AGREEMENT AND PLAN OF MERGER AND REORGANIZATION BY AND AMONG CITRIX SYSTEMS, INC., PVA ACQUISITION CORPORATION, PVA ACQUISITION LLC, XENSOURCE, INC. AND THE STOCKHOLDER REPRESENTATIVE

Exhibit 2.5

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

BY AND AMONG

CITRIX SYSTEMS, INC.,

PVA ACQUISITION CORPORATION,

PVA ACQUISITION LLC,

XENSOURCE, INC.

AND

THE STOCKHOLDER REPRESENTATIVE

Dated as of August 14, 2007

This Agreement and Plan of Merger and Reorganization (the “Merger Agreement”) contains representations and warranties that XenSource, Inc. (“XenSource”) and Citrix Systems, Inc. (“Citrix”) made to each other. These representations and warranties were made only for the purposes of the Merger Agreement and solely for the benefit of XenSource and Citrix as of specific dates, may be subject to important limitations and qualifications agreed to by XenSource and Citrix and included in confidential disclosure schedules provided by XenSource to Citrix in connection with the signing of the Merger Agreement, and may not be complete. Furthermore, these representations and warranties may have been made for the purposes of allocating contractual risk between XenSource and Citrix instead of establishing these matters as facts, and may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of the filing of the Merger Agreement by Citrix with the Securities and Exchange Commission. Accordingly, you should not rely upon the representations and warranties contained in the Merger Agreement as characterizations of the actual state of facts, since they were intended to be for the benefit of, and to be limited to, Citrix and XenSource.

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Exhibits and Schedules

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

This AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (this “ Agreement ”) is made and entered into as of August 14, 2007 by and among Citrix Systems, Inc., a Delaware corporation (“ Parent ”), PVA Acquisition Corporation, a Delaware corporation and a wholly owned subsidiary of Parent (“ Merger Sub ”), PVA Acquisition LLC, a Delaware limited liability company and a wholly owned subsidiary of Parent (the “ LLC ”), XenSource, Inc., a Delaware corporation (the “ Company ”), and John G. Connors, as the Stockholder Representative.

RECITALS

A. Parent, Merger Sub and the Company intend to effect a merger (the “ Merger ”) of Merger Sub with and into the Company in accordance with this Agreement and the General Corporation Law of the State of Delaware (the “ DGCL ”) and to the extent applicable the California General Corporation Law (the “ CGCL ”), with the Company to be the surviving corporation of the Merger. Promptly following the Merger, Parent will merge (the “ LLC Merger ”) the Interim Surviving Corporation with and into the LLC, with the LLC to be the surviving entity of the LLC Merger.

B. The Merger and the LLC Merger (collectively, the “ Integrated Merger ”) are intended to be part of an integrated plan and together are intended to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the “ Code ”), and this Agreement is intended to constitute a “plan of reorganization” within the meaning of the regulations promulgated under Section 368 of the Code.

C. The board of directors of the Company has unanimously (i) determined that the Merger is fair to, and in the best interests of, the Company and its stockholders, (ii) adopted and approved this Agreement and approved the Merger and the other transactions contemplated by this Agreement and (iii) resolved to recommend that the stockholders of the Company adopt and approve this Agreement and the other transactions contemplated by this Agreement, and approve the Merger.

D. The respective boards of directors of Parent and Merger Sub have approved this Agreement and the Escrow Agreement and the Merger and the other transactions contemplated by this Agreement.

E. Concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, each of the Persons listed on Schedule I is entering into a voting agreement with Parent.

F. Concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, each of the Key Employees and each of Keir Fraser, John Bara, Steven Hand and Christian Limpach is entering into a Vesting Continuation Agreement and an Option Reset Agreement with the Company.

G. Concurrently with the execution of this Agreement, and as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, each of Peter Levine, Simon Crosby, Ian Pratt, Frank Artale, Gordon Mangione and Earl Charles (collectively, the “ Key Employees ”) is entering into an Employment Agreement and Executive Confidentiality, Non-Solicitation and Non-Competition Agreement (collectively, an “ Employment and NSC Agreement ”) with Parent, which shall by its terms become effective upon the Effective Time.

NOW, THEREFORE, in consideration of the covenants, promises and representations set forth herein, and for other good and valuable consideration, and intending to be legally bound hereby, the parties agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions . For purposes of this Agreement:

“ Accounting Referee ” is defined in Section 2.6(g).

“ Acquisition Expenses ” means (i) all fees and expenses incurred by or on behalf of the Company or any of its Subsidiaries in connection with the Merger or the other transactions contemplated by this Agreement, including all legal, accounting, investment banking, tax and financial advisory and all other fees and expenses of third parties incurred in connection with the negotiation and effectuation of the terms and conditions of this Agreement and the transactions contemplated hereby and (ii) any premiums, fees or other costs or expenses incurred or accrued with respect to the purchase of the D&O Policy in excess of $125,000.

“ Adjusted Merger Consideration ” means the Merger Consideration minus the Aggregate Assumed Company Option Value.

“ Adjustment Amount ” is defined in Section 2.6(f)(iii).

“ Administrator ” is defined in Section 6.14.

“ Affiliate ” means, with respect to the Person to which it refers, a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, such Person.

“ Aggregate Assumed Company Option Value ” means (x) the product of the aggregate number of shares of Company Common Stock subject to the Assumed Company Options multiplied by the Per Share Merger Consideration minus (y) the Aggregate Option Exercise Price.

“ Aggregate Option Exercise Price ” means the aggregate of the exercise prices of all Assumed Company Options.

“ Agreed Claims ” is defined in Section 10.4(e).

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“ Agreement ” is defined in the Preamble.

“ Allocation Certificate ” is defined in Section 2.6(e).

“ Alternative Cash Ratio ” means the quotient obtained by dividing $62,500,000 by the Adjusted Merger Consideration.

“ Alternative Stock Ratio ” means 1.00 minus the Alternative Cash Ratio.

“ Antitrust Filings ” is defined in Section 6.5(a).

“ Assumed Company Option ” is defined in Section 6.14.

“ Balance Sheet Date ” is defined in Section 3.7(a).

“ Business Day ” means any day of the year on which national banking institutions in the State of Florida are open to the public for conducting business and are not required to close.

“ California Permit ” is defined in Section 7.2.

“ Cash Consideration ” is defined in Section 2.6(a).

“ Cash Ratio ” means 1.00 minus the Stock Ratio, unless there is a Parent Nasdaq Determination in which case it shall mean the Alternative Cash Ratio.

“ Certificate of Merger ” is defined in Section 2.2.

“ Certificates ” is defined in Section 2.8(b).

“ CGCL ” is defined in Recital A.

“ Claim Certificate ” is defined in Section 10.4(a).

“ Closing ” is defined in Section 2.2.

“ Closing Date ” is defined in Section 2.2.

“ Closing Date Balance Sheet ” is defined in Section 2.6(f)(i).

“ Closing Debt ” is defined in Section 2.6(f)(i).

“ Closing Working Capital ” is defined in Section 2.6(f)(i).

“ Code ” is defined in Recital B.

“ Co-Employer ” means any Person that is or was considered to be a co-employer with the Company or any of its Subsidiaries.

“ Company ” is defined in the Preamble.

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“ Company Authorizations ” is defined in Section 3.13.

“ Company Balance Sheet ” is defined in Section 3.7(a).

“ Company Capital Stock ” means the Company Common Stock and the Company Preferred Stock, collectively.

“ Company Certificate of Incorporation ” means the Company’s Amended and Restated Certificate of Incorporation as in effect as of immediately prior to the Effective Time.

“ Company Common Stock ” is defined in Section 3.3(a).

“ Company Customer Information ” is defined in Section 3.12(d).

“ Company Employee Plan ” means any plan, program, policy, practice, Contract, or other arrangement (written or oral) providing for deferred compensation, profit sharing, bonus, severance, termination pay, performance awards, stock or stock-related awards, fringe benefits, welfare, pension or other employee benefits or remuneration of any kind, whether formal or informal, funded or unfunded, voluntarily or statutorily payable, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, which is or has been maintained, contributed to, or required to be contributed to, by the Company or any of its Subsidiaries or ERISA Affiliates or any Co-Employer for the benefit of any Employee or any consultant or independent contractor of the Company or any of its Subsidiaries, or pursuant to which the Company or any of its Subsidiaries has or may have any liability, contingent or otherwise.

“ Company Financial Statements ” is defined in Section 3.7(a).

“ Company Intellectual Property ” means any Intellectual Property that has been used, is used or is held for use by the Company or any of its Subsidiaries in the business of the Company or any of its Subsidiaries as previously conducted, as currently conducted or, with respect to Company Products and Company Products Under Development, as currently proposed to be conducted.

“ Company Material Adverse Effect ” means a material adverse effect on (a) the business, assets, liabilities, financial condition or results of operations of the Company and its Subsidiaries taken as a whole or (b) the ability of the Company to perform its obligations pursuant to this Agreement and the Related Agreements and to consummate the Merger and the transactions contemplated hereby and thereby in accordance with the terms hereof and thereof.

“ Company Option Plan ” is defined in Section 3.3(b)(i).

“ Company Options ” means all outstanding stock options granted under the Company Option Plan.

“ Company Patents ” is defined in Section 3.14(a)(ii).

“ Company Preferred Stock ” is defined in Section 3.3(a).

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“ Company Products ” is defined in Section 3.15(a).

“ Company Products Under Development ” means each of the following future product or product feature releases as identified by internal Company project name: (i) “Rio” XenEnterprise v4; (ii) “Miami”; (iii) “Tokyo”; (iv) “Palo Alto”; and (v) “Cupertino”.

“ Company Registered Intellectual Property ” means all of the Registered Intellectual Property owned by, assigned to, or filed in the name of, the Company or any of its Subsidiaries.

“ Company Schedules ” is defined in Article III.

“ Company Stock Rights ” means (i) all outstanding Company Options and (ii) all other outstanding subscriptions, options, calls, warrants or any other rights, whether or not currently exercisable, to acquire any shares of Company Capital Stock or shares of capital stock of any Subsidiary of the Company, or that are or may become convertible into or exchangeable for any shares of Company Capital Stock or shares of capital stock of any Subsidiary of the Company or another Company Stock Right. For purposes of this definition, shares of Company Preferred Stock shall not be considered Company Stock Rights.

“ Company Stockholder Approval ” is defined in Section 3.4.

“ Company Stockholders Meeting ” is defined in Section 7.4(c).

“ Continuing Employees ” is defined in Section 6.8(a).

“ Contract ” means any written agreement, contract, mortgage, indenture, lease, license, understanding, arrangement, instrument, note, guaranty, indemnity, representation, warranty, deed, assignment, power of attorney, certificate, purchase order, work order, statement of work, insurance policy, benefit plan, scheme, commitment, covenant, assurance or undertaking of any nature, and also includes any of the foregoing that is unwritten, oral or implied but in each case only if it is legally binding on the Company or a Subsidiary of the Company.

“ Current Employee ” means any current employee, officer or director of the Company or any of its Subsidiaries, including any current employee, officer or director co-employed by the Company or any Subsidiary and a Co-Employer.

“ D&O Indemnification Agreements ” is defined in Section 3.26(m).

