8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported): October 10, 2011

Rimage Corporation

(Exact name of Registrant as Specified in its Charter)

Minnesota

(State Or Other Jurisdiction Of Incorporation)

000-00619	41-1577970
(Commission File Number)	(I.R.S. Employer Identification No.)
7725 Washington Avenue South Minneapolis, MN	55439
(Address Of Principal Executive Offices)	(Zip Code)

(952) 944-8144

Registrant’s Telephone Number, Including Area Code

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐      Written communications pursuant to Rule 425 under the Securities Act

☐      Soliciting material pursuant to Rule 14a-12 under the Exchange Act

☐      Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act

☐      Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act

Items under Sections 4, 6, and 7 are not applicable and therefore omitted.

ITEM 1.01	ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
ITEM 2.01	COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.

On October 10, 2011, Rimage Corporation (the “Company”), Qumu, Inc. (“Qumu”), and Quick Acquisition Corp., a wholly-owned subsidiary of the Company (“Merger Sub”), Shareholder Representative Services LLC, solely in its capacity as the Sellers’ representative, and certain shareholders of Qumu entered into an Agreement and Plan of Merger dated October 10, 2011 (the “Merger Agreement”). Pursuant to the Merger Agreement, Merger Sub merged with and into Qumu, with Qumu continuing as the surviving corporation in the merger (the “merger”). As a result of the merger, Qumu is a wholly-owned subsidiary of the Company. The merger was effective October 10, 2011. The aggregate purchase price payable in the merger was $52 million, consisting of approximately $39 million in cash and the issuance of 1,000,000 shares of the Company’s common stock. For the purposes of calculating the number of shares of common stock issuable in the merger, the parties agreed upon a value of $13.1865 per share.

Pursuant to the terms of the Merger Agreement, each share of Qumu’s capital stock issued and outstanding immediately prior to the effective time of the merger (other than shares held by shareholders who properly exercise their dissenters’ rights under California law) was cancelled and converted into the right to receive the per share cash or cash and Company stock consideration specified in the Merger Agreement. Further, vested options and warrants to purchase Qumu capital stock outstanding immediately prior to the effective time of the merger were converted into the right to receive the per share cash consideration as specified in the Merger Agreement. Unvested stock options and unvested warrants were cancelled.

Of the amounts payable in the merger, $5.2 million is subject to escrow to secure a possible working capital adjustment and the indemnification obligations to the Company under the Merger Agreement. Under the Merger Agreement, adjustments to working capital will be calculated not later than 60 days from closing and, if an adjustment is required in favor of the Company, paid from escrow approximately 90 days after closing, absent a dispute as to the adjustment amount. The remainder of the funds will be held for the escrow period of one year.

Each recipient of the Company’s common stock in the merger will enter into a lock-up letter agreement attached hereto as Exhibit 10.1 (the “Lock-Up Agreement”). Pursuant to the terms of the Lock-Up Agreement, the shares received in the merger will be restricted from transfer, subject to certain exceptions. The restrictions will lapse as to one-third of the shares at 180 days, 270 days and 365 days following the effective time of the merger. The Company will also enter into a registration rights agreement attached hereto as Exhibit 10.2 with the recipients of the Company’s common stock in the merger (the “Registration Rights Agreement”). The Registration Rights Agreement gives the holders the right to demand registration of their shares after one year and the right to require registration of their shares if the Company initiates certain registrations after one year. The registration rights are subject to certain conditions and limitations as set forth in the Registration Rights Agreement.

On October 10, 2011, the Company issued a press release announcing the merger.  A copy of the press release is attached as Exhibit 99.1 to this report and is incorporated herein by reference.

The foregoing summaries of the Merger Agreement, the Lock-Up Agreement and the Registration Rights Agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the respective agreements which are attached hereto as exhibits.

The Merger Agreement has been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company or Qumu. The Merger Agreement contains warranties of the parties thereto made to and solely for the benefit of each other. The assertions embodied in those warranties are qualified by information in confidential disclosure schedules that the parties have exchanged in connection with signing the Merger Agreement. Moreover, certain warranties in the Merger Agreement were used for the purpose of allocating risk, rather than establishing matters as facts. Accordingly, investors should not rely on the warranties as characterizations of the actual state of facts, since they were only made as of the date of the Merger Agreement and are modified in important part by the underlying confidential disclosure schedules.

ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.

As partial consideration for the merger described above, the Company issued 1,000,000 shares of its common stock in accordance with the Merger Agreement to certain shareholders of Qumu and Raymond R. Hood. The issuance of the shares was a transaction not registered under the Securities Act of 1933, as amended. Other than agreements with respect to the Merger Agreement and as otherwise described in this Current Report on Form 8-K, there are no other agreements between the Company and recipients of these shares.

Based on the manner of sale of the shares and representations from each recipient, including a representation that each such recipient is an accredited investor, the Company believes that the issuance is exempt from registration under Section 4(2) of the Securities Act of 1933, as amended, or Regulation D thereunder, as a transaction by an issuer not involving a public offering.

ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS.

On October 10, 2011, the Company appointed Raymond R. Hood as its Senior Vice President and General Manager, Qumu. Mr. Hood was formerly the Chief Executive Officer of Qumu.

Concurrently with Mr. Hood’s appointment, the Company entered into an employment agreement dated October 10, 2011 with Mr. Hood, attached hereto as Exhibit 10.3 (the “Employment Agreement”). Pursuant to the Employment Agreement, the Company will employ Mr. Hood on an at-will basis. Mr. Hood will receive a base salary of $300,000 per year. The Company is also required to maintain a bonus plan or program and Mr. Hood will have an opportunity to earn a cash bonus equal to 50% of his base salary to be paid between January 1 and March 31 of the calendar year immediately following the Company’s fiscal year to which the bonus relates.  Mr. Hood is also eligible to participate in the Company’s benefit programs. The Employment Agreement also contains confidentiality, non-solicitation and assignment of inventions provisions, as well as provisions relating to Section 409A of the Internal Revenue Code. In addition, Mr. Hood entered into a severance and change of control letter agreement substantially in the form of the Company’s current form of letter agreement, a copy of which was attached as Exhibit 10.1 to the Company’s Current Report on Form 8-K dated December 22, 2008.

In connection with Mr. Hood’s hiring, the Company granted Mr. Hood on October 10, 2011, the first day of his employment, a non-qualified stock option to purchase 150,000 shares of the Company’s common stock. The stock option was granted outside of the Company’s current equity incentive plan, the Amended and Restated 2007 Stock Incentive Plan, as an “inducement award” pursuant to Nasdaq Marketplace Rule 5635(c)(4). The option has an exercise price equal to the closing price of the Company’s common stock as reported by the Nasdaq Stock Market on the date of grant, will vest in four equal installments on each of the first four anniversaries of the date of grant, and will have a term of seven years. In other respects, the option was structured to mirror the terms of options granted under the Company’s Amended and Restated 2007 Stock Incentive Plan and is subject to the stock option agreement attached hereto as Exhibit 10.4.

The Company also announced the hiring of Mr. Hood through the press release attached hereto as Exhibit 99.1.

The foregoing summaries of the Employment Agreement, the severance and change of control letter agreement and the stock option agreement do not purport to be complete and are subject to and qualified in their entirety by reference to the respective agreements which are attached hereto as exhibits or incorporated by reference herein.

ITEM 8.01 OTHER EVENTS.

On October 7, 2011, the Board of Directors of the Company declared a dividend of $0.17 per share to shareholders of record as of November 30, 2011, payable December 15, 2011. The Company announced the dividend through the press release attached hereto as Exhibit 99.1.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

(a)        Financial Statements of Business Acquired

(b)        Pro Forma Financial Information

The financial statements and pro forma information required pursuant to Item 9.01 of Form 8-K will be filed by amendment to this report on Form 8-K within 71 calendar days after the date on which this report on Form 8-K must be filed.

(d)        Exhibits

Exhibit No.	Description
2.1	Agreement and Plan of Merger dated October 10, 2011 by and among Rimage Corporation, Qumu, Inc., Quick Acquisition Corp., Shareholder Representative Services LLC and the Major Holders identified therein.
10.1	Form of Lock-Up Letter Agreement dated October 10, 2011 by each Recipient of Rimage Corporation Common Stock in the Merger.
10.2	Registration Rights Agreement dated October 10, 2011 by and among Rimage Corporation and the Investors.
10.3	Employment Agreement dated October 10, 2011 by and between Rimage Corporation and Raymond R. Hood.
10.4	Stock Option Agreement dated October 10, 2011 by and between Rimage Corporation and Raymond R. Hood.
99.1	Press Release issued on October 10, 2011.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

RIMAGE CORPORATION
By:	/s/	James R. Stewart
		James R. Stewart
		Chief Financial Officer

Date: October 17, 2011

EX-2.1

Exhibit 2.1

agreement and plan of MERGER

BY AND among

rimage CORPORATION

QUICK ACQUISITION CORP.

QUmu, INC.

shareholder representative services LLc

AND

the other persons listed on the signature pages hereto

DATED AS OF october 10, 2011

TABLE OF CONTENTS

		Page
ARTICLE 1 DEFINITIONS		2
1.1	Definitions	2
ARTICLE 2 THE MERGER		2
2.1	The Merger	2
2.2	The Closing and the Effective Time; Stockholder Consent	2
2.3	Effect of the Merger	3
2.4	Articles of Incorporation and Bylaws of Surviving Corporation	3
2.5	Effect of the Merger on the Company Capital Stock and the Capital Stock of Merger Sub	3
2.6	Mechanism of Payment and Parent Stock Issuance	4
2.7	Stock Options and Warrants	6
2.8	No Further Ownership Rights in the Company Capital Stock	7
2.9	Company Indebtedness; Company Transaction Expenses; Management Incentive Payments	7
2.10	Dissenting Shares	8
2.11	Working Capital Adjustment	9
2.12	Directors and Officers	11
ARTICLE 3 CLOSING DELIVERIES		12
3.1	Closing Deliveries of the Major Holders and the Company	12
3.2	Closing Deliveries of Parent and Merger Sub	13
ARTICLE 4 REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY		13
4.1	Organization and Power	13
4.2	Authorization	14
4.3	Capitalization; Subsidiaries	14
4.4	Absence of Conflicts	15
4.5	Financial Statements	16
4.6	Absence of Certain Developments	16
4.7	Real Property	17
4.8	Title to Assets	18
4.9	Contracts and Commitments	18
4.10	Intellectual Property	19
4.11	Governmental Licenses and Permits	21
4.12	Litigation; Proceedings	21
4.13	Compliance with Laws	22
4.14	Employees	22
4.15	Employee Benefit Plans	22
4.16	Tax Matters	25
4.17	Brokerage	27
4.18	Affiliate Transactions	27

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4.19	Undisclosed Liabilities	27
4.20	Environmental Matters	27
4.21	Insurance	28
4.22	Receivables	28
4.23	Sufficiency of Assets	28
4.24	Product Warranty	28
4.25	Customers and Suppliers	28
4.26	Information Statement	28
4.27	Disclaimer	29
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF MAJOR HOLDERS		29
5.1	Organization and Power	29
5.2	Authorization	29
5.3	Litigation	30
5.4	Ownership of Company Capital Stock	30
5.5	Securities Law Representations	30
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB		31
6.1	Organization and Power	31
6.2	Authorization	32
6.3	Parent Stock	32
6.4	Absence of Conflicts	32
6.5	Governmental Authorities and Consents	32
6.6	Litigation	33
6.7	Brokerage	33
6.8	SEC Reports	33
ARTICLE 7 ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING		33
7.1	Indemnification	33
7.2	Mutual Assistance	38
7.3	Confidentiality	38
7.4	Expenses	38
7.5	Further Transfers	39
7.6	Transfer Taxes; Recording Charges	39
7.7	Directors and Officers Insurance	39
7.8	Release	40
7.9	Confidential Information	40
7.10	Non-Solicitation	40
ARTICLE 8 MISCELLANEOUS		41
8.1	Amendment and Waiver	41
8.2	Notices	41
8.3	Assignment	42
8.4	Severability	42
8.5	No Strict Construction	42

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8.6	Captions	43
8.7	No Third-Party Beneficiaries	43
8.8	Complete Agreement	43
8.9	Counterparts	43
8.10	Governing Law and Jurisdiction	43
8.11	Waiver of Jury Trial	43
8.12	Specific Performance	43
8.13	Sellers’ Representative	44
8.14	Public Announcements	46
ANNEX 1 DEFINITIONS		A-1

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LIST OF EXHIBITS AND SCHEDULES

Exhibits
Exhibit A	Form of Agreement of Merger
Exhibit B-1	Letter of Transmittal
Exhibit B-2	Option Cancellation Agreement
Exhibit B-3	Warrant Cancellation Agreement
Exhibit B-4	Management Incentive Acknowledgment and Release
Exhibit C	Working Capital Schedule
Exhibit D	Distribution Waterfall
Exhibit E	Escrow Agreement
Exhibit F	Lock-Up Letter
Exhibit G	Exchange Agent Agreement
Exhibit H	Registration Rights Agreement
Exhibit I	Opinion of Company’s Counsel
Exhibit J	Opinion of Parent’s Counsel

Schedules	Referenced in:
Governmental Licenses Schedule	Sections 1.1 and 4.11
Repaid Indebtedness Schedule	Section 2.9
Company Transaction Expenses Schedule	Section 2.9
Management Incentive Payments Schedule	Section 2.9
Corporate Organization Schedule	Section 4.1
Capitalization Schedule	Sections 4.3 and 5.6
Contracts Schedule	Sections 4.9(a) and (b)
Material Restrictions Schedule	Section 4.4
Financial Statements Schedule	Section 4.5
Indebtedness Schedule	Section 4.5
Developments Schedule	Section 4.6
Leased Real Property Schedule	Sections 4.7(b) and (c)
Intellectual Property Schedule	Sections 4.10(a), (b), (c), (e), (f) and (i)
Litigation Schedule	Section 4.12
Compliance Schedule	Section 4.13
Employees Schedule	Section 4.14
Employee Benefits Schedule	Sections 4.15(a), (c), (g)
Taxes Schedule	Sections 4.16(b)
Brokerage Schedule	Sections 4.17 and 5.4
Affiliate Transactions Schedule	Section 4.18
Environmental Matters Schedule	Section 4.20
Insurance Schedule	Section 4.21
Customers and Suppliers Schedule	Section 4.26
Parent Material Restrictions Schedule	Section 6.4
Parent Brokerage Schedule	Section 6.7

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into as of October 10, 2011, by and among Qumu, Inc., a California corporation (the “Company”), Quick Acquisition Corp., a California corporation (“Merger Sub”), Rimage Corporation, a Minnesota corporation (“Parent”), ”), Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as Sellers’ Representative (as defined in Section 8.13), and the other Persons whose names are set forth on the signature pages hereto and are designated thereon as the Major Holders (the “Major Holders”). Capitalized terms used in this Agreement without definition shall have the respective meanings given to such terms in Article 1 hereof.

