use or disposition of the consolidated assets of the Company, and (iv)
that the amount recorded for assets on the books and records of the Company is compared with the
existing assets at reasonable intervals and appropriate action is taken with respect to any
differences. Neither Company nor, to Company’s knowledge, Company’s independent auditors or any
current employee, consultant or director of Company, has identified or been made aware of any
fraud, whether or not material, that involves Company’s management or other current employees,
consultants directors of Company or any of its Subsidiaries who have a role in the preparation of
the consolidated financial statements or the internal accounting controls utilized by the Company,
or any claim or allegation regarding any of the foregoing. Neither the Company nor, to the
Company’s knowledge, any director, officer, employee, auditor, accountant or representative of the
Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any
material complaint, allegation, assertion or claim, whether written or oral, in each case,
regarding deficient accounting or auditing practices, procedures, methodologies or methods of the
Company or its internal accounting controls or any material inaccuracy in the Company’s
consolidated financial statements. There are no significant deficiencies or material weaknesses in
the design or operation of the Company’s internal controls which could adversely affect the
Company’s ability to record, process, summarize and report its consolidated financial data. At the
date of the Reference Balance Sheet, there were no material loss contingencies (as such term is
used in Statement of Financial Accounting Standards No. 5 (“Statement No. 5”) issued by the
Financial Accounting Standards Board in March 1975) that are not adequately provided for in the
Reference Balance Sheet as required by said Statement No. 5. There has been no change in the
Company accounting policies since January 1, 2007, except as described in the Audited Financial
Statements.

SECTION 3.09 Absence of Certain Changes or Events. Since May 31, 2010, except as
contemplated by this Agreement, the Company and its Subsidiaries have conducted their respective
businesses only in the ordinary course and in a manner consistent with past practice and, since
such date, (a) there has not been any Company Material Adverse Effect and (b) the Company and its
Subsidiaries have not taken or legally committed to take any of the actions specified in
Sections 5.01(a) through 5.01(cc).

 

36

 

SECTION 3.10  Absence of Litigation. There is no litigation, suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company, threatened in writing
against the Company or any Subsidiary (or, to the knowledge of the Company, against any officer,
director, employee, agent or other similar representative of Company or any Subsidiary in their
capacity as such or relating to their employment, services or relationship with Company or any
Subsidiary), or any property or asset owned by (or any material property or material asset licensed
by) the Company or any Subsidiary before any arbitrator or Governmental Entity (a “Legal
Proceeding”). To the Company’s knowledge, no event has occurred, and no claim or dispute
exists, that could reasonably be expected to give rise to or serve as a basis of the commencement
of any Legal Proceeding. None of the Company or any Subsidiary, the officers or directors thereof
in their capacity as such, or any property or asset of the Company or any Subsidiary is subject to
any continuing order of, consent decree, settlement agreement or other similar written agreement
with, or, to the knowledge of the Company, continuing investigation by, any Governmental Entity, or
any order, writ, judgment, injunction, decree, determination or award of any court, arbitrator or
Governmental Entity. Neither the Company nor any Subsidiary has any plans to initiate any Legal
Proceeding against any third party. Section 3.10 of the Company Disclosure Schedule lists all
Legal Proceedings involving the Company or any Subsidiary (or, to the knowledge of the Company, any
officer, director, employee, agent or other similar representative of Company or any Subsidiary in
their capacity as such or relating to their employment, services or relationship with Company or
any Subsidiary) that have been initiated, litigated or settled since January 1, 2005.

SECTION 3.11 Employee Benefit Plans; Labor Matters.

(a) Section 3.11(a) of the Company Disclosure Schedule lists (i) all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended (“ERISA”)), whether or not subject to ERISA, and all bonus, stock option, stock
purchase, stock appreciation right, restricted stock, phantom stock, incentive, retention, change
in control, deferred compensation, retiree medical, disability or life insurance, cafeteria
benefit, dependent care, disability, director or employee loan, fringe benefit, sabbatical,
supplemental retirement, severance or other benefit plans, programs or arrangements, and all
employment, termination, severance or other written or material oral contracts or agreements to
which the Company or any Subsidiary is a party, with respect to which the Company or any Subsidiary
has any obligation or which are maintained, contributed to or sponsored by the Company or any
Subsidiary for the benefit of any current or former employee, officer, independent contractor or
consultant, or director of the Company or any Subsidiary, (ii) each employee benefit plan for which
the Company or any Subsidiary could incur liability under Section 4069 of ERISA in the
event such plan has been or were to be terminated, (iii) any plan in respect of which the Company
or any Subsidiary could incur liability under Section 4212(c) of ERISA, (iv) any written or
material oral employment agreements, severance agreements or other contracts, arrangements or
understandings between the Company or any Subsidiary and any current employee, officer, independent
contractor, or director of the Company or any Subsidiary including, without limitation, any
contracts, arrangements or understandings relating to a sale of the Company which entitles such
person to compensation, severance, retention, bonus or other similar payment or unemployment
compensation, (v) any outstanding obligations or Liabilities with respect to any employment
agreement, offer letter, severance agreement or other
contracts, arrangements or understandings between the Company or any Subsidiary and any former
employee, in each case, other than agreements entered into pursuant to the Company Stock Plans
(each, a “Plan,” and collectively, the “Plans”). Neither the Company nor any
Subsidiary has an express or implied commitment to (x) create, incur liability with respect to, or
cause to exist any other employee benefit plan, program or arrangement, (y) enter into any contract
or agreement to provide compensation or benefits to any individual or (z) modify, change or
terminate any Plan, other than with respect to a modification, change or termination required by
ERISA or the Code.

 

37

 

(b) Each Plan is in writing and the Company has furnished to Parent a true and complete copy
of each Plan (or a written summary of any Plan that is not in writing) and a true and complete copy
of each material document, if any, prepared in connection with each such Plan, including, without
limitation, (i) a copy of each trust or other funding arrangement, (ii) each summary plan
description and summary of material modifications, (iii) the three (3) most recent annual reports
(Form 5500 series and all schedules and financial statements attached thereto), if any, required
under ERISA or the Code in connection with each Plan, (iv) the most recently received Internal
Revenue Service determination letter for each Plan intended to qualify under ERISA or the Code, (v)
if applicable, the most recently prepared actuarial report and financial statement in connection
with each such Plan, (vi) any correspondence with the Internal Revenue Service or the Department of
Labor with respect to each such Plan, (vii) each form of notice of grant and stock option agreement
used to document Company Options and (viii) any comparable documents with respect to each Plan
subject to any foreign Laws that are required to be prepared or filed under the applicable Laws of
such foreign jurisdiction.

(c) None of the Plans is a multi-employer plan (within the meaning of Section 3(37) or
4001(a)(3) of ERISA) (a “Multi-employer Plan”) or a single employer pension plan
(within the meaning of Section 4001(a)(15) of ERISA) for which the Company or any
Subsidiary could incur liability under Section 4063 or 4064 of ERISA (a
“Multiple Employer Plan”). Each Plan is subject only to the Laws of the United States or a
political subdivision thereof.

(d) Except as set forth in Section 3.11(d) of the Company Disclosure Schedule, none of
the Plans provides for the payment of separation, severance, termination or similar benefits to any
person or obligates the Company or any Subsidiary to pay separation, severance, termination or
similar-type benefits solely or partially as a result of any transaction contemplated by this
Agreement or as a result of a “change in ownership or control,” within the meaning of such term
under Section 280G of the Code. Except as set forth in Section 3.11(d) of the
Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby, either alone or together with another event,
will (i) result in any payment (including, without limitation, severance, unemployment
compensation, golden parachute, forgiveness of indebtedness or otherwise) becoming due under any
Plan, whether or not such payment is contingent, (ii) increase any benefits otherwise payable under
any Plan or other arrangement, (iii) result in the acceleration of the time of payment, vesting or
funding of any benefits, other than, but not limited to, the acceleration of the vesting and
exercisability of any Company Option, whether or not
contingent, or (iv) affect in any material respects any Plan’s current treatment under any
Laws including any Tax or social contribution Law. No Plan provides, or reflects or represents any
liability to provide, retiree health, disability, or life insurance benefits or coverage to any
person for any reason, except as may be required by the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended (“COBRA”), or other applicable statute, and the Company has never
represented, promised or contracted (whether in oral or written form) to any employee (either
individually or to employees as a group) or any other person that such employee or other person
would be provided with retiree health, disability, or life insurance benefits or coverage after
retirement or other termination of employment, except to the extent required by statute.

 

38

 

(e) Each Plan is now and always has been operated in all material respects in accordance with
its terms and the requirements of all applicable Laws, regulations and rules promulgated thereunder
including, without limitation, ERISA, the Code and similar Laws of foreign jurisdictions. Each of
the Company and each Subsidiary has performed all material obligations required to be performed by
it under, is not in any respect in default under or in violation of, and has no knowledge of any
default or violation by any party to, any Plan. No action, claim or proceeding is pending or, to
the knowledge of the Company, threatened with respect to any Plan (other than claims for benefits
in the ordinary course) and to the Company’s knowledge, no fact or event exists that could give
rise to any such action, claim or proceeding. Neither the Company nor any person that is a member
of the same controlled group as the Company or under common control with the Company within the
meaning of Section 414 of the Code (each, an “ERISA Affiliate”) is subject to any
penalty or Tax with respect to any Plan under Section 502(i) of ERISA or Sections
4975 through 4980 of the Code. Each Plan described in Section 3.11(a)(i) can
be amended, terminated or otherwise discontinued at any time without material liability to Parent,
the Company or any of their ERISA Affiliates (other than ordinary administration expenses). Neither
the Company nor any affiliate has, prior to the Effective Time and in any material respect,
violated any of the health care continuation requirements of COBRA, the requirements of the Family
Medical Leave Act of 1993, the requirements of the Health Insurance Portability and Accountability
Act of 1996, the requirements of the Women’s Health and Cancer Rights Act of 1998, the requirements
of the Newborns’ and Mothers’ Health Protection Act of 1996, or any amendment to each such act, or
any similar provisions of state Law applicable to its employees.

(f) Each Plan intended to qualify under Section 401(a) or Section 401(k) of
the Code and each trust intended to qualify under Section 501(a) of the Code (i) has
received a favorable determination, opinion, notification or advisory letter from the Internal
Revenue Service with respect to each such Plan as to its qualified status under the Code, including
all amendments to the Code effected by the Tax Reform Act of 1986 and subsequent legislation, and
no fact or event has occurred since the date of such determination letter or letters from the
Internal Revenue Service to adversely affect the qualified status of any such Plan or the exempt
status of any such trust, or (ii) has remaining a period of time under applicable Treasury
regulations or Internal Revenue Service pronouncements in which to apply for such a letter and make
any amendments necessary to obtain a favorable determination as to the qualified status of each
such Plan.
With respect to any Plan maintained outside the United States, all applicable foreign
qualifications or registration requirements have been satisfied in all material respects.

(g) Neither the Company nor any Subsidiary nor any Company ERISA Affiliate has incurred any
liability under, arising out of or by operation of Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary course), including,
without limitation, any liability in connection with the termination or reorganization of any
employee benefit plan subject to Title IV of ERISA or similar Laws of a foreign jurisdiction or the
withdrawal from any Multi-employer Plan or Multiple Employer Plan, and no fact or event exists
which could give rise to any such liability.

 

39

 

(h) Neither the Company nor any Subsidiary has, since January 1, 2000, terminated, suspended,
discontinued contributions to or withdrawn from any employee pension benefit plan, as defined in
Section 3(2) of ERISA, including, without limitation, any Multi-employer Plan. All
contributions, premiums or payments required to be made or accrued with respect to any Plan have
been made on or before their due dates. All such contributions have been fully deducted for income
tax purposes and no such deduction has been challenged or disallowed by any Governmental Entity and
no fact or event exists which could give rise to any such challenge or disallowance.

(i) Except as set forth in Section 3.11(i) of the Company Disclosure Schedule, (i)
neither the Company nor any Subsidiary is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or any Subsidiary or in the
Company’s or any Subsidiary’s business, and currently there are no organizational campaigns,
petitions or other unionization activities seeking recognition of a collective bargaining unit that
could affect the Company or any Subsidiary; (ii) there are no controversies, strikes, slowdowns or
work stoppages pending or, to the best knowledge of the Company, threatened between the Company or
any Subsidiary and any of its employees, and neither the Company nor any Subsidiary has experienced
any such controversy, strike, slowdown or work stoppage within the past three (3) years; (iii)
neither the Company nor any Subsidiary has breached or otherwise failed to comply with the
provisions of any collective bargaining or union contract and there are no grievances outstanding
against the Company or any Subsidiary under any such agreement or contract; (iv) the Company and
each Subsidiary have not engaged in any unfair labor practice, and there are no unfair labor
practice complaints pending against the Company or any Subsidiary before the National Labor
Relations Board or any other Governmental Entity or any current union representation questions
involving employees of the Company or any Subsidiary; (v) the Company and each Subsidiary are
currently in material compliance with (and, to the knowledge of the Company, have no outstanding
Liability with respect to) all applicable Laws relating to the employment of labor, including those
related to wages, hours, worker classification (including the proper classification of independent
contractors and consultants), collective bargaining, workers’ compensation and the payment and
withholding of Taxes and other sums as required by the appropriate Governmental Entity and has
withheld and paid to the appropriate Governmental Entity or is holding for payment not yet due to
such Governmental Entity all amounts required to be withheld from employees of the Company or any
Subsidiary
and is not liable for any arrears of wages, Taxes, penalties or other sums for failure to
comply with any of the foregoing; (vi) the Company and each Subsidiary has paid in full to all
employees or adequately accrued for in accordance with U.S. GAAP consistently applied all wages,
salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such
employees; (vii) there is no claim with respect to payment of wages, salary, overtime pay, workers
compensation benefits or disability benefits that has been asserted or threatened in writing
against the Company or any Subsidiary or that is now pending before any Governmental Entity with
respect to any person currently or formerly employed by, or otherwise providing services to, the
Company or any Subsidiary; (viii) neither the Company nor any Subsidiary is a party to, or
otherwise bound by, any consent decree with, or citation by, any Governmental Entity relating to
employees or employment practices; (ix) the Company and each Subsidiary are in material compliance
with all Laws and regulations relating to occupational safety and health Laws and regulations, and
there is no charge or proceeding with respect to a violation of any occupational safety or health
standards

 

40

 

that
has been asserted or is now pending or threatened with respect to the Company or any
Subsidiary; (x) the Company and each Subsidiary are in material compliance with all Laws and
regulations relating to discrimination in employment, and there is no charge of discrimination in
employment or employment practices for any reason, including, without limitation, age, gender,
race, religion or other legally protected category, which has been asserted or, to the knowledge of
the Company, threatened against the Company or any Subsidiary or that is now pending before the
United States Equal Employment Opportunity Commission or any other Governmental Entity; (xi) each
employee of the Company and each Subsidiary who is located in the United States and is not a United
States citizen has all provided the Company with information indicating that the employee is
legally authorized to work in the United States; and (xii) the Company and each Subsidiary have at
all times been in compliance with the Worker Adjustment Retraining and Notification Act, as amended
(or any similar state, local or foreign laws).

(j) Section 3.11(j) of the Company Disclosure Schedule contains a true and complete
list of (i) all individuals who serve as employees of or consultants to the Company and each
Subsidiary as of the date hereof, (ii) in the case of such employees, the position, date of hire,
severance eligibility, leave status and base compensation and bonus opportunity payable to each
such individual, (iii) in the case of each such consultant, the consulting rate payable to such
individual and (iv) the country in which such individual performs services for the Company or
applicable Subsidiary and the national law governing the provision of such services, in either case
if other than the United States.

(k) To the Company’s knowledge, no employee of or consultant to the Company or any Subsidiary
has been injured in the workplace or in the course of his or her employment or consultancy, except
for injuries which are covered by insurance or for which a claim has been made under worker’s
compensation or similar Laws.

(l) There is no agreement, contract or arrangement to which the Company or any Subsidiary is a
party, including the provisions of this Agreement, that could, individually or collectively, result
in the payment of any amount that would not be
deductible by reason of Sections 280G, 162 or 404 of the Code. There is no contract,
agreement, plan or arrangement to which the Company or any Subsidiary is a party or by which it is
bound to compensate any employee for excise taxes paid pursuant to Section 4999 of the Code.
Neither the Company nor any Subsidiary is a party to any contract and has not granted any
compensation, equity or award that could be deemed deferred compensation subject to the additional
20% tax under Section 409A of the Code, and neither Company nor any of its ERISA Affiliates has any
liability or obligation to make any payments or to issue any equity award or bonus that could be
deemed deferred compensation subject to the additional 20% tax under Section 409A of the Code.

(m) All Company Options and other equity or equity-based awards have been granted in
compliance with the terms of the applicable Plan, with applicable Law, and with the applicable
provisions of the Certificate of Incorporation and Bylaws as in effect at the applicable time.

 

41

 

SECTION 3.12 Contracts.