“ D&O Policy ” is defined in Section 6.9(b).

“ Debt ” means, without duplication, (a) all obligations of the Company and its Subsidiaries for borrowed money or extensions of credit (including bank overdrafts and advances), (b) all obligations of the Company and its Subsidiaries evidenced by bonds, debentures, notes or other similar instruments, (c) all obligations of the Company and its Subsidiaries to pay the deferred purchase price of property, except trade accounts payable arising in the ordinary course of business, (d) all obligations of the Company and its Subsidiaries as lessee capitalized in accordance with GAAP, (e) all obligations of others secured by a Lien on any asset of the Company or any of its Subsidiaries, whether or not such obligations are assumed

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by the Company or any of its Subsidiaries, (f) all obligations of the Company and its Subsidiaries, contingent or otherwise, directly or indirectly guaranteeing any obligation of any other Person, all obligations to reimburse the issuer in respect of letters of credit or under performance or surety bonds, or other similar obligations, (g) all obligations in respect of bankers’ acceptances and under reverse repurchase agreements, and (h) all obligations of the Company or any of its Subsidiaries in respect of futures contracts, swaps and other financial contracts (determined on a net basis as if such contract or obligation was being terminated early on such date).

“ Determination Date ” is defined in Section 7.3.

“ DGCL ” is defined in Recital A.

“ Dissenting Share Payments ” means (x) any payment in respect of Dissenting Shares in excess of the consideration that otherwise would have been payable in respect of such shares in accordance with this Agreement (valuing Parent Common Stock at the Parent Average Closing Price) and (y) any costs or expenses (including attorneys’ fees, costs and expenses in connection with any action or proceeding or in connection with any investigation) in respect of any Dissenting Shares (without duplication).

“ Dissenting Shares ” is defined in Section 2.7(a).

“ DOL ” means the United States Department of Labor.

“ Effective Time ” is defined in Section 2.2.

“ Employee ” means any current, former, or retired employee, officer, or director of the Company or any of its Subsidiaries, including any current, former or retired employee, officer or director co-employed by the Company or any Subsidiary and a Co-Employer.

“ Employment Agreement ” means any management, employment, service, severance, consulting, relocation, repatriation, expatriation or similar Contract between the Company, any of its Subsidiaries or any of their respective Affiliates, on the one hand, and any Employee, consultant or independent contractor, on the other hand.

“ Employment and NSC Agreement ” is defined in Recital G.

“ Equiserve ” is defined in Section 2.8(a).

“ ERISA ” means the United States Employee Retirement Income Security Act of 1974, as amended.

“ ERISA Affiliate ” means any Person that, together with the Company or any of its Subsidiaries, would be treated as a single employer under Section 414 of the Code or Section 4001 of ERISA and the regulations thereunder.

“ Escrow Agent ” means American Stock Transfer & Trust Company or such other Person selected by Parent and reasonably acceptable to the Company.

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“ Escrow Agreement ” is defined in Section 2.6(d).

“ Escrow Amount ” means an amount in cash equal to $62,500,000.

“ Estimated Closing Date Balance Sheet ” is defined in Section 2.6(e)(i).

“ Estimated Debt ” is defined in Section 2.6(e)(i).

“ Estimated Working Capital ” is defined in Section 2.6(e)(i).

“ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended.

“ Exchange Agent ” is defined in Section 2.8(a).

“ Excluded Company Material Adverse Effect ” means (x) a material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Company and its Subsidiaries taken as a whole that is proximately caused by (i) the outbreak or escalation of war, hostilities or terrorist activities, either in the United States or abroad, that does not affect the Company and its Subsidiaries disproportionately, or (ii) changes affecting the economy generally or the industry in which the Company principally operates generally that do not affect the Company and its Subsidiaries disproportionately, and (y) solely with respect to events, occurrences, changes, effects or conditions occurring after November 30, 2007, any material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Company and its Subsidiaries taken as a whole that is proximately caused by the announcement of the Merger.

“ Excluded Parent Material Adverse Effect ” means (x) a material adverse effect on the business, assets, liabilities, financial condition or results of operations of Parent and its Subsidiaries taken as a whole that (a) is proximately caused by (i) the outbreak or escalation of war, hostilities or terrorist activities, either in the United States or abroad, that does not affect Parent and its Subsidiaries disproportionately, or (ii) changes affecting the economy generally or the industry in which Parent principally operates generally that do not affect Parent and its Subsidiaries disproportionately, or (b) arises or results from or relates to an Option Effect or (y) solely with respect to events, occurrences, changes, effects or conditions occurring after November 30, 2007, any material adverse effect on the business, assets, liabilities, financial condition or results of operations of the Parent and its Subsidiaries taken as a whole that is proximately caused by the announcement of the Merger.

“ Fairness Hearing Law ” is defined in Section 7.2.

“ Final Surviving Entity ” is defined in Section 2.1

“ Fully Diluted Common Stock Outstanding ” means, without duplication, at the Effective Time: (i) the aggregate number of shares of Company Common Stock issued and outstanding; plus (ii) the aggregate number of shares of Company Common Stock issuable in respect of issued and outstanding shares of Company Preferred Stock; plus (iii) the aggregate number of shares of Company Common Stock issuable upon the exercise of all outstanding Company Options (whether or not then exercisable), including the Assumed Company Options; plus (iv) the aggregate number of shares of Company Common Stock issuable upon the conversion or exercise of any Company Stock Rights outstanding (whether or not then exercisable).

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“ Fundamental Representations ” is defined in Section 10.1(a).

“ GAAP ” is defined in Section 3.7(a).

“ Governmental Entity ” is defined in Section 3.6(a).

“ Hazardous Material ” is defined in Section 3.23(a).

“ Hazardous Materials Activities ” is defined in Section 3.23(b).

“ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

“ Indemnified D&Os ” is defined in Section 6.9(a).

“ Indemnified Parties ” is defined in Section 10.2(a).

“ Information Statement ” is defined in Section 7.2.

“ Integrated Merger ” is defined in Recital B.

“ Intellectual Property ” means any or all of the following and all rights in, arising out of, or associated therewith: (i) all United States, international and foreign patents and applications therefor and all reissues, divisions, divisionals, renewals, extensions, provisionals, continuations and continuations-in-part thereof, and all patents, applications, documents and filings claiming priority thereto or serving as a basis for priority thereof; (ii) all inventions (whether or not patentable), invention disclosures, improvements, trade secrets, proprietary information, know how, computer software programs (in both source code and object code form), technology, technical data and customer lists, tangible or intangible proprietary information, and all documentation relating to any of the foregoing; (iii) all copyrights, copyright registrations and applications therefor, and all other rights corresponding thereto throughout the world; (iv) all industrial designs and any registrations and applications therefor throughout the world; (v) all trade names, logos, common law trademarks and service marks, trademark and service mark registrations and applications therefor throughout the world; (vi) all proprietary databases and data collections and all rights therein throughout the world; (vii) all moral and economic rights of authors and inventors, however denominated, throughout the world; (viii) all Web addresses, sites and domain names and numbers; and (ix) any similar or equivalent rights to any of the foregoing anywhere in the world.

“ Interim Surviving Corporation ” is defined in Section 2.1.

“ Investor Agreements ” means, collectively, (i) that certain Investors’ Rights Agreement by and among the Company and the Investors listed on Exhibit A attached thereto dated September 29, 2006, (ii) that certain Voting Agreement by and among the Company, the Investors listed on Schedule A attached thereto, and the Common Stockholders listed on

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Schedule B attached thereto dated September 29, 2006, (iii) that certain First Refusal and Co-Sale Agreement by and among the Company, the Investors and the Common Stockholders listed on Schedule A attached thereto, dated September 29, 2006, (iv) that certain Management Rights Letter dated June 3, 2005, by and between the Company, Sevin Rosen Fund IX L.P., Sevin Rosen IX Affiliates Fund L.P., Sevin Rosen Bayless Management Company, KPCB Holdings, Inc., Radar Partners, Accel IX L.P., Accel IX Strategic Partners L.P. and Accel Investors 2005 L.L.C., (v) that certain Management Rights Letter dated September 28, 2005, by and between the Company and New Enterprise Associates 11, Limited Partnership and (vi) that certain Management Rights Letter dated September 29, 2006, by and between the Company, Ignition Venture Partners III, LP and Ignition Managing Directors Fund III, LLC.

“ IRS ” means the United States Internal Revenue Service.

“ Key Employee ” is defined in Recital G.

“ knowledge ” (including any derivation thereof such as “ known ” or “ knowing ”) means the actual knowledge of the directors of the Company and its Subsidiaries and, to the extent not included in the foregoing, any of the Key Employees, or any facts or circumstances that would be known by any of the foregoing Persons after review of this Agreement and the Company Schedules.

“ Law ” means any federal, state, foreign, or local law, statute, ordinance, rule, regulation, writ, injunction, directive, order, judgment, administrative interpretation, treaty, decree, administrative or judicial decision and any other executive, legislative, regulatory or administrative proclamation.

“ Leases ” is defined in Section 3.12(a)(ii).

“ Letter of Transmittal ” is defined in Section 2.8(b).

“ Lien ” means any lien, pledge, mortgage, deed of trust, security interest, claim, lease, license, charge, option, right of first refusal, easement, restriction, reservation, servitude, proxy, voting trust or agreement, transfer restriction under any shareholder or similar agreement, or encumbrance of any nature whatsoever.

“ LLC ” is defined in the Preamble.

“ LLC Act ” is defined in Section 2.1

“ LLC Certificate of Merger ” is defined in Section 2.2.

“ LLC Merger ” is defined in Recital A.

“ LLC Merger Effective Time ” is defined in Section 2.2.

“ Losses ” means claims, losses, liabilities, deficiencies, royalties, damages, diminution of value, interest and penalties, costs and expenses, including reasonable attorneys’ fees and reasonable expenses of investigation and defense, excluding any consequential, incidental,

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indirect, special, exemplary, enhanced or punitive damages or losses (in tort, contract or otherwise), including loss of future revenue, income or profits, diminution of value or loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement; provided , that (i) in the case of willful breach or intentional misconduct by or on behalf of the Company or any Stockholder, consequential, incidental, indirect, special, exemplary, enhanced or punitive damages or losses (in tort, contract or otherwise) shall constitute Losses notwithstanding the foregoing exclusion thereof, and (ii) in connection with a permanent injunction with respect to infringement or alleged infringement of a third party patent right or claim, loss of future revenue, income or profits shall constitute Losses notwithstanding the foregoing exclusion thereof. Notwithstanding any of the foregoing, Losses shall specifically include any consequential, incidental, indirect, special, exemplary, enhanced and punitive damages or losses (in tort, contract or otherwise) as well as any loss of future revenue, income or profits, diminution of value or loss of business reputation or opportunity in connection with any and all Third-Party Claims but only to the extent that an Indemnified Party is obligated to a Third Party Claimant for such Losses whether as a result of a settlement, judgment or otherwise.

“ Merger ” is defined in Recital A.

“ Merger Consideration ” is defined in Section 2.6(a).

“ Merger Sub ” is defined in the Preamble.

“ Nasdaq ” is defined in Section 6.19.

“ Nondisclosure Agreement ” is defined in Section 6.2.