WHEREAS, the board of directors of the Company (the “Company Board”), subject to the terms and conditions set forth herein, has (i) declared the advisability of this Agreement and approved and adopted this Agreement, and (ii) resolved to recommend approval and adoption of this Agreement by all of the holders of Company Capital Stock (as defined below)(the “Stockholders”);

WHEREAS, the board of directors of Merger Sub has (i) declared the advisability of this Agreement and (ii) approved and adopted this Agreement;

WHEREAS, Parent has adopted this Agreement in its capacity as the sole stockholder of Merger Sub;

WHEREAS, the Company Board and the board of directors of Merger Sub have approved the merger of Merger Sub with and into the Company, with the Company as the surviving corporation (the “Surviving Corporation”), upon the terms and subject to the conditions set forth in this Agreement and the applicable provisions of the California Corporations Code (“CCC”), whereby each issued and outstanding share of the Common Stock (the “Common Stock”), the Series A2 Preferred Stock (the “Series A2 Stock”), the Series B Preferred Stock(the “Series B Stock”), and the Series C Preferred Stock (the “Series C Stock” and, together with the Common Stock, the Series A2 Stock and the Series B Stock, the “Company Capital Stock”) of the Company (other than the Company Capital Stock to be canceled pursuant to Section 2.5(c) and the Dissenting Shares (as defined in Section 2.10)), shall be converted into the right to receive a portion of the Merger Consideration (as defined herein) upon the terms and subject to the conditions set forth herein and based upon the applicable liquidation preferences and other rights, preferences and privileges of such classes of the Company Capital Stock as set forth in the Company Charter;

WHEREAS, the Company has obtained, in accordance with Section 603 of the CCC, written consents of the Stockholders approving (i) this Agreement, the Merger and the other transactions contemplated hereby in accordance with Section 1201 of the CCC, (ii) certain Management Incentive Payments and the contemplated Employment Agreement between Parent and a director of the Company as interested party transactions as well as compliance with Section 280G of the Code in respect to certain Management Incentive Payments and other payments and (iii) as provided in the Distribution Waterfall, the payment of a lesser amount than otherwise required to the holders of Series A2 Stock, Series B Stock and Series C Stock under the Charter as provided in the Distribution Waterfall for the benefit of the holders of Common Stock, Options to purchase

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Common Stock and Participating Warrants to purchase Common Stock (collectively, the “Written Consent”); and

WHEREAS, the Company, Merger Sub, Parent and the Major Holders desire to make certain representations, warranties, covenants and agreements in connection with the Merger, and also to prescribe various conditions to the Merger, as set forth in, and subject to the provisions of, this Agreement.

NOW THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Parties hereto agree as follows:

ARTICLE 1

DEFINITIONS

1.1Definitions. As used in this Agreement, capitalized terms shall have the meanings set forth in Annex 1 hereto.

ARTICLE 2

the MERGER

2.1               The Merger. At the Effective Time and subject to and upon the terms and conditions of this Agreement and the applicable provisions of the CCC, 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 direct, wholly owned Subsidiary of Parent (the “Merger”).

2.2                The Closing and the Effective Time; Stockholder Consent.

(a)The Closing and the Effective Time. The closing of the Merger (the “Closing”) will take place at the offices of Lindquist & Vennum PLLP, 80 South Eighth Street, Suite 4200, Minneapolis, Minnesota 55402, at 10 a.m. local time, on the date hereof (the actual time and date of the Closing being referred to herein as the “Closing Date”). On the Closing Date, and upon the terms and subject to the conditions of this Agreement, the parties hereto shall cause the Merger to be consummated by filing the Agreement of Merger (the “Agreement of Merger”) in substantially the form attached hereto as Exhibit A, with the Secretary of State of the State of California, as required by, and executed in accordance with, the applicable provisions of the CCC (the time of such filing with the Secretary of State of the State of California, or such later time as may be agreed upon in writing by Parent and the Company and specified in the Agreement of Merger, shall be referred to herein as the “Effective Time”).

(b)Stockholder Consent. Prior to or simultaneously with the execution and delivery of this Agreement on the date hereof, the Written Consent shall be executed by those Stockholders as required by the applicable provisions of the CCC and the Company’s Charter and delivered to the Company and a copy thereof shall be delivered to Parent.

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

2.4              Articles of Incorporation and Bylaws of Surviving Corporation. At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub or the Company, (i) the articles of incorporation of the Surviving Corporation shall be the articles of incorporation of Surviving Corporation as amended and restated as provided in Exhibit A to the Agreement of Merger and (ii) the bylaws of the Surviving Company shall be amended and restated to be the bylaws of the Merger Sub, as in effect immediately prior to the Effective Time, until duly amended as provided therein or by applicable laws.

2.5Effect of the Merger on the Company Capital Stock and the Capital Stock of Merger Sub.

(a)Effect on the Company Capital Stock. At the Effective Time, by virtue of the Merger and without any action on the part of Merger Sub, the Company or the Stockholders, each share of Company Capital Stock issued and outstanding immediately prior to the Effective Time (other than the Dissenting Shares or those shares to be cancelled pursuant to Section 2.5(c)), upon the terms and subject to the conditions set forth in this Section 2.5 and throughout this Agreement, will be canceled and extinguished and be converted automatically into the right to receive that portion of the Merger Consideration as set forth in this Section 2.5(a).

(i)Each share of Company Capital Stock that is issued and outstanding immediately prior to the Effective Time (other than the Dissenting Shares or those shares to be cancelled pursuant to Section 2.5(c)) shall be converted into the right to receive a portion of the Merger Consideration in accordance with the Distribution Waterfall. For avoidance of doubt, holders of Series A2 Stock, Series B Stock, and Series C Stock shall be entitled to receive cash and Parent Stock in exchange for such shares and all holders of Common Stock shall be entitled to receive cash in exchange for such shares, all in accordance with the Distribution Waterfall.

(ii)For purposes of calculating the amount to be paid to each Stockholder at the Effective Time, the amounts described in this Section 2.5(a) shall be calculated assuming that the Merger Consideration is equal to the Initial Merger Consideration, and shall be adjusted following the Closing as set forth herein, and shall be reduced (from the cash portion of the Merger Consideration to be received) by such Stockholder’s Escrow Account Allocation of the Escrow Amount and Seller Expense Amount, which amounts, subject to the terms of this Agreement, shall be payable to such Stockholder by the Exchange Agent in accordance with the terms and conditions of the Escrow Agreement.

(iii)All shares of Company Capital Stock, when canceled, extinguished and converted pursuant to this Section 2.5(a), shall no longer be outstanding and shall

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automatically be canceled and retired, and each former holder of Company Capital Stock shall cease to have any rights with respect thereto, except the right to receive the consideration provided for in this Section 2.5(a).

(b)Capital Stock of Merger Sub. Each share of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one share of the capital stock of the Surviving Corporation. Each share certificate of Merger Sub evidencing ownership of any such shares shall continue to evidence ownership of such shares of the Surviving Corporation.

(c)Cancellation of Treasury Stock. Any Company Capital Stock that is owned by the Company and not issued and outstanding as of the Effective Time shall be automatically canceled and shall cease to exist and no consideration shall be delivered in exchange therefor.

2.6Mechanism of Payment and Parent Stock Issuance.

(a)At the Effective Time, Parent shall pay, or cause to be paid, the following:

(i)the Repaid Indebtedness (as defined in Section 2.9), Company Transaction Expenses and the Management Incentive Payments in accordance with Section 2.9;

(ii)the Escrow Amount to the Escrow Agent in accordance with the Escrow Agreement; and

(iii)the Seller Expense Amount to the Sellers’ Representative.

(b)At the Effective Time, Parent or Merger Sub shall deliver, or Parent or Merger Sub shall otherwise take all steps necessary to cause to be delivered, to the Exchange Agent solely for the benefit of the Stockholders, Participating Options and Participating Warrants, (i) cash, by wire transfer of immediately available funds, in an aggregate amount equal to the Initial Cash Merger Consideration, less the Escrow Amount and the Seller Expense Amount, and (ii) an irrevocable letter of instruction to the Transfer Agent (each such letter, an “Instruction Letter”) to issue the Parent Stock Consideration, with the Parent Stock Consideration evidenced by a book entry made in the records of the Transfer Agent (in each case, minus any amounts that would be payable in respect of Dissenting Shares) (collectively, the “Payment Fund”), which deposit shall be held by Exchange Agent and used solely and exclusively for purposes of paying the consideration specified in Section 2.5(a) and 2.7(a). Exchange Agent shall make the payments provided for in Section 2.5(a) and 2.7(a) of this Agreement out of the Payment Fund pursuant to the terms of the Exchange Agent Agreement.

(c)Immediately after the Effective Time, Parent or the Surviving Corporation shall mail the Seller Transaction Documents, including the Letter of Transmittal in the form attached as Exhibit B-1, to each Stockholder for the Stockholder to use in surrendering the certificates that represented the Stockholder’s Company Capital Stock against payment of the Merger Consideration. Upon surrender to the Parent of a certificate (or a lost stock affidavit as contemplated by Section 2.6(e) hereof) representing, immediately prior to the Effective Time, Company Capital Stock (other than a certificate (or portion thereof) representing Dissenting Shares, the treatment of which is addressed in Section 2.10) (“Certificates”), together with the Seller Transaction Documents duly

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executed and completed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive, within five (5) Business Days after such surrender, in exchange therefor, (i) cash in an amount set forth in the Distribution Waterfall, which amount shall be paid by the Exchange Agent by check and rounded down to the nearest whole cent and, if applicable, (ii) the number of shares of Parent Stock set forth in the Distribution Waterfall, which shall be issued in the name of such holder(s) in accordance with the Instruction Letter and evidenced by a book entry made in the records of the Transfer Agent. No interest or dividends will be paid or accrued on the consideration payable upon the surrender or transfer of any Certificate. If the consideration provided for herein is to be delivered in the name of a person other than the person in whose name the Certificate was surrendered, it shall be a condition of such delivery that the Certificate so surrendered shall be properly endorsed or otherwise in proper form for transfer. Until surrendered in accordance with the provisions of this Section 2.6(c), each Certificate (other than those representing Dissenting Shares or Company Capital Stock to be canceled pursuant to Section 2.5(c)) shall represent, for all purposes, only the right to receive an aggregate amount in cash and Parent Stock equal to the portion of the Merger Consideration payable in respect thereof pursuant to Section 2.5(a) in respect of the Company Capital Stock formerly evidenced by such Certificate, without any interest or dividends thereon.

(d)Neither Parent nor the Surviving Corporation shall be liable to a holder of Certificates or any other person in respect of any cash or Parent Stock delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered or transferred by the sixth anniversary of the Closing Date (or immediately prior to such earlier date on which any Merger Consideration, dividends (whether in cash, stock or property) or other distributions with respect to Company Capital Stock in respect of such Certificate would otherwise escheat to or become the property of any foreign, federal, state or local governments or governmental agency), any such shares, cash, dividends or distributions in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interests of any person previously entitled thereto.

(e)In the event any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit (in form and substance reasonably acceptable to the Surviving Corporation) of that fact by the person (who shall be the record owner of such Certificate) claiming such Certificate to be lost, stolen or destroyed, the Company will issue in exchange for such lost, stolen or destroyed Certificate the Merger Consideration deliverable in respect thereof pursuant to this Agreement.

(f)Each of the Surviving Corporation, Parent and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of Company Capital Stock pursuant to this Agreement such amounts as may be required to be deducted or withheld with respect to the making of such payment under the Code, or any applicable provision of state, local or foreign tax law, with such deductions first being made from the cash portion of such consideration. To the extent that amounts are so deducted or withheld and paid over to the appropriate taxing authority by the Company, the Surviving Corporation, Parent or the Exchange Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

(g)No fractional Parent Shares shall be issued to any holder of Company Capital Stock as provided in this Section 2.5, and in lieu thereof, such holder shall receive an amount in cash

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equal to the Deemed Value multiplied by such fraction (rounded to the nearest one hundredth of a share) and the result rounded down to the nearest whole cent.

(h)Twenty four (24) months after the Effective Time, the Exchange Agent shall return to the Surviving Corporation (to be held in accordance with Section 2.6(d) hereof) any funds or Parent Stock which was delivered to the Exchange Agent pursuant to Section 2.6(b) and which it continues to hold.

2.7Stock Options and Warrants.

(a)At the Effective Time, each outstanding Participating Option and Participating Warrant shall be entitled to receive that portion of the Merger Consideration set forth on the Distribution Waterfall (the “Option and Warrant Consideration”). For purposes of calculating the amount to be paid to each holder of a Participating Option or a Participating Warrant at the Effective Time, the Option and Warrant Consideration shall be calculated assuming that the Merger Consideration is equal to the Initial Merger Consideration, and shall be adjusted following the Closing as set forth herein, and shall also be reduced by such holder’s Escrow Account Allocation of the Escrow Amount and Seller Expense Amount, which amounts, subject to the terms of this Agreement, shall be released from the Escrow Account to the Exchange Agent in accordance with the terms and conditions of the Escrow Agreement and thereafter shall be payable to such holder by the Exchange Agent in accordance with the terms and conditions of the Exchange Agreement. The amount to be paid in cash to each such holder for each share of Company Capital Stock purchasable pursuant to a Participating Option and Participating Warrant shall be rounded down to the nearest whole cent. The Option and Warrant Consideration shall be allocated among the holders of Participating Options and Participating Warrants as provided in the Distribution Waterfall. At the Effective Time each outstanding Participating Option shall be terminated and cancelled and shall be converted into, and only be entitled to receive, that portion of the Merger Consideration set forth on the Distribution Waterfall, subject to compliance with the terms of this Agreement. At the Effective Time, each outstanding Participating Warrant containing terms which allow for the termination and cancellation thereof in consideration of a cash payment as provided in the Distribution Waterfall shall be terminated and cancelled and shall be converted into, and only be entitled to receive that portion of the Merger Consideration set forth on the Distribution Waterfall. At the Effective Time, each outstanding Participating Warrant containing terms which do not allow for the termination thereof if not exercised prior to the Effective Time and do not provide for the termination and cancellation thereof in consideration of a cash payment shall continue to be exercisable in accordance with its terms but shall thereafter only be exercised for that portion of the Merger Consideration set forth in the Distribution Waterfall, subject to compliance with the terms of this Agreement.

(b)Upon receipt by the Exchange Agent of an Option Cancellation Agreement in the form attached hereto as Exhibit B-2 from a holder of a Participating Option or a Warrant Cancellation Agreement in the form attached hereto as Exhibit B-3 from a holder of a Participating Warrant, the holder of such Participating Option and Participating Warrants shall be entitled to receive, within five (5) Business Days after the later of such delivery or the Effective Time, in exchange therefor, cash in an amount set forth in the Distribution Waterfall, which amount shall be paid by the Exchange Agent by check. No interest or dividends will be paid or accrued on the consideration payable upon the surrender or transfer of any Participating Option or Participating Warrant. If the consideration provided for herein is to be delivered in the name of a person other than the holder of the Participating Option or Participating

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Warrant, it shall be a condition of such delivery that the holder of the Participating Option or Participating Warrant shall have properly transferred such Participating Option or Participating Warrant prior to the Effective Time. Until the holder delivers a duly executed Option Cancellation Agreement or Warrant Cancellation Agreement in accordance with the provisions of this Section 2.7(b), each Participating Option and Participating Warrant shall represent, for all purposes, only the right to receive an aggregate amount in cash equal to the portion of the Option and Warrant Consideration payable in respect thereof pursuant to Section 2.7(a), without any interest or dividends thereon.