(a) Section 3.12(a) of the Company Disclosure Schedule lists (under the appropriate
subsection) each of the following written or material oral contracts and agreements of the Company
or any Subsidiary as of the date hereof (such contracts and agreements, along with all agreements
listed on Section 3.14(c) of the Company Disclosure Schedule, being the “Material
Contracts”):

(i) each contract and agreement for the purchase or lease of personal property with
any supplier or for the furnishing of services to the Company or any Subsidiary with
payments greater than $25,000 per year;

(ii) all broker, exclusive dealing or exclusivity, distributor, dealer, manufacturer’s
representative, franchise, agency, sales promotion or representative, research, marketing,
consulting and advertising contracts and agreements to which the Company or any Subsidiary
is a party or any other contract that compensates any person based on any sales by the
Company or any Subsidiary under which, in each case, the Company and its Subsidiaries has
paid or received monies in excess of $25,000 since January 1, 2009;

(iii) all leases and subleases of real property;

(iv) all contracts and agreements relating to indebtedness for borrowed money other
than trade indebtedness of the Company or any Subsidiary, including any contracts and
agreements in which the Company or any Subsidiary is a guarantor of indebtedness for
borrowed money;

(v) all contracts and agreements with any Governmental Entity to which the Company or
any Subsidiary is a party;

(vi) all contracts containing confidentiality requirements (including all
nondisclosure agreements), other than agreements (A) between the Company or any of its
Subsidiaries and current or former directors, officers, employees, consultants or
independent contractors of the Company or its Subsidiaries, in their capacity as such or
(B) entered into with customers of the Company or any of its Subsidiaries in the ordinary
course of business;

(vii) all contracts and agreements between or among the Company or any Subsidiary
thereof, on the one hand, and any stockholder of the Company or, to the knowledge of the
Company, any Subsidiary or any affiliate of such person, on the other hand;

(viii) all contracts and agreements relating to the voting and any rights or
obligations of a stockholder of the Company or any Subsidiary;

(ix) all contracts to manufacture for, supply to or distribute to any third party any
products or components under which the Company or its Subsidiaries have paid or received
monies in excess of $25,000 since January 1, 2009;

 

42

 

(x) all contracts regarding the acquisition, issuance or transfer of any securities of
a third party;

(xi) all contracts providing for indemnification of any officer, director, employee or
agent of the Company or any Subsidiary;

(xii) all contracts related to or regarding the performance of consulting, advisory or
other services or work of any type by any third party under which the Company or its
Subsidiaries have paid monies in excess of $25,000 since January 1, 2009;

(xiii) any agreement of the Company or any Subsidiary that is terminable upon or
prohibits a change of ownership or control of the Company;

(xiv) all other contracts and agreements not made in the ordinary course of business,
that contemplate an exchange of consideration with an aggregate value greater than $25,000;

(xv) all contracts and agreements relating to the disposition or acquisition by the
Company or any of its Subsidiaries, with obligations remaining to be performed (or
liabilities continuing) after the date of this Agreement, of any business or any material
amount of assets not in the ordinary course of business;

(xvi) any joint venture or partnership contract, arrangement or commitment, any
contract, arrangement or commitment relating to a limited liability company, or any other
agreement which has involved, or is reasonably expected to involve, a sharing of revenues,
profits, cash flows, expenses or losses by Company with any other party;

(xvii) any agreement pursuant to which Company has acquired a business or entity, or
assets of a business or entity, whether by way of merger, consolidation, purchase of stock,
purchase of assets, license or otherwise (collectively, the “Prior Merger
Agreements”), including disclosure of (1) any amounts remaining payable by the Company
or any Subsidiary thereof arising from current or contingent obligations to make payments
in respect of the business, entity or assets acquired and (2) whether any claims have been
made in respect of indemnification obligations of any party to such agreement and, to the
knowledge of the Company, whether any grounds for such claims exist;

(xviii) all contracts and agreements to provide source code or other technology of any
Company Intellectual Property (as defined below) (“Source Materials”) into any
escrow or to any third party (under any circumstances) for any product or technology that
is material to the Company and its Subsidiaries taken as a whole;

(xix) any settlement agreement entered into within five (5) years prior to the date of
this Agreement other than releases immaterial in nature or amount entered into by the
Company or its Subsidiaries; and

 

43

 

(xx) any other contract, arrangement or commitment that is material to Company’s
business, its financial condition, its Intellectual Property rights or technology or any of
its current or proposed products or services.

(b) Each Material Contract (i) is valid and binding on the Company or a Subsidiary, as the
case may be, and, on the other parties thereto, and is in full force and effect, and (ii) upon
consummation of the transactions contemplated by this Agreement, shall continue in full force and
effect without penalty or other adverse consequence. Neither the Company nor any Subsidiary is in
breach or violation of, or default under, any Material Contract and, to the knowledge of the
Company, no other party to any Material Contract is in breach or violation thereof or default
thereunder.

(c) The Company has made available to Parent (or its designated advisors) accurate and
complete copies of all Material Contracts identified in Section 3.12(a) of the Company
Disclosure Schedule, including all amendments thereto. Section 3.12(a) of the Company
Disclosure Schedule provides an accurate description of the terms of each Material Contract that is
not in written form.

SECTION 3.13 Environmental Matters.

(a) The Company and each Subsidiary (i) has been and is in compliance in all material respects
with all applicable Environmental Laws (as defined below), (ii) has held and holds all material
Environmental Permits (as defined below) necessary to conduct the Company’s or each Subsidiary’s
business and (iii) has been and is in compliance in all material respects with their respective
Environmental Permits.

(b) Neither the Company nor any Subsidiary has released and, to the knowledge of the Company,
no other person has released Hazardous Materials (as
defined below) on any real property owned or leased by the Company or any Subsidiary or,
during their ownership or occupancy of such property, on any property formerly owned or leased by
the Company or any Subsidiary.

(c) Neither the Company nor any Subsidiary has received any written request for information,
or has received notice, written or otherwise, that it is a potentially responsible party, under
CERCLA (as defined below) or any similar Law of any state, locality or any other jurisdiction.
Neither the Company nor any Subsidiary has entered into or agreed to any consent decree or order or
is subject to any judgment, decree or judicial order relating to compliance with Environmental
Laws, Environmental Permits or the investigation, sampling, monitoring, treatment, remediation,
removal or cleanup of Hazardous Materials and, to the knowledge of the Company, no investigation,
litigation or other proceeding is pending or threatened in writing with respect thereto.

(d) None of the real property currently or formerly owned or leased by the Company or any
Subsidiary is listed or, to the knowledge of the Company, proposed to be listed on the “National
Priorities List” under CERCLA, as updated through the date of this Agreement, or any similar list
of sites in the United States or any other jurisdiction requiring investigation or cleanup.

 

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For purposes of this Agreement:

“CERCLA” means the U.S. Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.

“Environmental Laws” means any Federal, state or local statute, law, ordinance,
regulation, rule, code or order of the United States, or any other jurisdiction and any enforceable
judicial or administrative interpretation thereof, including any judicial or administrative order,
consent decree or judgment, relating to pollution or protection of the environment or natural
resources, including, without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials, as in effect as of the
date of this Agreement.

“Environmental Permits” means any permit, approval, identification number, license and
other authorization required under any applicable Environmental Law.

“Hazardous Materials” means (i) any petroleum, petroleum products, by-products or
breakdown products, radioactive materials, asbestos-containing materials or polychlorinated
biphenyls or (ii) any chemical, material or substance defined or regulated as toxic or hazardous or
as a pollutant or contaminant or waste under any applicable Environmental Law.

SECTION 3.14 Intellectual Property.

(a) The Company and its Subsidiaries each own or are licensed for, and in any event possess
sufficient and legally enforceable rights with respect to, all
Company Intellectual Property (as defined below) that is used in (or that may be necessary
for) the conduct of their respective businesses as presently or presently proposed to be conducted.
“Intellectual Property” means (i) all computer software and code, including assemblers,
applets, compilers, source code, object code, annotated code, compiled code, development tools,
design tools, toolkits, software development kits, user interfaces and data, in any form or format,
however fixed (“Software”); (ii) all patents and patent applications, design patents and
design patent applications and industrial design registrations and applications together with all
reissuances, divisionals, continuations, continuations-in-part, revisions, renewals, extensions,
and reexaminations thereof, and any identified invention disclosures and design patent disclosures
(“Patents”); (iii) trade secret rights and corresponding rights in confidential information
and other non-public information (whether or not patentable), including ideas, formulas,
compositions, processes, Software, algorithms, data structures, system architecture diagrams,
flowcharts, databases, data collections, circuits, systems, devices, inventor’s notes, discoveries
and improvements, know how, manufacturing and production processes and techniques, testing
information, research and development information, inventions, invention disclosures, unpatented
blueprints, drawings, specifications, designs, plans, proposals and technical data, business and
marketing plans, market surveys, market know-how and customer lists and information (“Trade
Secrets”); (iv) all copyrights, copyrightable works, rights in Software algorithms, data
structures, system architecture diagrams, databases, data collections, “moral” rights, mask works,
copyright registrations and applications therefor and corresponding rights in works of authorship
(“Copyrights”); (v) all trademarks, service marks, design marks, logos, business names,
trade dress and trade names and domain names indicating the source of goods or services, and other
indicia of commercial source or origin (whether registered, common law, statutory or otherwise),
all registrations and applications to register the foregoing anywhere in the world and all goodwill
associated therewith (“Trademarks”); (vi) all Internet electronic addresses, uniform
resource locators and alphanumeric designations associated therewith and all registrations for any
of the foregoing (“Domain Names”); and (vii) any similar, corresponding or equivalent
rights to any of the foregoing anywhere in the world (collectively, together with all rights to
Intellectual Property, “IP Rights”). “Company Intellectual Property” means all
Intellectual Property that was or is used, exercised, or exploited (“Use(d)”) in any
business of the Company or any Subsidiary. “Infringement” means any conflict with or
infringement or misappropriation of any Intellectual Property right or other rights or property of
any Person.

 

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(b) To the extent included in Company Intellectual Property (but excluding Intellectual
Property licensed to the Company and its subsidiaries only on a nonexclusive basis), Section
3.14(b) of the Company Disclosure Schedule lists (by title, number, jurisdiction and owner) all
patents and patent applications; all registered and material unregistered Trademarks used in the
business of the Company and all registered copyrights and mask works; and all other issuances,
registrations, applications and the like with respect to those or any other Company Intellectual
Property. All the foregoing (i) are valid, enforceable and subsisting to the extent such concepts
are applicable, and (ii) along with all related filings, registrations and correspondence, have
been made available to Parent. No cancellation, termination, expiration or abandonment of any of
the foregoing (except natural expiration or termination at the end of the full possible
term, including extensions and renewals) is anticipated by the Company or any Subsidiary,
except where such event would not reasonably be expected to have a Company Material Adverse Effect.

(c) Section 3.14(c) of the Company Disclosure Schedule lists: (i) all licenses,
sublicenses and other agreements to which the Company or a Subsidiary is a party (or by which it or
any Company Intellectual Property is bound or subject) and pursuant to which any Person has been or
may be assigned, authorized to Use, granted any lien or encumbrance regarding, or given access or
any rights to any Company Intellectual Property other than customer agreements entered in the
ordinary course of business granting non-exclusive rights in Company Intellectual Property, the
form of which have been made available to the Parent; (ii) all licenses, sublicenses and other
agreements pursuant to which the Company or a Subsidiary has been or may be assigned or authorized
to Use or granted other rights to any third party Intellectual Property, other than standard,
generally commercially available, “off-the-shelf” third party Software purchased for a cost of less
than $5,000 or licensed for a cost of less than $5,000 per year, (iii) each agreement pursuant to
which the Company or a Subsidiary has deposited or is required to deposit Source Materials with an
escrowholder or any other Person (“Escrow Materials”); and (iv) each agreement pursuant to
which the Company or a Subsidiary has agreed to indemnify, hold harmless or defend any other Person
with respect to any assertion of Infringement other than customer agreements entered in the
ordinary course of business granting non-exclusive rights in Company Intellectual Property, the
form of which have been made available to the Parent. There are no royalties, honoraria, fees or
other payments payable by the Company or any of its Subsidiaries to any Person (other than salaries
payable to employees, consultants and independent contractors not contingent on or related to use
of their work product) as a result of the use, license-in, license-out, sale or disposition of any
Company Intellectual Property by the Company or any of its Subsidiaries (including without
limitation, in connection with consummation of the transactions contemplated by this Agreement) in
excess of those payable by the Company or its Subsidiaries in the absence of this Agreement or the
transactions contemplated hereby. All licenses, sublicenses or other agreements listed in
Section 3.14(c)(ii) of the Company Disclosure Schedule, which grant the Company or any of
its Subsidiaries exclusive rights to any Intellectual Property, are fully transferable by the
Company or its Subsidiaries, as applicable.

 

46

 

(d) No event or circumstance has occurred (including, without limitation, the authorization,
execution or delivery of this Agreement or the consummation of any of the transactions contemplated
hereby) that (with or without notice or the lapse of time) and, to the knowledge of the Company and
its Subsidiaries, there is no current basis on which any event or circumstance could reasonably be
expected to occur, that would result in a Company Material Adverse Effect by (i) the breach or
violation of any license, sublicense or other agreement required to be listed in Section
3.14(c) of the Company Disclosure Schedule, (ii) the loss or expiration of any right or option
by the Company or any of its Subsidiaries (or the gain thereof by any third party) under any such
license, sublicense or other agreement or (iii) the release, disclosure or delivery to any third
party of any part of the Source Materials.

(e) There is, to the knowledge of the Company and its Subsidiaries, no unauthorized Use,
disclosure, or infringement or misappropriation of any Company Intellectual Property owned by
Company by any third party, including, without limitation, any employee or former employee of the
Company or any of its Subsidiaries. Neither the Company nor any Subsidiary has brought or
threatened any action, suit or proceeding against any third party for any infringement or
misappropriation of any Company Intellectual Property or any breach of any license, sublicense or
agreement involving Company Intellectual Property.

(f) The Company and its Subsidiaries have taken commercially reasonable steps to protect and
preserve trade secrets included within the Company Intellectual Property and the confidentiality of
all Company Intellectual Property with respect to which the Company wishes to maintain
confidentiality and that is not otherwise disclosed in published patents or patent applications or
registered copyrights (“Company Confidential Information”). All use by and disclosure to
employees or others of Company Confidential Information has been pursuant to the terms of written
confidentiality and nonuse/restricted-use agreements or agreements that contain similar
obligations. Other than to the applicable escrowholder, no release or disclosure has been made,
and no access has been granted, to any Person to any part of any of the Escrow Materials deposited
pursuant to any agreement required to be listed in Section 3.14(c)(iii) of the Company
Disclosure Schedule, and no such demand for any such release, disclosure or access has been made.

(g) Each current and former employee and contractor of the Company or any Subsidiary who is or
was involved in, or who has contributed to, the creation or development of any Company Intellectual
Property has executed and delivered (and to the Company’s knowledge, is in compliance with) an
agreement in substantially the form of the Company’s standard Proprietary Information and
Inventions Agreement (in the case of an employee) or Consulting Agreement (in the case of a
contractor), or (in the case of a contractor) a comparable agreement which provides valid written
assignments to the Company or such Subsidiary of all title and rights to any Company Intellectual
Property conceived or developed thereunder but not already owned by the Company or a Subsidiary by
operation of Law.

 

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(h) The Company and the operation of the business of the Company and its Subsidiaries in the
manner that it is currently conducted and in the manner that it is contemplated to be conducted,
including their Uses of Company Intellectual Property, does not and will not infringe or
misappropriate any Intellectual Property right of any Person, violate the rights of any Person
(including rights to privacy or publicity) or constitute unfair competition or trade practices
under the laws of any jurisdiction. None of the Company or its Subsidiaries has received any
written communication alleging that the Company or any Subsidiary has been or may be engaged in,
liable for or contributing to any Infringement, nor does the Company or any Subsidiary have any
particular reason to expect that any such communication will be forthcoming. Neither the Company
nor any Subsidiary has been sued in any suit, action or proceeding, and no other legal proceeding
of any nature has been initiated, is pending or threatened, which involves a claim of Infringement
or which contests the validity, ownership or right of the Company
or any Subsidiary to exercise any Company Intellectual Property right. Neither the Company
nor any Subsidiary has received any opinion of Company counsel that any Company product or service
or the operation of the Company’s business, infringes or misappropriates any third party IP Rights.

(i) None of the Company or its Subsidiaries is aware that any of its employees is obligated
under any agreement, commitment, judgment, decree, order or otherwise (an “Employee
Obligation”) that would interfere with the use of his or her best efforts to promote the
interests of the Company and its Subsidiaries or that would conflict with any of their businesses
as conducted or proposed to be conducted. To each of the Company’s and its Subsidiaries’
knowledge, neither the execution nor delivery of this Agreement nor the conduct of the Company’s
business as conducted or proposed to be conducted, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any Employee Obligation. None
of the Company or its Subsidiaries is Using, and it will not be necessary to Use, (i) any
Intellectual Property of any of their past or present employees (or people currently intended to be
hired) made prior to their employment by the Company or such Subsidiary (that has not already been
assigned to Company) or (ii) any confidential information or trade secret of any former employer of
any such Person.

(j) The Company takes commercially reasonable measures (including without limitation, by
inspection using industry standard tools and techniques) to ensure that all Company Software is
free of viruses, worms, trojan horses and intentionally harmful routines and does not contain any
bugs, errors, or problems that, to the Company’s or any Subsidiary’s knowledge, would have a
material adverse impact on its operation or the operation of other software programs, information
technology systems or operating systems. “Company Software” means Software that is (i)
used in the operation of the business of the Company or any Subsidiary, including, but not limited
to, that operated by the Company or any Subsidiary on its web sites or used by the Company or any
Subsidiary in connection with processing customer orders, storing customer information, or storing
or archiving data, or (ii) manufactured, distributed, sold, licensed or marketed by the Company or
any Subsidiary.