“ Nonstatutory Option ” means any Company Option (or portion thereof) that is not an incentive stock option within the meaning of Section 422 of the Code.

“ Option Effect ” means any change, event, modification, restatement, revision, update, development, result or effect that directly or indirectly arises or results from or relates to Parent’s historical stock option granting practices and related accounting, tax treatment, reporting, disclosure and investigation thereof and the outcome, resolution or results thereof including any related litigation.

“ Option Exchange Ratio ” means the quotient obtained by dividing (x) the Per Share Merger Consideration by (y) the Parent Average Closing Price.

“ Option Reset Agreement ” is defined in Section 6.14.

“ Parent ” is defined in the Preamble.

“ Parent 2007 Q1 Disclosure ” means the disclosures in the press release (excluding quotes of Parent’s Chief Executive Officer and Parent’s quarterly and annual guidance) attached as Exhibit 99.1 to Parent’s Form 8-K dated as of April 25, 2007 furnished to the SEC.

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“ Parent 2007 Q2 Disclosure ” means the disclosures in the press release (excluding quotes of Parent’s Chief Executive Officer and Parent’s quarterly and annual guidance) attached as Exhibit 99.1 to Parent’s Form 8-K dated as of July 18, 2007 furnished to the SEC.

“ Parent 2007 Disclosure ” means the Parent 2007 Q1 Disclosure and the Parent 2007 Q2 Disclosure.

“ Parent Average Closing Price ” means $36.18.

“ Parent Common Stock ” means the common stock of Parent, par value $.001 per share.

“ Parent Draft 10-K” means the draft of Parent’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006 provided by Parent to the Company and the Persons set forth on Schedule I.

“ Parent Material Adverse Effect ” means a material adverse effect on (a) the business, assets, liabilities, financial condition or results of operations of Parent and its Subsidiaries taken as a whole or (b) the ability of Parent or Merger Sub to perform its obligations pursuant to this Agreement and the Related Agreements and to consummate the Merger and the transactions contemplated hereby and thereby in accordance with the terms hereof and thereof. For purposes of clarity, changes in the market price of shares of Parent Common Stock shall not constitute or be deemed to constitute a Parent Material Adverse Effect; provided , that the Company shall not be prevented from asserting that a separate material adverse effect resulting in changes in the market price of shares of Parent Common Stock constitutes a Parent Material Adverse Effect or from introducing evidence that such changes in market price are evidence of the materiality of such separate material adverse effect.

“ Parent Nasdaq Determination ” means a determination by Parent (with notice to the Company) in its sole and reasonable discretion that replacing the term “Stock Ratio” with “Alternative Stock Ratio” for all purposes in this Agreement could not result in the issuance by Parent of a number of shares of Parent Common Stock that, taking into account all facts and circumstances in connection with the Merger, would require the approval of the stockholders of Parent under Rule 4350(i)(1) of the Marketplace Rules of the National Association of Securities Dealers.

“ Parent Options ” is defined in Section 4.5.

“ Parent Preferred Stock ” is defined in Section 4.5.

“ Parent SEC Reports ” means (i) Parent’s Annual Report on Form 10-K for the year ended December 31, 2006 and (ii) any of Parent’s Quarterly Reports required to be filed on Form 10-Q with respect to any 2007 fiscal quarter of Parent ending prior to the Closing Date and required to be filed prior to the Closing Date.

“ Per Share Merger Consideration ” means the amount equal to the quotient obtained by dividing (x) the sum of the Merger Consideration plus the Aggregate Option Exercise Price by (y) the Fully Diluted Common Stock Outstanding.

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“ Permitted Liens ” means any: (i) mechanic’s and other similar statutory Liens that are not material in nature or amount, (ii) Liens for Taxes or other governmental charges not yet due and payable or due but not delinquent or that are being contested in good faith and which are fully reserved for in the Company Financial Statements, (iii) Liens for which adequate reserves have been established in the Company Financial Statements, (iv) restrictions on transfers of securities under applicable securities Laws or (v) other Liens that are not material in nature, significance or amount and that do not materially impair the value of use of the assets to which they relate.

“ Person ” means any individual, corporation, partnership, limited liability company, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental Entity or other entity.

“ Plans ” is defined in Section 6.8(a).

“ Pro Rata Share ” means, with respect to each Stockholder, the quotient obtained by dividing (x) the Merger Consideration payable with respect to such Stockholder’s shares of Company Capital Stock (including for these purposes the Escrow Amount), by (y) the aggregate Merger Consideration payable with respect to all shares of Company Capital Stock (including for these purposes the Escrow Amount).

“ Proposal ” is defined in Section 6.11.

“ Proxy Statement ” is defined in Section 7.3(a).

“ Publicly Available Software ” is defined in Section 3.14(l).

“ Real Property ” is defined in Section 3.12(a)(i).

“ Registered Intellectual Property ” means all United States, international and foreign: (i) patents and patent applications (including provisional applications and design patents and applications) and all reissues, divisions, divisionals, renewals, extensions, counterparts, continuations and continuations-in-part thereof, and all patents, applications, documents and filings claiming priority thereto or serving as a basis for priority thereof; (ii) registered trademarks, registered service marks, applications to register trademarks, applications to register service marks, intent-to-use applications, or other registrations or applications related to trademarks; (iii) registered copyrights and applications for copyright registration; (iv) domain name registrations and Internet number assignments; and (v) any other Intellectual Property that is the subject of an application, certificate, filing, registration or other document issued, filed with, or recorded by any Governmental Entity.

“ Registration Statement ” is defined in Section 7.3.

“ Related Agreement(s) ” is defined in Section 3.4.

“ Rule 145 ” is defined in Section 6.17.

“ Rule 145 Affiliate ” is defined in Section 6.17.

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“ SEC ” means the Securities and Exchange Commission.

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

“ Services ” is defined in Section 3.15(b).

“ Soliciting Materials ” is defined in Section 7.4(b).

“ Standard Support Agreement ” is defined in Section 3.14(q).

“ Stock Consideration ” is defined in Section 2.6(a).

“ Stock Ratio ” means the quotient obtained by dividing (i) (x) 8,969,525 multiplied by the Parent Average Closing Price minus (y) the Aggregate Assumed Company Option Value by (ii) the Adjusted Merger Consideration, unless there is a Parent Nasdaq Determination in which case it shall mean the Alternative Stock Ratio; provided , however , that in all circumstances the Stock Ratio shall be adjusted so that in no event could Parent be required to issue a number of shares of Parent Common Stock that, taking into account all facts and circumstances in connection with the Merger, would require the approval of the stockholders of Parent under Rule 4350(i)(1) of the Marketplace Rules of the National Association of Securities Dealers.

“ Stockholder ” means any holder of a share of Company Capital Stock.

“ Stockholder Representative ” is defined in Section 10.5(a).

“ Subsidiary ” means (i) with respect to any Person, any Person of which equity securities or other ownership interests having ordinary power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned or controlled by such Person and (ii) with respect to the Company, also includes any Person required to be disclosed on Schedule 3.2(a)(i) .

“ Subsidiary Securities ” is defined in Section 3.2(b).

“ Support Agreements ” is defined in Section 3.14(q).

“ Target Working Capital Amount ” means $12,699,000, minus $43,333 for each calendar day from and after July 31, 2007 through and including the Closing Date.

“ Tax Authority ” means any Governmental Entity responsible for the imposition or collection of any Tax.

“ Tax Returns ” means all returns, declarations, reports, claims for refund, information statements and other documents relating to Taxes, including all schedules and attachments thereto, and including all amendments thereof.

“ Taxes ” means all federal, state, local and foreign net income, alternative or add-on minimum, estimated, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital profits, lease, service, license, withholding, payroll, employment, excise,

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severance, stamp, occupation, premium, property, environmental or windfall profit taxes, customs duties and other taxes and governmental fees in the nature of taxes (including tax liabilities incurred or borne as a transferee or successor, or by contract or otherwise), together with all interest, penalties, additions to tax and additional amounts with respect thereto.

“ Terminated Employee ” is defined in Section 6.8(d).

“ Termination Date ” is defined in Section 11.1(b).

“ Third Party Claim ” is defined in Section 10.4(a).

“ Third Party Claimant ” is defined in Section 10.4.

“ Threshold Amount ” is defined in Section 10.3(a).

“ Transaction Bonus Amount ” is defined in Section 3.25(h).

“ Transaction Bonus Plan ” is defined in Section 3.25(h).

“ Vesting Continuation Agreement ” is defined in Section 7.4(d).

“ Working Capital ” means, as of the Closing, the consolidated current assets of the Company and its Subsidiaries, minus the consolidated current liabilities of the Company and its Subsidiaries (determined in accordance with GAAP); provided , however , that (i) current liabilities shall exclude any Debt and (ii) current liabilities shall include all Acquisition Expenses to the extent not paid as of the Closing.

“ Working Capital Deficiency ” means the absolute value of the amount (if any) by which the Estimated Working Capital is less than the Target Working Capital Amount.

ARTICLE II

THE MERGER

2.1 The Integrated Merger . At the Effective Time, and subject to and upon the terms and conditions of this Agreement and the provisions of the DGCL and to the extent applicable the CGCL, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall cease, and the Company shall continue as the surviving corporation and as a wholly owned subsidiary of Parent. The surviving corporation after the Merger is sometimes referred to herein as the “ Interim Surviving Corporation .” At the LLC Merger Effective Time, and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the Delaware Limited Liability Company Act (the “ LLC Act ”) and the DGCL, the Interim Surviving Corporation shall be merged with and into the LLC, the separate corporate existence of the Interim Surviving Corporation shall cease, and the LLC shall continue as the surviving entity and as a wholly-owned subsidiary of Parent. The surviving entity after the LLC Merger is sometimes referred to herein as the “ Final Surviving Entity .”

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2.2 Effective Time . Unless this Agreement is earlier terminated pursuant to Section 11.1, the closing of the Merger (the “ Closing ”) will take place as promptly as practicable, but no later than three (3) Business Days, following the satisfaction or waiver of the conditions set forth in Article IX (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of such conditions), at the offices of Bingham McCutchen LLP, 150 Federal Street, Boston, Massachusetts unless another place or time is agreed to by Parent and the Company. The date upon which the Closing occurs is herein referred to as the “ Closing Date .” On the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a properly completed and executed Certificate of Merger satisfying the requirements of the DGCL substantially in the form of Exhibit A (the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL (the time of acceptance by the Secretary of State of the State of Delaware of such filing being referred to herein as the “ Effective Time ”). Promptly after the Effective Time, Parent shall cause the LLC Merger to be consummated by filing a Certificate of Merger substantially in the form of Exhibit B (the “ LLC Certificate of Merger ”) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and the LLC Act (the time of the acceptance of such filing by the Secretary of State of the State of Delaware being referred to herein as the “ LLC Merger Effective Time ”).

2.3 Effect of the Merger . At the Effective Time, the effect of the Merger shall be as provided in this Agreement and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all rights and property of the Company and Merger Sub shall vest in the Interim Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become debts, liabilities and duties of the Interim Surviving Corporation. At the LLC Merger Effective Time, the effect of the LLC Merger shall be as provided in this Agreement and the applicable provisions of the DGCL and the LLC Act. Without limiting the generality of the foregoing, and subject thereto, at the LLC Merger Effective Time all rights and property of the Interim Surviving Corporation and the LLC shall vest in the Final Surviving Entity, and all debts, liabilities and duties of the Interim Surviving Corporation and the LLC shall become the debts, liabilities and duties of the Final Surviving Entity.