(c)At the Effective Time, each Stock Option that is not a Participating Option and each Warrant that is not a Participating Warrant shall be canceled and terminated without any consideration paid therefor and without any further obligation or liability on the part of the Company.

(d)Prior to the Effective Time, the Company shall take all actions necessary (i) to give effect to the actions contemplated by this Section 2.7 and (ii) to terminate, effective immediately after the Effective Time, the Company Stock Plan and all awards thereunder so that on and after the Effective Time no employee, consultant or independent contractor of the Company or any participant under any Company Stock Plan or any other person shall have any Stock Option to purchase shares of Company Capital Stock or any right to receive any other equity interest in the Company (in each case, without the creation of any liability to the Company).

(e)Each of the Surviving Corporation, Parent and the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable to any holder of a Participating Option or Participating Warrant pursuant to this Agreement such amounts as may be required to be deducted or withheld with respect to the making of such payment under the Code, or any applicable provision of state, local or foreign tax law, with such deductions first being made from the cash portion of such consideration. To the extent that amounts are so deducted or withheld and paid over to the appropriate taxing authority by the Company, the Surviving Corporation, Parent or the Exchange Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

2.8              No Further Ownership Rights in the Company Capital Stock. The portion of the Merger Consideration paid in respect of the surrender for exchange of the Company Capital Stock in accordance with the terms hereof shall be deemed to be full satisfaction of all rights pertaining to such Company Capital Stock, and there shall be no further registration of transfers on the records of the Surviving Corporation of the Company Capital Stock which were outstanding immediately prior to the Effective Time.

2.9Company Indebtedness; Company Transaction Expenses; Management Incentive Payments. It is contemplated by the parties that, upon the Closing, the Indebtedness of the Company set forth on the attached “Repaid Indebtedness Schedule” (the “Repaid Indebtedness”) will be fully repaid at Closing by the Parent. In order to facilitate such repayment, no less than one (1) Business Day prior to the Closing, the Company shall obtain payoff letters for the Repaid Indebtedness, which payoff letters shall include wire instructions for purposes of payment thereof and shall otherwise be in a form reasonably acceptable to Parent and Merger Sub. Subject to the satisfaction of the Company’s conditions, covenants and obligations to be satisfied prior to the Closing, in connection with the Closing, the Parent shall make the payments referenced in such payoff letters on the Closing Date in order to discharge the Repaid Indebtedness covered thereby. It is also contemplated by the Parties that, upon the Closing, all of the Company Transaction Expenses will be fully paid. Subject to the satisfaction of the Company’s conditions, covenants and obligations to be satisfied prior to the

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Closing, in connection with the Closing, the Parent shall make payment of the Company Transaction Expenses set forth on the “Company Transaction Expenses Schedule” attached hereto on the Closing Date in order to discharge the amounts payable thereunder. In addition, it is contemplated by the Parties that, upon the Closing, the Management Incentive Payments set forth on the attached “Management Incentive Payments Schedule” will be paid by Parent, contingent upon receipt by the Company of a Management Incentive Acknowledgement and Release in the form of Exhibit B-4 executed by each person who receives a Management Incentive Payment (the “Incentive Recipient”). Notwithstanding the foregoing, the Management Incentive Payments shall be reduced (from the cash portion of the Management Incentive Payments) by each Incentive Recipient’s Escrow Account Allocation of the Escrow Amount and Seller Expense Amount, which amounts, subject to the terms of this Agreement, shall be payable to such Incentive Recipient by the Exchange Agent pursuant to the terms and conditions of the Escrow Agreement. The Management Incentive Acknowledgement and Release shall, among other things, provide that such Incentive Recipient shall join with the Sellers in the indemnification obligations under Article 7 to the extent of such Incentive Recipient’s Escrow Account Allocation of the Escrow Amount and shall acknowledge appointment of the Sellers’ Representative. Notwithstanding the foregoing, with respect to that portion of the Management Incentive Payments payable in Parent Stock as set forth in the Management Incentive Payments Schedule, Parent shall deliver, at the Effective Time (and following receipt by Parent of a Certificate of Accredited Status, a Management Incentive Acknowledgement and Release, and Lock-Up Letter each duly executed by the recipients of such Parent Stock), an Instruction Letter to issue to such recipients the Management Incentive Stock Allocation and evidenced by a book entry made in the records of the Transfer Agent. Each of the Surviving Corporation, Parent and the Exchange Agent shall be entitled to deduct and withhold from the Management Incentive Payments, including the Incentive Recipient’s Management Incentive Stock Allocation, otherwise payable to any Incentive Recipient pursuant to this Agreement such amounts as may be required to be deducted or withheld with respect to the making of such payment under the Code, or any applicable provision of state, local or foreign tax law, with such deductions first being made from the cash portion of such consideration. To the extent that amounts are so deducted or withheld and paid over to the appropriate taxing authority by the Company, the Surviving Corporation, Parent or the Exchange Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the Person to whom such amounts would otherwise have been paid.

2.10Dissenting Shares.

(a)Notwithstanding any provision of this Agreement to the contrary, shares of Company Capital Stock that are outstanding immediately prior to the Effective Time and that are held by the holders of Company Capital Stock who shall have not voted in favor of the Merger and who shall have demanded properly in writing appraisal for such shares in accordance with Sections 1300-1313 of the CCC (collectively, the “Dissenting Shares”) shall not be converted into, or represent the right to receive, any portion of the Merger Consideration payable pursuant to the terms of this Agreement. Such holders of Company Capital Stock shall be entitled to receive payment of the appraised value of such shares of Company Capital Stock held by them in accordance with the

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provisions of such Sections, except that all Dissenting Shares held by the holders of Company Capital Stock who shall have failed to perfect or who effectively shall have withdrawn or lost their rights to appraisal of such shares under such Sections shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive any portion of the Merger Consideration payable pursuant to the terms of this Agreement, without any interest thereon, upon surrender, in the manner provided herein, of the Certificate or Certificates that formerly evidenced such shares.

(b)The Company shall give (i) Parent prompt written notice of any demands for appraisal received by the Company, withdrawals of such demands, and any other instruments served pursuant to the CCC and received by the Company and (ii) Parent the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the CCC. The Company shall not, except with the prior written consent of Parent, make any payment with respect to any demands for appraisal or offer to settle or settle any such demands.

2.11Working Capital Adjustment.

(a)Determination of Closing Adjustment. No later than one (1) Business Day prior to the Closing, the Company shall provide Parent with its good faith estimate of Working Capital as of the close of business on the day prior to the Closing Date (“Estimated Working Capital”), and its good faith estimate of the aggregate amount of all Cash of the Company as of the close of business on the day prior to the Closing Date (“Estimated Cash”). The Estimated Working Capital adjustment determined pursuant to this Section 2.11(a) is hereinafter referred to as the “Estimated Working Capital Adjustment,” which shall be determined as follows:

(i)If the Estimated Working Capital is less than the Target Working Capital, then the Estimated Working Capital Adjustment shall be an amount equal to (A) the Target Working Capital, minus (B) the Estimated Working Capital, and the Initial Cash Merger Consideration shall be decreased by such amount; and

(ii)If the Estimated Working Capital is greater than the Target Working Capital, then the Estimated Working Capital Adjustment shall be an amount equal to (A) the Estimated Working Capital, minus (B) the Target Working Capital, and the Initial Cash Merger Consideration shall be increased by such amount.

(b)Determination of Post-Closing Adjustment. No later than sixty (60) days following the Closing, Parent shall deliver to Sellers’ Representative the calculation of the actual Working Capital as of the close of business on the Closing Date, without giving effect to the transactions contemplated by this Agreement (“Actual Working Capital”) (prepared in accordance with the “Working Capital Schedule” attached hereto as Exhibit C) and a calculation of the actual Cash of the Company as of the close of business on the Closing Date, without giving effect to the transactions contemplated by this Agreement (“Actual Cash”).

(c) Disputed Final Adjustment.

(i)No later than thirty (30) days following the delivery by Parent of the calculation of Actual Working Capital and Actual Cash, Sellers’ Representative shall notify Parent in writing whether it accepts or disputes the accuracy of the calculation of Actual

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Working Capital and Actual Cash. During such thirty (30) day period, the Sellers’ Representative and its agents shall be provided with such access (including electronic access, to the extent available) to the financial books and records of the Company and the personnel or representatives of the Company and Parent, including but not limited to the individuals responsible for preparing the calculation of the Actual Working Capital and Actual Cash, as it may reasonably request to enable it to evaluate the calculations of Actual Working Capital and Actual Cash prepared by Parent. If the Sellers’ Representative accepts the calculation of Actual Working Capital and Actual Cash determined pursuant to Section 2.11(b), or if the Sellers’ Representative fails within such thirty (30) day period to notify Parent of any dispute with respect thereto, then the calculation of Actual Working Capital determined pursuant to Section 2.11(b), shall be the “Final Working Capital” and the calculation of Actual Cash determined pursuant to Section 2.11(b), shall be the “Final Cash” which, in each case, shall deemed final and conclusive and binding upon all parties in all respects.

(ii)If the Sellers’ Representative disputes the accuracy of the calculation of Actual Working Capital or Actual Cash, the Sellers’ Representative shall provide written notice to Parent no later than thirty (30) days following the delivery by Parent to the Sellers’ Representative of the calculation of Actual Working Capital and Actual Cash (the “Dispute Notice”), setting forth in reasonable detail those items that the Sellers’ Representative disputes. During the thirty (30) day period following delivery of a Dispute Notice, Parent and the Sellers’ Representative shall meet and negotiate in good faith with a view to resolving their disagreements over the disputed items. During such thirty (30) day period and until the final determination of Final Working Capital and/or Final Cash in accordance with this Section 2.11(c)(ii), the Sellers’ Representative and its agents shall be provided with such access to the financial books and records of the Company, as it may reasonably request to enable it to address all matters set forth in any Dispute Notice. If the parties resolve their differences over the disputed items in accordance with the foregoing procedure, “Final Working Capital” and/or “Final Cash” shall be the amounts agreed upon by them. If the parties fail to resolve their differences over the disputed items within such thirty (30) day period, then Parent and the Sellers’ Representative shall forthwith jointly request that Deloitte Services, L.P. (the “Accounting Arbitrator”) make a binding determination as to the disputed items in accordance with this Agreement.

(iii)The Accounting Arbitrator will under the terms of its engagement have no more than thirty (30) days from the date of referral and no more than ten (10) Business Days from the final submission of information and testimony by Parent and the Sellers’ Representative within which to render its written decision with respect to the disputed items (and only with respect to any unresolved disputed items set forth in the Dispute Notice) and the final calculation of Actual Working Capital and/or Actual Cash shall be based solely on the resolution of such disputed items. The Accounting Arbitrator shall review such submissions and base its determination solely on such submissions. In resolving any disputed item, the Accounting Arbitrator may not assign a value to any item greater than the greatest value for such item claimed by either party or less than the least value for such item claimed by either party. The decision of the Accounting Arbitrator shall be deemed final and binding upon the parties and enforceable by any court of competent jurisdiction and the Accounting Arbitrator’s final calculation of Actual Working Capital shall be deemed the “Final Working Capital” and/or the Accounting Arbitrator’s final calculation of Actual Cash

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shall be deemed the “Final Cash.” The fees and expenses of the Accounting Arbitrator shall be allocated to be paid by Parent, on the one hand, and the Sellers’ Representative (solely on behalf of the Sellers and in its capacity as the Sellers’ Representative, not in its individual capacity), on the other, based upon the percentage that the portion of the contested amount not awarded to each party bears to the amount actually contested by such party, as determined by the Accounting Arbitrator.

(d)Payment following Calculation of Final Working Capital and Final Cash. Following the determination of the Final Working Capital and the Final Cash pursuant to Section 2.11(c), (i) the Estimated Working Capital Adjustment set forth in Section 2.11(a) shall be recalculated substituting the Final Working Capital for the Estimated Working Capital (the “Final Working Capital Adjustment”), (ii) the Estimated Cash set forth in Section 2.11(a) shall be recalculated substituting the Final Cash for the Estimated Cash (the “Final Cash”) and (ii) the Initial Cash Merger Consideration shall be recalculated substituting the Final Working Capital Adjustment and the Final Cash for the Estimated Working Capital Adjustment and the Estimated Cash, respectively, in Section 1.1 (the “Final Initial Cash Merger Consideration”). If (after taking into account the Final Working Capital Adjustment and Final Cash) (A) the Final Initial Cash Merger Consideration is greater than the Initial Cash Merger Consideration on the Closing Date, then the Company shall pay to the Sellers and the Incentive Recipients, either directly or through the Exchange Agent, cash in the amount of their Escrow Account Allocation of such difference by check within five (5) Business Days after such determination and (B) the Initial Cash Merger Consideration on the Closing Date is greater than the Final Initial Cash Merger Consideration, then such deficiency shall be released in accordance with the Sellers’ and the Incentive Recipients’ Escrow Account Allocation by the Sellers’ Representative from the Escrow Account and paid to Parent by wire transfer of immediately available funds within five (5) Business Days after such determination.

2.12Directors and Officers.

(a)The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation at and after the Effective Time, each to hold office as a director until his or her successor is duly elected or appointed and qualified in accordance with applicable law and the articles of incorporation and bylaws of the Surviving Corporation.

(b)The officers of the Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation at and after the Effective Time, each to hold office until his or her successor is duly elected or appointed and qualified in accordance with applicable law and the articles of incorporation and bylaws of the Surviving Corporation.

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ARTICLE 3

CLOSING deliveries

3.1              Closing Deliveries of the Major Holders and the Company. At or prior to the Closing, the Major Holders and/or the Company will deliver the following to Parent, duly executed as appropriate:

(a)the Escrow Agreement;

(b)the Lock-up Letter;

(c)the Registration Rights Agreement;

(d)the Written Consent;

(e)a certificate dated as of the Closing Date from the Company, signed by a duly authorized officer thereof and in form and substance satisfactory to Parent certifying (i) the resolutions of the Company Board authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, including without limitation, the termination of the Company’s 401(k) Plan to be effective prior to the Effective Time, (ii) the Written Consent, (iii) the authenticity of attached copies of the Company Charter and bylaws, and (iv) the incumbency and signatures of the officers of the Company executing this Agreement or any other agreement contemplated by this Agreement;

(f)a certificate of good standing of the Company from the California Secretary of State, dated no more than ten days prior to the Closing Date;

(g)an opinion of the legal counsel to the Company as to the matters referred to on Exhibit I;

(h)agreements from holders of Participating Warrants consenting to the payment of cash in cancellation of their Warrants as provided in Section 2.7(a);

(i)all releases, consents, approvals and notices required to be obtained from or made to any Person by the Company or any Major Holder in connection with the transactions contemplated by this Agreement to the extent expressly noted on the Material Restrictions Schedule as being required to be delivered at Closing;

(j)an estoppel certificate with respect to each of the leases of Leased Real Property from the other party to such lease, in form and substance satisfactory to Parent;

(k)a certificate provided by the Company to Parent in accordance with Treasury Regulation Section 1.1445-2(c)(3) certifying under penalties of perjury that the shares of Company Capital Stock are not United States real property interests, and the notice required under Treasury Regulation Section 1.897-2(h)(2) prepared and executed under penalties of perjury by the Company on or prior to the Closing, in each case reasonably satisfactory to Parent;

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(l) a Certificate of Accredited Status from each Major Holder and each Incentive Recipient receiving Parent Stock;

(m)employment agreements with key personnel of the Company acceptable to Parent;

(n)non-competition and non-solicitation agreements with each Seller that is an employee of the Company as of the Effective Time, to the extent permitted under Sections 16601-16602.5 of the CCC;

(o)Management Incentive Acknowledgment and Releases from each person entitled to a Management Incentive Payment; and

(p)terminations of each of the agreements set forth on Schedule 3.1(p) on terms and conditions acceptable to Parent, except to the extent such agreements terminate by their express terms as indicated on Schedule 3.1(p).