 

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(k) To the knowledge of the Company, no facts or circumstances exist that would render any
Company Intellectual Property invalid or unenforceable.

(l) The Company and its Subsidiaries have obtained all approvals and agreements necessary or
appropriate (including, without limitation, assurances from customers regarding further export) for
exporting any Company Intellectual Property outside the United States and importing any Company
Intellectual Property into any country in which they are or have been disclosed, sold or licensed
for Use, and all such export and import approvals in the United States and throughout the world are
valid, current, outstanding and in full force and effect.

(m) The Company has made available to Parent all material information in its possession
relating to any material problem or issue, to the knowledge of the Company, with respect to any of
the Software in the Company Intellectual
Property, which does, or may reasonably be expected to, materially and adversely affect the
value, functionality or fitness for the intended purposes of the same. Notwithstanding the
foregoing, to the knowledge of the Company, there are no defects in any Software in the Company
Intellectual Property, and, to the knowledge of the Company, there are no errors in any technical
documentation, specifications, manuals, user guides, promotional materials, drawings, flow charts,
diagrams, benchmark test results, and other written materials associated with or used with any such
Software, which defects or errors would reasonably be expected to materially and adversely affect
the business of the Company or its Subsidiaries.

(n) Section 3.14(n) of the Company Disclosure Schedule lists all software that is
licensed by the Company or any Subsidiary under any license recognized as an open source license by
the Open Source Initiative (“Open Source Materials”) and used by the Company or any
Subsidiary in any way in connection with its products or services, and describes the manner in
which such Open Source Materials are used. The Company is in compliance with the terms and
conditions of all licenses for the Open Source Materials. Neither the Company nor any of its
Subsidiaries has used or distributed Open Source Materials in any manner that would or could, with
respect to any Company Intellectual Property (other than the Open Source Materials themselves), (i)
require its disclosure or distribution in source code form, (ii) require its licensing thereof for
the purpose of making derivative works, or (iii) impose any restriction on the consideration to be
charged for the distribution thereof.

(o) No (i) government funding or (ii) facilities of a university, college, other educational
institution or research center was used in the development of the Company Intellectual Property
owned by Company. Neither the Company nor any Subsidiary is now or has ever been a member or
promoter of, or a contributor to, any industry standards body that would reasonably be expected to
require or obligate the Company or any Subsidiary to grant or offer to any other Person any license
or right to any Company Intellectual Property. Neither the Company nor any Subsidiary has a
present obligation (and there is no substantial basis to expect that there will be a future
obligation) to grant or offer to any other Person any license or right to any Company Intellectual
Property by virtue of Company’s or any other Person’s membership in, promotion of, or contributions
to any industry standards body.

 

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(p) The Company and each Subsidiary have complied with their respective privacy policies and
all applicable Laws relating to the use, collection, storage, disclosure and transfer of any
personally identifiable information collected or obtained by the Company or any Subsidiary or by
third parties having authorized access to the records of the Company or any Subsidiary. Each such
privacy policy has at all times made all disclosures to users or customers required by applicable
Laws, and none of such disclosures made or contained in any such privacy policy or in any such
materials has been inaccurate, misleading or deceptive or in violation of any applicable Laws.
Neither the Company nor any Subsidiary has received a complaint regarding the Company’s or any
Subsidiary’s use, collection, storage, disclosure or transfer of personally identifiable
information. With respect to all personally identifiable information collected or obtained by the
Company, the Company and each of its Subsidiaries have taken steps reasonably
necessary (including implementing and monitoring compliance with adequate measures with
respect to technical and physical security) in an effort to ensure that the personally identifiable
information is protected against loss and against unauthorized access, use, modification,
disclosure or other misuse. There has been no unauthorized access to or other misuse of such
personally identifiable information.

(q) All Owned Company Intellectual Property is fully transferable, alienable and licensable by
the Company or its Subsidiaries without restriction and without payment of any kind to any third
party and each item of Owned Company Intellectual Property is solely and exclusively owned, free
and clear of any liens or encumbrances (excluding non-exclusive licenses), by the Company or one of
its Subsidiaries. “Owned Company Intellectual Property” means any and all Intellectual
Property that is owned, purported to be owned, filed by, or held in the name of the Company or any
of its Subsidiaries.

(r) Neither this Agreement nor the transactions contemplated by this Agreement will cause:
(i) Parent, any of its affiliates or the Company or any of its Subsidiaries to grant to any third
party any right to or with respect to, or agreement to not assert or enforce, any IP Rights owned
by, or licensed to, any of them or (ii) the forfeiture or termination or give rise to a right of
forfeiture or termination of any of the Company Intellectual Property or any IP Rights.

SECTION
3.15 Taxes.

(a) All Tax (as defined below) returns, statements, reports, declarations and other forms and
documents (including without limitation estimated Tax returns and reports and information returns
and reports) required to be filed with any Tax Authority (as defined below) with respect to any
Taxable (as defined below) period ending on or before the Closing, by or on behalf of the Company
or any Subsidiary (collectively, “Tax Returns” and individually, a “Tax Return”),
have been or will be completed and filed when due (including any extensions of such due date). All
such Returns are true, complete and correct in all material respects and were prepared in
substantial compliance with all applicable Laws. Company and each Subsidiary has paid all Taxes
due and owing (whether or not shown on any Return) for all periods through the date of the
Reference Balance Sheet, except to the extent reserves for such Taxes have been established on the
Reference Balance Sheet. The Interim Financial Statements fully accrue all actual liabilities for
unpaid Taxes (as defined below) with respect to all periods through the date of the Reference
Balance Sheet and neither the Company nor any Subsidiary has, nor will, incur any Tax liability in
excess of the amount reflected (excluding any amount thereof that reflects timing differences
between the recognition of income for purposes of U.S. GAAP and for Tax purposes) on the Reference
Balance Sheet included in the Interim Financial Statements with respect to such periods. Neither
the Company nor any Subsidiary has incurred any Tax liability since the date of the Reference
Balance Sheet other than in the ordinary course of business or Taxes resulting from the
transactions contemplated by this Agreement and the Company and each
Subsidiary has made adequate provisions for all Taxes since that date in accordance with U.S.
GAAP on at least a quarterly basis.

 

50

 

(b) The Company and each Subsidiary has withheld and paid to the applicable financial
institution or Tax Authority all amounts required to be withheld. To the best knowledge of the
Company, no Tax Returns filed with respect to Taxable years through the Taxable year ended the date
of the Reference Balance Sheet in the case of the United States, have been examined and closed.
The Company (or any member of any affiliated or combined group of which the Company has been a
member) has not granted any extension or waiver of the limitation period applicable to any Tax
Returns that is still in effect and there is no claim, audit, action, suit, proceeding, or (to the
knowledge of the Company) investigation now pending or threatened in writing, against or with
respect to the Company or any Subsidiary in respect of any Tax or assessment. No notice of
deficiency or similar document of any Tax Authority has been received by the Company or any
Subsidiary. No claim has ever been made by a Governmental Entity in a jurisdiction where Company
or any Subsidiary does not file Tax Returns that Company or any Subsidiary is or may be subject to
taxation by that jurisdiction. There are no liens for Taxes (other than for current Taxes not yet
due and payable) upon the assets of the Company or any Subsidiary. All elections with respect to
the Company’s and each Subsidiary’s Taxes made during the fiscal years ending December 31, 2007,
2008 and 2009 are reflected on the Company’s or Subsidiary’s Tax Returns for such periods, copies
of which have been provided to Parent. The Company has previously made available to Parent true
and correct copies of all income, franchise, and sales Tax Returns, as reasonably requested by
Parent.

(c) Neither the Company nor any Subsidiary or any predecessor of the Company or any Subsidiary
has ever been a member of an affiliated group of corporations, within the meaning of Section
1504 of the Code of which the Company or any predecessor of the Company was not the ultimate
parent corporation. Neither the Company nor any Subsidiary is a party to or bound by any Tax
sharing, Tax indemnity, or Tax allocation agreement nor does the Company or any Subsidiary have any
liability or potential liability to another party under such agreement. Neither the Company nor
any Subsidiary has any liability for the Taxes of any Person (other than the Company or any
Subsidiary) under Treas. Reg. §1.1502-6 (or any similar provision of state, local or
foreign law) as a transferee or successor, by contract or otherwise. The Company has never been a
party (either as a distributing corporation, a distributed corporation or otherwise) to any
transaction intended to qualify under Section 355 or Section 361 of the Code or any
corresponding provision of state Law.

(d) The Company and each Subsidiary is in full compliance with all the terms and conditions of
any Tax exemption of which the Company claims the benefit of or other Tax-sharing agreement of
which the Company is a party, and the consummation of the Merger will not have any adverse effect
on the continued validity and effectiveness of any such Tax exemption or other Tax-sharing
agreement or order. Neither the Company nor any Subsidiary is currently and never has been subject
to the reporting requirements of Section 6038A of the Code. Neither the Company nor any
Subsidiary has participated in (and will not participate in) an international boycott within
the meaning of Section 999 of the Code. Neither the Company nor any U.S. Subsidiary
has not had a permanent establishment in any foreign country, as defined in any applicable Tax
treaty or convention between the United States of America and such foreign country and neither the
Company nor any U.S. Subsidiary has engaged in a trade or business within any foreign country.

 

51

 

(e) Neither the Company nor any Subsidiary has ever elected to be treated as an S-corporation
under Section 1362 of the Code or any corresponding provision of Federal or state Law.

(f) The Company has not been a United States real property holding corporation (as defined in
Section 897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.

(g) Neither the Company nor any Subsidiary has consummated or participated in, and is not
currently participating in, any transaction which was or is a “Tax shelter” transaction as defined
in Section 6662, 6011, 6111 or 6112 of the Code or the Regulations.

(h) Neither the Company nor any Subsidiary will be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period (or portion thereof)
ending after the Closing Date as a result of any: (i) change in method of accounting, other than
by reason of the transactions contemplated herein, for Tax purposes for a taxable period ending on
or prior to the Closing Date (including, without limitation, by reason of Section 481 or
203A of the Code); (ii) “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign income Tax Law) executed
on or prior to the Closing Date; (iii) intercompany transaction or excess loss account described in
Section 1502 of the Code and the Regulations thereunder (or any corresponding or similar
provision of state, local or foreign income Tax Law); (iv) installment sale or open transaction
disposition made on or prior to the Closing Date; or (v) prepaid amount received on or prior to the
Closing Date.

(i) Schedule 3.15(i) hereto sets forth a complete and accurate list of all agreements,
rulings, settlements or other Tax documents relating to Tax incentives between Company and any
Governmental Entity.

(j) No Subsidiary of the Company owned directly or indirectly is, or at any time has been, a
passive foreign investment company within the meaning of Section 1297 of the Code, no
Subsidiary of the Company that is not a United States person (x) is, or at any time has been,
engaged in the conduct of a trade or business within the United States or treated as or considered
to be so engaged or (y) has, or at any time has had, an investment in ‘United States property’
within the meaning of Section 956(c) of the Code; neither the Company nor any of its
Subsidiaries is, or at any time has been, subject to (A) the dual consolidated loss provisions of
the Section 1503(d) of the Code, (B) the overall foreign loss provisions of Section
904(f) of the Code or (iii) the re-characterization provisions of Section 952(c)(2) of
the Code.

 

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(k) For purposes of this Agreement, the following terms have the following meanings:
“Tax” (and, with correlative meaning, “Taxes” and “Taxable”) means any and
all taxes including, without limitation, (i) any net income, alternative or add-on minimum tax,
estimated tax, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits,
value added, net worth, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, environmental or windfall profit tax, custom, duty or other tax, or
other like assessment or charge of any kind whatsoever, together with any interest or any penalty,
addition to tax or additional amount imposed by any Governmental Entity responsible for the
imposition of any such tax (domestic or foreign) (a “Tax Authority”), (ii) any liability
for the payment of any amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any taxable period or as the result of
being a transferee or successor thereof and (iii) any liability for the payment of any amounts of
the type described in (i) or (ii) as a result of any express or implied obligation to indemnify any
other person.

SECTION 3.16 Vote Required. The Written Consents satisfy all requirements for votes
of the holders of any classes or series of capital stock of the Company necessary to approve and
adopt this Agreement, the Merger and the transactions contemplated herein.

SECTION 3.17 Assets; Absence of Liens and Encumbrances. Except as set forth in
Section 3.17 of the Company Disclosure Schedule, the Company and each Subsidiary own and
have the legal title to all of the tangible assets and properties and have adequate rights of every
kind, nature, character and description, including, without limitation, real property and personal
property (other than Intellectual Property, which is covered by Section 3.14 hereof), used
or intended to be used in the conduct of the business of the Company or such Subsidiary or
otherwise owned or leased by the Company or such Subsidiary and, with respect to contract rights,
is a party to and enjoys the right to the benefits of all contracts, agreements and other
arrangements used or intended to be used by the Company or such Subsidiary in or relating to the
conduct of the business of the Company and each Subsidiary (all such properties, assets and
contract rights being the “Assets”). Section 3.17(a) of the Company Disclosure
Schedule sets forth a complete and accurate list and a brief description of all personal property
of the Company or any Subsidiary subject to capitalized equipment leases. The Company and each
Subsidiary have good and marketable title to, or, in the case of leased or subleased Assets, valid
and subsisting leasehold interests in, all the Assets, free and clear of all mortgages, liens,
pledges, charges, claims, defects of title, restrictions, infringements, security interests or
encumbrances of any kind or character (“Liens”) except for (a) Liens for Taxes, assessments
and other governmental levies, fees or charges not yet due and payable or which the taxpayer is
contesting in good faith; (b) cashiers’, landlords’, mechanics’, materialmens’, carriers’,
workmens’, repairmens’, contractors’ and warehousemens’ Liens and similar Liens incurred in the
ordinary course of business for amounts which are not delinquent and which would not, in the
aggregate, be material; (c) zoning, building codes and other land use Laws regulating the use or
occupancy of any
property that is the subject of a Company Lease (“Leased Real Property”) or the
activities conducted thereon which are imposed by any Governmental Entity having jurisdiction over
such Leased Real Property, and which are not violated by the current use or occupancy of such
Leased Real Property or the operation of the Company and its Subsidiaries; (d) purchase money Liens
securing rental payments under capital lease or operating lease arrangements; (e) easements,
covenants, conditions, rights of way, restrictions and other similar charges and encumbrances of
record and other encroachments and title and survey defects, none of which interfere materially
with the ordinary conduct of the Company and its Subsidiaries or detract materially from the use,
occupancy, value or marketability of title of the assets subject thereto ((a) through (f)
collectively, “Permitted Liens”); and (g) licenses of Company Intellectual Property. The
equipment of the Company and the Subsidiaries used in the operations of their business is, taken as
a whole, in reasonably good operating condition and repair, ordinary wear and tear excepted.

 

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SECTION 3.18 Real Property. The Company and the Subsidiaries do not own any real
property. Section 3.18 of the Company Disclosure Schedule sets forth a list of all real
property currently leased, subleased or licensed by or from the Company or any of its Subsidiaries
or otherwise used or occupied by the Company or any of its Subsidiaries (to the extent required to
be listed, whether or not actually listed, the “Company Leases”), including the name of the
lessor, licensor, sublessor, master lessor and/or lessee, the date and term of the lease, license,
sublease or other occupancy right and each amendment thereto, and, with respect to any current
lease, license, sublease or other occupancy right, the size of the premises, and the aggregate
annual rental payable thereunder. To Company’s knowledge, the Company and the Subsidiaries are not
in violation of any zoning, building, safety or environmental ordinance, regulation or requirement
or other law or regulation applicable to the operation of its owned or leased properties, nor has
Company or any Subsidiary received any notice of violation of law with which it has not complied.

SECTION 3.19 Certain Interests.

(a) To the Company’s knowledge, no holder of greater than 3% of the voting power of the
Company or its affiliates or any officer or director of the Company or any Subsidiary and, to the
knowledge of the Company, no immediate relative or spouse (or immediate relative of such spouse)
who resides with, or is a dependent of, any such officer or director:

(i) has any direct or indirect financial interest in any creditor, competitor,
supplier, manufacturer, agent, representative, distributor or customer of the Company or
any Subsidiary; provided, however, that the ownership of securities
representing no more than 1% of the outstanding voting power of any creditor, competitor,
supplier, manufacturer, agent, representative, distributor or customer, and which are
listed on any national securities exchange or traded
actively in the national over-the-counter market, shall not be deemed to be a
“financial interest” as long as the person owning such securities has no other connection
or relationship with such creditor, competitor, supplier manufacturer, agent,
representative, distributor or customer and has not filed a report on Schedule 13D or 13G
or Form 3 or 4 relating to such entity;

(ii) owns, directly or indirectly, in whole or in part, or has any other interest in,
any tangible or intangible property that the Company or any Subsidiary uses in the conduct
of its business (except for any such ownership or interest resulting from the ownership of
securities in a public company on which such person has not filed a report on Schedule 13D
or 13G or Form 3 or 4); or

 

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(iii) has outstanding any indebtedness to the Company or any Subsidiary.

(b) Except for the payment of employee compensation in the ordinary course of business,
consistent with past practice, neither the Company nor any Subsidiary has any liability or any
other obligation under any contract or agreement (oral or in writing) to any Company Stockholder or
any affiliate thereof or to any officer or director of the Company or any Subsidiary or, to the
knowledge of the Company, to any immediate relative or spouse (or immediate relative of such
spouse) of any such officer or director.