2.4 Organizational Documents .

(a) At the Effective Time, the Certificate of Incorporation of Merger Sub shall be the Certificate of Incorporation of the Interim Surviving Corporation until thereafter amended as provided by the DGCL and such Certificate of Incorporation; provided , that Article I of the Certificate of Incorporation of the Interim Surviving Corporation shall be amended to read as follows: “The name of the corporation is XenSource, Inc.”.

(b) At the Effective Time, the By-laws of Merger Sub shall be the By-laws of the Interim Surviving Corporation until thereafter amended.

(c) At the LLC Merger Effective Time, the Certificate of Formation of the LLC as in effect immediately prior to the LLC Merger Effective Time shall be the Certificate of Formation of the Final Surviving Entity until thereafter amended in accordance with the LLC Act and such Certificate of Formation; provided , however , that as of the LLC Merger Effective Time, the Certificate of Formation shall provide that the name of the Final Surviving Entity is “XenSource, LLC.”

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(d) At the LLC Merger Effective Time, the Limited Liability Company Agreement of the LLC as in effect immediately prior to the LLC Merger Effective Time shall be the Limited Liability Company Agreement of the Final Surviving Entity until thereafter amended in accordance with the LLC Act and such Limited Liability Company Agreement; provided , however , that as of the LLC Merger Effective Time, the Limited Liability Company Agreement shall provide that the name of the Final Surviving Entity is “XenSource, LLC.”

2.5 Directors, Managers and Officers .

(a) Directors/Managers . At the Effective Time and by virtue of the Merger, the director(s) of Merger Sub immediately prior to the Effective Time shall be the initial director(s) of the Interim Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Interim Surviving Corporation. At the LLC Merger Effective Time, and by virtue of the LLC Merger, the managers of the LLC immediately prior to the LLC Merger Effective Time shall be the initial managers of the Final Surviving Entity, until their respective successors are duly elected or appointed and qualified.

(b) Officers . At the Effective Time and by virtue of the Merger, the officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Interim Surviving Corporation, each to hold office in accordance with the By-laws of the Interim Surviving Corporation. At the LLC Merger Effective Time, by virtue of the LLC Merger, the officers of LLC immediately prior to the LLC Merger Effective Time shall be the initial officers of the Final Surviving Entity, each to hold office until their respective successors are duly elected or appointed and qualified.

2.6 Merger Consideration; Effect on Company Capital Stock; Escrow; Adjustment .

(a) Merger Consideration . The maximum aggregate consideration payable by Parent and Merger Sub in the Merger (the “ Merger Consideration ”) shall be an amount, subject to adjustment pursuant to Section 2.6(f), equal to: (i) $500,000,000, minus (ii) any Debt outstanding at the Effective Time, minus (iii) the Working Capital Deficiency, if any, and minus (iv) the Transaction Bonus Amount. The Merger Consideration payable to the Stockholders shall be paid in shares of Parent Common Stock (the “ Stock Consideration ”) and in cash (the “ Cash Consideration ”) as set forth in Section 2.6(c).

(b) Effect on Company Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the Stockholders:

(i) Cancellation of Parent-Owned and Company-Owned Stock . Each share of Company Capital Stock owned by Merger Sub, Parent, the Company or any direct or indirect wholly owned Subsidiary of Parent or of the Company at the Effective Time shall be canceled and extinguished without any conversion thereof or consideration therefor.

(ii) Company Capital Stock . Each share of Company Capital Stock issued and outstanding at the Effective Time (other than Dissenting Shares or as set forth in Section 2.6(b)(i)) will be cancelled and extinguished and be converted into the right to receive an amount, without interest, equal to the Per Share Merger Consideration, upon the terms and subject to the conditions set forth in this Agreement, including the escrow contribution provisions set forth in Section 2.6(d) and the indemnification provisions set forth in Article X hereof.

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

(c) Form of Consideration . The Per Share Merger Consideration shall be paid in an amount of cash equal to the Per Share Merger Consideration multiplied by the Cash Ratio and a number of shares of Parent Common Stock equal to the quotient obtained by dividing (i) the Per Share Merger Consideration multiplied by the Stock Ratio by (ii) the Parent Average Closing Price.

(d) Escrow . At Closing, Parent shall deposit the Escrow Amount with the Escrow Agent to provide a source of funding to the Indemnified Parties for any Losses for which they are entitled to be indemnified pursuant to Article X. The Escrow Amount shall be held in trust by the Escrow Agent pursuant to the terms of the escrow agreement substantially in the form of Exhibit C (the “ Escrow Agreement ”) and shall be released in accordance with the terms thereof. The parties hereby acknowledge and agree that the Escrow Amount shall be treated as an installment obligation for purposes of Section 453 of the Code, and no party shall take any action or filing position inconsistent with such characterization. The parties further agree that, consistent with Proposed Treasury Regulation Section 1.468B-8, for Tax reporting purposes, all interest or other income earned from the investment of Escrow Amount or any portion thereof in any Tax year shall be reported as allocated to Parent until the distribution of the Escrow Amount (or portions thereof) is determined and thereafter to Parent and the Stockholders in accordance with their respective interests in the Escrow Amount consistent with Proposed Treasury Regulation Section 1.468B-8.

(e) Allocation Certificate . At least two Business Days prior to the Closing Date, the Company shall deliver to Parent a certificate (the “ Allocation Certificate ”) of the Company signed by the Chief Executive Officer and the Chief Financial Officer of the Company on behalf of the Company certifying, in each case as of the Closing, as to:

(i) an estimated consolidated unaudited balance sheet (the “ Estimated Closing Date Balance Sheet ”) of the Company and its Subsidiaries as of 11:59 p.m., Eastern time, on the Closing Date, which Estimated Closing Date Balance Sheet shall (x) be substantially in the form of the Company Balance Sheet, (y) be prepared in accordance with GAAP on a basis consistent with and utilizing the same principles, practices and policies as those used in preparing the Company Balance Sheet (except for the absence of footnotes) and (z) set forth the Company’s estimate of (A) the Working Capital (the “ Estimated Working Capital ”), (B) the Working Capital Deficiency, if any, and (C) the Debt (the “ Estimated Debt ”), in each case as of 11:59 p.m., Eastern time, on the Closing Date and as derived from the Estimated Closing Date Balance Sheet;

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(ii) the estimated aggregate Acquisition Expenses, together with a description and the amount of each element thereof ( i.e. , legal, accounting, investment banking);

(iii) the Company’s calculation of the Merger Consideration, using the Estimated Debt and the Estimated Working Capital to determine the Debt and the Working Capital Deficiency, if any, for purposes of such calculation pursuant to Section 2.6(a);

(iv) the Company’s calculation of the number of shares of Fully Diluted Common Stock Outstanding, the Aggregate Option Exercise Price, the Per Share Merger Consideration, and the Aggregate Assumed Company Option Value;

(v) (x) the identity and mailing address of each record holder of Company Capital Stock and the number of shares of Company Common Stock and Company Preferred Stock held by each such Stockholder and (y) the identity and mailing address of each holder of a Company Stock Right, the number and type of shares of Company Capital Stock subject to the Company Stock Rights held by such holder, the date of grant, the exercise prices and vesting schedules thereof, the number and type of shares of Company Capital Stock subject to each Company Stock Right that will be vested and exercisable as of the Closing, and whether such Company Stock Right is qualified as an “incentive stock option” under section 422 of the Code; and

(vi) (x) each Stockholder’s Pro Rata Share of the Escrow Amount; (y) the amount of the Merger Consideration to be paid to each Stockholder net of such Stockholder’s Pro Rata Share of the Escrow Amount with respect to each Certificate held by such Stockholder and the amount of the Cash Consideration and the Stock Consideration with respect to each such Certificate; and (z) the amount of the required Tax withholding (if any), including with respect to the Transaction Bonus Plan, with respect to each Stockholder.

Parent shall be given timely access to all supporting workpapers used in the preparation of the Estimated Closing Date Balance Sheet and the Allocation Certificate, which Allocation Certificate, when accepted or deemed accepted by Parent, shall be deemed final for purposes of the Closing and serve as the basis for calculating the payments to be made on the Closing Date and each Stockholder’s Pro Rata Share. Unless Parent shall have objected to the Allocation Certificate delivered by the Company, the Allocation Certificate shall be deemed accepted by Parent as of the Closing. If Parent objects to the Allocation Certificate delivered by the Company, the parties hereto shall use good faith efforts to agree upon a final form of Allocation Certificate before Closing.

(f) Adjustment to Merger Consideration .

(i) At Parent’s option, but in any event within 90 days following the Closing Date if it so elects, Parent shall prepare and deliver to the Stockholder Representative an unaudited consolidated balance sheet (the “ Closing Date Balance Sheet ”) of the Company and its Subsidiaries as of 11:59 p.m., Eastern time, on the Closing Date. The Closing Date Balance

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Sheet shall be substantially in the form of the Company Balance Sheet and shall be prepared in accordance with GAAP (except for the absence of footnotes) and on a basis consistent with and utilizing the same principles, practices and policies as those used in preparing the Company Balance Sheet. The Closing Date Balance Sheet shall set forth Working Capital (the “ Closing Working Capital ”) and Debt (the “ Closing Debt ”) as of the Closing, each as derived from the Closing Date Balance Sheet. The Stockholder Representative shall be given timely access to all supporting workpapers used in the preparation of the Closing Date Balance Sheet.

(ii) The Stockholder Representative may dispute any amounts reflected on the Closing Date Balance Sheet or the calculation of Closing Working Capital or Closing Debt by notifying Parent in writing of each disputed item, specifying the amount thereof in dispute and setting forth, in reasonable detail, the basis for such dispute, within 30 days of Parent’s delivery of the Closing Date Balance Sheet pursuant to clause (i) above. If the Stockholder Representative delivers a notice of disagreement within such 30-day period, the Stockholder Representative and Parent shall, during the 45 days following such delivery, each use good faith efforts to reach agreement on the disputed items or amounts in order to finally determine the Closing Date Balance Sheet, Closing Working Capital and/or Closing Debt. If the Stockholder Representative and Parent are unable to reach agreement concerning the Closing Date Balance Sheet, Closing Working Capital and/or Closing Debt during such 45-day period, they shall promptly thereafter submit the dispute to the Accounting Referee for resolution pursuant to Section 2.6(g).

(iii) The Closing Date Balance Sheet, Closing Working Capital and Closing Debt shall be deemed conclusively determined for purposes of this Agreement upon the earlier to occur of (x) the failure of the Stockholder Representative to notify Parent of a dispute within 30 days of Parent’s delivery of the Closing Date Balance Sheet as set forth in clause (ii) above, (y) the written resolution of all disputes pursuant to clause (ii) by Parent and the Stockholder Representative, and (z) the resolution of all disputes by the Accounting Referee pursuant to Section 2.6(g). Within three Business Days of such conclusive determination, if (x) the Closing Working Capital is less than the Estimated Working Capital, and/or (y) the Closing Debt is greater than the Estimated Debt (the absolute value of the amount by which (A) the Estimated Working Capital minus the Estimated Debt exceeds (B) the Closing Working Capital minus the Closing Debt, the “ Adjustment Amount ”), then Parent and the Stockholder Representative shall jointly instruct the Escrow Agent in writing to transfer from the Escrow Amount to Parent an amount equal to the Adjustment Amount, and the Adjustment Amount shall be deemed a decrease to the Merger Consideration.