3.2              Closing Deliveries of Parent and Merger Sub. At or prior to the Closing, Parent and Merger Sub will deliver the following to the Company, duly executed as appropriate:

(a)the Escrow Agreement;

(b)the Exchange Agent Agreement;

(c)the Registration Rights Agreement;

(d)a certificate dated as of the Closing Date from Parent, signed by a duly authorized officer thereof and in form and substance satisfactory to the Company certifying (i) the resolutions of Parent’s board of directors authorizing the execution, delivery and performance of this Agreement and the transactions contemplated hereby, and (ii) the incumbency and signatures of the officers of the Company executing this Agreement or any other agreement contemplated by this Agreement;

(e)a certificate of good standing of Parent from the Minnesota Secretary of State, dated no more than ten (10) days prior to the Closing Date;

(f)an opinion of the legal counsel to Parent and Merger Sub as to the matters referred to on Exhibit J.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY

As a material inducement to Parent and Merger Sub to enter into this Agreement and consummate the transactions contemplated hereby, except as set forth on the schedules referenced with respect to such representations in this Article 4, the Company hereby represents and warrants to Parent and Merger Sub as of the date hereof as follows:

4.1              Organization and Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of California. Except as set forth on

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the attached “Corporate Organization Schedule,” the Company is qualified to do business as a foreign entity and is in good standing in each jurisdiction listed on the attached “Corporate Organization Schedule,” which jurisdictions constitute all of the jurisdictions in which the Company is required to be so qualified, except to the extent the failure to have such power and authority would not have a Material Adverse Effect. The Company has all requisite power and authority to carry on the Business as now conducted and to own and use the properties owned and used by it. The Company has all requisite corporate power and authority to execute and deliver this Agreement and the other agreements contemplated hereby and to perform its obligations hereunder and thereunder.

4.2              Authorization. The execution, delivery and performance by the Company of this Agreement, the consummation of the Merger, the other agreements contemplated hereby and each of the transactions contemplated hereby or thereby have been duly and validly authorized by the Company and no other act or proceeding on the part of the Company (other than the filing and effectiveness of the Agreement of Merger with the Office of the Secretary of State of the State of California), the Company Board or the Stockholders is necessary to authorize the execution, delivery or performance by the Company of this Agreement or any other agreement contemplated hereby or the consummation of any of the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by the Company and, assuming the due execution and delivery of this Agreement and the other agreements contemplated hereby by the other parties hereto and thereto, this Agreement constitutes, and the other agreements contemplated hereby upon execution and delivery by the Company will each constitute, a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as the enforceability hereof or thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and as limited by the availability of specific performance and other equitable remedies or applicable equitable principles (whether considered in a proceeding at law or in equity). All proper notices to the Stockholders including those required in connection with the Written Consent, have been given or waived and all waiting periods required in respect thereto to consummate the transactions contemplated hereby have been satisfied. All proper notices to the holders of Options, Warrants and Company debt securities have been given or properly waived and all waiting periods required to consummate the transactions contemplated hereby have been satisfied. The Company has complied with the terms and conditions of the Company Stock Plan and all Options issued thereunder in connection with the approval and consummation of the transactions contemplated by this Agreement. The Company Board and the Stockholders have taken all required action in compliance with the CCC, its Charter, bylaws and any agreements binding upon the Company or the Stockholders to provide for a payment of a lesser amount than otherwise required to the holders of Series A2 Stock, Series B Stock and Series C Stock as provided in the Distribution Waterfall for the benefit of the holders of Common Stock, Participating Options to purchase Common Stock and Participating Warrants to purchase Common Stock.

4.3              Capitalization; Subsidiaries.

(a)The attached “Capitalization Schedule” accurately sets forth the authorized and outstanding capital stock of the Company and the name and number of shares of capital stock held by each Stockholder. All of the issued and outstanding shares of capital stock of the Company have been duly authorized, are validly issued, fully paid and nonassessable, are owned of record and beneficially by the Stockholders and were not issued in violation of, or in any attempt to circumvent,

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the preemptive or other rights of any Person or any agreement (including the Company’s Charter and bylaws) or Law by which the Company was bound at the time of issuance. Set forth on the Capitalization Schedule is the name of each holder of a Stock Option or Warrant, the type of each Stock Option held, the number and class of shares of Company Capital Stock subject to each Stock Option or Warrant, the exercise price of each Stock Option or Warrant, and the extent to which each Stock Option or Warrant is vested and exercisable. Each of the Options and Warrants set forth on the Capitalization Schedule have been duly authorized, are validly issued, are owned of record and beneficially by the holders noted thereon and were not issued in violation of, or in any attempt to circumvent, the preemptive or other rights of any Person or any agreement (including the Company’s Charter and bylaws) or Law by which the Company was bound at the time of issuance. Except for this Agreement and as may be set forth on the attached Capitalization Schedule, there are no outstanding or authorized options, warrants, rights, contracts, pledges, calls, puts, rights to subscribe, conversion rights or other agreements or commitments to which the Company is a party or which is binding upon the Company providing for the issuance, disposition or acquisition of any of its capital stock or any rights or interests exercisable therefor. There are no outstanding or authorized equity appreciation, phantom stock or similar rights with respect to the Company. Except as set forth on the Capitalization Schedule, the Company is not a party to any voting trust or other agreement with respect to the voting, redemption, sale, transfer or other disposition of the capital stock of the Company. There are no declared, accrued or unpaid dividends with respect to any shares of the Company Capital Stock. The Distribution Waterfall accurately and properly reflects all issued and outstanding shares of capital stock of the Company, all outstanding options, warrants, rights, contracts, pledges, calls, puts, rights to subscribe, conversion rights or other agreements or commitments to which the Company is a party or which is binding upon the Company providing for the issuance, disposition or acquisition of any of its capital stock or any rights or interests exercisable therefor, and the relative rights and preferences of the same, and the amount of the Initial Merger Consideration to be paid to the holders of Company Capital Stock and to the holders of Options and Warrants under the terms of the Charter and all other agreements governing the rights of any Seller or any holder of an Option or Warrant. All Company Capital Stock, Options and Warrants have been issued in compliance with all applicable federal and state securities laws.

(b)The Company has no Subsidiaries. The Company does not control directly or indirectly or have any direct or indirect equity participation in any Person.

4.4              Absence of Conflicts. Except as set forth on the attached “Material Restrictions Schedule,” the execution, delivery and performance by the Company of this Agreement, the consummation of the Merger, and execution, delivery and performance by the Company of the other agreements contemplated hereby and the consummation of each of the transactions contemplated hereby or thereby will not (a) violate any applicable law or any provision of the Company’s Charter or bylaws (or equivalent organizational documents); (b) violate, conflict with, result in any breach of, constitute a default under, result in the termination or acceleration of, create in any party the right to accelerate, terminate, modify or cancel, or require any notice under any agreement, contract, lease, license, instrument, or other arrangement to which the Company is a party or by which the Company is bound or to which the Company’s assets are subject; or (c)  require any authorization, consent, approval, exemption or other action by or notice to any Person (except for the filing and recordation of the Agreement of Merger as required by the CCC). The Company is in compliance with its Charter and bylaws and each agreement and other instrument governing the rights of holders of Company Capital Stock, Options and Warrants.

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4.5              Financial Statements. The attached “Financial Statements Schedule” contains the following financial statements (the “Financial Statements”):

(a)the audited balance sheet of the Company as of December 31, 2008, December 31, 2009, and December 31, 2010, and the related audited statements of income, consolidated changes in shareholders’ equity and consolidated cash flows for the annual periods then ended; and

(b)the unaudited balance sheets of the Company as of August 31, 2011 (the “Stub Period Balance Sheet”), and the related unaudited statements of income, changes in shareholders’ equity and cash flows (collectively, the “Stub Period Financial Statements”) for the seven-month and eight-month periods then ended, respectively.

Each of the foregoing Financial Statements is accurate and complete in all material respects and presents fairly the financial condition, results of operations and cash flows of the Company throughout the periods covered thereby and such Financial Statements have been (except as set forth on the Financial Statements Schedule) prepared in accordance with GAAP consistently applied throughout the periods indicated (except that the Stub Period Balance Sheet lacks footnote disclosure and other presentation items, and does not include year-end audit adjustments (which will not be material)). Except as set forth on the “Indebtedness Schedule”, the Company has no Indebtedness.

4.6              Absence of Certain Developments. Except as set forth on the “Developments Schedule,” since the date of the Stub Period Balance Sheet, the Company has conducted its business only in the ordinary course of business, and the Company has not:

(a)suffered a Material Adverse Effect;

(b)sold, leased, assigned, licensed or transferred any of its material assets or portion thereof (other than sales of inventory, in each case, in the ordinary course of business, or sales of obsolete assets) or mortgaged, pledged or subjected them to any additional Lien, except for Permitted Liens;

(c)made any material capital expenditures or commitments therefor either (i) in excess of $50,000, individually or in the aggregate, or (ii) otherwise in a manner that is not consistent with the Company’s existing budget for capital expenditures or outside the ordinary course of business consistent with past custom and practice;

(d)suffered any damage, destruction or loss to any of its material assets or portion thereof (whether or not covered by insurance)

(e)created, incurred, assumed or guaranteed any Indebtedness;

(f)amended or authorized the amendment of its articles of incorporation or bylaws (or equivalent organizational documents);

(g)entered into any agreement, contract, lease, or license either involving more than $50,000 or outside the ordinary course of business;

(h)accelerated, terminated, modified, or cancelled any agreement, contract, lease, or license either involving more than $50,000 or outside the ordinary course of business (or had any other party thereto take such action);

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(i)made any capital investment in, any loan to, or any acquisition of the securities or other assets of, any Person;

(j)delayed or postponed the payment of accounts payable or other Liabilities outside the ordinary course of business;

(k)cancelled, compromised, waived, or released any right or claim either involving more than $50,000 (individually or in the aggregate) or outside the ordinary course of business;

(l)issued, sold or transferred any of its capital stock or other equity securities, securities convertible into its capital stock or other equity securities or warrants, options or other rights to acquire its capital stock or other equity securities, or any bonds or debt securities;

(m)declared or made any payment or distribution of cash or other property to holders of its capital stock or equity interests, or purchased or redeemed any capital stock or equity interests;

(n)made any changes in any employee compensation, benefits, severance or termination agreement other than routine salary increases in the ordinary course of business;

(o)received any notice or other indication from any customer (whether formal or informal) with respect to any warranty claims, termination of contracts or work orders, or disputes as to amounts billed in excess of $50,000; or

(p)agreed to do any of the foregoing.

4.7              Real Property.

(a)Owned Real Property. The Company owns no real property.

(b)Leased Real Property. The attached “Leased Real Property Schedule” sets forth the address of each Leased Real Property facility of the Company and each lease pursuant to which the Company leases the Leased Real Property. The Company has provided to Parent a true, correct and complete copy of each such lease. Except as set forth in the attached “Leased Real Property Schedule”, with respect to each of the leases: (i) such lease is in full force and effect and has not been modified, (ii) the transactions contemplated hereby do not require the consent of any other party to such lease and will not result in a breach of or default under such lease, and (iii) no party to such lease is in material breach or material default under any such lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default or permit the termination, modification or acceleration of rent under such lease, and will not otherwise cause any such lease to cease to be in full force and effect on the same terms following the Closing.

(c)Real Property Used in the Business. The Leased Real Property identified on the attached “Leased Real Property Schedule” comprises all of the real property used in the operation of the Business.

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(d)To the Company’s Knowledge, all buildings, structures, fixtures, building systems and equipment, and all material components thereof included in the Leased Real Property are in good condition and repair and sufficient for the operations of the Business.

(e)To the Company’s Knowledge, there are no pending, contemplated or threatened condemnation proceedings against all or any portion of the Leased Real Property. To the Company’s Knowledge, there are no (i) public improvements which have been commenced or completed and for which an assessment may be levied against the Leased Real Property, or (ii) any planned improvements which may result in any assessment against the Leased Real Property. To the Company’s Knowledge, none of the Leased Real Property, buildings, structures, fixtures, building systems and equipment, or the use thereof, contravenes or violates any applicable law.

4.8              Title to Assets. Except as set forth in the attached “Title to Assets Schedule,” the Company owns good and valid title to, or a valid license or leasehold interest in, all of the assets (other than the Company Intellectual Property which is subject to the representation in Section 4.10) used in the conduct of the Business, shown on the Stub Period Balance Sheet, or acquired since the date thereof, free and clear of all Liens, other than Permitted Liens, except assets disposed of in the ordinary course of business since the date of the Stub Period Balance Sheet.

4.9              Contracts and Commitments.

(a)The “Contracts Schedule” attached hereto lists all of the following contracts, agreements or other arrangements to which the Company is a party or by which any of its assets or properties is bound (the “Scheduled Contracts”):

(i)contracts which involve commitments to make capital expenditures or which provide for the purchase of goods or services by the Company from any one Person under which the undelivered balance of such products or services has a purchase price in excess of $50,000;

(ii)contracts which provide for the sale of products or services by the Company and under which the undelivered balance of such products or services has a sale price in excess of $100,000;

(iii)contracts relating to Indebtedness of the Company, or any guaranty by the Company of any obligation in respect of borrowed money, or any Lien on any asset of the Company;

(iv)employment, consulting and non-competition agreements with any employee, officer or consultant that is not terminable on 60 or fewer days notice by the Company without Liability for any penalty or severance payment;

(v)contracts pursuant to which the Company is (A) a lessee of any property, personal or real, or holds or operates any tangible personal property owned by another Person, except for any leases of personal property under which the aggregate annual rent or lease payments do not exceed $5,000, or (B) a lessor of any property, personal or real, or allows any other Person to hold or operate any tangible personal property owned by the Company;

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(vi)collective bargaining agreement or other similar contract with any labor union;

(vii)agreement that restricts the ability of the Company to engage in any line of business or compete with any Person;

(viii)joint venture or partnership agreement involving a sharing of profits, losses, costs or liabilities by the Company with any other Person;

(ix)power of attorney granted by or to the Company;

(x)agreement not entered into in the ordinary course of business; and

(xi)other agreement that is material to the Company or the Business.