SECTION 3.20 Insurance Policies. Section 3.20 of the Company Disclosure
Schedule sets forth (i) a true and complete list of all insurance policies to which the Company or
any Subsidiary is a party or is a beneficiary or named insured as of the date hereof and (ii) any
claims made thereunder or made under any other insurance policy within the past three (3) years.
True and complete copies of all such policies have been made available to Parent. All premiums due
on such policies have been paid, and the Company and each Subsidiary is otherwise in compliance
with the terms of such policies. Neither the Company nor any Subsidiary has failed to give any
notice or present any claim under any such policy in a timely fashion, except where such failure
would not prejudice the Company’s or any Subsidiary’s ability to make a claim. Such insurance to
the date hereof has been maintained in full force and effect and not been canceled or changed,
except to extend the maturity dates thereof. Since December 31, 2007 (other than that certain
letter received by the Company dated July 1, 2010) neither the Company nor any Subsidiary has
received any notice or other communication regarding any actual or possible (i) cancellation or
threatened termination of any insurance policy, (ii) refusal of any coverage or rejection of any
claim under any insurance policy or (iii) material adjustment in the amount of the premiums payable
with respect to any insurance policy.

SECTION 3.21 Restrictions on Business Activities. Neither the Company nor any
Subsidiary thereof is a party to, and no asset or property of Company or any Subsidiary thereof is
bound or affected by, any judgment,
injunction, order, decree, contract, agreement, arrangement, commitment or undertaking
(noncompete or otherwise) that could reasonably be expected to restrict or prohibit, or purports to
restrict or prohibit, the Company or, following the Effective Time, the Surviving Corporation, from
freely engaging in the Company’s or any of its Subsidiaries’ business as currently conducted and
proposed to be conducted, from competing anywhere in the world (including any judgments,
injunctions, orders, decrees or Contracts restricting the geographic area in which Company or its
Subsidiaries may sell, license, market, distribute or support any products or technology or provide
services or restricting the markets, customers or industries that the Company may address in
operating the Company’s or any Subsidiaries’ business, restricting the prices which the Company or
any Subsidiary may charge for their respective products, technology or services, or providing for
most favored customer pricing provisions, rights of first refusal, rights of first negotiation or
similar rights), or includes any grants by the Company or any Subsidiary of exclusive rights or
licenses.

 

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SECTION 3.22 Brokers. Except for Mooreland Partners (the “Advisor”) no
broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the origination, negotiation or execution of this Agreement, the
Merger or the other transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company or any Subsidiary. The Company has heretofore made available to Parent a
complete and correct copy of all agreements between the Company and the Advisor pursuant to which
such advisor would be entitled to any payment in relation to the Merger or the transactions
contemplated by this Agreement. The Merger Consideration Recipients shall be responsible for any
such fees paid or payable by the Company that do not constitute Company Transaction Expenses. To
the Company’s knowledge, no recipient of Special Payments shall be subject to continuing
obligations regarding the provision of services to Parent (or any subsidiary thereof) in
consideration of the payment of any Special Payments.

SECTION 3.23 State Takeover Statutes. The Board of Directors of the Company has taken
all action necessary to ensure that any restrictions on business combinations contained in the DGCL
(including Section 203 of the DGCL) will not apply to the Merger and the other transactions
contemplated by this Agreement. No other “fair price,” “moratorium,” “control share acquisition”
or other similar anti-takeover statute or regulation or any anti-takeover provision in the
Company’s Certificate of Incorporation or Bylaws is, or at the Effective Time will be, applicable
to the Company, the shares of Company Stock, the Merger or the other transactions contemplated by
this Agreement.

SECTION 3.24 Customers and Suppliers. Section 3.24 of the Company Disclosure
Schedule contains a complete list of all customers of the Company who accounted for more than five
percent (5%) of the Company’s and its Subsidiaries’ revenues during the fiscal years ended December
31,
2008 or December 31, 2009 or the most recent fiscal quarter ended March 31, 2010. No customer
listed on Section 3.24 of the Company Disclosure Schedule has, within the past twelve (12)
months, cancelled or otherwise terminated, or made any threat in writing to cancel or terminate,
its relationship with the Company or any Subsidiary, or decreased materially its usage of the
Company’s or any Subsidiary’s services or products. No material supplier of the Company or any
Subsidiary has within the past twelve (12) months cancelled or otherwise terminated any contract
with the Company prior to the expiration of the contract term, or made any threat in writing to the
Company or any Subsidiary to cancel, reduce the supply or otherwise terminate its relationship with
the Company or any Subsidiary. Neither the Company nor any Subsidiary has (i) breached (so as to
provide a benefit to the Company that was not intended by the parties) any agreement with or (ii)
engaged in any fraudulent conduct with respect to, any customer or supplier of the Company or any
Subsidiary.

SECTION 3.25 Accounts Receivable; Bank Accounts. All accounts receivable of the
Company and the Subsidiaries reflected on the Reference Balance Sheet are valid receivables subject
to no setoffs or counterclaims and are current and currently collectible (within ninety (90) days
after the date on which they first became due and payable), net of the applicable reserve for bad
debts on the Reference Balance Sheet. All accounts receivable reflected in the financial or
accounting records of the Company and the Subsidiaries that have arisen since the date of the
Reference Balance Sheet are valid receivables subject to no setoffs or counterclaims and are
current and currently collectible (within ninety (90) days after the date on which they first
became due and payable), net of a reserve for bad debts in an amount proportionate to the reserve
shown on the Reference Balance Sheet. Notwithstanding the foregoing, Parent hereby acknowledges
that the representations set forth in this Section 3.25 shall not be construed to
constitute a guarantee of collectability of any such receivables, provided, however, the Company
shall not be released from any liability resulting from a breach of any representation made
hereunder. Allowances for doubtful accounts and warranty returns have been prepared in accordance
with U.S. GAAP consistently applied and in accordance with Company’s past practices. Section
3.25 of the Company Disclosure Schedule lists each account maintained by or for the benefit of
the Company or any Subsidiary at any bank or other financial institution and the names of all
persons authorized to draw thereon or make withdrawals therefrom.

 

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SECTION 3.26 Powers of Attorney. There are no outstanding powers of attorney executed
on behalf of the Company or any Subsidiary.

SECTION 3.27 Warranties. No product or service manufactured, sold, leased, licensed
or delivered by the Company or any Subsidiary is subject to any guaranty, warranty, right of
return, right of credit or other indemnity other than (i) the applicable standard terms and
conditions of sale or lease of the Company or the appropriate Subsidiary, which are set
forth in Section 3.27 of the Company Disclosure Schedule and (ii) manufacturers’
warranties for which neither the Company nor any Subsidiary has any liability. Section
3.27 of the Company Disclosure Schedule sets forth the aggregate expenses incurred by the
Company and the Subsidiaries in fulfilling their obligations under their guaranty, warranty, right
of return and indemnity provisions during each of the fiscal years and the interim period covered
by the Company Audited Financial Statements and the Company Interim Financial Statements, and
neither the Company nor any Subsidiary knows of any reason why such expenses should significantly
increase as a percentage of sales in the future.

SECTION 3.28 Books and Records. The minute books and other similar records of the
Company and each Subsidiary contain materially complete and accurate records of all actions taken
at any meetings of the Company’s or each Subsidiary’s stockholders, Board of Directors or any
committee thereof and of all written consents executed in lieu of any such meeting and no actions
have been taken by the Company or any Subsidiary inconsistent with such actions or consents in any
material respect.

SECTION 3.29 Foreign Corrupt Practices Act. The Company and each Subsidiary and, to
the Company’s knowledge, each employee, officer, director, affiliate and agent thereof, have
complied with and are in compliance with in all material respects and none of them has taken any
action that has violated or would reasonably be expected to result in a failure to comply in all
material respects with or a material violation of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder, the OECD Convention on Combating Bribery of
Foreign Public Officials in International Transactions, dated 21 November 1977, any other Laws that
prohibit commercial bribery, domestic corruption or money laundering, and the standards established
by the Financial Action Task Force on Money Laundering.

SECTION 3.30 Debt. Section 3.30 of the Company Disclosure Schedule accurately
lists all indebtedness of Company or any Subsidiary for money borrowed (“Debt”), including,
for each item of Debt, the interest rate, maturity date and any assets securing such Debt. Except
as set forth on Section 3.30 of the Company Disclosure Schedule, all Debt may be prepaid at
the Closing without penalty under the terms of the agreements governing the Debt.

 

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SECTION 3.31 No Misstatements. No representation or warranty made by the Company or any
Subsidiary in this Agreement, the Company Disclosure Schedule or any certificate delivered or
deliverable pursuant to the terms hereof contains or will contain any untrue statement of a
material fact necessary in order to make the statements made, in light of the circumstances under
which they were made, not misleading.

SECTION 3.32 Reliance. The Company makes the foregoing representations and warranties
with the knowledge and expectation that Parent is placing reliance thereon.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby represent and warrant to the Company that the statements
contained in this Article IV are true and correct as of the date of this Agreement (except for any
such representation and warranty that expressly is made as of a specific date, which such
representation and warranty shall be true and correct as of such date), subject to such
qualifications as set forth in the disclosure schedule delivered by Parent to the Company
concurrently with the execution of this Agreement (the “Parent Disclosure Schedule”). The
Parent Disclosure Schedule shall be arranged according to specific sections in this Article IV and
shall provide exceptions to, or otherwise qualify in reasonable detail, the corresponding section
in this Article IV and any other section hereof where it is clear and readily apparent, upon a
reading of such disclosure without any independent knowledge on the part of the reader regarding
the matter disclosed, that the disclosure would apply to such other section.

SECTION 4.01 Organization and Qualification.

(a) Parent is a corporation duly incorporated, validly existing and in good standing under the
laws of the State of Delaware and has all requisite corporate power and authority to own, lease and
otherwise hold and operate its properties and other assets and to carry on its business as it is
now being conducted, except where the failure to be so organized, existing or in good standing or
to have such corporate power and authority have not had, and would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect (as defined below). The
term “Parent Material Adverse Effect” means any event, change, violation, inaccuracy,
circumstance or effect (regardless of whether or not such events, changes, violations,
inaccuracies, circumstances or effects are inconsistent with the representations or warranties made
by the Parent and Merger Sub in this Agreement) that is, or would reasonably be expected to be,
individually or in the aggregate, materially adverse to the business, operations as conducted on
the date hereof, condition (financial or otherwise), properties, assets (tangible or intangible),
liabilities or results of operations of the Parent, except for any such events, changes,
violations, inaccuracies, circumstances or effects resulting from or arising in connection with (i)
any changes in general economic or business conditions or the financial or securities markets
generally that do not disproportionately impact Parent relative to other participants in Parent’s
industry, (ii) any changes or events affecting the industry in which Parent operates that do not
disproportionately impact Parent relative to other participants in Parent’s industry, (iii) changes
in any applicable Law or U.S. GAAP or international accounting standards that do not
disproportionately impact Parent relative
to other participants in Parent’s industry, (iv) changes caused by hostilities, acts of
terrorism or war, or any material escalation of any such hostilities, acts of terrorism or war
existing on the date hereof that do not disproportionately impact the Parent relative to other
participants in Parent’s industry, (v) the announcement, negotiation, existence or performance of
this Agreement or the transactions contemplated by this Agreement (including the loss or departure
of employees or adverse developments in relationships with customers, suppliers, distributors, or
other business partners), or (vi) the taking of any action required by this Agreement or that an
authorized representative of the Company has requested, or expressly consented to, in writing.

 

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(b) Merger Sub is a corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware.

SECTION 4.02 Authority Relative to This Agreement. Each of Parent and Merger Sub has
all necessary corporate power and authority to execute and deliver this Agreement, and to perform
its obligations hereunder and to consummate the Merger and the other transactions contemplated by
this Agreement. The execution and delivery of this Agreement by each of Parent and Merger Sub and
the consummation by each of Parent and Merger Sub of the Merger and the other transactions
contemplated by this Agreement have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize this Agreement or to consummate the Merger and the other transactions contemplated by
this Agreement (other than with respect to the Merger, the filing and recordation of appropriate
merger documents as required by the DGCL and the adoption of this Agreement by Parent, in its
capacity as the sole stockholder of Merger Sub). This Agreement has been duly and validly executed
and delivered by each of Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation of each of Parent and
Merger Sub, enforceable against each of Parent and Merger Sub in accordance with its terms, subject
to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar Laws
affecting creditors’ rights generally and subject, as to enforceability, to the effect of general
principles of equity.

SECTION 4.03 No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement by Parent and Merger Sub do not, and the
consummation of the transactions contemplated hereby will not, conflict with, or result in any
violation of, or default under (with or without notice or lapse of time, or both), or give rise to
a right of termination, cancellation or acceleration of any obligation or loss of a benefit under
(i) any provision of the Certificate of Incorporation or Bylaws of Parent and Merger Sub, as
amended to date, or (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Merger Sub is a party,
except where such conflict, violation, default, termination, cancellation or acceleration,
individually or in the
aggregate, would not be material to Parent’s or Merger Sub’s ability to consummate the Merger
or to perform their respective obligations under this Agreement.

(b) No consent, approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity, is required by or with respect to Parent or Merger Sub in connection
with the execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of the Certificate of Merger, as provided in
Section 1.02, (ii) such filings and notifications as may be required to be made by Parent
in connection with the Merger under the HSR Act or applicable foreign antitrust laws and the
expiration or early termination of applicable waiting periods under the HSR Act or applicable
foreign antitrust laws, (iii) such consents, authorizations, filings, approvals, notices and
registrations as may be required under federal or state securities laws or NASDAQ rules in
connection with the offer and sale of Parent Common Stock pursuant to this Agreement, and (iv) such
other consents, authorizations, filings, approvals, notices and registrations which, if not
obtained or made, would not be material to Parent’s or Merger Sub’s ability to consummate the
Merger or to perform their respective obligations under this Agreement.

 

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SECTION 4.04 SEC Filings; Financial Statements. Parent has timely filed all forms,
reports and documents required to be filed by it with the Securities and Exchange Commission (the
“SEC”) since January 1, 2007 through the date of this Agreement (collectively, the
“Parent SEC Reports”). As of their respective dates (or, if amended prior to the date
hereof, as of the date of such amendment), the Parent SEC Reports did not contain any untrue
statement of a material fact necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading.

SECTION 4.05 Interim Operations of Merger Sub. Merger Sub was formed by Parent solely
for the purpose of engaging in the transactions contemplated by this Agreement, has engaged in no
other business activities and has conducted its operations only as contemplated by this Agreement.
Merger Sub has no liabilities and, except for a subscription agreement pursuant to which all of its
authorized capital stock was issued to Parent, is not a party to any agreement other than this
Agreement and agreements with respect to the appointment of registered agents and similar matters.

SECTION 4.06 Valid Issuance of Parent Shares. The shares of Parent Common Stock to be
issued pursuant to this Agreement will, when issued, be duly authorized, validly issued, fully paid
and non-assessable.

SECTION 4.07 Required Financing. Parent has sufficient cash or other sources of immediately available funds, and a
sufficient number of authorized but unissued shares of capital stock, to enable it to pay the
Merger Consideration as required under this Agreement.

SECTION 4.08 Brokers and Finders. Except for Blackstone, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or commission in connection
with the origination, negotiation or execution of this Agreement, the Merger or the other
transactions contemplated by this Agreement based upon arrangements made by or on behalf of Parent
or Merger Sub. The Parent shall be responsible for any such fees paid or payable by Parent.

SECTION 4.09 Litigation. There is no claim, action, suit, or proceeding pending or,
to the knowledge of the Parent, threatened in writing against or affecting Parent or Merger Sub
(or, to the knowledge of Parent, any of its officers, directors or employees), or any of its
properties before any court or arbitrator or any Governmental Entity, which would reasonably be
expected to prevent, impair or materially delay the consummation of the Merger.

SECTION 4.10 Reliance. Parent and Merger Sub make the foregoing representations and
warranties with the knowledge and expectation that Company is placing reliance thereon.

 

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ARTICLE V

CONDUCT OF BUSINESSES PENDING THE MERGER

SECTION 5.01 Conduct of Business by the Company and the Subsidiaries Pending the
Merger. During the period from the date of this Agreement and continuing until the earlier of
the termination of this Agreement or the Effective Time, except to the extent that Parent shall
otherwise consent in writing (which consent shall not be unreasonably withheld, conditioned or
delayed) or as otherwise expressly permitted or authorized by this Agreement, the Company shall,
and shall cause each Subsidiary to, carry on its business in the usual, regular and ordinary course
and in compliance with all applicable Laws and in substantially the same manner as previously
conducted, to pay its debts and Taxes when due (subject to good faith disputes over such debts or
Taxes), to pay or perform other obligations when due and, to the extent consistent with such
business, to use all commercially reasonable efforts consistent with past practices and policies to
preserve intact its present business organization, keep available the services of its present
officers and key employees and consultants and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others having business dealings with it. The
Company shall use commercially reasonable efforts to promptly notify Parent of any
material event or occurrence not in the ordinary course of business of the Company or any
Subsidiary of which it becomes aware. The parties hereto understand and acknowledge that it is
their intent to work closely together during the time period from the date hereof until the
Effective Time. If Company becomes aware of a material deterioration in the relationship with any
significant customer, key advertiser, key supplier or key employee or significant number of other
employees of Company, it will promptly bring such information to the attention of Parent in
writing.