(g) Adjustment Dispute Resolution . If the Stockholder Representative and Parent are unable to reach agreement concerning the Closing Date Balance Sheet, Closing Working Capital, and/or Closing Debt pursuant to Section 2.6(f), they shall submit such dispute to PricewaterhouseCoopers LLC, or such other nationally recognized independent accounting expert selected by Parent and reasonably acceptable to the Stockholder Representative (the “ Accounting Referee ”) for resolution pursuant to this Section 2.6(g) and instruct the Accounting Referee to review the disputed items or amounts for the purpose of final determination of the Closing Date Balance Sheet, the calculation of Closing Working Capital and/or Closing Debt, as the case may be. In making such determination and calculations, the Accounting Referee shall consider only those items or amounts in the Closing Date Balance Sheet and/or Parent’s

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calculation of Closing Working Capital and/or Closing Debt as to which the Stockholder Representative has disagreed in writing, and shall apply the same principles, practices and policies utilized by the Company in its preparation of the Company Balance Sheet. Parent and the Stockholder Representative shall instruct the Accounting Referee to use its best efforts to deliver to the Stockholder Representative and Parent as promptly as practicable (but in no event later than 30 days after submission) a report setting forth the Accounting Referee’s calculation of the disputed amounts. Such report shall be final and binding upon the Stockholder Representative, the Stockholders, Parent and the Interim Surviving Corporation and the resulting Closing Date Balance Sheet and calculation of Closing Working Capital and Closing Debt shall be final for all purposes of this Agreement. Parent, on the one hand, and the Stockholder Representative on behalf of the Stockholders, on the other hand, shall each pay their own fees and expenses and one-half of the costs and charges of the Accounting Referee’s review and report. The Stockholders’ share of these costs will be deducted from the Escrow Amount, subject to the limitations set forth in Section 10.5(b).

(h) Fractional Shares . No fraction of a share of Parent Common Stock will be issued, but in lieu thereof, each Stockholder who would otherwise be entitled to a fraction of a share of Parent Common Stock (based on the aggregate number of shares of Company Capital Stock held by such Stockholder) shall be entitled to receive from Parent an amount of cash (rounded to the nearest whole cent) equal to the product of (i) such fraction, multiplied by (ii) the Parent Average Closing Price.

(i) Withholding and Deductions . Each of Parent, the Company, the Interim Surviving Corporation, the Final Surviving Entity, the Exchange Agent and the Escrow Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement, the Transaction Bonus Plan or any Related Agreement to any Person (i) such amounts as Parent, the Company, the Interim Surviving Corporation, the Final Surviving Entity, the Exchange Agent or the Escrow Agent may determine it is required to deduct and withhold with respect to the making of such payment under the Code, or any other provision of Tax Law and (ii) the amount of any outstanding loans (including any accrued but unpaid interest thereon and any amounts in respect thereof) owed by such Person to the Company at the Effective Time. To the extent that amounts are so withheld pursuant to clause (i) above, such withheld amounts shall be treated for all purposes hereof as having been paid to such Person in respect of which such deduction and withholding was made and Parent shall timely deposit such withheld amounts with the applicable Tax Authority. Parent, the Interim Surviving Corporation and the Final Surviving Entity are hereby authorized to sell or otherwise dispose of at fair market value such portion of the Stock Consideration as is necessary to provide sufficient funds to Parent or the Interim Surviving Corporation, as the case may be, in order to enable it to comply with such deduction or withholding requirements to the extent that there is not sufficient cash consideration in connection with any such payment to make such payment fully in cash.

2.7 Dissenting Shares .

(a) Notwithstanding any provision of this Agreement to the contrary, any shares of Company Capital Stock held by a Stockholder who has demanded and perfected appraisal or dissenters’ rights for such shares in accordance with the DGCL or the CGCL, as applicable, and who, as of the Effective Time, has not effectively withdrawn or lost such

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appraisal or dissenters’ rights (collectively, “ Dissenting Shares ”) shall not be converted into or represent the right to receive the Merger Consideration pursuant to Section 2.6, but the holder thereof shall only be entitled to such rights as are granted by the DGCL or the CGCL, as applicable.

(b) Notwithstanding the provisions of Section 2.7(a), if any Stockholder who holds Dissenting Shares as of the Effective Time shall effectively withdraw or lose (through passage of time, failure to demand or perfect, or otherwise) the right to demand and perfect appraisal or dissenters’ rights under the DGCL or the CGCL, then, as of the later of the Effective Time and the occurrence of such event, such holder’s shares that were Dissenting Shares shall automatically be converted into and represent only the right to receive the Merger Consideration pursuant to and subject to Section 2.6 (subject to the escrow contribution provisions of Section 2.6(d) and the indemnification provisions set forth in Article X hereof) without interest thereon upon surrender of the certificate representing such shares.

(c) The Company shall give Parent (i) prompt notice of any written demands for appraisal of any shares of Company Capital Stock, withdrawals of such demands, and any other instruments or notices served pursuant to the DGCL or the CGCL, as applicable, on the Company and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands for appraisal under the DGCL or demands for purchase under the CGCL. The Company shall not, except with the prior written consent of Parent, voluntarily make any payment with respect to any demands for appraisal of Company Capital Stock or offer to settle or settle any such demands.

2.8 Surrender of Certificates .

(a) Exchange Agent . Prior to the Effective Time, Parent shall designate Computershare Shareholder Services, Inc. and its wholly owned subsidiary Equiserve Trust Company N.A. (collectively, “ Equiserve ”) or, if Equiserve is unwilling or unable to act, another United States bank or trust company reasonably acceptable to the Company to act as exchange agent (the “ Exchange Agent ”) in the Merger.

(b) Exchange Procedures On or before the fifth Business Day after the Closing, Parent shall cause to be mailed to each holder of record of a certificate or certificates (the “ Certificates ”) which immediately prior to the Effective Time represented outstanding shares of Company Capital Stock, (A) a letter of transmittal substantially in the form of Exhibit D (the “ Letter of Transmittal ”) and (B) instructions for use in effecting the surrender of the Certificates in exchange for Cash Consideration and certificates representing the Stock Consideration. Following the Effective Time and delivery to the Exchange Agent of a duly completed and validly executed Letter of Transmittal, together with surrender of a Certificate (or Certificates) for cancellation, each Stockholder shall be entitled to receive in exchange therefor a certificate representing the number of whole shares of Parent Common Stock constituting the Stock Consideration to which such Stockholder is entitled pursuant to Section 2.6, the Cash Consideration to which such Stockholder is entitled pursuant to Section 2.6 (less the Escrow Amount to be deposited with the Escrow Agent on such holder’s behalf) and any cash in lieu of fractional shares as provided in Section 2.6(h). The Certificate(s) so surrendered shall be canceled. Following the Effective Time, until so surrendered, each outstanding Certificate that,

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prior to the Effective Time, represented shares of Company Capital Stock will be deemed from and after the Effective Time, for all corporate purposes, to evidence only the right to receive the Merger Consideration as provided in this Article II.

(c) Parent to Provide Parent Common Stock and Cash to Exchange Agent . On or before the second Business Day after the Closing, Parent shall deposit with the Exchange Agent for exchange in accordance with this Section 2.8 the Stock Consideration and Cash Consideration payable pursuant to Section 2.6 as Merger Consideration in exchange for outstanding shares of Company Capital Stock; provided , however , that Parent shall deposit the Escrow Amount with the Escrow Agent pursuant to Section 2.6(d) and Article X.

(d) No Liability . Notwithstanding anything to the contrary in this Section 2.8, none of the Exchange Agent, Parent, the Interim Surviving Corporation, the Final Surviving Entity or any party hereto shall be liable to any Person for any amount properly paid to a public official in compliance with any applicable abandoned property, escheat or similar Law

(e) Distributions With Respect to Unexchanged Shares . No dividends or other distributions declared or made after the Effective Time with respect to Parent Common Stock with a record date after the Effective Time will be paid to the holder of any unsurrendered Certificate with respect to the shares of Parent Common Stock to be issued in exchange therefor until the holder of record of such Certificate shall surrender such Certificate in accordance with this Section 2.8. Subject to applicable Law, following surrender of any such Certificate, there shall be paid to the record holder of the certificates representing whole shares of Parent Common Stock issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such whole shares of Parent Common Stock. No interest shall be payable on any cash deliverable upon the exchange of any Company Capital Stock for cash.

2.9 No Further Ownership Rights in Company Capital Stock . The Merger Consideration paid or payable upon the surrender for exchange of shares of Company Capital Stock in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of Company Capital Stock, and there shall be no further registration of transfers on the records of the Interim Surviving Corporation of shares of Company Capital Stock that were outstanding at the Effective Time. If, after the Effective Time, Certificates are presented to the Interim Surviving Corporation or the Final Surviving Entity for any reason, they shall be returned to the presenter for exchange in accordance with the exchange procedures set forth in Section 2.8.

2.10 Lost, Stolen or Destroyed Certificates . In the event any Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, the Merger Consideration required pursuant to Section 2.6 (subject to the escrow contribution provisions of Section 2.6(d)) at the times set forth in Article II; provided , that Parent may, in its discretion and as a condition precedent to the payment thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a non-refundable bond in such amount as Parent may determine (as of the date hereof, such amount is the greater of $20 and 3% of the Merger Consideration payable with respect to the shares evidenced by such Certificate) and/or provide

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an indemnity acceptable to Parent against any claim that may be made against Parent, the Interim Surviving Corporation, the Final Surviving Entity or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed and make any processing fee payments to the Exchange Agent.

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

2.12 Taking of Necessary Action; Further Action . If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Interim Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of the Company and Merger Sub, the officers and directors of the Company and Merger Sub are fully authorized in the name of their respective corporations or otherwise to take, and will take, all such lawful and necessary action.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Subject to such exceptions as are disclosed in the disclosure letter dated the date hereof and delivered herewith to Parent (the “ Company Schedules ”) corresponding to the applicable Section and subsection or clause of this Article III (or disclosed in any other section, subsection or clause of the Company Schedules provided that it is reasonably apparent on its face, upon a reading of the disclosure without any independent knowledge on the part of the reader regarding the matter disclosed, that such disclosure is responsive to such other Section, subsection or clause of this Article III), the Company hereby represents and warrants to each of Parent and Merger Sub as of the date hereof and as of the Closing Date as follows:

3.1 Organization of the Company . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has all requisite corporate power and authority to own, lease and operate its properties and to carry on its business as now being conducted. The Company is duly qualified or licensed to do business and is in good standing as a foreign corporation in each jurisdiction listed on Schedule 3.1(a) , which constitute all of the jurisdictions in which the conduct of its business or the ownership, leasing, holding or use of its properties makes such qualification necessary, except such other jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a Company Material Adverse Effect. The Company has delivered to Parent a true and correct copy of the Company Certificate of Incorporation and its By-laws, each as amended to date and in full force and effect on the date hereof. The Company has not violated the Company Certificate of Incorporation or its By-laws in any material respect. Schedule 3.1(b) lists every state or foreign jurisdiction in which the Company has facilities, maintains an office or has an Employee.