(b)The Company has provided to Parent a true, correct and complete copy of each Scheduled Contract. Neither the Company, nor to the Knowledge of the Company, any other party to a Scheduled Contract has breached in any material respect such Scheduled Contract, except to the extent such breach has been duly and timely cured. The Company is not in receipt of any written claim of default under any such Scheduled Contract. Each Scheduled Contract is in full force and effect and is a valid and binding obligation of the Company, and, to the Knowledge of the Company, a valid and binding obligation of the other party thereto. Except as set forth on the Material Restrictions Schedule, the transactions contemplated by this Agreement do not require the consent of any party to any Scheduled Contract, will not result in a violation or breach of or default under any Scheduled Contract, and will not otherwise cause any Scheduled Contract to cease to be in full force and effect on the same terms following the Closing.

4.10              Intellectual Property.

(a)The attached “Intellectual Property Schedule” lists all patents owned by the Company (“Company Patents”), the date of issuance and registration numbers for each Company Patent, and the jurisdictions in which each Company Patent is issued. The Company Patents and all claims incorporated therein are valid, subsisting and enforceable in the jurisdictions in which the Company Patents are issued. The Intellectual Property Schedule lists all pending applications for patents that have been filed by or for the Company (“Company Patent Applications”), the date of filing and serial or application numbers for each Company Patent Application, and the jurisdictions in which each Company Patent Application is filed.

(b)The Intellectual Property Schedule lists all registered and material unregistered copyrights that are owned by the Company . The Company’s registered and unregistered copyrights are collectively referred to herein as “Company Copyrights”. The Intellectual Property Schedule lists all jurisdictions where Company Copyrights have been registered. The Intellectual Property Schedule lists all pending applications for copyright registration that have been filed by or for the Company, and the jurisdictions where the applications have been filed. All registered Company Copyrights are valid and enforceable in the jurisdictions where they are registered.

(c)The Intellectual Property Schedule lists all registered and material unregistered trademarks and trade names that are owned by the Company (“Company Trademarks”) and all

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jurisdictions where Company Trademarks are registered. The Intellectual Property Schedule lists all applications for trademark registration that have been filed or prepared for filing by or for the Company that are pending as of the date hereof . All registered Company Trademarks are valid and enforceable in the jurisdictions where they are registered. The term (“Company Know-how”) means all material unpatented inventions, concepts, processes, procedures, innovations and other proprietary information and know-how owned by the Company and used in the Business. The term “Company Intellectual Property” means all Company Patents, Company Patent Applications, Company Copyrights, Company Trademarks and Company Know-how.

(d)The Intellectual Property Schedule lists (i) all agreements which are currently in effect under which the Company has been granted a license to any patents or patent rights, copyrights and works of authorship, registered and unregistered trademarks and trade names, and all unpatented inventions, concepts, processes, procedures, innovations, proprietary information and know-how (except for agreements pertaining to “off-the-shelf” software products for which less than $10,000 was paid) and (ii) all licenses granted to third parties in or to the Company Intellectual Property which are currently in effect (each such agreement and license being a “License Agreement”). The Company has provided to Parent a true, correct and complete copy of each License Agreement and a written description of the material terms of each oral License Agreement. The Company has not materially breached any License Agreement and to the Company’s Knowledge, no other party to such License Agreements has breached them in any material respect. The Company is not in receipt of any written claim of default under any such License Agreement. Each License Agreement is in full force and effect and is a valid and binding obligation of the Company, and, to the Knowledge of the Company, a valid and binding obligation of the other party thereto. The transactions contemplated by this Agreement do not require the consent of any party to any License Agreement, will not result in a violation or breach of or default under any License Agreement, and will not otherwise cause any Scheduled Contract to cease to be legal, binding, enforceable and in full force and effect on the same terms following the Closing.

(e)The Intellectual Property Schedule lists all rights or interests of third parties in or to the Company Intellectual Property (other than rights or interests granted pursuant to a License Agreement). Except as described in the Intellectual Property Schedule, the Company is the sole and exclusive owner of all right, title and interest in the Company Intellectual Property, free of all liens, encumbrances, third party rights, options, agreements or understandings of any kind, whether written, oral or implied.

(f)All taxes, filing fees, issue fees, annuities and other fees and charges applicable to the Company Intellectual Property have been paid, including but not limited to those required for the issuance, registration and maintenance of the Company Patents, registrations for Company Copyrights and Company Trademarks, and filing and prosecution of the Company Patent Applications, Company Copyright Registrations and Copyright Trademark Registrations. The Intellectual Property Schedule lists all adverse administrative decisions, determinations and judgments rendered by any judicial, administrative or government authority with respect to the scope, validity or enforceability of the Company Intellectual Property or any claim therein. Except as listed in the Intellectual Property Schedule, to the Company’s Knowledge, there is no pending or threatened interference, opposition, cancellation, protest, litigation or other challenge or adversarial proceeding related to the Company Intellectual Property. The Company has not committed any act that has diminished or impaired the scope, validity or enforceability of the Company Intellectual Property, or the right, title or interest of the Company therein.

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(g)To the Company’s knowledge, the conduct of the Business in general, in the manner and to the extent presently conducted, does not and will not infringe or violate any third party intellectual property right. The Company has not received any notice of any infringement, misappropriation or violation by it of any third party intellectual property right.

(h)Except as described on the Intellectual Property Schedule, all employees of the Company have executed one or more agreements under which they have effectively assigned, to the Company all of the inventions and works of authorship that such employees create, or have created in the scope of their employment therewith. Except as described on the Intellectual Property Schedule, all contractors that provide, or have provided services to the Company have executed one or more agreements under which they have effectively assigned to the Company that engaged them all of the inventions and works of authorship that such contractors create, or have created in the scope of their service relationship with the Company.

(i)The Intellectual Property Schedule lists all software and other material that is licensed to the Company under the GNU General Public License, the GNU Lesser General Public license, the Mozilla Public License, the Apache License or any other license or agreement that (i) is designated an Open Source License by the Open Source Initiative, or (ii) meets the conditions of the Open Source Definition.  In no case has the Company used or distributed any software or other material that is subject to a license, contract or term or condition under which the Company (i) is required to grant to any third party, other than the licensee in the case of a distribution, any right to any Company Intellectual Property, or (ii) is obligated to disclose, distribute or otherwise make available to available to any third party (other than as an escrow beneficiary) any source code version of any software owned by or licensed to the Company.

4.11              Governmental Licenses and Permits. The attached “Governmental Licenses Schedule” contains a complete listing of all material Governmental Licenses used in the conduct of the Business or otherwise granted or issued to the Company. Except as indicated on the attached “Governmental Licenses Schedule,” the Company owns or possesses all right, title and interest in and to all of the Governmental Licenses that are necessary to own and operate the Business as presently conducted. The Company is in compliance with the material terms and conditions of such material Governmental Licenses and has not received any written notices that it is in violation of any of the terms or conditions of such material Governmental Licenses. The execution, delivery or performance of this Agreement by the parties will not have any effect on the continued validity or sufficiency of such material Governmental Licenses, nor will any additional Governmental Licenses be required by virtue of the execution, delivery or performance of this Agreement by the parties hereto to enable the Company to conduct the Business.

4.12              Litigation; Proceedings. Except as set forth on the attached “Litigation Schedule,” (a) there are no actions, suits, proceedings, hearings, orders, charges, claims or investigations pending or, to the Company’s Knowledge, threatened against the Company or any of its assets or the Business; and (b) the Company is not subject to any injunctions, judgments, orders, decrees, rulings, or charges of any Governmental Authority.

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4.13              Compliance with Laws. Except as set forth on the attached “Compliance Schedule,” the Company is in compliance in all material respects with all applicable statutes, laws, ordinances, codes, rules, regulations and requirements of any Government Authority, in each case as currently enforced by the applicable Government Authority. No written notice has been received by the Company alleging a violation of or liability or potential responsibility under (or an investigation with respect to) any such statute, law, ordinance, code, rule, regulation or requirement which is pending or remains unresolved.

4.14              Employees. Except as set forth on the attached “Employees Schedule” the Company has not experienced any union organization attempts, material labor disputes or material work stoppage or material slowdowns due to labor disagreements. To the Company’s Knowledge, there is no labor strike, material dispute, material work stoppage or material slowdown pending or threatened against the Company. Except as set forth on the attached “Employees Schedule”, the Company is not a party to any labor or union agreement. The qualifications for employment of each of the Company’s employees under applicable immigration laws have been reviewed by the Company and a properly completed Form I-9 is on file with the Company for each employee. The Company has complied with the U.S. Immigration and Nationality Act, as amended from time to time, and the rules and regulations promulgated thereunder, to the extent applicable to the Company.

4.15              Employee Benefit Plans.

(a)Except as set forth on the attached “Employee Benefits Schedule,” with respect to current or former employees of the Company and ERISA Affiliates, neither the Company nor any ERISA Affiliate maintains, contributes to or has any obligation to contribute to, or has any Liability with respect to any (i) qualified defined contribution or defined benefit plans (whether or not terminated) which are employee pension benefit plans (as defined in Section 3(2) of ERISA) (the “Employee Pension Plans”); (ii) ongoing or terminated funded or unfunded employee welfare benefit plans (as defined in Section 3(1) of ERISA) (“Employee Welfare Plans”); or (iii) plan, policy, program or arrangement which provides nonqualified deferred compensation benefits, equity or cash incentive compensation, or any other program, plan, policy or arrangement which provides any health, life, disability, accident, vacation, tuition reimbursement or other fringe benefits (“Other Plans”). Except as set forth on the attached “Employee Benefits Schedule,” neither the Company nor any ERISA Affiliate participates in or contributes to and neither the Company nor any ERISA Affiliate has participated in or contributed to, or ever had any Liability under, any multiemployer plan (as defined in Section 3(37) of ERISA) (“Multiemployer Plan”), “defined benefit plan” (as defined in Section (3)(35) of ERISA), multiple employer plan (as defined in Section 413(c) of the Code) or a plan subject to Section 412 of the Code. Neither the Company nor any ERISA Affiliate maintains or has any obligation to contribute to any funded or unfunded Employee Welfare Plan, Multiemployer Plan or Other Plan which provides post-retirement health, accident or life insurance benefits to current or former employees, current or former independent contractors, current or future retirees, their spouses, dependents or beneficiaries, other than health benefits required to be provided to former employees, their spouses and other dependents under Code Section 4980B. (Any Employee Pension Plan, any Employee Welfare Plans and any Other Plan or other similar plans or laws shall be referred to herein collectively as the “Employee Plans”).

(b)There are no pending or, to the Company’s Knowledge, threatened claims (other than routine claims for benefits) by or on behalf of any Employee Plan or any trusts which are

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associated with such Employee Plans and none of the Employee Plans are under audit or investigation by the Internal Revenue Service, the Department of Labor, the Pension Benefit Guaranty Corporation or any other agency. To the Knowledge of the Company, there is no basis for any such action, suit, proceeding, hearing, audit or investigation.

(c)Except as set forth on the attached “Employee Benefits Schedule,” the Employee Plans have been maintained, funded and administered in accordance with their terms and comply in form and in operation in all material respects with the applicable requirements of ERISA, the Code and all applicable laws. The reserves reflected in the Financial Statements for the Liabilities of the Company under the Employee Plans were determined in accordance with GAAP. The Company has no Liabilities arising out of any action or inaction by any fiduciary (as defined in Section 3(21) of ERISA) in connection with any Employee Plan. The Company has made no current commitment, proposal, or communication to employees regarding the creation of an additional Employee Plan or any increase in benefits under any Employee Plan.

(d)Each Employee Pension Plan has received a determination letter from the IRS confirming that it qualifies under Section 401(a) of the Code or is entitled to rely on an opinion letter issued to a prototype sponsor and nothing has occurred since the issuance of the determination or opinion letter which would adversely affect the qualified status or the Company’s ability to rely on such letter. Each Employee Pension Plan has been timely amended to reflect the provisions of any and all laws, regulations and rulings in effect for any period prior to or as of the Closing other than amendments for which the remedial amendment period under Section 401(b) of the Code (including, if applicable, any extension of the remedial amendment period) has not expired, and there are no plan document failures, operational failures, demographic failures or employee eligibility failures within the meaning of Rev. Proc. 2008-50 with respect to any Employee Pension Plan.

(e)With respect to each Employee Plan, the Company has delivered to Parent correct and complete copies of (to the extent applicable): (i) each Employee Plan document (including all amendments and related trust documents) and, in the case of unwritten Employee Plans, written descriptions thereof, (ii) the most recent summary plan descriptions provided to participants, (iii) the most recent determination or opinion letter received from the Internal Revenue Service, (iv) the most recent annual report (Form 5500 series) with all applicable attachments, and (v) all related trust agreements, insurance contracts, service or other agreements and the most recent compliance testing information, list of assets and other funding arrangements related to each such Employee Plan. The Company will have no Liability with respect to, nor has it made, any statements or commitments in any handbook or other communication, oral or written, provided by the Company to its employees that are not consistent with the terms of each Employee Plan set forth on the Employee Benefits Schedule.

(f)There are no nonexempt prohibited transactions within the meaning of Section 4975 of the Code or Section 406 of ERISA or any breach of fiduciary duty under ERISA with respect to any Employee Plan.

(g)Except as disclosed on the Employee Benefits Schedule, no employee of the Company is a party to any employment or other agreement with the Company that entitles him or her to compensation or other consideration upon the acquisition by any person of control of the Company, or to benefits or increased benefits under any Employee Plan covering such employee as a

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result of such acquisition of control. The consummation of the transactions contemplated by this Agreement (alone or together with any other event) will not entitle any Person to, accelerate the time of payment or vesting of, or increase the amount of, any compensation or any benefit under any Employee Plan.

(h)Each Employee Plan which is a nonqualified deferred compensation plan subject to Code Section 409A is in compliance, in form and in operation, with the applicable requirements of that section, the regulations thereunder and guidance provided by the Internal Revenue Service, and no participant in such a plan will incur taxes or penalties on the benefits under such plan as a result of actions by the Company prior to the date the benefits are actually paid to the employee.

(i)All contributions (including all employer contributions and employee salary reduction contributions) that are due have been made within the time periods prescribed by ERISA and the Code to each such Employee Pension Plan and all contributions for any period ending on or before the Closing Date which are not yet due have been made to each such Employee Pension Plan or accrued by the Company in accordance with GAAP. All premiums, other payments or accruals for incurred but not reported liability for any Employee Welfare Plan for all periods ending on or before the Closing Date have been paid or accrued consistent with GAAP with respect to each such Employee Welfare Plan.

(j)All required reports and descriptions (including annual reports (IRS Form 5500), summary annual reports, and summary plan descriptions) have been timely filed and/or distributed in accordance with the applicable requirements of ERISA and the Code with respect to each such Employee Plan. The requirements of COBRA have been met with respect to each such Employee Welfare Plan subject to COBRA.