By way of amplification and not limitation, except as specifically contemplated by this
Agreement or as specifically set forth in Section 5.01 of the Company Disclosure Schedule,
the Company shall not, and shall not permit any Subsidiary to, between the date of this Agreement
and the Effective Time, directly or indirectly, authorize, do, or propose to do, any of the
following without the prior written consent of Parent (which consent shall not be unreasonably
withheld, conditioned or delayed):

(a) amend or otherwise change its Certificate of Incorporation or Bylaws or equivalent
organizational documents;

(b) issue, sell, pledge, dispose of, grant, encumber, authorize or propose the issuance, sale,
pledge, disposition, grant or encumbrance of any shares of its capital stock of any class, or any
options, warrants, convertible securities or other rights of any kind to issue, deliver, sell or
cause to be issued delivered or sold, any shares of such capital stock or any other ownership
interest (including, without limitation, any phantom interest), of the Company or any Subsidiary,
except pursuant to the terms of options, warrants or preferred stock outstanding on the date of
this Agreement;

 

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(c) sell, lease, license, pledge, grant, encumber (other than Permitted Liens) or otherwise
dispose of any of its properties or assets which are material, individually or in the aggregate, to
its business outside of the ordinary course of business;

(d) declare, set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock;

(e) split, combine, subdivide, redeem or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or in substitution for
shares of its capital stock, or purchase or otherwise acquire (or grant any rights to have
purchased or otherwise acquired), directly or indirectly, any shares of its capital stock or any
options, warrants, convertible securities or other rights of any kind, except from former
employees, directors and consultants in accordance with agreements providing for the repurchase of
shares in connection with any termination of service by such party;

(f) acquire (including, without limitation, by merger, consolidation, or acquisition of stock
or assets) any interest or any assets in any corporation, partnership, other business organization
or any division thereof;

(g) institute or settle any Legal Proceeding;

(h) incur any indebtedness for borrowed money or issue any debt securities or assume,
guarantee or endorse, or otherwise as an accommodation become responsible for, the obligations of
any person, or make any loans or advances;

(i) authorize any capital expenditure in excess of $25,000 in the aggregate;

(j) enter into any lease or contract for the purchase or sale of any real property or material
personal property;

(k) waive or release any material right or claim;

(l) increase, or agree to increase, the compensation or benefits payable, or to become
payable, to its officers or employees or grant any severance or termination pay to, or enter into
any employment or severance agreement with, any of its directors, officers or other employees, or
establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other Plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee; provided, however, that the
foregoing provisions of this subsection shall not apply to any amendments to employee benefit plans
described in Section 3(3) of ERISA that may be required by Law or that are contemplated or provided
for by this Agreement;

(m) accelerate, amend or change the period of exercisability or the vesting schedule of
restricted stock or Company Options granted under any option plan, employee stock plan or other
agreement or authorize cash payments in exchange for any Company Options granted under any of such
plans except as specifically required by the terms of such plans or any such agreement or any
related agreement in effect as of the date of this Agreement and disclosed in the Company
Disclosure Schedule;

 

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(n) extend any offers of employment to potential employees, consultants or independent
contractors or terminate any existing employment relationships;

(o) amend or terminate any Material Contract or enter into, amend or terminate any contract
that would be a Material Contract;

(p) enter into, amend or terminate any contract, agreement, commitment or arrangement that, if
fully performed, would not be permitted under this Section 5.01;

(q) other than in the ordinary course of business consistent with past practice, enter into
any licensing, distribution, OEM agreements, sponsorship, advertising, merchant program or other
similar contracts, agreements or obligations that may not be cancelled without penalties by the
Company upon notice of thirty (30) days or less;

(r) enter into any contract or agreement outside the ordinary course of business that is
material to the business, results of operations or financial condition of the Company;

(s) other than paying the Company Transaction Expenses or any Debt, pay, discharge or satisfy
any material claim, liability or obligation (absolute, accrued, asserted, unasserted, contingent or
otherwise) other than in the ordinary course of business and consistent with past practices;

(t) take any action resulting in a material change, with respect to accounting policies,
principles or procedures, including for the avoidance of doubt as related to accounts payable,
accounts receivable and the recognition of deferred revenue;

(u) make or change any Tax or accounting election, change any annual accounting period, adopt
or change any accounting method, file any amended Tax Return, enter into any closing agreement,
settle any Tax claim or assessment relating to the Company or any Subsidiary, surrender any right
to claim refund of Taxes, consent to any extension or waiver of the limitation period applicable to
any Tax claim or assessment relating to the Company or any Subsidiary, or take any other action
outside the ordinary course of business that would have the effect of increasing the Tax liability
of the Company or any Subsidiary or Parent;

(v) other than in the ordinary course of business, (i) sell, assign, lease, terminate,
abandon, transfer, permit to be encumbered (other than Permitted Liens) or otherwise dispose of or
grant any security interest in and to any item of the Company Intellectual Property, in whole or in
part, (ii) grant any license with respect to any Company Intellectual Property, other than
non-exclusive licenses granted to customers of the Company or any Subsidiary, or (iii) disclose, or
allow to be disclosed, any confidential Company Intellectual Property, unless such Company
Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against
disclosure thereof;

 

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(w) enter into any agreement to develop, create or invent any Intellectual Property jointly
with any third party;

(x) revalue any of its assets, including writing down the value of inventory or writing off
notes or accounts receivable;

(y) fail to maintain its equipment and other assets in good working condition and repair
according to the standards it has maintained up to the date of this Agreement, subject only to
ordinary wear and tear;

(z) take any action that would cause there to be a Company Material Adverse Effect;

(aa) permit any insurance policy naming it as a beneficiary or a loss payable payee to be
cancelled or terminated without notice to Parent;

(bb) except as required by U.S. GAAP, write off as uncollectible, or establish any
extraordinary reserve with respect to, any account receivable or other indebtedness in excess of
$10,000 with respect to a single matter, or in excess of $25,000 in the aggregate; or

(cc) take, or agree in writing or otherwise to take, authorize the entrance into, or enter
into any contract or agreement to do any of the actions described in subsections (a) through (bb)
above.

SECTION 5.02 Litigation. The Company shall notify Parent in writing promptly after
learning of any claim, action, suit, arbitration, mediation, proceeding or investigation by or
before any court, arbitrator or arbitration panel, board or other Governmental Entity initiated by
it or against it, or known by the Company to be threatened against the Company, its Subsidiaries or
any of their respective officers, directors, employees or stockholders in their capacity as such.

SECTION 5.03 Notification of Certain Matters. Parent shall give prompt notice to the
Company, and the Company shall give prompt notice to Parent, as applicable, of (i) the occurrence,
or non-occurrence, of any event the occurrence, or non-occurrence, of which would be likely to
cause (x) any representation or warranty contained in this Agreement by such party to be untrue or
inaccurate or (y) any covenant or agreement made by such party or any condition for the benefit of
the other party contained in this Agreement not to be complied with or satisfied, in the case of
each of clauses (x) and (y), such that the conditions set forth in Article VII could not be
satisfied prior to the Outside Date or will not be satisfied prior to the Effective Date; (ii) any
failure or inability of Parent or the Company, as the case may be, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it hereunder in any material
respect; and (iii) to the knowledge of the Company, any breach of any representation, warranty,
covenant or agreement by any Person that has executed and delivered the form of written consent in
Exhibit A where such breach could be material to the consummation of the transactions
contemplated by this Agreement; provided, however, that the delivery of any notice
pursuant to this Section 5.03 shall not limit or otherwise affect the rights or remedies
available hereunder or otherwise to the party receiving such notice.

 

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ARTICLE VI

ADDITIONAL AGREEMENTS

SECTION 6.01 Access to Information; Confidentiality.

(a) From the date of this Agreement to the Effective Time, the Company shall: (i) provide to
Parent (and its officers, directors, employees, accountants,
consultants, legal counsel, advisors, agents and other representatives (collectively,
“Representatives”)) access at reasonable times upon prior notice to the directors,
officers, key employees, agents, properties, offices and other facilities of the Company and the
Subsidiaries and to the files, books and records thereof and (ii) furnish promptly such information
concerning the business, properties, contracts, assets, technology, liabilities, personnel and
other aspects of the Company and the Subsidiaries as Parent or its Representatives may reasonably
request.

(b) The parties shall comply with, and shall cause their respective Representatives to comply
with, all of their respective obligations under the Non-Disclosure Agreement, dated June 8, 2009
(the “Non-Disclosure Agreement”), between the Company and Parent.

SECTION 6.02 No Solicitation of Transactions.

(a) The Company will not, directly or indirectly, and will instruct its Representatives not
to, directly or indirectly, solicit, initiate or encourage (including by way of furnishing
nonpublic information), or take any other action to facilitate, any inquiries or the making of any
proposal or offer (including, without limitation, any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing Transaction (as defined
below), or enter into or maintain or continue discussions or negotiate with any person in
furtherance of such inquiries or to obtain a Competing Transaction, or agree to or endorse any
Competing Transaction, or authorize or permit any of the officers, directors or employees of the
Company, or any investment banker, financial advisor, attorney, accountant or other representative
retained by the Company, to take any such action, or enter into any non-disclosure agreement or
similar arrangement or share confidential information with any third party. The Company will
notify Parent promptly after receipt by the Company (or any of its officers, directors, employees,
agents, advisors or other representatives) of any proposal for, or inquiry respecting, any
Competing Transaction, or any request for nonpublic information in connection with such proposal or
inquiry or for access to the properties, books or records of the Company by any person that informs
or has informed the Company that it is considering making or has made such a proposal or inquiry,
subject to confidentiality obligations that may be owed to third parties. Such notice to Parent
shall indicate in reasonable detail the identity of the person making such proposal or inquiry and
the terms and conditions of such proposal or inquiry (including copies of any written proposals or
inquiries or, in the case of oral proposals or inquiries, a complete summary of the terms thereof),
subject to confidentiality obligations that may be owed to third parties. The Company immediately
shall cease and cause to be terminated all existing discussions or negotiations with any parties
conducted heretofore with respect to a Competing Transaction. The Company agrees not to release
any third party from, or waive any provision of, any confidentiality or standstill agreement to
which it is a party. Without limiting the foregoing, it is understood that any violation of the
restrictions set forth in this Section 6.02(a) by any officer, director, affiliate or
employee of Company or any
investment banker, attorney or other advisor or representative of Company will be deemed to be
a breach of this Section 6.02(a) by Company.

 

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(b) A “Competing Transaction” means any of the following involving the Company or any
Subsidiary (other than the Merger and the other transactions contemplated by this Agreement): (i)
a merger, consolidation, share exchange, business combination or other similar transaction; (ii)
any sale, lease, exchange, transfer or other disposition of a material portion of the assets or
debt or equity securities of such party; (iii) a tender offer or exchange offer for 15% or more of
the outstanding voting securities of such party or (iv) any solicitation in opposition to approval
by the Company Stockholders of this Agreement, the Merger and the transactions contemplated herein.

SECTION 6.03 Employee Benefits Matters.

(a) All employees of the Company and the Subsidiaries shall continue in their existing benefit
plans until such time as, in Parent’s sole discretion and no sooner than the Effective Time, an
orderly transition can be accomplished to employee benefit plans and programs maintained by Parent
for its and its affiliates’ employees and in connection with such transition, Parent shall take
such reasonable actions, to the extent permitted by Parent’s benefits programs, as are necessary to
allow eligible employees of the Company and the Subsidiaries to participate in the health, welfare
and other benefit programs of Parent or alternative benefits programs in the aggregate that are
substantially equivalent to those applicable to employees of Parent in similar functions and
positions on similar terms (it being understood that equity incentive plans are not considered
employee benefits). Pending such action, Parent shall maintain the effectiveness of the Company’s
and each Subsidiary’s benefit plans.

(b) Parent intends, prior to the Effective Time, to enter into retention agreements or offer
letters (each, an “Employment Arrangement”) with the individuals set forth on Schedule
7.02(f) hereto. Except as otherwise set forth in the Employment Arrangements, Parent shall
assume and honor any obligations of the Company under those existing employment or similar
agreements set forth on Section 3.11(a) of the Company Disclosure Schedule.

(c) Prior to the Effective Time, the Company shall take all necessary actions to seek the
requisite stockholder approval under Section 280G(b)(5) of the Code (in a manner reasonably
satisfactory to Parent) seeking approval of any payments or benefits that would be considered
“excess parachute payments” within the meaning of Section 280G of the Code and shall
require all “disqualified individuals” within the meaning of Section 280G of the Code to
subject their existing benefits and payments to the stockholder approval requirements of
Section 280G(b)(5) of the Code, as contemplated in the Treasury Regulations promulgated
thereunder to the extent necessary to satisfy the vote requirements of Section 280G(b)(5)
of the Code. The Company further agrees that whether or not its stockholders approve any such
excess parachute
payments, neither Parent nor the Surviving Corporation shall have any responsibility or
liability with respect to any excise taxes owed by the recipients of any such payments.

 

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(d) The Company shall take all necessary corporate action to maintain its 401(k) plan (the
“401(k) Plan”) through the Effective Date.

(e) The Company and, as applicable, each Company ERISA Affiliate agree to terminate any and
all group severance, separation or salary continuation plans, programs or arrangements immediately
prior to Closing (other than contractual obligations in respect of severance set forth in
employment agreements or offer letters previously disclosed to Parent and set forth on Section
3.11(a) of the Company Disclosure Schedule).

(f) The provisions of this Section 6.03 are for the sole benefit of the parties to
this Agreement and nothing herein, expressed or implied, is intended or shall be construed to
confer upon or give to any Person (including for the avoidance of doubt, any employee of the
Company), other than the parties hereto and their respective permitted successors and assigns, any
legal or equitable or other rights or remedies (with respect to the matters provided for in this
Section 6.03) under or by reason of any provision of this Agreement. Nothing in this
Section 6.03 shall amend, or be deemed to amend, any Plan or any compensation or benefit
plan, program, agreement or arrangement of Parent. Nothing in this Section 6.03 shall
prevent the amendment or termination of any Plan by Parent, the Surviving Corporation or their
respective subsidiaries and affiliates.

SECTION 6.04 Further Action; Consents; Filings.

(a) Upon the terms and subject to the conditions hereof, each of the parties hereto shall use
its reasonable best efforts to (i) take, or cause to be taken, all appropriate action and do, or
cause to be done, all things necessary, proper or advisable under applicable Law or otherwise to
consummate and make effective the Merger and the other transactions contemplated by this Agreement
as promptly as reasonably practicable, (ii) obtain from any Governmental Entity or any other person
all consents, licenses, permits, waivers, approvals, authorizations or orders and send any notices,
in each, which are required to be obtained, made or sent by Parent or the Company or any of their
subsidiaries in connection with the authorization, execution and delivery of this Agreement and the
consummation of the Merger and the other transactions contemplated by this Agreement, including
those required under the HSR Act, if any, and (iii) make all necessary filings and notifications,
and thereafter make any other required submission or application, with respect to this Agreement,
the Merger and the other transactions contemplated by this Agreement required under applicable Law.
The parties hereto shall cooperate with each other in connection with the making of all such
filings, applications and submissions including by providing copies of all such documents to the
nonfiling party and its advisors prior to filing and, if requested, by accepting all reasonable
additions, deletions or changes suggested in connection therewith.

 

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(b) Parent and the Company shall file as soon as practicable after the date hereof
notifications, if any, required under the HSR Act and each of Parent and the Company shall use
commercially reasonable efforts to respond as promptly as practicable to all reasonable inquiries
or requests and to resolve such objections, if any, as may be asserted by any Governmental Entity
with respect to the transactions contemplated by this Agreement under the HSR Act, the Sherman Act,
as amended, the Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any
other Federal, state or foreign statutes, rules, regulations, orders or decrees that are designed
to prohibit, restrict or regulate actions having the purpose or effect of monopolization or
restraint of trade (collectively, “Antitrust Laws”). The parties hereto will consult and
cooperate with one another, and consider in good faith the views of one another, in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions and proposals made
or submitted by or on behalf of any party hereto in connection with proceedings under or relating
to any Antitrust Laws. Notwithstanding the provisions of the immediately preceding sentence, it is
expressly understood and agreed that Parent shall have no obligation to litigate or contest any
administrative or judicial action or proceeding or any Antitrust Order. Each of Parent and Company
shall use all reasonable efforts to take such actions as may be required to cause the expiration of
the waiting periods under the HSR Act or other Antitrust Laws with respect to such transactions as
promptly as possible after the execution of this Agreement; provided, however, that
nothing contained herein shall require either party to seek early termination of any such waiting
period under the Antitrust Laws.

(c) Notwithstanding anything to the contrary in Section 6.04(a) or (b), (i)
neither Parent nor any of its subsidiaries shall be required to divest (including, without
limitation, through a licensing arrangement) any of their respective businesses, product lines or
assets, or to take or agree to take any other action or agree to any limitation that would
reasonably be expected to have a Parent Material Adverse Effect and (ii) neither the Company nor
any Subsidiary shall be required to divest (including, without limitation, through a licensing
arrangement) any of its respective businesses, product lines or assets, or to take or agree to take
any other action or agree to any limitation that would reasonably be expected to have a Company
Material Adverse Effect.

(d) From the date of this Agreement until the earlier of the Effective Time or the termination
of this Agreement, each party shall promptly notify the other party in writing of any pending or,
to the knowledge of such party, threatened action, proceeding or investigation by any Governmental
Entity or any other person (i) challenging or seeking damages in connection with this Agreement or
the transactions contemplated hereunder or (ii) seeking to restrain or prohibit the consummation of
the Merger or the transactions contemplated hereunder or otherwise limit the right of Parent or its
subsidiaries to own or operate all or any portion of the business, assets or properties of the
Company.