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3.2 Subsidiaries .

(a) Except as set forth on Schedule 3.2(a)(i) , the Company (A) does not own and has never otherwise owned, directly or indirectly, any capital stock of or any other equity interest in, or controlled, directly or indirectly, any other Person or any Subsidiary and (B) does not own and has never otherwise owned, directly or indirectly, any equity or other ownership interest in any partnership, joint venture or similar business entity. Each Subsidiary is duly organized, validly existing and in good standing (to the extent applicable) under the Laws of its jurisdiction of formation. Each Subsidiary has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted. Each Subsidiary is duly qualified or licensed to do business and is in good standing (to the extent applicable) as a foreign organization in each jurisdiction listed on Schedule 3.2(a)(ii) , which constitute all of the jurisdictions in which the conduct of its business or the ownership, leasing, holding or use of its properties makes such qualification necessary, except such other jurisdictions where the failure to be so qualified or licensed or in good standing would not reasonably be expected to have a Company Material Adverse Effect. The Company has delivered to Parent a true and correct copy of each Subsidiary’s certificate of incorporation and by-laws (or other comparable organizational documents), each as amended to date and in full force and effect on the date hereof. None of the Subsidiaries has violated its certificate of incorporation or by-laws or comparable organizational documents in any material respect. Schedule 3.2(a)(iii) lists every state or foreign jurisdiction in which each Subsidiary of the Company has facilities, maintains an office or has an Employee. Except as set forth in Schedule 3.2(a)(iv) , the Company is not and has not otherwise been, directly or indirectly, a party to, member of or participant in any partnership, joint venture or similar business entity.

(b) All of the outstanding capital stock of, or other ownership interests in, each Subsidiary is owned by the Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or other ownership interests) other than Permitted Liens. There are no outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any of its Subsidiaries or (ii) options or other rights to acquire from the Company or any of its Subsidiaries, or obligation on the part of the Company or any of its Subsidiaries to issue, any capital stock, voting securities or other ownership interests in, or any securities convertible into or exchangeable for any capital stock, voting securities or ownership interests in, any Subsidiary (the items in clauses (i) and (ii) being referred to collectively as the “ Subsidiary Securities ”). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any outstanding Subsidiary Securities. All of the outstanding share capital of each Subsidiary has been duly authorized and validly issued and is fully paid and non-assessable.

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3.3 Company Capital Structure .

(a) The authorized capital stock of the Company consists of 46,414,210 shares, consisting of: 29,500,000 shares of common stock, par value $.0001 per share (the “ Company Common Stock ”), of which 4,326,383 shares are issued and outstanding as of the date hereof; and 16,914,210 shares of preferred stock, par value $.0001 per share (the “ Company Preferred Stock ”). Of the authorized Company Preferred Stock: (i) 6,292,264 shares have been designated Series A Preferred Stock, all of which shares are issued and outstanding as of the date hereof; (ii) 6,371,946 shares have been designated Series B Preferred Stock, all of which shares are issued and outstanding as of the date hereof; and (iii) 4,250,000 shares have been designated Series C Preferred Stock, of which 3,447,019 shares are issued and outstanding as of the date hereof. The Company does not have any other shares of capital stock authorized, issued or outstanding. As of the date hereof, the outstanding shares of Company Capital Stock are held of record and, to the knowledge of the Company, beneficially by the Persons, with the addresses of record and in the amounts set forth on Schedule 3.3(a) . All outstanding shares of Company Capital Stock (i) are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Company Certificate of Incorporation or By-laws of the Company or any agreement to which the Company is a party or by which it is bound, and (ii) have been offered, sold and delivered by the Company in compliance in all material respects with all applicable Laws. All preferential rights of the Company Preferred Stock in connection with the sale of substantially all of the assets of the Company or a merger involving the Company are set forth in the Company Certificate of Incorporation. Each outstanding share of Company Preferred Stock is convertible into one share of Company Common Stock in accordance with the terms of the Company Certificate of Incorporation. There are no declared or accrued but unpaid dividends with respect to any shares of Company Capital Stock.

(b) (i) Except as set forth on Schedule 3.3(b)(i) and except for the Company’s 2005 Stock Plan, as amended and restated and in effect on the date hereof (the “ Company Option Plan ”) and for stock option grants and stock issuances pursuant thereto, neither the Company nor any of its Subsidiaries has ever adopted, sponsored or maintained any stock option plan or any other plan or agreement providing for equity compensation to any Person. The Company Option Plan has been duly authorized, approved and adopted by the Company’s board of directors and its stockholders and is in full force and effect. The Company has reserved a total of 8,301,000 shares of Company Common Stock for issuance to Employees of, and consultants or independent contractors to, the Company under the Company Option Plan, of which as of the date hereof (x) 5,754,137 shares are issuable upon the exercise of outstanding, unexercised Company Options, (y) 1,587,043 shares are available for grant but have not yet been granted pursuant to the Company Option Plan, and (z) 959,820 shares have been issued and are outstanding pursuant to the prior exercise of stock options or other stock rights granted pursuant to the Company Option Plan. No outstanding Company Option permits payment of the exercise price therefor by any means other than by cash or check or, at the discretion of the board of directors of the Company, by the surrender of shares of Company Common Stock, in consideration of services rendered, by delivery of a full recourse promissory note, or any other form permitted by the DCGL. All outstanding Company Options have been offered, issued and delivered by the Company in compliance in all material respects with all applicable Laws and with the terms and conditions of the Company Option Plan. Schedule 3.3(b) sets forth for each outstanding Company Option, the name of the holder of such option, the domicile address of

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such holder as reflected on the books of the Company, an indication of whether such holder is a Current Employee of the Company or one of its Subsidiaries, the date of grant or issuance of such option, the number of shares of Company Common Stock subject to such option, the exercise price of such option, the vesting schedule for such option, including the extent vested on the date of this Agreement and whether and to what extent the exercisability of such option will be accelerated and become exercisable as a result of the transactions contemplated by this Agreement (ignoring for such purpose the effect of the Option Reset Agreements), and whether such option is a Nonstatutory Option or an incentive stock option as defined in Section 422 of the Code. Each Company Option has an exercise price that equals or exceeds the fair market value of a share of Company Common Stock as of the date of grant of such Company Option within the meaning of Section 422 of the Code regardless of whether such Company Option is otherwise intended to be an incentive stock option within the meaning of Section 422 of the Code.

(ii) Except for the Company Options set forth on Schedule 3.3(b)(ii) , there are no Company Stock Rights or agreements of any character, written or oral, to which the Company or any of its Subsidiaries is a party, or by which the Company or any of its Subsidiaries is bound, obligating the Company or any Subsidiary to issue, deliver, sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any Company Capital Stock or Subsidiary Securities or obligating the Company or any Subsidiary to grant, extend, accelerate the vesting of, change the price of, otherwise amend or enter into any such Company Stock Right or any Subsidiary Securities. There are no outstanding or authorized stock appreciation, phantom stock, profit participation, or other similar rights with respect to the Company or any of its Subsidiaries.

(iii) Except for the Investor Agreements, there are no (x) voting trusts, proxies, or other agreements or understandings with respect to the voting stock of the Company or any of its Subsidiaries to which the Company or any of its Subsidiaries is a party, by which the Company or any of its Subsidiaries is bound, or of which the Company has knowledge, or (y) agreements or understandings to which the Company or any of its Subsidiaries is a party, by which the Company or any of its Subsidiaries is bound, or of which the Company has knowledge relating to the voting, registration, sale or transfer (including agreements relating to rights of first refusal, “co-sale” rights or “drag-along” rights) of any Company Capital Stock or Subsidiary Securities. The execution and delivery of this Agreement and the Related Agreements and the consummation of the transactions contemplated hereby and thereby by the Company does not implicate any rights or obligations under the Investor Agreements that have not been complied with or waived. The holders of Company Capital Stock and Company Stock Rights have been or will be properly given or shall have properly waived any required notice prior to the Merger.

3.4 Authority . The Company has all requisite corporate power and authority to enter into this Agreement, the Vesting Continuation Agreements, the Option Reset Agreements and the Certificate of Merger (the “ Related Agreements ”) and any other agreements, certificates or documents contemplated hereby or thereby to which it is a party and, subject to obtaining the Company Stockholder Approval, to consummate the transactions contemplated hereby and thereby. The execution and delivery of this Agreement and the Related Agreements to which the Company is a party, and the consummation by the Company of the transactions contemplated hereby and thereby (including the Merger) have been duly authorized by all necessary corporate

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action on the part of the Company and no further action is required on the part of the Company to authorize this Agreement and the Related Agreements to which it is a party and the transactions contemplated hereby and thereby (including the Merger), subject only to obtaining the Company Stockholder Approval. The board of directors of the Company has unanimously (i) determined that the Merger is fair to, and in the best interests of, the Company and the Stockholders, (ii) adopted and approved this Agreement and approved the Merger and the other transactions contemplated hereby and thereby, and (iii) resolved to recommend that the Stockholders adopt and approve this Agreement, the Related Agreements and the other transactions contemplated hereby and thereby, and approve the Merger. The adoption of this Agreement and the approval of the Merger by vote or written consent of Stockholders holding as of the record date at least (x) a majority of the outstanding shares of Company Common Stock voting together as a single class, (y) a majority of the outstanding shares of Company Common Stock and Company Preferred Stock voting together as a single class on an as-converted basis, and (z) a majority of the outstanding shares of Company Preferred Stock (collectively, the “ Company Stockholder Approval ”), constitute all the votes, consents or approvals required of the Stockholders in connection with this Agreement and the Related Agreements and the performance by the Company of its obligations hereunder and thereunder and the consummation of the transactions contemplated hereby and thereby, including the Merger. This Agreement has been, and each of the Related Agreements to which the Company is a party will be at the Closing, duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by the other parties hereto and thereto (other than the Company), this Agreement constitutes, and in the case of each of the Related Agreements they will at Closing constitute, valid and binding obligations of the Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be subject to applicable bankruptcy, reorganization, insolvency, moratorium and similar Laws affecting the enforcement of creditors’ rights generally and by general principles of equity; provided, however, that the Certificate of Merger will not be effective until filed with the Secretary of State of the State of Delaware.

3.5 No Conflict . The execution and delivery by the Company of this Agreement and the Related Agreements to which the Company is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with or result in any violation of or default under (with or without notice or lapse of time, or both) or give rise to a right of termination, cancellation, modification or acceleration of any obligation or loss of any benefit under (i) any provision of the Company Certificate of Incorporation, By-laws or other organizational or constituent documents of the Company or any of its Subsidiaries, (ii) any (x) material Contract to which the Company or any of its Subsidiaries is a party or to which they or any of their respective properties or assets (whether tangible or intangible) is subject or bound or (y) Contract described in Section 3.16, in any material respect, or (iii) any Law applicable to the Company or any of its Subsidiaries or any of their respective properties or assets (whether tangible or intangible) in any material respect.