(k)Each Employee Plan, including any related service or investment contract related thereto, can be terminated without payment of any additional contribution, penalty, fee or amount and, except as otherwise required by ERISA, without vesting or acceleration of any benefits promised by such Plan.

(l)Neither the Company nor any ERISA Affiliate has any Liability, including any Liabilities under any Employee Plan, with respect to any misclassification of a person as an independent contractor rather than as an employee or with respect to any employees “leased” from another entity.

(m) The Company has taken all necessary action in order for the Qumu, Inc. Retirement Trust (“401(k) Plan”) to fully vest all participants in the 401(k) Plan and to properly terminate the 401(k) Plan prior to Closing. The Company has and will have no Liability for the operation, termination or administration of the 401(k) Plan, including, but not limited to, claims for contributions due from the Company under the 401(k) Plan.

(n)The Company has paid all 2011 employee bonuses for the period January 1, 2011 through September 30, 2011 and all sales commissions to sales and service people in the normal course according payment schedules within the applicable commission plans prior to the Closing Date.

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4.16              Tax Matters.

(a)All Tax Returns required to be filed by or on behalf of the Company have been duly and timely filed. All such Tax Returns correctly and completely reflect the facts regarding the income, business, assets, operations, activities, status and other matters of the Company and any other information required to be shown thereon. All Taxes owed by the Company, including all estimated Taxes for the current taxable year, whether or not shown on a Tax Return, have been paid in full by the Company. All Taxes of the Company that are not yet due have been properly accrued and appear on the Financial Statements, including the Stub Period Financial Statements, in accordance with GAAP. The Company has no Tax liabilities (whether due or to become due) with respect to the income, property and operations of the Company, except for Tax liabilities (i) reflected in the Stub Period Financial Statements, or (ii) that have arisen after the date of the Stub Period Financial Statements in the ordinary course of business and in a manner and at a level consistent with prior periods. The Company has made available to Parent true, correct and complete copies of all Tax Returns for which the applicable statute of limitations has not expired, and all examination reports, and statements of deficiencies assessed against or agreed to by the Company with respect to such taxable periods.

(b)Except as set forth in the attached “Taxes Schedule”:

(i)(A) the Company has not granted, requested or is subject to any waiver or extension of the period of limitations for the assessment or collection of any Tax; (B) the Company has not executed any power of attorney with respect to any matter relating to Tax; (C) there is no unpaid deficiency or adjustment for Taxes of the Company that has been claimed, proposed, asserted or assessed by any Tax Authority; (D) the Company has not requested or been granted an extension of the time for filing any Tax Return except for Tax Returns timely filed within such extension period; and (E) there is no action, suit, proceeding, claim, examination, deficiency, assessment or audit now in progress or pending against or with respect to the Company with respect to any Tax and, to the Company’s Knowledge, no basis exists therefor;

(ii)there are no closing agreements or rulings relating to Taxes that have been entered into or issued by any Tax Authority with or in respect of the Company;

(iii)there are no Liens for Taxes upon any of the assets of the Company or upon the Company Capital Stock, other than Liens for Taxes not yet due and payable;

(iv)the Company has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, and the Company has complied with all reporting and recordkeeping requirements with respect thereto;

(v)(A) the Company has not been a member of an Affiliated Group (other than a group of which the Company is or was the parent); (B) the Company has no liability for the Taxes of any Person (other than the Company) under Treasury Regulation Section 1.1502-6 (or any corresponding provision of state, local or foreign Tax law), or as a transferee or successor, or by contract, or otherwise; and (C) the Company is not a party to or bound by any Tax allocation, Tax sharing or similar agreement or arrangement.

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(vi)the Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any, (A) intercompany transaction or excess loss account described in United States Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local, or foreign Tax law), (B) installment sale or open transaction disposition transaction made on or prior to the Closing Date, (C) prepaid amount received on or prior to the Closing Date, or (D) change in method of accounting for a taxable period ending on or prior to the Closing Date, and no Tax Authority has proposed any adjustment pursuant to Section 481(a) (or any similar provision of state, local or foreign Tax law) or change in accounting method;

(vii)the Company has not made or filed an election under Sections 108, 441, or 1017 of the Code;

(viii)the Company is not a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of any “excess parachute payments” within the meaning of Section 280G of the Code (without regard to the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code);

(ix)for the taxable year of the Company ending on December 31, 2010, the Company has net operating loss carryforwards for U.S. federal income tax purposes totaling not less than $28 million (the “NOL Carryforwards”) and, for the taxable year of the Company ending on the Closing Date, the NOL Carryforwards will not be less than $28 million. Except as may result from the Merger, none of the NOL Carryforwards is currently subject to any limitation under Section 382 of the Code.

(x)(A) none of the shares of Company Capital Stock is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code; and (B) no portion of the Merger Consideration is subject to the Tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of law;

(xi)the Company is not a party to or member of any joint venture, partnership, limited liability company or other arrangement or contract which could be treated as a partnership for federal income tax purposes;

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

(xiii)the Company has not distributed the shares of another Person, and has not had its shares distributed by another Person, in a transaction that was purported or intended to be governed in whole or in part by Sections 355 or 361 of the Code.

(xiv)the Taxes Schedule contains a list of all U.S., Federal, State and non-U.S. jurisdictions to which the Company files Tax Returns or pays Taxes;

(xv)(A) the Company has disclosed on its federal Income Tax Returns all positions taken in such Tax Returns that could give rise to a substantial understatement of

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federal Income Tax within the meaning of Section 6662 of the Code; and (B) the Company has not (i) participated or engaged in any transaction, or taken any Tax Return position, described in Treasury Regulations Section 301.6111-2(b)(2) (or any corresponding or similar provision of state, local or non-U.S. Tax law); or (ii) participated or engaged in any “reportable transaction” within the meaning of Treasury Regulations Section 1.6011-4 (or any corresponding or similar provision of state, local or non-U.S. Tax law); and

(xvi)the Company does not have and has not had taxable presence in any jurisdiction other than jurisdictions for which Tax Returns have been duly filed, and Taxes have been duly paid, and no claim has been made by a Tax Authority in a jurisdiction where the Company does not file Tax Returns and pay Taxes that the Company is or may be subject to any Tax Return filing requirements or subject to taxation by that jurisdiction.

4.17              Brokerage. Except as disclosed on the attached “Brokerage Schedule,” neither the Company nor Parent or Merger Sub will have any Liability to pay any broker’s, finder’s, investment banker’s, financial advisor’s or similar fee in connection with this Agreement or the transactions contemplated by this Agreement by reason of any action taken by or on behalf of any Seller or the Company. Any such Liability is a Company Transaction Expense.

4.18              Affiliate Transactions. Except as disclosed on the “Affiliate Transactions Schedule,” no Seller, officer, director, stockholder, or Affiliate of the Company is a party to any contract, commitment or transaction with the Company or has any material interest in any material property used by the Company.

4.19              Undisclosed Liabilities. The Company has no Liabilities of the type required by GAAP to be set forth on a balance sheet, except for (i) Liabilities set forth on the face of the Stub Period Balance Sheet, (ii) Liabilities which have arisen after the date thereof in the ordinary course of business (none of which results from, arises out of, relates to, is in the nature of, or was caused by any breach of contract, breach of warranty, tort, infringement, or violation of law), and (iii) Liabilities incurred in connection with the negotiation, execution, delivery or performance of the transactions contemplated by this Agreement to the extent reflected in Company Transaction Expenses (or other transaction expenses satisfied by the Company prior to the Closing) or the Final Working Capital.

4.20              Environmental Matters. The Company has complied with all applicable Environmental Laws, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, demand or notice has been filed or commenced against the Company alleging any failure to so comply. The Company has obtained and is in compliance with all Governmental Licenses pursuant to Environmental Laws for the occupation of the Leased Real Property and the operation of the Business; and all such Governmental Licenses are set forth on the attached “Environmental Matters Schedule.” The Company has not assumed or otherwise become subject to any Liability, including any investigatory, remedial or corrective obligations, of any other Person arising under Environmental Laws. The Company has provided Parent with all environmental audits, reports and other material environmental documents relating to the Company’s past or current properties, facilities and operations.

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4.21              Insurance. The attached “Insurance Schedule” lists each insurance policy, bond or other form of insurance maintained by the Company (the “Insurance Policies”). With respect to each Insurance Policy: (i) the policy is in full force and effect; (ii) the policy will continue to be in full force and effect on the same terms following the consummation of the transactions contemplated hereby; (iii) neither the Company nor any other party to the policy is in breach or default (including with respect to the payment of premiums or the giving of notices), and no event has occurred which, with notice or the lapse of time, would constitute such a breach or default, or permit termination, modification, or acceleration, under the policy; (iv) no party to the policy has repudiated any provision thereof; and (v) the Company has provided to Parent a true, correct and complete copy of the policy. No Insurance Policy contains a provision that would permit the termination, limitation, lapse, exclusion or change in the terms of coverage of such Insurance Policy (including, without limitation, change in the limits of liability) by reason of the consummation of the transactions contemplated by this Agreement.

4.22              Receivables. All notes and accounts receivable of the Company are reflected properly on their books and records, are valid receivables subject to no setoffs or counterclaims, are current and collectible, and will be collected in accordance with their terms at their recorded amounts, subject only to the reserve for bad debts set forth on the face of the Stub Period Balance Sheet, as adjusted to reflect operations thereafter in accordance with past practice.

4.23              Sufficiency of Assets. The Company owns or leases all buildings, machinery, equipment, computers and related equipment, furniture, vehicles, and other tangible and intangible assets necessary for the conduct of the Business. Each such tangible asset is in good operating condition and repair (ordinary wear and tear excepted), and is suitable for the purposes for which it is used.

4.24              Product Warranty. All products manufactured, sold, leased, distributed or delivered by, and all services provided by, the Company (or any Person for which the Company may be responsible) have been in conformity with all applicable contractual commitments and all express and implied warranties, and the Company has no Liability for replacement or repair thereof or other damages in connection therewith.

4.25              Customers and Suppliers. The attached “Customers and Suppliers Schedule” contains a list of the ten largest customers and the ten largest suppliers of the Company for the calendar year ended December 31, 2010 and for the eight months ended August 31, 2011, and includes the net sales or purchases by the Company attributable to each such customer or supplier for each such period. To the Company’s Knowledge, no customer or supplier listed on the Customers and Suppliers Schedule, nor any other material customer or supplier of the Company, intends to cease doing business with the Company or decrease the amount of business it does with the Company in any material respect.

4.26              Information Statement. The Company delivered to each Stockholder prior to the execution by such Stockholder of the Written Consent and, if required by the terms of the Stock Options or Warrants, delivered to each holder of Participating Options and Participating Warrants prior to the Closing Date, information regarding the transactions contemplated by this Agreement (the “Information Statement”). As of the Closing Date, the Information Statement contained all material information (i) required by the CCC (including Sections 1300-1313 of the CCC), the Securities Act and the securities laws of the state of residence of each Stockholder, and the terms of

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the Participating Options and the Participating Warrants, (ii) necessary to permit the Major Holders to make a fully informed investment decision relating to the Parent Stock Consideration, and (iii) necessary to permit the Stockholders to make a fully informed decision to vote in favor of, vote against or abstain from voting through the Written Consent. The Information Statement does not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements made therein not misleading, provided that this representation and warranty shall not apply to any statement or omission made in reliance upon written information furnished to the Company by Parent expressly for use in the Information Statement.

4.27              Disclaimer. Except as expressly set forth in this Article 4 and in Article 5 hereof or any other document contemplated hereby, neither the Major Holders nor the Company makes any representation or warranty, express or implied, at law or in equity and any such other representations or warranties are hereby expressly disclaimed.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF major holders

As a material inducement to Parent and Merger Sub to enter into this Agreement and consummate the transactions contemplated hereby, each Major Holder, severally with respect to himself, herself or itself only and not jointly represents and warrants to Parent and Merger Sub as of the date hereof as follows:

5.1              Organization and Power. Such Major Holder that is an entity is duly organized, validly existing and in good standing under the laws of the state of its organization. Such Major Holder that is an entity has all requisite organizational power and authority to execute and deliver this Agreement and the other agreements contemplated hereby and to perform its obligations hereunder and thereunder.

5.2              Authorization. The execution, delivery and performance by such Major Holder of this Agreement, the Written Consent, the Seller Documents to which such Major Holder is or will be a party and the consummation of the transactions contemplated hereby and thereby has been duly and validly authorized by such Major Holder and no other act or proceeding on the part of such Major Holder is necessary to authorize the execution, delivery or performance by such Major Holder of this Agreement or the Seller Documents to which such Major Holder is or will be a party or the consummation of any of the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by such Major Holder and, assuming the due execution and delivery of this Agreement and the Seller Documents to which such Major Holder is or will be a party by the other parties hereto and thereto, constitutes, and the Seller Documents to which such Major Holder is or will be a party each constitute a valid and binding obligation of such Major Holder, enforceable against such Major Holder in accordance with its terms, except as the enforceability hereof or thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and as limited by the availability of specific performance and other equitable remedies or applicable equitable principles (whether considered in a proceeding at law or in equity).

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5.3              Litigation. There are no actions, suits, proceedings, hearings, orders, charges, claims or investigations pending, or to such Major Holder’s Knowledge, threatened against such Major Holder, at law or in equity, or before or by any Governmental Authority which could reasonably be expected to adversely affect such Major Holder’s performance under this Agreement, the other agreements contemplated hereby to which such Major Holder is a party or the consummation of the transactions contemplated hereby or thereby.

5.4              Ownership of Company Capital Stock. The attached “Capitalization Schedule” accurately sets forth the number of shares of capital stock of the Company held by such Major Holder. All such shares of capital stock are owned of record by such Major Holder, free and clear of all Liens. Such Major Holder is not a party to any voting trust or other agreement with respect to the voting, redemption, sale, transfer or other disposition of the capital stock of the Company, other than theAmended and Restated Voting Agreement dated May 9, 2008, the Amended and Restated Right of First Refusal and Cosale Agreement dated May 9, 2008, and the Amended and Restated Investors’ Rights Agreement dated May 9, 2008.

5.5              Securities Law Representations. The following representations are made by each Major Holder entitled to receive Parent Stock hereunder:

(a)Such Major Holder has sufficient knowledge and experience in financial and business matters to enable it to evaluate the merits and risks of the transactions contemplated by this Agreement and an investment in the Parent Stock Consideration or such Major Holder has obtained, to the extent such Major Holder deems necessary, personal professional advice with respect to the risks inherent in an investment in the Parent Stock Consideration, and the suitability of the investment in the Parent Stock Consideration in light of such Major Holder’s financial condition and investment needs;

(b)Such Major Holder is in a financial position to hold the Parent Stock Consideration for an indefinite period of time and is able to bear the economic risk and withstand a complete loss of the Major Holder’s investment in the Parent Stock Consideration;

(c)Such Major Holder has received and reviewed the Information Statement, the Reports and acknowledges the information regarding Parent that is publicly available via the Securities and Exchange Commission’s website (www.sec.gov). Such Major Holder been given the opportunity to (i) ask questions of and receive answers from the officers of Parent concerning the terms and conditions of the transactions contemplated by this Agreement the issuance of the Parent Stock Consideration and (ii) obtain, and has received to the extent requested by such Major Holder, any additional information that Parent possesses or can acquire without unreasonable effort or expense deemed necessary by such Major Holder to verify the accuracy of the Information Statement, the Reports or the other information provided by Parent.