SECTION 6.05 Transfer Taxes. All transfer, documentary, sales, use, stamp,
registration and other substantially similar Taxes and fees incurred in connection with this
Agreement
(collectively, “Transfer Taxes”) shall be paid, one-half (1/2) by the Company
Participants and one-half (1/2) by Parent, when due, and the Company Participants will, at their
own expense, file all necessary Tax Returns and other documentation with respect to all such
Transfer Taxes.

SECTION 6.06 Satisfaction of Conditions Precedent. Each of the parties hereto will
use its commercially reasonable efforts to satisfy or cause to be satisfied all the conditions
precedent which are set forth in Article VII as promptly as reasonably possible, and will
use its commercially reasonable efforts to cause the transactions provided for herein to be
consummated as promptly as reasonably possible.

 

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SECTION 6.07 No Public Announcement. No party hereto shall directly or indirectly
issue any press release, public statement other announcement relating to the terms of this
Agreement or the transactions contemplated hereby or use any party’s name or refer to any party
directly or indirectly in connection with the parties’ relationships hereunder in any media
interview, advertisement, news release, press release or professional or trade publication, or in
any print media or public forum, whether or not in response to an inquiry, without the prior
written approval of Parent, on the one hand, and the Stockholders Representative, on the other
hand, unless required by law (in which event a satisfactory opinion of counsel to that effect shall
be first delivered to the other parties prior to any such disclosure). Notwithstanding anything
herein or in the Non-Disclosure Agreement, after the date of this Agreement, Parent may issue such
press releases, file a report on Form 8-K or make such other public statements regarding this
Agreement or the transactions contemplated hereby as Parent may, in its reasonable discretion,
determine are advisable or are required under the securities Laws or rules of any exchange on which
Parent’s capital stock is listed.

SECTION 6.08 Expenses. All costs and expenses incurred in connection with this
Agreement, the Merger and other transactions contemplated by this Agreement (including, without
limitation, the fees and expenses of financial advisors, accountants and legal counsel) (i) if
incurred by Parent and Merger Sub, shall be paid by Parent, whether or not the Merger is
consummated, (ii) if incurred by the Company Stockholders, shall be paid by the Company
Stockholders, whether or not the Merger is consummated and (iii) if incurred by the Company, shall
be paid, if the Merger is consummated, as Company Transaction Expenses and if the Merger is not
consummated, by the Company.

SECTION 6.09 Preliminary Closing Consideration Schedule. Prior to the Effective Time,
the Company shall prepare a schedule (the “Preliminary Closing Consideration Schedule”)
showing an estimate of the amount and (as reasonably estimated by the Company) type of the Closing
Equityholder Consideration to be paid to each Closing Consideration Recipient and each Closing
Consideration Recipient’s respective portion of the Escrow Amount, together, if requested by
Parent, with reasonable supporting documentation for such calculation.

SECTION 6.10 State Takeover Statutes. In the event that any “fair price,”
“moratorium,” “control share acquisition,” or other anti-takeover statute or regulation or any
anti-takeover provision of the Company’s Certificate of Incorporation or Bylaws is or becomes, or
at the Effective Time will be, applicable to the Company, shares of Company Stock, the Merger or
the other transactions contemplated by this Agreement, the Company, at the direction of the Board
of Directors, shall use its reasonable best efforts to ensure that the transactions contemplated by
this Agreement may be consummated as promptly as practicable on the terms and subject to the
conditions set forth in this Agreement, and otherwise to minimize the effect of such statute or
regulation on this Agreement and the transactions contemplated hereby.

SECTION 6.11 Termination of the Company’s Agreements. Prior to the Closing Date, the
Company shall cause the termination of the agreements set forth on Schedule 6.11 hereto
(the “Existing Investment Documents”), in each case, in accordance with and subject to
their terms.

 

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SECTION 6.12 Securities Laws.

(a) As promptly as practical following the date hereof, the Company shall, in conformity with
applicable Law, use commercially reasonable efforts to obtain written consents in substantially the
form of Exhibit A executed by the requisite holders of capital stock of the Company.

(b) The Company shall use its commercially reasonable efforts to assist Parent, to the extent
necessary, to comply with the securities and blue sky laws of all jurisdictions which are
applicable in connection with the Merger. Without limiting the foregoing, Company covenants and
agrees to undertake any or all the following:

(i) The Company will provide Parent, not less than two (2) business days prior to
circulating to the recipients thereof, a draft of any document that Company intends to
provide to the Company Stockholders to be used in connection with obtaining the Written
Consent (each. a “Consent Request Document”). Parent shall have the right to review
and comment on any Consent Request Document and the Company shall use reasonable efforts to
include any comments reasonably provided by Parent in such documents.

(ii) If so requested by Parent, Company will use all reasonable efforts to assist
Parent in compliance with alternative exemption to Rule 506; provided
further that Parent shall have no obligation to make any such request.

(c) Each certificate representing Parent Common Stock issued in the Merger may bear the
following legend:

“THE SALE AND ISSUANCE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAW
OF ANY STATE OR OTHER JURISDICTION. THESE SECURITIES HAVE BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE DISTRIBUTION THEREOF. THESE SECURITIES MAY NOT BE
OFFERED, SOLD, PLEDGED, OR TRANSFERRED UNLESS A REGISTRATION
STATEMENT UNDER THE ACT IS IN EFFECT AS TO THESE SECURITIES AND
SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OR
THERE IS AN OPINION OF COUNSEL OR OTHER EVIDENCE, SATISFACTORY TO
THE CORPORATION THAT AN EXEMPTION THEREFROM IS AVAILABLE AND THAT
SUCH OFFER, SALE, PLEDGE, OR TRANSFER IS IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.”

 

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(d) Notwithstanding anything herein to the contrary, from the date hereof until the Effective
Time, the Company shall not issue any shares of capital stock to any Person whom the Company does
not reasonably believe to be an Accredited Investor, except pursuant to the terms of Company
Options, Company Warrants or Company Preferred Stock outstanding on the date of this Agreement.

(e) When the shares of Parent Common Stock issued in connection with the Merger become
eligible for resale under Rule 144 of the Securities Act, Parent will use its commercially
reasonable efforts to provide any consents or legal opinions necessary to allow the holders of such
stock to sell the shares of Parent Common Stock issued in the Merger, subject to trading windows,
compliance with Parent’s insider trading policy and applicable Law.

SECTION 6.13 Officers’ and Directors’ Indemnification.

(a) Parent and Merger Sub agree that all rights to indemnification or exculpation existing in
favor of, and all limitations on the personal liability of, each present and former director,
officer, employee, fiduciary and agent of the Company (the
“D&O Indemnified Parties”) provided for in the Certificate of Incorporation or By-Laws
or otherwise in effect as of the date hereof shall continue in full force and effect for a period
of six (6) years from the Effective Time; provided, however, that all rights to indemnification in
respect of any claims (each a “Claim”) asserted or made within such period shall continue
until the disposition of such Claim. From and after the Effective Time, Parent and the Surviving
Corporation also agree to indemnify and hold harmless the present and former officers and directors
of the Company in respect of acts or omissions occurring prior to the Effective Time to the extent
provided in any written indemnification agreements with the Company as disclosed on Section
3.12 of the Company Disclosure Schedule. The Company hereby represents to Parent that no claim
for indemnification has been made by any officer or director of the Company.

(b) Immediately prior to the Effective Time, the Surviving Corporation or the Parent shall
purchase an extended reporting period endorsement under the Company’s existing directors’ and
officers’ liability insurance coverage for the directors and officers of the Company in a form
acceptable to the Stockholders’ Representative 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 the Company (the “D&O Tail
Policy”). Parent shall, and shall cause the Surviving Corporation to, maintain such policy in
full force and effect, and continue to honor the obligations thereunder. The premium payable in
connection with such extended reporting period endorsement shall be included as a Company
Transaction Expense.

(c) The obligations under this Section 6.13 shall not be terminated or modified in
such a manner as to adversely affect any Person to whom this Section 6.13 applies without
the consent of such affected Person (it being expressly agreed that the D&O Indemnified Parties to
whom this Section 6.13 applies shall be third party beneficiaries of this Section
6.13 and shall be entitled to enforce the covenants contained herein). In the event Parent or
the Surviving Corporation or any of their respective successors or assigns (i) consolidates with or
merges into any other Person and shall not be the continuing or surviving corporation or entity of
such consolidation or merger or (ii) transfers or conveys all or substantially all of its
properties and assets to any Person, then, and in each such case, to the extent necessary, proper
provision shall be made so that the successors and assigns of Parent or the Surviving Corporation,
as the case may be, assume the obligations set forth in this Section 6.13.

 

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SECTION 6.14 Provision Respecting Legal Representation. Each of the parties to this
Agreement hereby agrees, on its own behalf and on behalf of its directors, members, partners,
officers, employees and Affiliates, that Goodwin Procter LLP may serve as counsel to each and any
holder of Company Stock and their respective Affiliates (individually and collectively, the
“Holder Group”), on the one hand, and the Company, on the other hand, in connection with
the negotiation, preparation, execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, and that, following consummation of the transactions contemplated
hereby,
Goodwin Procter LLP (or any successor) may serve as counsel to the Stockholders’ Representative,
Holder Group or any director, member, partner, officer, employee or Affiliate of the Holder Group,
in connection with any litigation, claim or obligation arising out of or relating to this Agreement
or the transactions contemplated by this Agreement notwithstanding such representation and each of
the parties hereto hereby consents thereto and waives any conflict of interest arising therefrom,
and each of such parties shall cause any Affiliate thereof to consent to waive any conflict of
interest arising from such representation.

ARTICLE VII

CONDITIONS TO THE MERGER

SECTION 7.01 Conditions to the Obligations of Each Party. The respective obligations
of the Company, Parent and Merger Sub to consummate the Merger are subject to the satisfaction or
waiver (where permissible) of the following conditions:

(a) No Order. No Governmental Entity or court of competent jurisdiction located or
having jurisdiction in the United States shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, decree, judgment, injunction or other order, whether
temporary, preliminary or permanent (each an “Order”) which is then in effect and has the
effect of making the Merger or any other transaction contemplated by this Agreement illegal or
otherwise prohibiting consummation of the Merger or any such transaction;

(b) Litigation. There shall not be pending and not withdrawn, any action, proceeding
or counterclaim by or on behalf of any Governmental Entity challenging this Agreement, the Merger
or any of the other transactions contemplated by this Agreement; and

(c) Antitrust Laws. All waiting periods (and any extensions thereof) and all other
approvals, clearances, filings and notices, applicable to the consummation of the Merger and the
other transactions contemplated hereby under the HSR Act or foreign Antitrust Laws shall have
expired or been terminated or been obtained or made.

 

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SECTION 7.02 Conditions to the Obligations of Parent and Merger Sub. The obligations
of Parent and Merger Sub to consummate the Merger are subject to the satisfaction or waiver (where
permissible) of the following additional conditions:

(a) Representations and Warranties. Each of the representations and warranties made
by the Company in this Agreement shall be true and correct in all material respects (without giving
effect to any qualifications with respect to materiality or Company Material Adverse Effect
included therein) as of the Effective Time with the same force and effect as if made on and as of
the Effective Time, except that those
representations and warranties that address matters only as of a particular date shall remain
true and correct as of such date and Parent shall have received a certificate of the Chief
Executive Officer of the Company, dated as of the Closing Date, to such effect;

(b) Agreements and Covenants. The Company shall have performed or complied in all
material respects with all agreements and covenants required by this Agreement to be performed or
complied with by it on or prior to the Effective Time and Parent shall have received a certificate
of the Chief Executive Officer of the Company, dated as of the Closing Date, to that effect;

(c) Approvals. The Company shall have received all authorizations, consents, orders
and approvals (i) required by any Governmental Entity or official, if any, (ii) set forth in
Section 7.02(c) and (iii) pursuant to the Written Consent, the requisite approval of the
Company Stockholders holding at least 66% of the Company Stock (on an as-converted basis)
outstanding immediately prior to the Effective Time;

(d) Verizon Agreement. The Verizon Consent Agreement shall remain in full force and
effect;

(e) No Company Material Adverse Effect. No event or events shall have occurred, or
would be reasonably likely to occur, which, individually or in the aggregate, have, or would
reasonably be expected to have, a Company Material Adverse Effect;

(f) Employment Arrangements. At least 80% of the individuals set forth on
Schedule 7.02(f), including each individual identified with a “*” on such Schedule, shall
have executed, prior to the Closing, an Employment Arrangement effective as of the Closing and such
Employment Arrangements shall remain in full force and effect and have not been anticipatorily
breached or repudiated by such individual;

(g) Escrow Agreement. The Stockholders’ Representative shall have entered into the
Escrow Agreement;

(h) Termination of Employee Plans. The Company shall have terminated the Plans set
forth on Schedule 7.02(h), and the Company shall have provided Parent with evidence as to
the termination of such Plans;

(i) Termination of Company Warrants. All Company Warrants shall have been terminated
(or will be terminated at the Effective Time) and all other rights to acquire shares of Company
Stock including, without limitation, the warrants held by Verizon, Silicon Valley Bank and Michael
Mulica shall have been terminated or will be terminated at the Effective Time, and the Company
shall have provided Parent with evidence as to such termination.

 

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(j) Secretary’s Certificate. Parent shall have received (i) a certificate executed by
the Secretary of the Company in the form attached hereto as Exhibit 7.02(j) certifying as
to matters customary for a transaction of this sort, including, without limitation, the true and
correct copies of the Company’s current Certificate of
Incorporation and Bylaws and copies of the resolutions of the Company’s Board of Directors and
the Company Stockholders approving and adopting this Agreement and the transactions relating
hereto;

(k) FIRPTA Compliance. The Company shall, prior to the Closing Date, provide Parent
with a properly executed Foreign Investment in Real Property Tax Act of 1980 (“FIRPTA”)
Notification Letter, which states that shares of capital stock of the Company do not constitute
“United States real property interests” under Section 897(c) of the Code, for purposes of
satisfying Parent’s obligations under Treasury Regulation Section 1.1445-2(c)(3). In
addition, simultaneously with delivery of such Notification Letter, the Company shall have provided
to Parent, as agent for the Company, a form of notice to the Internal Revenue Service in accordance
with the requirements of Treasury Regulation Section 1.897-2(h)(2) along with written
authorization for Parent to deliver such notice form to the Internal Revenue Service on behalf of
the Company upon the consummation of the Merger;

(l) Board and Officer Resignations. The Company shall have received written letters
of resignation, in the form attached hereto as Exhibit 7.02(l), from each of the current
members of the Board of Directors (or other applicable governing bodies) and officers of the
Company and each Subsidiary, in each case effective at the Effective Time;

(m) Termination of the Company’s Agreements. The Existing Investment Documents shall
have been terminated or shall have terminated in accordance with their terms, in each case
effective at the Effective Time;

SECTION 7.03 Conditions to the Obligations of the Company. The obligations of the
Company to consummate the Merger are subject to the satisfaction or waiver (where permissible) of
the following additional conditions:

(a) Representations and Warranties. Each of the representations and warranties made
by Parent and Merger Sub in this Agreement shall be true and correct in all material respects
(without giving effect to any qualifications with respect to materiality or Company Material
Adverse Effect included therein) as of the Effective Time except that those representations and
warranties that address matters only as of a particular date shall remain true and correct as of
such date, and the Company shall have received a certificate of a duly authorized officer of
Parent, dated as of the Closing Date, to that effect;

(b) Agreements and Covenants. Each of Parent and Merger Sub shall have performed or
complied in all material respects with all agreements and covenants required by this Agreement to
be performed or complied with by it on or prior to the Effective Time, and the Company shall have
received a certificate of a duly authorized officer of Parent to that effect; and

 

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ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

SECTION 8.01 Termination. Other than as provided in Section 8.02, this
Agreement may be terminated and the Merger and the other transactions contemplated by this
Agreement may be abandoned at any time prior to the Effective Time, notwithstanding any requisite
approval and adoption of this Agreement and the transactions contemplated by this Agreement, as
follows:

(a) by mutual written consent of Parent and the Company duly authorized by the Boards of
Directors of each of Parent and the Company, respectively;

(b) by either Parent or the Company if the Effective Time shall not have occurred on or before
August 31, 2010, which date may be further extended to September 30, 2010 at Parent’s option
(exercised prior to the then applicable Outside Date) (as applicable, the “Outside Date”);
provided, however, that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose failure to fulfill any obligation
under this Agreement has been a principal cause of, or resulted in, the failure of the Effective
Time to occur on or before the Outside Date;

(c) by either Parent or the Company upon the issuance of any Order which is final and
nonappealable which would prevent the consummation of the Merger;

(d) by Parent upon a material breach of any representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, or if any representation or warranty of the
Company shall have become untrue, in either case such that the conditions set forth in Sections
7.02(a) and 7.02(b) could not reasonably be expected to be satisfied prior to the
Outside Date (“Terminating Company Breach”); provided, however, that, if
such Terminating Company Breach is curable by the Company through the exercise of its commercially
reasonable efforts and for so long as the Company continues to exercise such commercially
reasonable efforts, Parent may not terminate this Agreement under this Section 8.01(d)
unless such breach is not cured within thirty (30) days after notice thereof is provided by Parent
to the Company (but no cure period is required for a breach which, by its nature, cannot be cured);

(e) by the Company upon a material breach of any representation, warranty, covenant or
agreement on the part of Parent and Merger Sub set forth in this Agreement, or if any
representation or warranty of Parent and Merger Sub shall have become untrue, in either case such
that the conditions set forth in Sections 7.03(a) and 7.03(b) could not reasonably
be expected to be satisfied prior to the Outside Date (“Terminating Parent Breach”);
provided, however, that, if such Terminating Parent Breach is curable by Parent and
Merger Sub through the exercise of their respective commercially reasonable efforts and for so long
as Parent and Merger Sub continue to exercise such commercially reasonable efforts, the Company may
not terminate this
Agreement under this Section 8.01(e) unless such breach is not cured within thirty
(30) days after notice thereof is provided by the Company to Parent (but no cure period is required
for a breach which, by its nature, cannot be cured); or

 

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(f) by Parent at any time within two (2) and five (5) business days of the date hereof, if the
Agreement and the Merger has not been approved and adopted as provided herein pursuant to the
Written Consent in accordance with applicable Law and the Certificate of Incorporation and Bylaws
and copies of the executed consents in the form of Exhibit A constituting the Written
Consent have not been delivered to Parent no later than the day after the execution of the
Agreement.