3.6 Consents . (a) No consent, waiver, approval, order or authorization of, or registration, declaration or filing with, or notice to any court, administrative agency or commission or other federal, state, county, local or foreign governmental authority, instrumentality, agency or commission (each, a “ Governmental Entity ”) is required by or of the Company or any of its Subsidiaries in connection with the execution and delivery of this

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Agreement and the Related Agreements to which the Company or any of its Subsidiaries is a party or the consummation of the transactions contemplated hereby and thereby, except for (i) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and (ii) consents, waivers, approvals, orders, authorizations, registrations, declarations, notices and filings required under the HSR Act and other applicable antitrust or competition Laws, if any.

(b) Schedule 3.6 sets forth all notices to, and all consents, waivers and approvals of, parties to any material Contracts as are required thereunder in connection with the Merger, or for any such Contract to remain in full force and effect without limitation, modification or alteration (including payment of any additional amounts or consideration other than ongoing fees, royalties or payments which the Company or any of its Subsidiaries, as the case may be, would otherwise be required to pay pursuant to the terms of such Contracts had the transactions contemplated by this Agreement not occurred) after the Effective Time so as to preserve all material rights of, and benefits to, the Interim Surviving Corporation and its Subsidiaries, as the case may be, under such Contracts from and after the Effective Time.

3.7 Company Financial Statements and Internal Controls .

(a) Schedule 3.7(a) sets forth (i) the audited consolidated balance sheets and the related audited consolidated statements of operations, of stockholders’ equity and of cash flows of the Company and its Subsidiaries as of and for the fiscal years ended December 31, 2005 and December 31, 2006 and the opinion of Deloitte & Touche LLP, the Company’s independent auditor, thereon, and (ii) the unaudited consolidated balance sheet of the Company and its Subsidiaries (the “ Company Balance Sheet ”) as of July 31, 2007 (such date, the “ Balance Sheet Date ”) and the related unaudited consolidated statements of operations, of stockholders’ equity and of cash flows of the Company and its Subsidiaries for the seven-month period then ended (the financial statements referred to in items (i) and (ii), collectively, the “ Company Financial Statements ”). The Company Financial Statements are accurate and complete in all material respects and have been prepared from the books and records of the Company and in accordance with generally accepted accounting principles effective in the United States (“ GAAP ”) applied on a consistent basis throughout the periods indicated and consistent with each other, except for the absence of footnotes in the case of the unaudited interim Company Financial Statements. The Company Financial Statements fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of the Company and its Subsidiaries as of the dates and for the periods indicated therein, subject, in the case of the unaudited interim financial statements, to normal year-end adjustments which are not material in amount or significance. The Company’s revenue recognition policy complies with GAAP.

(b) The Company and each of its Subsidiaries has in place systems and processes that are customary and adequate for a company at the same stage of development as the Company and designed to (i) provide reasonable assurances regarding the reliability of the Company Financial Statements and (ii) accumulate and communicate to the Company’s principal executive officer and principal financial officer in a timely manner the type of information that is required to be disclosed in the Company Financial Statements. Neither the Company nor any of its Subsidiaries nor, to the Company’s knowledge, any Employee, auditor, accountant or representative of the Company or any of its Subsidiaries has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral,

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regarding the inadequacy of such systems and processes or the accuracy of the Company Financial Statements. To the Company’s knowledge, there have been no instances of fraud, whether or not material, during any period covered by the Company Financial Statements.

(c) To the Company’s knowledge, no Employee has provided or is providing information to any Governmental Entity regarding the commission or possible commission of any crime or the violation or possible violation of any Law applicable to the Company, any of its Subsidiaries or any part of their respective operations. To the Company’s knowledge, none of the Company, any of its Subsidiaries or any Employee, independent contractor, consultant, subcontractor or agent of the Company or any Subsidiary has discharged, demoted, suspended, threatened, harassed or in any other manner discriminated against an Employee in the terms and conditions of employment because of any act of such Employee described in 18 U.S.C. Section 1514A(a).

(d) During the periods covered by the Company Financial Statements, the Company’s external auditor was independent of the Company and its management. Schedule 3.7(d) lists each report by the Company’s external auditors to the Company’s board of directors, or any committee thereof, or the Company’s management concerning any of the following and pertaining to any period covered by the Company Financial Statements: critical accounting policies; internal controls; significant accounting estimates or judgments; alternative accounting treatments; and any required communications with the Company’s board of directors, or any committee thereof, or with management of the Company.

3.8 No Undisclosed Liabilities . (a) Neither the Company nor any of its Subsidiaries has: (A) any liability, indebtedness, obligation (other than (i) future performance obligations under Contracts disclosed on Schedule 3.16 of which the Company has no knowledge of a potential future breach by the Company or any of its Subsidiaries and (ii) future obligations to comply with applicable Laws that to the Company’s knowledge the Company and its Subsidiaries are fully capable of complying with in the ordinary course), expense, claim, deficiency, guaranty or endorsement of any type, whether accrued, absolute, contingent, matured, unmatured or other (whether or not required to be reflected in the Company Financial Statements in accordance with GAAP), that (i) exceeds $100,000 in any individual case or $200,000 in the aggregate and (ii) has not been (x) reflected in the Company Balance Sheet or (y) set forth on Schedule 3.8 ; or (B) any “off-balance sheet arrangements” (as such term is defined in Item 303(a)(4) of Regulation S-K promulgated under the Exchange Act).

(b) Neither the Company nor any of its Subsidiaries has, at any time, (i) made a general assignment for the benefit of creditors, (ii) filed, or had filed against it, any bankruptcy petition or similar filing, (iii) suffered the attachment or other judicial seizure of all or a substantial portion of its assets, (iv) admitted in writing its inability to pay its debts as they become due, or (v) been convicted of, or pleaded guilty or no contest to, any felony. Neither the Company nor any of its Subsidiaries is insolvent. To the Company’s knowledge, none of its current Employees has been convicted of, or pleaded guilty or no contest to, any felony.

3.9 Absence of Certain Changes . Except as set forth in Schedule 3.9 or as specifically contemplated by this Agreement, since the Balance Sheet Date through the date hereof, there has not been, occurred or arisen any:

(a) material transaction by the Company or any of its Subsidiaries that was not in the ordinary course of business and consistent with past practices;

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(b) amendments or changes to the Company Certificate of Incorporation or By-laws of the Company or the comparable organizational documents of any of its Subsidiaries;

(c) capital expenditure or capital commitment by the Company or any of its Subsidiaries in any amount in excess of $100,000 in any individual case or $200,000 in the aggregate;

(d) payment, discharge or satisfaction, in any amount in excess of $100,000 in any one case or $200,000 in the aggregate, of any claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise) of the Company or any of its Subsidiaries, other than payments, discharges or satisfactions in the ordinary course of business and consistent with past practices of liabilities reflected or reserved against in the Company Balance Sheet;

(e) failure to pay accounts payable when due or any delay in payment or renegotiation thereof, except in the ordinary course of business and consistent with past practices;

(f) destruction of, damage to or loss of any material assets of the Company or any of its Subsidiaries (whether or not covered by insurance), or termination or cancellation of any material Contract to which the Company or any its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound with any customer or re-seller of the Company’s or any of its Subsidiaries’ products or services, or notice of intended termination or cancellation or non-renewal of any Contract or customer relationship with any material customer or re-seller of the Company or any of its Subsidiaries;

(g) work stoppage, labor strike or other material labor trouble with respect to any Current Employees, current consultants or current independent contractors, or any action, suit, claim, labor dispute or material grievance relating to any labor, employment and/or safety matter involving the Employees, consultants or independent contractors of the Company or any of its Subsidiaries, including charges of wrongful discharge, discrimination, wage and hour violations, or other unlawful labor and/or employment practices or actions;

(h) material change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by the Company or any of its Subsidiaries;

(i) revaluation by the Company or any its Subsidiaries of any of their assets, including the writing down of the value of inventory or writing off of notes or accounts receivable, in excess of $100,000 in any individual case or $200,000 in the aggregate;

(j) (A) declaration, setting aside or payment of a dividend or other distribution (whether in cash, stock or property) with respect to any Company Capital Stock or Subsidiary Securities, or any direct or indirect redemption, purchase or other acquisition by the Company or any of its Subsidiaries of any Company Capital Stock, Company Stock Rights or Subsidiary Securities, other than repurchases of Company Common Stock from Employees,

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consultants, independent contractors or other Persons performing services for the Company pursuant to agreements under which the Company has the option to repurchase such shares at cost upon the termination of employment or other services, (B) split, combination or reclassification of any Company Capital Stock, or (C) issuance or authorization of the issuance of any Company Capital Stock or Subsidiary Securities, other than the issuance of shares of Company Common Stock upon the exercise of Company Options pursuant to their terms, or any other securities in respect of, in lieu of or in substitution for any Company Capital Stock or Subsidiary Securities, including any Company Stock Rights;

(k) increase in the salary or other compensation payable or to become payable by the Company or any of its Subsidiaries to any of their Current Employees, or current consultants, independent contractors, or advisors, including the modification of any existing compensation or equity arrangements with such individuals (including any repricing of any Company Stock Rights or any acceleration, promise of acceleration, or amendment of any vesting terms related to thereto held by such individuals), or the declaration, payment or commitment or obligation of any kind for the payment, by the Company or any of its Subsidiaries, of a bonus or other additional salary or compensation to any such Person except in any case pursuant to (i) the Transaction Bonus Plan or (ii) the express terms of Contracts outstanding as of the Balance Sheet Date and disclosed in the Company Schedules;

(l) Employee terminations and/or layoffs by the Company or any of its Subsidiaries, it being understood that termination of Employees with poor performance ratings or for cause shall not constitute a violation of this clause (l);

(m) (A) grant of any severance or termination pay to any Employee, consultant or independent contractor except payments made pursuant to written agreements in effect on the date hereof and as disclosed in the Company Schedules, (B) adoption or amendment of any Company Employee Plan, or (C) entering into any employment contract, extension of any employment offer, payment or agreement to pay any bonus or special remuneration to any Employee, in each case other than (i) pursuant to standard written agreements in effect on the date hereof and disclosed in Schedule 3.16 or (ii) pursuant to the Transaction Bonus Plan;

(n) entering into any Contract (except commercially available in-bound “shrink wrap” or “clickwrap” end-user licenses in the ordinary course of business and consistent with past practices), any termination, extension, amendment or modification of the material terms of any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound, or any waiver, release or assignment of any material rights or claims thereunder;

(o) sale, lease, license or other disposition of any material assets or properties of the Company or any of its Subsidiaries, or creation of any Lien (other than a Permitted Lien) in such assets or properties, except sales or non-exclusive licenses of Company Products in the ordinary course of business and consistent with past practices;

(p) loan by the Company or any of its Subsidiaries to any Person, incurrence by the Company or any of its Subsidiaries of any Debt, guarantee by the Company or any of its Subsidiaries of any Debt, issuance or sale of any debt securities of the Company or any of its

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Subsidiaries or purchase of or guaranteeing of any debt securities of others, except for advances to Employees for travel and business expenses in the ordinary course of business and consistent with past practices;

(q) waiver or release of any material right or claim of the Company or any of its Subsidiaries, including any write-off or other compromise of any account receivable of the Company, except in the ordinary course of business and consistent with past practices;