(d)Such Major Holder is acquiring the Parent Stock Considerationfor such Major Holder’s own account, for investment purposes, and not with a present view to resale or for distribution of all or any portion of the Parent Stock Consideration. Such Major Holder represents and warrants that such Major Holder has made no agreement with others regarding the Parent Stock Consideration (other than the Stockholder Lock-up and Registration Rights Agreement). Such Major Holder is aware that, in the view of the Securities and Exchange Commission, a purchase of the

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Parent Stock Consideration with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in the condition of Parent, or in connection with a contemplated liquidation or settlement of any loan obtained for the acquisition of the Parent Stock Consideration and for which the Parent Stock Consideration was pledged as security, would represent an intent inconsistent with the representations set forth above.

(e)Such Major Holder understands that (i) the Parent Stock Consideration has not been registered under the Securities Act or under any state securities laws, but is being offered and sold pursuant to exemptions from such laws and that Parent’s reliance upon such exemptions is predicated in part on such Major Holder’s representations as contained herein, (ii) the Parent Stock Consideration cannot be sold unless it is subsequently registered under the Securities Act and applicable state securities laws, or an exemption from such registration is available, and only then in compliance with the terms of the Lock-up Letter and after first obtaining the opinion of counsel satisfactory to Parent that such proposed disposition or transfer may be lawfully made without registering the Parent Stock Consideration pursuant to the Securities Act, and applicable state securities laws, or such registration, (iii) the transferability of the Parent Stock Consideration is restricted and resale of the Parent Stock Consideration is limited as a result of the exemptions referenced in clause (i) and the Lock-up Letter, and (iv) a “stop transfer” order against the Parent Stock Consideration and a notation regarding the restrictions on transferability of the Parent Stock Consideration will be made with the Transfer Agent and if the Parent Stock Consideration is issued in certificated form, a legend will be placed upon such certificate stating that the Parent Stock has not been registered under the Securities Act and setting forth or referring to the restrictions on transferability and sale of the Parent Stock, and (v) Parent has no obligation to register the Parent Stock Consideration except as required by the Registration Rights Agreement.

(f)Each Major Holder further represents that:

(i)Such Major Holder is an Accredited Investor and has indicated the basis for this status on a Certificate of Accredited Status delivered to Parent;

(ii)Such Major Holder has not been offered the Parent Stock by any form of general advertising or general solicitation; and

(iii)Such Major Holder is a bona fide resident of, and is domiciled in, the state set forth in the Certificate of Accredited Status delivered to Parent.

ARTICLE 6

REPRESENTATIONS AND WARRANTIES OF Parent AND MERGER SUB

As an inducement to the Company to enter into this Agreement and consummate the transactions contemplated hereby, Parent and Merger Sub each represent and warrant to the Company and the Major Holders as of the date hereof as follows:

6.1              Organization and Power. Parent is a corporation duly organized, validly existing and in good standing under the laws of the State of Minnesota. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of California. Each

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of Parent and Merger Sub has all requisite corporate power and authority to execute and deliver this Agreement and the other agreements contemplated hereby and to perform its obligations hereunder and thereunder.

6.2              Authorization. The execution, delivery and performance by Parent and Merger Sub of this Agreement, the consummation of the Merger, and the other agreements contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly and validly authorized by all requisite corporate action, and no other corporate act or proceeding on the part of Parent or Merger Sub, or either of their respective boards of directors or stockholders is necessary to authorize the execution, delivery or performance of this Agreement or the other agreements contemplated hereby and, assuming the due execution and delivery of this Agreement and the other agreements contemplated hereby by the other parties hereto and thereto, the consummation of the transactions contemplated hereby or thereby. This Agreement has been duly executed and delivered by Parent and Merger Sub and this Agreement constitutes, and the other agreements contemplated hereby upon execution and delivery by Parent and Merger Sub will each constitute, a valid and binding obligation of Parent and Merger Sub, enforceable in accordance with their terms except as the enforceability hereof and thereof may be limited by any applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditor’s rights generally and as limited by the availability of specific performance and other equitable remedies or applicable equitable principles (whether considered in a proceeding at law or in equity).

6.3              Parent Stock. The Parent Stock to be delivered to the Major Holders pursuant to this Agreement (i) has been duly authorized, validly issued, fully paid and non-assessable; and (ii) subject to the accuracy of the Major Holders’ representations set forth in Section 5.7, has been issued pursuant to valid exemptions from the registration requirements of the Securities Act and applicable state securities laws.

6.4              Absence of Conflicts. Except as set forth on the attached “Parent Material Restrictions Schedule,” neither the execution and the delivery of this Agreement and the other documents contemplated hereby to which Parent or Merger Sub is a party, nor the consummation of the transactions contemplated hereby and thereby, will (a) conflict with, result in a breach of any of the provisions of; (b) constitute a default under; (c) result in the violation of; (d) give any third party the right to terminate or to accelerate any obligation under; or (e) require any authorization, consent, approval, execution or other action by or notice to any Governmental Authority under, any material agreement to which Parent or Merger Sub is bound or affected, Parent’s or Merger Sub’s organizational documents or any statute, regulation, rule, judgment, order, decree or other restriction of any Governmental Authority to which Parent or Merger Sub is subject.

6.5              Governmental Authorities and Consents. No permit, consent, approval or authorization of, or declaration to or filing with, any Governmental Authority or any other Person (except for the filing and recordation of the Agreement of Merger as required by the CCC) is required in connection with the execution, delivery or performance of this Agreement by Parent or Merger Sub or the consummation by Parent or Merger Sub of the transactions contemplated hereby and thereby.

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6.6              Litigation. There are no actions, suits, proceedings, orders or investigations pending or, to the best of Parent’s Knowledge, threatened against or affecting Parent or Merger Sub, at law or in equity, or before or by any Government Authority which would adversely affect Parent’s or Merger Sub’s performance under this Agreement, the other agreements contemplated hereby or the consummation of the transactions contemplated hereby or thereby.

6.7              Brokerage. There are no claims for brokerage commissions, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made or alleged to have been made by or on behalf of Parent or Merger Sub except as set forth on the attached “Parent Brokerage Schedule.”

6.8              SEC Reports. Parent has delivered to the Major Holders entitled to receive Parent Stock Consideration hereunder Parent’s Annual Report on Form 10-K for the year ended December 31, 2010, as amended by Amendment No. 1 to Annual Report on Form 10-K/A, and its Quarterly Report on Form 10-Q for the quarter ended June 30, 2011 (the “Reports”). As of their respective filing dates (or, to the extent superseded or amended prior to the date hereof, as of the date of such superseding or amended filing), such Reports did not contain any untrue statement of a material fact or, to the knowledge of Parent, omit to state any fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements contained in such Reports have been prepared in accordance with GAAP consistently followed throughout the periods indicated and fairly present the financial position of the Parent as of the respective dates thereof and the results of its operations for the respective periods indicated. Since June 30, 2011, there has not been any material adverse change in the financial condition or the results of operations of the Parent. Parent shall use its commercially reasonable efforts to maintain at all times during the period of twelve (12) months following the Closing “current public information” as defined in Rule 144(c) promulgated under the Securities Act.

ARTICLE 7

ADDITIONAL AGREEMENTS; COVENANTS AFTER CLOSING

7.1              Indemnification.

(a)Seller’s Indemnification.

(i)Subject to the other limitations in this Section 7.1, from and after the Closing, each of Sellers and Incentive Recipients, severally and not jointly, shall indemnify Parent and its Affiliates (including the Company) and their respective officers, directors, employees, stockholders, agents and representatives (collectively, the “Parent Indemnitees”) against any Loss that such Parent Indemnitee suffers as a result of: (A) the breach by the Company of any representation or warranty of the Company contained in Article 4 of this Agreement; (B) any Indebtedness of the Company or Company Transaction Expenses that are not paid and discharged at or prior to Closing or not otherwise taken into account in the determination of the Initial Cash Merger Consideration in accordance with this Agreement; (C) Excluded Taxes; (D) any claim related to the Bridge Notes, Management Incentive Payments or

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Dissenting Shares (solely with respect to amounts in excess of the amount that would have otherwise been payable to such holder pursuant to Section 2.5(a)); and (E) claims related to the matters set forth on the Litigation Schedule.

(ii)Subject to the other limitations in this Section 7.1, from and after the Closing, each Major Holder, severally and not jointly, shall indemnify the Parent Indemnitees against any Loss that each Parent Indemnitee suffers as a result of the breach by such Major Holder of any representation or warranty contained in Article V of this Agreement or any covenant of such Major Holder contained in Article 7 or Article 8 of this Agreement or in any Seller Transaction Document to which such Major Holder is a party. For avoidance of doubt, a Major Holder shall only be liable under this Section 7.1(a)(ii) in respect of a breach by such Major Holder and not in respect of a breach by any other Major Holder.

(iii)All claims by any Parent Indemnitee pursuant to Section 7.1(a)(i)(A)-(E) must be made on or before the applicable Survival Date. It is understood that so long as written notice of a claim is given as provided herein on or prior to the Survival Date, such representations, warranties and agreements of indemnification shall continue to survive solely with respect to such claim or claims set forth in such notice until such matter is resolved. For purposes of this Agreement, the term “Survival Date” shall mean the date that is 12 months following the Closing Date; provided, however, that the representations and warranties set forth in Sections 4.1 (Organization and Power), 4.2 (Authorization), 4.3 (Capitalization; Subsidiaries), Section 4.16 (Tax Matters), Articles 5 and 6, the indemnification obligations set forth in Section 7.1(a)(i)(C) and (D) and any representation or warranty that is based upon a claim of fraud or intentional misrepresentation shall survive for the applicable statute of limitations period. The covenants and agreements of the parties shall survive for the applicable statute of limitations period or for such other specified period as is explicitly set forth herein. It is the express intent of the parties that, if the applicable survival period for an item as contemplated by this Section 7.1 is shorter than the statute of limitations that would otherwise have been applicable to such item, then, by contract, the applicable statute of limitations with respect to such item shall be reduced to the shortened survival period contemplated hereby. The parties further acknowledge that the time periods set forth in this Section 7.1 for the assertion of claims under this Agreement are the result of arms’-length negotiation among the parties and that they intend for the time periods to be enforced as agreed by the parties.

(iv)The indemnification provided for in Section 7.1(a)(i) above is subject to each of the following limitations:

(A)Recovery from the Escrow Amount shall be the Parent Indemnitees’ sole and exclusive remedy for Losses resulting from the matters referred to in Section 7.1(a)(i)(A), (B) and (E) (the “Indemnification Cap”).

(B)No Parent Indemnitee shall be entitled to make any claims against Sellers or an Incentive Recipient pursuant to Section 7.1(a)(i)(A) unless and until the Parent Indemnitees (as a group) have suffered Losses as a result of breaches described in Section 7.1(a)(i)(A) in excess of $75,000 in the aggregate (the “Indemnification Basket”) (provided that the Parent

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Indemnitees (as a group) shall only be entitled to seek recovery for such Losses to the extent exceeding the Indemnification Basket).

(C)Notwithstanding the foregoing, the Indemnification Cap and the Indemnification Basket shall not apply to (I) any breach of the representations and warranties set forth in Sections 4.1 (Organization and Power), 4.2 (Authorization), 4.3 (Capitalization; Subsidiaries), 4.16 (Tax Matters) and Article 5, (II) any claims made pursuant to Sections 7.1(a)(i)(C)-(D), or (III) any claims based on fraud or intentional misrepresentation; provided, however, the aggregate amount of Losses payable by a Seller with respect to all claims for indemnification hereunder shall not exceed an amount equal to such Seller’s Escrow Account Allocation of the Losses (and the aggregate amount of Losses payable by a Major Holder with respect to claims for indemnification hereunder that are not recoverable from the Escrow Amount shall not exceed such Major Holder’s Pro Rata Portion of such Losses) and shall in no circumstance exceed the amount of (i) the Merger Consideration (with the price per share of any Parent Stock equal to the Deemed Value) actually paid to such Seller (including amounts withheld from such Seller and paid into the Escrow Account), plus (ii) with respect to each Major Holder in respect to any claim arising out of or related to the Bridge Notes, an additional amount equal to the amount by which the Merger Consideration actually paid to such Major Holder has been reduced by the payment to such Major Holder in respect to the Bridge Notes under this Agreement. Notwithstanding anything herein to the contrary, the sole source of recovery by a Parent Indemnitee for any claim for Losses under this Agreement against an Incentive Recipient or a Seller, other than a Major Holder, shall be the Escrow Amount. Further, notwithstanding the foregoing, the Indemnification Basket shall not apply to any breach of the representations and warranties set forth in Section 4.15 (Employee Benefits Plans).

(D)The parties acknowledge that the representations and warranties contained in Article 5 and the covenants and agreements made by each Major Holder in this Agreement or in the Seller Transaction Documents to which a Major Holder is a party are made severally by each Major Holder as to itself only, and any Major Holder who has breached any such representation, warranty, covenant or agreement as to itself shall be liable with respect to all Losses as a result of the breach thereof, subject to the limitations set forth in this Section 7.1 and the other Sellers, including the other Major Holders, and the Incentive Recipients shall not be liable with respect to such Losses.

(b)Parent’s Indemnification.

(i)From and after the Closing, Parent agrees to indemnify the Sellers and their respective officers, directors, employees, stockholders, agents and representatives (collectively, the “Seller Indemnitees”) and hold each Seller Indemnitee harmless against any Loss which any Seller Indemnitee suffers, as a result of: (A) the breach of any representation

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or warranty contained in Article 6 hereof; and (B) the breach by Parent or Merger Sub of any covenant or agreement of Parent or Merger Sub contained in this Agreement.

(ii)Parent shall not be liable with respect to any claim under Section 7.1(b)(i)(A)-(B) unless written notice of a possible claim for indemnification is given by the claiming Seller Indemnitee to Parent on or before the Survival Date, it being understood that so long as such written notice is given on or prior to the Survival Date, such representations and warranties and covenants shall continue to survive until such matter is resolved.

(c)Procedures.