SECTION 8.02 Effect of Termination. In the event of termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of Parent, Merger Sub or the Company or any of their
respective affiliates, officers or directors, and all rights and obligations of each party hereto
shall cease; provided, however, that (i) Section 6.01(b), Section
6.07, Section 8.02, and Article X shall remain in full force and effect and
survive any termination of this Agreement and (ii) nothing herein shall relieve any party from
liability for the willful breach of any of its representations or warranties or the breach of any
of its covenants or agreements set forth in this Agreement.

SECTION 8.03 Waiver. At any time prior to the Effective Time, any party hereto may
(a) extend the time for the performance of any obligation or other act of any other party hereto,
(b) waive any inaccuracy in the representations and warranties contained herein or in any document
delivered pursuant hereto, and (c) waive compliance with any agreement or condition contained
herein. Any such extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby. No delay in the enforcement of any rights in
connection with this Agreement shall constitute a waiver of any right or remedy.

ARTICLE IX

INDEMNIFICATION

SECTION 9.01 Survival of Representations and Warranties. The representations and warranties of Parent, Merger Sub, the Company and the Company
Participants contained in this Agreement and any other document or certificate delivered pursuant
to this Agreement, including, without limitation, the Investment Representation Letters
(collectively, the “Acquisition Documents”) shall terminate and be of no further force and
effect at the date that is the later of the dates specified in clause (a) or (b) of this
Section 9.01 (and such specified survival period shall supersede any other applicable
statute of limitations period):

(a) (i) Except as to the items specified in clause (a)(ii) of this Section 9.01, at
11:59 p.m. Eastern Time on the date that is twenty-one (21) months following the Closing Date; or

(ii) with respect to representations and warranties contained in Section 3.01
(Organization, Good Standing and Qualification), Section 3.03 (Subsidiaries), Section
3.04 (Capitalization), including, for the avoidance of doubt, the Closing Consideration
Schedule and the Earn-Out Consideration Schedule), Section 3.05 (Authority Relative to This
Agreement), Section 3.14 (Intellectual Property), Section 3.15 (Taxes), and the
representations and warranties of the Company Participants contained in the Investment
Representation Letters relating to their status as Accredited Investors (collectively, but
excluding Section 3.14, the “Fundamental Representations”), at the expiration of
the applicable statute of limitations; or

 

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(b) with respect to (but only with respect to) any representation or warranty that is the
subject of a claim or demand for which written notice of such claim or demand is properly delivered
on or prior to the relevant date described in clause (i) or (ii) of Section 9.01(a), at the
final resolution of such claim or demand described in such properly delivered written notice.

The respective covenants and obligations of the parties hereto set forth in this Agreement or
in the Acquisition Documents shall survive until satisfied in accordance with their respective
terms. The parties acknowledge that the time periods set forth in this Section 9.01 and
elsewhere in this Agreement for the assertion of claims and notices under this Agreement are the
result of arms’-length negotiation among the parties and that they intend for the time periods to
be enforced as agreed by the parties. The parties further acknowledge that the time periods set
forth in this Section 9.01 and elsewhere in the Agreement may be shorter than otherwise
provided by law.

SECTION 9.02 Indemnification by the Company Participants.

(a) After the Effective Time, Parent and its affiliates (including, after the Effective Time,
the Surviving Corporation), officers, directors, managers, employees, agents, successors and
assigns (collectively, the “Parent Indemnified Parties”) shall be indemnified and held
harmless by the Company Participants, severally in proportion to their Pro Rata Percentage, and not
jointly, for any and all Losses arising out of or resulting from:

(i) any inaccuracy or breach of any representation or warranty (disregarding for
purposes of this Section 9.02(a)(i) any “material”, “in all material respects”,
“Company Material Adverse Effect” or similar qualification contained therein or with
respect thereto both for purposes of determining whether a representation or warranty is
true and correct and for purposes of calculating Losses) made by the Company or any Company
Participant in the Acquisition Documents;

(ii) the breach of any covenant or agreement made by the Company or any Company
Participant in the Acquisition Documents;

(iii) in the event that any Company Stockholder properly exercises appraisal rights
under applicable Law, the amount, if any, by which the fair market value (determined in
accordance with applicable Law) of the Dissenting Shares exceeds the amount such Company
Stockholder was otherwise entitled to receive pursuant to Sections 2.01 and
2.02 of this Agreement;

(iv) any Company Transaction Expenses which were unpaid as of immediately prior to the
Effective Time (other than those actually paid at the Effective Time in accordance with the
terms of this Agreement) and have not been taken into account in the calculation of the
Final Net Working Capital Schedule;

 

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(v) any cost, loss or other expense (including the value of any Tax deduction lost) as
a result of the application of Section 280G of the Code to any of the transactions
contemplated by this Agreement plus any necessary gross up amount;

(vi) notwithstanding any items or statements set forth on, or referenced in, the
Company Disclosure Schedule, any cost, loss or other expense or Liability, third party or
otherwise, (1) relating to claims in respect of or arising out of the Prior Merger
Agreements, (2) resulting from any undisclosed liability in any of the Company’s
Subsidiaries (expressly excluding FusionOne Eesti OU) or reasonable out-of-pocket costs
related to the winding down of such Subsidiaries, including the payment of any taxes or
penalties in respect thereof, (3) arising from the violation by the Company or any
Subsidiary of any employment or labor Law or breach by the Company or any Subsidiary of any
written agreement involving, in each case, the employees of FusionOne Eesti OU, (4) owed to
Verizon on account of, or any Loss stemming from, the release of source code under any
agreement between the Company and Verizon based on the transactions contemplated herein,
(5) paid in respect of any dispute with Asurion Corporation or (6) paid in satisfaction of
indemnity claims made against the Company arising from previously settled patent
infringement lawsuits in an amount greater than the aggregate amount reserved in respect
thereof as a Current Liability and taken into account in the calculation of Net Working
Capital;

(vii) any claims for indemnification or expense reimbursement by or in respect of any
current or former officer, director or agent of the Company with respect to any matter
which, if brought against the Company, would have been a Loss for which an indemnified
party would have been entitled to indemnification pursuant to this Section 9.02, in
each case, in excess of the amounts, if any, recoverable under the D&O Tail Policy; or

(viii) defending any third-party claim alleging the occurrence of facts or
circumstances that, if true, would entitle an Indemnified Party to indemnification
hereunder.

(b) As used herein, “Losses” are not limited to matters asserted by third parties, but include
Losses actually incurred or sustained by any of the Parent Indemnified Parties in the absence of
claims by third parties.

(c) Notwithstanding anything to the contrary contained in this Agreement, except with respect
to (1) claims based on fraud or intentional misrepresentation or misconduct, (2) any Losses for
which indemnification may be sought pursuant to Section 9.02(a)(i) for breaches of
Fundamental Representations, (3) any Losses for which indemnification may be sought pursuant to
Section 9.02(a)(i) for breaches of the representations and warranties contained in
Section 3.14 (Intellectual Property) and (4) any Losses for which indemnification may be
sought pursuant to the Article IX other than Sections 9.02(a)(i), (vi),
(vii), or (viii) (Losses arising from or related to the foregoing Section
9.02(c)(1)-(4), the “Special Losses”):

(i) no indemnification payment by the Company Participants with respect to any
indemnifiable Losses otherwise payable under Section 9.02(a) and arising out of or
resulting from the causes enumerated in Section 9.02(a) shall be payable until such
time as all such indemnifiable Losses shall aggregate to more than $250,000, after which
time the Company Participants shall be liable in full for all indemnifiable Losses
(including the first $250,000); provided, however that the Company Participants shall be
liable in full for all indemnifiable Losses arising out of or resulting from the causes
enumerated under Section 9.02(a)(vi) without regard to any minimum aggregate
amount;

 

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(ii) No Company Participant shall be responsible or obligated to provide
indemnification with respect to Losses arising out of or resulting from any inaccuracy or
breach of any representation or warranty, or the breach of any covenant or agreement, made
by any other Company Participant; and

(iii) the aggregate amount of indemnification available under Section 9.02(a)
shall be limited to the amount of the Escrow Fund, and the Escrow Fund shall be the sole
and exclusive source of any recovery pursuant to Section 9.02(a).

(d) Notwithstanding anything to the contrary contained in this Agreement, with respect to
Special Losses:

(i) The aggregate indemnification to be provided by the Company Participants with
respect to Special Losses arising under Section 9.02(c)(3) above shall not exceed
$6,000,000 in excess of the Escrow Fund (as reduced from time to time by payments to the
Parent Indemnified Parties on account of indemnifiable claims);

(ii) Parent shall first satisfy any claim with respect to Special Losses in full out
of the Escrow Fund before seeking indemnification (A) through the right of setoff set
forth in Section 9.07 or (B) directly from any Company Participant;

(iii) The Company Participants shall be severally liable for the amount by which
Special Losses exceed the Escrow Fund in proportion to their respective Pro Rata
Percentages, and no Company Participant shall be responsible for more than its Pro Rata
Percentage of any Loss, in each case, except as set forth and subject to clause (iv) below;

(iv) No Company Participant shall be responsible or obligated to provide
indemnification with respect to Losses arising out of or resulting from any inaccuracy or
breach of any representation or warranty, or the breach of any covenant or agreement, made
by any other Company Participant or with respect to fraud or intentional misrepresentation
or misconduct by any other Company Participant;

(v) the aggregate maximum liability of any Company Participant for any and all Losses,
including Special Losses (other than those based fraud or intentional misrepresentation or
misconduct), shall be limited to the value of the Transaction Consideration such Company
Participant actually received pursuant to this Agreement (valued at the date of such
receipt). Nothing contained in this Article IX shall be deemed to limit or
restrict in any manner any rights or remedies which the Parent Indemnified Parties have, or
might have, at Law, in equity or otherwise, based on fraud or intentional misrepresentation
or misconduct.

 

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(e) Notwithstanding anything to the contrary contained in this Agreement, with respect to any
indemnity under Section 9.02(a) relating to any breach of a representation or warranty in
Section 3.15, a Parent Indemnified Party’s right to indemnification for Losses with respect
to Taxes shall be limited to Taxes attributable to taxable periods (or portions thereof) of the
Company or any Subsidiary ending on or prior to the Closing Date.

SECTION 9.03 Indemnification of Stockholder Indemnified Parties. After the Effective Time, each Company Participant and its affiliates, officers, directors,
managers, employees, agents, successors and assigns (collectively, the “Stockholder Indemnified
Parties”) shall be indemnified and held harmless by Parent for any and all Losses suffered,
incurred or paid by them, arising out of or resulting from:

(a) any inaccuracy or breach of any representation or warranty made by Parent or Merger Sub in
the Acquisition Documents; and

(b) the breach of any covenant or agreement made by Parent or Merger Sub in the Acquisition
Documents.

Notwithstanding the foregoing, no indemnification payment by Parent with respect to any
indemnifiable Losses otherwise payable under Section 9.03 and arising out of or resulting
from the causes enumerated in Section 9.03 shall be payable until such time as all such
indemnifiable Losses shall aggregate to more than $250,000, after which time Parent shall be liable
in full for all indemnifiable Losses (including the first $250,000). The aggregate maximum
liability of Parent for any and all Losses pursuant this Section 9.03 shall be limited to
value of the total Net Closing Consideration actually paid pursuant to this Agreement (valued as of
the date of such payment).

SECTION 9.04 Calculation of Losses.

(a) For purposes of this Agreement, and subject to the other limitations set forth in this
Article IX, the term “Losses” shall mean the amount of any liabilities, losses,
damages, claims, costs, expenses, fines, fees, deficiencies, interest, awards, judgments, amounts
paid in settlement and penalties (including, without limitation, attorneys’ fees and expenses and
other costs of defending, investigating or settling claims) actually incurred, paid, accrued or
sustained by an Indemnified Party; provided, however, an Indemnifying Party shall
not be liable under this Article IX for any (i) Losses relating to any matter to the extent
that there is included in the Reference Balance Sheet a specific liability or reserve relating to
such specifically identified matter; or (ii) Losses that are for consequential, special,
incidental, indirect or punitive damages.

(b) The amount of any Losses payable under this Article IX by an Indemnifying Party
shall be reduced by (i) amounts recovered by the Indemnified Party under applicable insurance
policies or from any other Person alleged to be responsible therefor and (ii) the Tax Benefits
actually realized by the Indemnified Party or the Surviving Corporation and its subsidiaries (in
the case of a Parent Indemnified Party) arising from the incurrence or payment of any such Losses.
If an Indemnified Party receives any amounts under applicable insurance policies, or from any
other Person alleged to be responsible for any Losses, subsequent to an indemnification payment by
the Indemnifying Party, then such Indemnified Party shall promptly reimburse the Indemnifying Party
for any payment made or expense incurred by such Indemnifying Party in connection with providing
such indemnification payment in the amount received by the Indemnified Party, net of any expenses
reasonably incurred by such Indemnified
Party in collecting such amount. “Tax Benefit” shall mean any refund, credit, or
other reduction in otherwise required Tax payments in the year in which the Loss occurs or the
immediately succeeding taxable year.

 

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(c) No Parent Indemnified Party shall be entitled to indemnification hereunder for any Losses
arising from a breach of any representation, warranty, covenant or agreement set forth herein (and
the amount of any Losses incurred in respect of such breach shall not be included in the
calculation of any limitations on indemnification set forth herein) to the extent the amount of
such specific Loss is included and properly accounted for in the calculation of the Final Net
Working Capital.

SECTION 9.05 Indemnification Procedures.

(a) For purposes of this Section 9.05, a party against which indemnification may be
sought is referred to as the “Indemnifying Party” and the party that may be entitled to
indemnification is referred to as the “Indemnified Party.”

(b) The obligations and liabilities of Indemnifying Parties under this Article IX with
respect to Losses arising from actual or threatened claims or demands by any third party which are
subject to the indemnification provided for in this Article IX (“Third Party
Claims”) shall be governed by and contingent upon the following additional terms and
conditions: if an Indemnified Party shall receive notice of any Third Party Claim, the Indemnified
Party shall give the Indemnifying Party notice of such Third Party Claim promptly following the
receipt by the Indemnified Party of such notice; provided, however, that the
failure to provide such notice shall not release an Indemnifying Party from any of its obligations
under this Article IX except to the extent that such Indemnifying Party is materially
prejudiced by such failure. The notice of claim shall describe in reasonable detail the facts
known to the Indemnified Party giving rise to such indemnification claim, and the amount or good
faith estimate of the amount arising therefrom.

(c) The Indemnifying Party shall be entitled to assume and control the defense of such Third
Party Claim at its own expense and through counsel of its choice (such counsel to be reasonably
acceptable to the Indemnified Party) if it gives notice of its intention to do so to the
Indemnified Party within thirty (30) days of the receipt of such notice from the Indemnified Party;
provided, however, that the Indemnifying Party shall not have the right to assume
the defense of the Third Party Claim if (i) any such claim seeks, in addition to or in lieu of
monetary losses or damages, any injunctive or other equitable relief, (ii) the Indemnifying Party
fails to provide reasonable assurance to the Indemnified Party of the adequacy of the Escrow Fund
to provide indemnification in accordance with the provisions of this Agreement and the Escrow
Agreement with respect to such proceeding, (iii) there is reasonably likely to exist a conflict of
interest that would make it inappropriate (in the judgment of the Indemnified Party in its
reasonable discretion) for the same counsel to represent both the Indemnified Party and the
Indemnifying Party, or (iv) settlement of, or an adverse judgment with respect to, the
Third Party Claim may establish (in the reasonable good faith judgment of the Indemnified
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or would increase the Tax liability of the Indemnified Party. If the Indemnifying Party assumes
the defense of a Third Party Claim, it will conduct the defense actively, diligently and at its own
expense, and it will hold all Indemnified Parties harmless from and against all Losses caused by or
arising out of any settlement thereof, subject to the limitations on indemnifications set forth in
Article IX. The Indemnified Party shall cooperate with the Indemnifying Party in such
defense and make available to the Indemnifying Party, at the Indemnifying Party’s expense, all
witnesses, pertinent records, materials and information in the Indemnified Party’s possession or
under the Indemnified Party’s control relating thereto as is reasonably requested by the
Indemnifying Party. Except with the written consent of the Indemnified Party (not to be
unreasonably withheld), the Indemnifying Party will not, in the defense of a Third Party Claim,
consent to the entry of any judgment or enter into any settlement (i) which does not include as an
unconditional term thereof the giving to the Indemnified Party by the third party of a release from
all liability with respect to such suit, claim, action, or proceeding; (ii) unless there is no
finding or admission of (A) any violation of Law by the Indemnified Party (or any affiliate
thereof), (B) any liability on the part of the Indemnified Party (or any affiliate thereof) or (C)
any violation of the rights of any person and no effect on any other claims of a similar nature
that may be made by the same third party against the Indemnified Party (or any affiliate thereof);
or (iii) which exceeds the then current value of the Escrow Fund.