(r) commencement, or notice or threat of commencement, of any lawsuit or proceeding against or, to the Company’s knowledge, investigation of the Company or any of its Subsidiaries or their affairs, or commencement of any litigation by the Company or any of its Subsidiaries or settlement of any lawsuit, proceeding or investigation (regardless of the party initiating the same);

(s) (i) transfer or sale by the Company or any of its Subsidiaries of any rights to the Company Intellectual Property or the entering by the Company or any of its Subsidiaries into of any license agreement (other than non-exclusive end-user license agreements entered into by the Company in the ordinary course of business consistent with past practices that do not include any rights with respect to source code), distribution agreement, reseller agreement, security agreement, assignment or other conveyance or option for the foregoing, with respect to the Company Intellectual Property with any Person, (ii) purchase or other acquisition by the Company or any of its Subsidiaries of any Intellectual Property or the entering by the Company of any of its Subsidiaries into any license agreement, distribution agreement, reseller agreement, security agreement, assignment or other conveyance or option for the foregoing, with respect to the Intellectual Property of any other Person, other than commercially available, in-bound “shrink wrap” or “click-wrap” end-user licenses, or (iii) entering into or amendment of any agreement with respect to the development of any Intellectual Property with a third party;

(t) Contract, or modification to any Contract, pursuant to which any Person was granted by the Company or any of its Subsidiaries marketing, distribution, reseller, development, manufacturing or similar rights of any type or scope with respect to any Company Intellectual Property, products, services or technology of the Company or any of its Subsidiaries;

(u) event, occurrence, change, effect or condition of any character that, individually or in the aggregate, has had or reasonably would be expected to have a Company Material Adverse Effect; or

(v) agreement (whether written or oral) by the Company or any of its Subsidiaries, or any Current Employees thereof, to do any of the things described in the preceding clauses (a) through (u) (other than negotiations with Parent and its representatives regarding the transactions contemplated by this Agreement and the Related Agreements).

3.10 Accounts Receivable . Schedule 3.10 lists all accounts receivable of the Company and its Subsidiaries as of the Balance Sheet Date other than accounts receivable that in the aggregate do not exceed $10,000, together with an aging schedule indicating a range of days elapsed since being invoiced. All of the accounts receivable of the Company and its Subsidiaries arose in the ordinary course of business, are carried at values determined in accordance with

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GAAP consistently applied, and will be good and collectible in full, except to the extent of any reserve for uncollectible accounts receivable set forth on the Company Balance Sheet. No Person has any Lien on any accounts receivable of the Company or any of its Subsidiaries and no request or agreement for deduction or discount has been made with respect to any accounts receivable of the Company or any of its Subsidiaries. The Company has no knowledge that any of its customers has any basis for any deduction, discount or refund in respect of accounts receivable or has otherwise indicated its unwillingness to pay any account receivable.

3.11 Restrictions on Business Activities .

(a) Except as set forth on Schedule 3.11(b) , there is no Contract, judgment, injunction, order or decree to which the Company or any of its Subsidiaries is a party, is subject, or that is otherwise binding on the Company or any of its Subsidiaries that has had, or would reasonably be expected to have, the effect of prohibiting or impairing any material business practice of the Company or any of its Subsidiaries, any material acquisition of property (tangible or intangible) by the Company or any of its Subsidiaries, the conduct of business by the Company or any of its Subsidiaries as currently conducted or as currently contemplated to be conducted, or otherwise limiting the freedom of the Company or any of its Subsidiaries to engage in any line of business or to compete with any Person, in each case whether arising as a result of a change in control of the Company or any of its Subsidiaries or otherwise. Without limiting the generality of the foregoing, except as set forth on Schedule 3.11(b) neither the Company nor any of its Subsidiaries has (i) entered into any agreement under which the Company or any of its Subsidiaries is restricted from selling, licensing, manufacturing or otherwise distributing any of its technology or products or from providing services to customers or potential customers or any class of customers in any geographic area, during any period of time, or in any segment of the market, or (ii) granted any Person exclusive rights to sell, license, manufacture or otherwise distribute any of the Company’s or any of its Subsidiaries’ technology or products in any geographic area or with respect to any customers or potential customers or any class of customers during any period of time or in any segment of the market.

(b) Except as set forth on Schedule 3.11(b) , there is no Contract or, to the Company’s knowledge, judgment, injunction, order or decree to which the Company or any of its Subsidiaries is a party, is subject, or that is otherwise binding on the Company or any of its Subsidiaries, that would reasonably be expected to have the effect of prohibiting or impairing any material business practice of Parent or any of its Subsidiaries, any material acquisition of property (tangible or intangible) by Parent or any of its Subsidiaries, the conduct of business by Parent or any of its Subsidiaries, or otherwise limiting the freedom of Parent or any of its Subsidiaries to engage in any line of business or to compete with any Person after the Effective Time.

3.12 Title to Properties; Absence of Liens and Encumbrances .

(a) (i) None of the real property used or occupied by the Company or any of its Subsidiaries, in each case together with all buildout, fixtures and improvements created thereon (“ Real Property ”), is owned by the Company or any of its Subsidiaries, nor has the Company or any of its Subsidiaries ever owned any real property. All of the Real Property is leased or subleased by the Company or one of its Subsidiaries.

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(ii) Schedule 3.12 sets forth all leases, subleases and other agreements pursuant to which the Company and each of its Subsidiaries derives its rights in the Real Property (the “ Leases ”), including, with respect to each such Lease, the identity of the landlord or sublandlord, the addresses, the date of such Lease and each amendment thereto, and the aggregate annual rent.

(iii) The Leases are valid, binding and enforceable in accordance with their respective terms, and there does not exist under any such Lease any material default by the Company or any of its Subsidiaries or, to the Company’s knowledge, by any other Person, or any event that, with or without notice or lapse of time or both, would constitute a material default by the Company or any of its Subsidiaries or, to the Company’s knowledge, by any other Person. The Company has delivered to Parent complete copies of all Leases, including all amendments and agreements related thereto, and the Leases constitute the entire agreement between the Company or any of its Subsidiaries and each landlord or sublandlord with respect to the Real Property. All rent and other charges currently due and payable by the Company or any of its Subsidiaries under the Leases have been paid.

(iv) The Company or one of its Subsidiaries is the holder of the tenant’s interest under the Leases and has not assigned the Leases nor subleased all or any portion of the premises leased thereunder. Neither the Company nor any of its Subsidiaries has made any material alterations, additions or improvements to the premises leased under the Leases that are required to be removed (or of which any landlord or sublandlord could require removal) at the termination of the applicable Lease terms.

(b) The tangible assets and properties of the Company are adequate and sufficient, in all material respects, for the conduct of the business of the Company as currently conducted. The Company and each of its Subsidiaries has good and valid title to, or, in the case of leased properties and assets, valid leasehold interests in, all of its material tangible properties and assets, real, personal and mixed, used or held for use in its business, other than Intellectual Property which is addressed in Section 3.14, free and clear of any Liens except for Permitted Liens.

(c) All material facilities, machinery, equipment, fixtures, vehicles, and other tangible personal properties owned, leased or used by the Company or any of its Subsidiaries are in all material respects (i) adequate for the conduct of the business of the Company and its Subsidiaries as currently conducted and as currently proposed to be conducted and (ii) in reasonable operating condition, subject to normal wear and tear, and reasonably fit and usable for the purposes for which they are being used.

(d) Neither the Company nor any of its Subsidiaries has sold, transferred, disclosed, made available to the public or otherwise released for distribution any of its confidential customer files, data contributed by a customer, or other customer information relating to the Company’s or any of its Subsidiaries’ current and former customers (the “ Company Customer Information ”), other than as expressly permitted pursuant to and in compliance with any written agreements with such customers and the Company’s and its Subsidiaries’ publicly available privacy policies. The Company has not exceeded or violated the permitted use of any Customer Information pursuant to the terms of the customer Contracts or

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applicable Law in any material respect. Except for information as provided by the Company or any of its Subsidiaries to sales representatives, distributors or resellers (which information is subject to a customary non-disclosure agreement), to the Company’s knowledge no Person other than the Company or one of its Subsidiaries possesses or has any claims or rights with respect to use of the Company Customer Information.

3.13 Governmental Authorization . Schedule 3.13 lists each material consent, license, permit, grant or other authorization issued to the Company, any of its Subsidiaries or any Employee by any Governmental Entity (i) pursuant to which the Company or any of its Subsidiaries currently operates or holds any interest in any of its properties or (ii) that is required for the operation of its business as currently conducted or, with respect to Company Products and Company Products Under Development, as currently proposed to be conducted, for the holding of any such interest in any of its properties (collectively, the “ Company Authorizations ”). The Company Authorizations are in full force and effect and constitute all Company Authorizations required to permit the Company and each of its Subsidiaries to operate or conduct its business as currently conducted or, with respect to Company Products and Company Products Under Development, as currently proposed to be conducted, or to hold any interest in its properties or assets. None of the Company, any of its Subsidiaries or, to the knowledge of the Company, any Employee, is in violation of any Company Authorization in any material respect.

3.14 Intellectual Property .

(a) (i) Schedule 3.14(a) lists and separately identifies (x) all Company Registered Intellectual Property (setting forth, for each item, the applicable jurisdiction, status, application or registration number, and date of application, registration or issuance, as applicable) and (y) all hardware products and tools, software and firmware products and tools, and all services that are currently sold, published, offered for sale, or under development by the Company or any of its Subsidiaries. In addition, Schedule 3.14(a) sets forth for each Company Patent an accurate and complete list of all upcoming due dates and filing deadlines within 12 months following the date hereof.

(ii) Except as set forth on Schedule 3.14(a)(ii) , the Company has complied with all the requirements of all United States and foreign patent offices and all other applicable Governmental Entities to maintain the patents and patent applications included in the Company Registered Intellectual Property (the “ Company Patents ”) in full force and effect, including payment of all required fees when due to such offices or agencies. The Company has no knowledge either of any prior art references that have not been properly disclosed in all applicable filings or of any prior public uses, sales, offers for sale or disclosures that would reasonably be expected to invalidate the Company Patents or any claim thereof, or of any conduct the result of which would reasonably be expected to render the Company Patents or any claim thereof invalid or unenforceable.

(iii) The original, first and joint inventors of the subject matter claimed in the Company Patents are properly represented in the Company Patents, and the applicable statutes governing marking of products covered by the inventions in the Company Patents have been fully complied with.

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(b) Except as set forth on Schedule 3.14(b) , each item of Company Intellectual Property is either: (i) owned solely by the Company or one of its Subsidiaries free and clear of any Liens; or (ii) rightfully used and authorized for use by the Company or one of its Subsidiaries and their permitted successors pursuant to a valid and enforceable written license. Other than in-bound “shrink-wrap” and “click-wrap” end-user licenses and similar generally available commercial binary code end-user licenses in each case that are not used for software development or in any software, products or services provided by the Company to its customers, all of the Company Intellectual Property that is used or held for use by the Company or any of its Subsidiaries pursuant to a license or other grant of rights by a third party is separately identified in Schedule 3.14(b) . Except as set forth on Schedule 3.14(b) , the Company and its Subsidiaries have and have had all rights in the Company Intellectual Property necessary to carry out the Company’s and its Subsidiaries’ former activities, current activities and currently planned