(d) In the event that the Indemnifying Party fails or elects not to assume the defense of an
Indemnified Party against such Third Party Claim which the Indemnifying Party had the right to
assume pursuant to Section 9.05(c), the Indemnified Party shall have the right, at the
expense of the Indemnifying Party, to defend or prosecute such claim in any manner as it may
reasonably deem appropriate and may settle such claim after giving written notice thereof to the
Indemnifying Party, on such terms as such Indemnified Party may deem appropriate, and the
Indemnified Party may seek prompt indemnification pursuant to the terms of this Article IX
for any Losses incurred in connection with such settlement. If no settlement of such Third Party
Claim is made, the Indemnified Party may seek prompt indemnification pursuant to the terms of this
Article IX for any Losses arising out of any judgment rendered with respect to such claim.
Any Losses for which an Indemnified Party is entitled to indemnification hereunder shall be
promptly paid as suffered, incurred or accrued (in accordance with U.S. GAAP). If the Indemnifying
Party does not elect to assume the defense of a Third Party Claim which it has the right to assume
hereunder, the Indemnified Party shall have no obligation to do so.

(e) In the event that the Indemnifying Party is not entitled to assume the defense of the
Indemnified Party against such Third Party Claim pursuant to Section 9.05(c), the
Indemnified Party shall have the right, at the expense of the Indemnifying Party, to defend or
prosecute such claim and consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim in any manner it may reasonably deem appropriate after giving
written notice thereof to the Indemnifying Party, and the Indemnified Party may seek prompt
indemnification pursuant to the terms
of this Article IX for any Losses incurred in connection with such judgment or
settlement. In such case, the Indemnified Party shall conduct the defense of the Third Party Claim
actively and diligently, and the Indemnifying Party shall cooperate with the Indemnified Party in
such defense and make available to the Indemnified Party, at the Indemnifying Party’s expense, all
such witnesses, records, materials and information in the Indemnifying Party’s possession or under
the Indemnifying Party’s control relating thereto as is reasonably requested by the Indemnified
Party. If no settlement of such Third Party Claim is made, the Indemnified Party may seek prompt
indemnification pursuant to the terms of this Article IX for any Losses arising out of any
judgment rendered with respect to such claim. Any Losses for which an Indemnified Party is
entitled to indemnification hereunder shall be promptly paid as suffered, incurred or accrued (in
accordance with U.S. GAAP).

 

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(f) The procedures relating to indemnification claims are further governed, where applicable,
by the terms of the Escrow Agreement.

(g) Following the Closing, no Company Participant shall have any right of indemnification,
contribution or subrogation against the Company with respect to any indemnification made by or on
behalf of any Company Participant under Section 9.02 if the Merger and the transactions
contemplated by this Agreement are consummated.

SECTION 9.06 Stockholders’ Representative.

(a) John Malloy (such person and any successor or successors being the “Stockholders’
Representative”) shall act as the representative of the Company Participants, and shall be
authorized to act on behalf of the Company Participants and to take any and all actions required or
permitted to be taken by the Stockholders’ Representative under this Agreement with respect to any
claims (including the settlement thereof) made by a Parent Indemnified Party or a Stockholder
Indemnified Party (as the case may be) for indemnification pursuant to this Article IX and
with respect to any actions to be taken by the Stockholders’ Representative pursuant to the terms
of the Escrow Agreement (including, without limitation, the exercise of the power to (i) authorize
the delivery of Escrow Funds to a Parent Indemnified Party or, in Parent’s sole discretion, setoff
against the Aggregate Earn-Out Amount, if permitted under this Agreement, in satisfaction of claims
by a Parent Indemnified Party, (ii) agree to, negotiate, enter into settlements and compromises of,
and comply with orders of courts with respect to any claims for indemnification and (iii) take all
actions necessary in the judgment of the Stockholders’ Representative for the accomplishment of the
foregoing). In all matters relating to this Article IX, the Stockholders’ Representative
shall be the only party entitled to assert the rights of the Company Participants, and the
Stockholders’ Representative shall perform all of the obligations of the Company Participants
hereunder. The Parent Indemnified Parties shall be entitled to rely on all statements,
representations and decisions of the Stockholders’ Representative. The Stockholders’
Representative may resign at any time upon ten (10) days prior notice to Parent, at which
time the holders of a majority of the shares of Company Stock immediately prior to the
Effective Time (voting on an as-converted basis) shall designate a replacement Stockholders’
Representative.

(b) The Company Participants shall be bound by all actions taken by the Stockholders’
Representative in his, her or its capacity thereof, except for any action that conflicts with the
limitations set forth in subsection (d) below. The Stockholders’ Representative shall at all times
act in his or her capacity as Stockholders’ Representative in a manner that the Stockholders’
Representative believes to be in the best interest of the Company Participants. Neither the
Stockholders’ Representative nor any of its directors, officers, agents or employees, if any, shall
be liable to any person for any error of judgment, or any action taken, suffered or omitted to be
taken under this Agreement or the Escrow Agreement, except in the case of its gross negligence, bad
faith or willful misconduct. The Stockholders’ Representative may consult with legal counsel,
independent public accountants and other experts selected by it. The Stockholders’ Representative
shall not have any duty to ascertain or to inquire as to the performance or observance of any of
the terms, covenants or conditions of this Agreement or the Escrow Agreement. As to any matters
not expressly provided for in this Agreement or the Escrow Agreement, the Stockholders’
Representative shall not exercise any discretion or take any action.

 

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(c) Each Company Participant shall indemnify and hold harmless and reimburse the Stockholders’
Representative from and against such Company Participant’s ratable share of any and all
liabilities, losses, damages, claims, costs or expenses suffered or incurred by the Stockholders’
Representative arising out of or resulting from any action taken or omitted to be taken by the
Stockholders’ Representative under this Agreement or the Escrow Agreement, other than such
liabilities, losses, damages, claims, costs or expenses arising out of or resulting from the
Stockholders’ Representative’s gross negligence, bad faith or willful misconduct.

(d) Notwithstanding anything to the contrary herein or in the Escrow Agreement, the
Stockholders’ Representative is not authorized to, and shall not, accept on behalf of any Company
Participant any Transaction Consideration to which such Company Participant is entitled under this
Agreement and the Stockholders’ Representative shall not in any manner exercise, or seek to
exercise, any voting power whatsoever with respect to shares of capital stock of the Company or
Parent now or hereafter owned of record or beneficially by any Company Participant unless the
Stockholders’ Representative is expressly authorized to do so in a writing signed by such Company
Participant.

SECTION 9.07 Setoff. Subject to the indemnification limitations and procedures set
forth in this Article IX (including Section 9.02(d)(ii)), Parent is authorized (in
its sole and absolute discretion), to setoff and apply all indemnifiable Losses that constitute
Special Losses against any payments comprising any portion of the Aggregate Earn-Out Amount to be
paid (and not then paid) to the Earn-Out Consideration Recipients (provided that any set-off shall be made in a proportionate manner relative to the amounts that the Earn-Out
Consideration Recipients are otherwise entitled to receive).

SECTION 9.08 Remedies Exclusive. From and after the Effective Time, except in the
event of fraud, the rights of the parties to indemnification relating to this Agreement or the
transactions contemplated hereby shall be strictly limited to those contained in this Article
IX, and such indemnification rights shall be the sole and exclusive remedies of the parties
subsequent to the Effective Time with respect to any matter in any way relating to this Agreement
or arising in connection herewith. Except as provided in this Article IX or in the event
of fraud, no claim, action or remedy shall be brought or maintained by any party against any other
party, and no recourse shall be brought or granted against any of them, by virtue of or based upon
any alleged misstatement or omission respecting an inaccuracy in or breach of any of the
representations, warranties or covenants of any of the parties hereto set forth or contained in
this Agreement.

 

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ARTICLE
X

GENERAL PROVISIONS

SECTION 10.01 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person, by cable, telecopy, facsimile, telegram or telex or
by registered or certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 10.01):

	 	(a)	 	if to Parent or Merger Sub:

750 Route 202 South

Suite 600

Bridgewater, NJ 08807

Attention: Ronald Prague, Esq., Senior Vice President and

General Counsel

Telephone No: (908) 547-1239

Facsimile No: (908) 231-0762

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

Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP

850 Winter Street

Waltham, Massachusetts 02451

Facsimile No.: (781) 622-1622

Attention: Marc Dupré, Esq.

	 	(b)	 	if to the Company (if before the Effective Time):

55 Almaden Blvd., 5th Floor

San Jose, CA 95113

Attn: Chief Executive Officer

Facsimile: (408) 282-1233

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

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Facsimile: (617) 523-1231

Attn: John J. Egan III, Esq.

John B. Steele, Esq.

 

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	 	(c)	 	if to the Stockholders’ Representative:

BlueRun Ventures

545 Middlefield Road, Suite 210

Menlo Park, CA 94025

Facsimile No: (650) 462-7252

Attention: John Malloy

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

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Facsimile: (617) 523-1231

Attn: John J. Egan III, Esq.

John B. Steele, Esq.

SECTION 10.02 Certain Definitions. As used in this Agreement, the following terms
shall have the following meanings:

(a) “affiliate” of a specified person means a person who directly or indirectly
through one or more intermediaries controls, is controlled by, or is under common control with such
specified person.

(b) “business day” means any day on which banks are not required or authorized to
close in New York, New York.

(c) “Termination for Cause” in respect of any Earn-Out Eligible Employee means
termination of such person’s employment by Parent or any subsidiary thereof for reason of (a)
unauthorized use or disclosure of confidential information or
trade secrets, (b) material breach of any employment agreement between such person and Parent
or any subsidiary thereof, (c) material failure to comply with the written policies or rules of
Parent or any subsidiary thereof, (d) conviction of, or plea of “guilty” or “no contest” to, a
felony under any applicable law, (e) gross negligence or willful misconduct, (f) continuing failure
to perform assigned duties after receiving written notification of such failure from such person’s
direct or indirect manager or supervisor or (g) failure to cooperate in good faith with a
governmental or internal investigation of Parent or any subsidiary or their respective directors,
officers or employees, if Parent or such subsidiary has requested such cooperation.

(d) “knowledge” means with respect to any fact, circumstance, event or other matter in
question, the actual knowledge of such fact, circumstance, event or other matter after reasonable
inquiry of (A) an individual, if used in reference to an individual or (B) with respect to the
Company, each of the directors and officers of the Company set forth on Schedule 10.02(c)
hereto (the individuals specified in clause (B) are collectively referred to herein as the
“Entity Representatives”). Any such individual or Entity Representative will be deemed to
have actual knowledge of a particular fact, circumstance, event or other matter if (i) such fact,
circumstance, event or other matter is reflected in one or more documents (whether written or
electronic, including electronic mails sent to or by such individual or Entity Representative) in,
or that have been in, the possession of such individual or Entity Representative, including his or
her personal files or (ii) with respect to the above listed Entity Representatives who are officers
of the Company, such knowledge could be obtained from reasonable inquiry or due investigation of
the persons employed by the Company charged with administrative or operational responsibility for
such matters for the Company and who directly report to such officers of the Company.

 

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(e) “made available” means, with respect to any document, information or other
materials, made available by Company for review by Parent or Parent’s Representatives as of the
date of execution of this Agreement (and for no less than five (5) continuous business days prior
to such date) in the virtual data room maintained by the Company with the BMC Group in connection
with the transaction contemplated by this Agreement.

(f) “person” or “Person” means an individual, corporation, partnership,
limited partnership, syndicate, person (including, without limitation, a “person” as defined in
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended), trust, association or
entity or government, political subdivision, agency or instrumentality of a government.

(g) “Pro Rata Percentage” means, with respect to any Company Participant, the
fraction, expressed as a percentage, that the aggregate Transaction Consideration received by such
Company Participant bears to the aggregate Transaction Consideration received by all Company
Participants.

(h) “subsidiary” or “subsidiaries” of any person means any corporation,
partnership, joint venture or other legal entity of which such person (either
alone or through or together with any other subsidiary) owns, directly or indirectly, more
than 50% of the stock or other equity interests, the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such corporation or
other legal entity.

SECTION 10.03 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full force and effect so
long as the economic or legal substance of the transactions contemplated by this Agreement is not
affected in any manner materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the parties
as closely as possible in a mutually acceptable manner in order that the transactions contemplated
by this Agreement be consummated as originally contemplated to the fullest extent possible.

SECTION 10.04 Assignment; Binding Effect; Benefit. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the parties hereto
(whether by operation of Law or otherwise) without the prior written consent of the Parent, on the
one hand, and prior to the Effective Time, the Company, and after the Effective Time, the
Stockholders’ Representative, on the other hand. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns. Except as specifically set forth herein, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or liabilities under or by
reason of this Agreement except that (i) Section 6.13 shall also be for the benefit of the
D&O Indemnified Parties, and (ii) Article IX shall also be for the benefit of the
Indemnified Parties.

 

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SECTION 10.05 Incorporation of Exhibits. The Company Disclosure Schedule, the Parent
Disclosure Schedule, the Schedules and all Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as if fully set forth herein.

SECTION 10.06 Specific Performance. The parties hereto agree that irreparable damage
would occur in the event any provision of this Agreement was not performed in accordance with the
terms hereof and that the parties shall be entitled to specific performance of the terms hereof in
addition to any other remedy at law or in equity.

SECTION 10.07 Governing Law; Forum. This Agreement shall be governed by, and construed in accordance with, the laws of the
State of Delaware applicable to contracts executed in and to be performed in that state and without
regard to any applicable conflicts of law. In any action between the parties hereto arising out of
or relating to this Agreement or any of the transactions contemplated by this Agreement: (i) each
of the parties irrevocably and unconditionally consents and submits to the exclusive jurisdiction
and venue of either the state courts located in Wilmington, Delaware or the United States District
Court for the District of Delaware and (ii) each of the parties irrevocably consents to service of
process by first class certified mail, return receipt requested, postage prepaid.

SECTION 10.08 Time of the Essence. For purposes of this Agreement and the
transactions contemplated by this Agreement, time is of the essence.

SECTION 10.09 Waiver of Jury Trial. Each of the parties hereto hereby irrevocably
waives any and all right to trial by jury in any legal proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby.

SECTION 10.10 Construction and Interpretation.

(a) For purposes of this Agreement, whenever the context requires, the singular number shall
include the plural, and vice versa; the masculine gender shall include the feminine and neuter
genders; the feminine gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.

(b) Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or
resolved against any party, whether under any rule of construction or otherwise. No party to this
Agreement shall be considered the draftsman. The parties acknowledge and agree that this Agreement
has been reviewed, negotiated, and accepted by all parties and their attorneys and shall be
construed and interpreted according to the ordinary meaning of the words used so as fairly to
accomplish the purposes and intentions of all parties hereto.

 

88

 

(c) As used in this Agreement, the words “include” and “including,” and variations thereof,
shall not be deemed to be terms of limitation, but rather shall be deemed to be followed by the
words “without limitation.”

(d) Except as otherwise indicated, all references in this Agreement to “Articles,” “Sections,”
“Schedules” and “Exhibits” are intended to refer to an Article or Section of, or Schedule or
Exhibit to, this Agreement.

(e) Except as otherwise indicated, all references (i) to any agreement (including this
Agreement), contract or Law are to such agreement, contract or Law as amended, modified,
supplemented or replaced from time to time, and (ii) to any Governmental Entity include any
successor to that Governmental Entity.

(f) If any notices or other communications would otherwise be deemed due or given on a day
which is not a business day, then such notice or other communication shall be deemed due or given
on the first business day following such day.

SECTION 10.11 Further Assurances. Each party hereto shall execute and cause to be
delivered to each other party hereto such instruments and other documents, and shall take such
other actions, as such other party may reasonably request (prior to, at or after the Closing) for
the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement.

SECTION 10.12 Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.

SECTION 10.13 Counterparts. This Agreement may be executed and delivered (including
by facsimile or .PDF transmission) in two or more counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together shall constitute one
and the same agreement.

SECTION 10.14 Entire Agreement; Amendment. This Agreement (including the Exhibits,
the Schedules, the Company Disclosure Schedule and the Parent Disclosure Schedule) and the
Non-Disclosure Agreement constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings among the parties with
respect thereto. No addition or amendment to or modification of any provision of this Agreement
shall be binding upon any party hereto unless made in writing and signed by Parent, on the one
hand, and prior to the Effective Time, the Company, and after the Effective Time, the Stockholders’
Representative, on the other hand. Subject to the preceding sentence, any such addition, amendment
or modification shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.

 

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IN WITNESS WHEREOF, each of Parent, Merger Sub, the Company and the Stockholders’
Representative has executed or has caused this Agreement to be executed by its duly authorized
officer as of the date first written above.

	 	 	 	 	 
	 	SYNCHRONOSS TECHNOLOGIES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	ECHO MERGER SUB, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	FUSIONONE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	STOCKHOLDERS’ REPRESENTATIVE
	 
	 
	 	 
	 
	 	
John Malloy, solely as Stockholders’

Representative

 	 

[Signature Page to Agreement and Plan of Merger]

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