(i)Notice of Claim. Any indemnified party making a claim for indemnification pursuant to Section 7.1(a) or (b) (an “Indemnified Party”) based on any action, lawsuit, proceeding, investigation or other claim by a third party (a “Proceeding”) must give the Sellers’ Representative or Parent, as the case may be, written notice of such claim describing such claim and the nature and amount of such Loss, to the extent that the nature and amount thereof are determinable at such time (a “Claim Notice”) promptly after the Indemnified Party receives any written notice of the Proceeding; provided, however, that the failure to notify or delay in notifying the Sellers’ Representative or Parent, as the case may be, will not relieve the indemnifying party (the “Indemnifying Party”) of its obligations pursuant to Section 7.1(a) or (b), except to the extent that such Indemnifying Party is materially prejudiced as a result thereof. In each case where the Indemnified Party or the Indemnifying Party is, collectively, the Sellers and the Incentive Recipients, then in each such case all references to such Indemnified Party or Indemnifying Party, as the case may be, in this Section 7.1 shall be deemed (except for provisions relating to an obligation to make or a right to receive any payments) to refer to the Sellers’ Representative acting on behalf of such Indemnified Party or Indemnifying Party, as applicable. After the delivery of a Claim Notice, the Indemnifying Party and its agents shall be provided with such access (including electronic access, to the extent available) to the financial books and records of the Indemnified Party and the personnel or representatives of the Indemnified Party, including but not limited to the individuals responsible for the matters that are subject of the Claim Notice, as the Indemnifying Party may reasonably request to enable it to evaluate the Claim Notice.

(ii)Control of Defense; Conditions. An Indemnifying Party, at its option, may defend the Indemnified Party against any Proceeding so long as (A) the Indemnifying Party notifies the Indemnified Party in writing within thirty (30) days after the Indemnified Party has given notice of the Proceeding that the Indemnifying Party will indemnify the Indemnified Party for the Losses the Indemnified Party may suffer as a result of such Proceeding, (B) the Proceeding involves only money damages for which indemnification may be provided, (C) the Indemnifying Party is not a party to the Proceeding such that the Indemnified Party determines in good faith that joint representation would be inappropriate, and (D) the Indemnifying Party diligently defends the Proceeding.If the Indemnifying Party elects not to assume the defense of such Proceeding, the Indemnified Party shall proceed with the defense of such Proceeding with counsel of its choice (and the expense of such defense shall be a Loss of the Indemnified Party, subject to the applicable limitations set forth in this Section 7.1); and the Indemnifying Party shall be entitled, at the Indemnifying Party’s

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expense, to participate in any defense of such Proceeding. Parent must obtain the prior written consent of the Sellers’ Representative (which will not be unreasonably withheld) prior to entering into any settlement of any Proceeding.

(iii)Control of Defense; Exceptions, etc. If the Indemnifying Party defends against the Proceeding, the Indemnified Party will be entitled to participate in the defense of such claim and to employ separate counsel of its choice for such purpose at its own expense, with the Indemnified Party obligated hereby to provide reasonable cooperation with the Indemnifying Party in the defense of claims or litigation, including by making employees, information and documentation reasonably available.

(iv)Settlement of Claims. The Indemnifying Party must obtain the prior written consent of the Indemnified Party (which will not be unreasonably withheld) prior to entering into any settlement of any Proceeding or ceasing to defend any Proceeding unless the proposed settlement involves no payment of money by the Indemnified Party, involves no limitation on the future business of the Company, releases the Indemnified Party from all liability in connection with such claim and does not impose an injunction or other equitable relief on the Indemnified Party.

(d)Net Recovery. The amount of any Loss shall be net of any amounts actually recovered by the Indemnified Party under insurance policies, indemnities, reimbursement arrangements, or contracts pursuant to which or under which such Person or such Person’s Affiliates is a party or has rights (“Alternative Arrangements”) with respect to such Loss.

(e)Working Capital. Notwithstanding anything to the contrary contained in this Agreement, the Parent Indemnitees shall have no right to make any claim against Sellers or Incentive Recipients with respect to any matter to the extent the expense, loss or liability comprising the Loss (or a part thereof) with respect to such matter has been specifically taken into account in the determination of Final Working Capital and/or the Final Working Capital Adjustment such that the claim would amount to the Parent Indemnitees recovering twice for such matter.

(f)Payments. Any payment pursuant to a claim for indemnification shall be made not later than thirty (30) days after receipt by the Indemnifying Party of written notice from the Indemnified Party stating the amount of the claim, unless the claim is subject to defense as provided in Section 7.1(c) or the claim is disputed by the Indemnifying Party and such dispute remains unresolved, in which case payment shall be made not later than thirty (30) days after the amount of the claim is finally determined or any such dispute is resolved.

(g)Recoupment Against Escrow and Major Holders. Notwithstanding anything in this Agreement to the contrary, any payment to which any Parent Indemnitee is entitled under this Agreement pursuant to a claim for indemnification, other than a claim under Section 7.1(a)(ii), shall first be paid from the Escrow Amount in accordance with each Seller’s and each Incentive Recipient’s Escrow Account Allocation of such payment and with the terms of the Escrow Agreement and no recovery from a Seller shall be permitted until the Escrow Amount is exhausted in full. Nothing in this Section 7.1(g) shall preclude Parent Indemnitees from making claims against or seeking payment for Losses from (i) the Major Holders in respect to claims or Losses which any Parent Indemnitee is entitled to make or receive under Section 7.1(a)(iv)(C) of this Agreement

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which exceed the Escrow Amount or (ii) a Major Holder under Section 7.1(a)(ii). Except with respect to Losses paid from the Escrow Amount, each Major Holder shall be entitled to satisfy such indemnification claims, at its option, in cash or with Parent Stock; the price per share attributable to the Parent Stock for this purpose shall be the Deemed Value. Each Seller and Incentive Recipient for and on behalf of himself and itself and its Affiliates, waives, and acknowledges and agrees that such Seller or Incentive Recipient and its Affiliates shall not have and shall not exercise or assert (or attempt to exercise or assert), any right of contribution, right of indemnity or other right or remedy against Parent or against the Surviving Corporation in connection with any indemnification obligation or any other liability to which such Seller or Incentive Recipient may become subject under or in connection with this Agreement.

(h)Exclusive Remedy. Subject to injunctive and other equitable remedies under Section 7.10 and Section 8.12, each of the parties hereto acknowledges and agrees that from and after the Closing, the foregoing indemnification provisions in this Section 7.1 shall be the exclusive remedy of the Parent Indemnitees arising under this Agreement, and, with respect to the Major Holders, the Seller Documents (except for disputes under Section 2.11, which disputes will be resolved in accordance with the dispute resolution mechanism set forth in Section 2.11).

(i)Characterization of Indemnity Payments. Any indemnification payments made pursuant to this Agreement shall be treated for all Tax purposes as an adjustment to the Merger Consideration, unless otherwise required by applicable law.

7.2              Mutual Assistance. Each of the parties hereto agrees that they will mutually cooperate in the expeditious filing of all notices, reports and other filings with any Governmental Authority required to be submitted jointly by any of the parties hereto in connection with the execution and delivery of this Agreement, the other agreements contemplated hereby and the consummation of the transactions contemplated hereby or thereby. Subsequent to the Closing, each of the Company, Parent and the Major Holders, at their own cost, will assist each other (including by the retention of records and the provision of access to relevant records) in the preparation of their respective Tax Returns and the filing and execution of Tax elections, if required, as well as in the defense of any audits or litigation that may ensue as a result of the filing thereof, to the extent that such assistance is reasonably requested.

7.3              Confidentiality. The Company and Parent agree that, following the Closing, that certain Mutual Non-Disclosure Agreement by and between the Company and Parent dated as of March 7, 2011 (the “Confidentiality Agreement”) shall be terminated and of no further force or effect.

7.4              Expenses. Except as otherwise set forth in this Agreement, each of the parties hereto shall be solely responsible for and shall bear all of its own costs and expenses incident to its obligations under and in respect of this Agreement and the transactions contemplated hereby (which, in the case of the Sellers, shall include the costs of the Company), including, but not limited to, any such costs and expenses incurred by any party hereto in connection with the negotiation, preparation and performance of and compliance with the terms of this Agreement (including the fees and expenses of legal counsel, accountants, investment bankers or other representatives and consultants), regardless of whether the transactions contemplated hereby are consummated.

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7.5              Further Transfers. Each of the parties hereto shall, and shall use reasonable best efforts to cause its Affiliates to, execute and deliver such further instruments and take such additional action as any other party hereto may reasonably request to effect or consummate the transactions contemplated hereby.

7.6              Transfer Taxes; Recording Charges. Notwithstanding anything to the contrary herein, all transfer, documentary, sales, use, stamp, registration and other such Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement shall be paid by Sellers when due, and Sellers’ will, at Sellers’ expense, file all necessary Tax Returns and other documentation with respect to all such Taxes, fees and charges, and, if required by applicable law, Parent will join in the execution of any such Tax Returns and other documentation.

7.7              Directors and Officers Insurance.

(a)Prior to the Closing Date, the Company shall purchase tail director and officer liability insurance (the “Tail D&O Insurance”), which shall provide coverage for a period of six (6) years following the Closing Date for all past and present directors, officers and employees of the Company (the “Company Indemnified Parties”) comparable to the policy or policies maintained by the Company immediately prior to the Closing for the benefit of such individuals. On the Closing Date, the Company shall pre-pay the entire premium in respect of the Tail D&O Insurance and such payment shall be a Company Transaction Expense.

(b)From and after the Effective Time, Parent shall cause the Surviving Corporation to fulfill and honor in all respects the obligations of the Company pursuant to any indemnification provision under the articles of incorporation or bylaws of the Company, each as in effect on the date of this Agreement.For a period of six (6) years after the Closing, Parent shall not, and shall not permit the Company to, amend, repeal or modify (in a manner adverse to the beneficiary thereof) any provision in the Company’s articles of incorporation or bylaws (or equivalents) relating to the exculpation or indemnification of any officers or directors, it being the intent of the parties hereto that the officers and directors of the Company on the date hereof shall continue to be entitled to such exculpation and indemnification to the full extent of the law. In the event that the Surviving Corporation or any of its successors or assigns (i) consolidates with or merges into any other Person and shall not be the continuing or surviving entity of such consolidation or merger or (ii) transfers or conveys a majority of its properties and assets to any Person, then, and in each such case, proper provision shall be made so that the successors, assigns and transferees of the Surviving Corporation, as the case may be, assume the obligations set forth in this Section 7.7(b).

(c)To the extent that a Company Indemnified Party is entitled to indemnification from the Surviving Corporation as provided in Section 7.7(b), Parent and the Surviving Corporation will use all commercially reasonable efforts to seek recourse for any such claimed indemnification from the Tail D&O Insurance. To the extent the claim for indemnification by the Company Indemnified Party arises out of a matter for which a Parent Indemnitee is entitled to be indemnified under this Agreement, all amounts paid by a Parent Indemnitee to such Company Indemnified Party and all out-of pocket costs incurred in seeking recourse from the Tail D&O Policy shall be a Loss of Parent Indemnitee, subject to the terms of Section 7.1(d).

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7.8              Release. Each Major Holder releases and discharges (a) the Company, (b) the officers, directors managers and employees of the Company in their capacities as such, (c) any other party to whom any the Company has an indemnity obligation with respect to any Liability which is subject to such indemnity obligation (the Persons identified in the foregoing clauses (a) and (b) and in this clause (c) being the “Releasees”), and (d) the Releasees’ heirs, executors, administrators and successors and assigns, from all actions, causes of actions, suits, controversies, damages, claims and demands whatsoever, in law or equity (known or unknown), which each Major Holder or any successor or assign of each Major Holder ever had, now has or hereafter can, shall or may have for, as of the date of this Agreement against the Releasees or any of them; provided, however, that this release and discharge excludes (i) claims or rights arising under this Agreement, the Escrow Agreement, the Registration Rights Agreement and any of the other agreements contemplated by this Agreement and (ii) such Major Holder’s rights to indemnification or advancement of expenses from the Company pursuant to terms of any indemnification agreement between such Major Holder and the Company or the charter documents of the Company. Each Major Holder represents and warrants to Parent that there has been no assignment or other transfer of any interest in any claim which each Major Holder had or may have against the Company. As part of the foregoing general release, and not by way of limitation, each Major Holder expressly waives all of such Major Holder’s rights under Section 1542 of the California Civil Code, which states: “A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.”

7.9              Confidential Information. Except as required by applicable law, each Major Holder (a) shall, and shall cause its Affiliates and their employees to, hold and treat all information of the Company that is not generally known to the public (“Company Confidential Information”) in confidence and shall not, without the prior written consent of Parent, disclose or reveal any Company Confidential Information to any Person other than Parent, the Company or its Affiliates; (b) will refrain from using the Company Confidential Information for its or its Affiliates’ own benefit; and (c) acknowledges that because a remedy at law for any violation or breach of the provisions of this Section might be inadequate, in addition to any relief at law that may be available to Parent and the Company for such violation or breach and regardless of any other provision contained in this Agreement, Parent and the Company will be entitled to seek injunctive and other equitable relief restraining such violation or breach without the obligation to post any bond. Notwithstanding the foregoing, and for the avoidance of doubt, each Major Holder that is a venture capital or other investment fund shall be permitted to disclose to its limited partners or other investors (including prospective investors) such information regarding this Agreement and the transactions contemplated hereby as is customary for such Major Holder.

7.10              Non-solicitation. For a period of one (1) year following the Closing Date, no Major Holder may, without the prior written consent of Parent, directly or indirectly, (i) hire or attempt to hire away any employee of the Company, persuade any such employee to leave employment with the Company or identify any employee of the Company as a candidate for employment for a portfolio company of such Major Holder or (ii) solicit, divert, or take away, or attempt to solicit, divert or take

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away, the business of any Person with whom the Company has established, or, to the Knowledge of such Major Holder, is actively seeking to establish, a business or customer relationship; provided, however, that this Section 7.10 shall not be construed to preclude a Major Holder from (A) soliciting or hiring any such employee (x) who was terminated by the Company or (y) who otherwise ceased employment with the Company more than six (6) months prior to the commencement of employment discussions between the Major Holder and such employee, (B) placing general advertisements for employees in newspapers, periodicals or other media of general circulation (including through a recruiting firm) or hiring any such employee as a result thereof or (C) voting for approval of a candidate of employment for a portfolio company provided that such Major Holder did not violate the provisions of subsection (i) above. Each Major Holder acknowledges that because a remedy at law for any violation or breach of the provisions of this Section 7.10 may be inadequate, in addition to any relief at law that may be available to Parent for such violation or breach and regardless of any other provision contained in this Agreement, Parent may be entitled to injunctive and other equitable relief restraining such violation or breach.

ARTICLE 8

MISCELLANEOUS

8.1              Amendment and Waiver. This Agreement may not be amended, altered or modified except by a written instrument executed by the Company, Parent and each of the Major Holders, and to the extent such amendment, alteration or modification affects the rights or obligations of the Sellers’ Representative, Sellers or Incentive Recipients, by the Sellers’ Representative. No course of dealing between or among any Persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any Person under or by reason of this Agreement. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute, a waiver of any other provisions, whether or not similar, nor shall any waiver constitute a continuing waiver.

8.2              Notices. All notices, demands and other communications to be given or delivered to Parent, the Company or Sellers’ Representative under or by reason of the provisions of this Agreement will be in writing and will be deemed to have been given when personally delivered, one (1) day after being sent by reputable overnight courier or when transmitted by facsimile or telecopy (transmission confirmed), to the addresses indicated below (unless another address is so specified by the applicable party in writing):

If to Sellers’ Representative, then to:

Shareholder Representative Services LLC
601 Montgomery Street, Suite 2020
San Francisco, CA 94111
Attention: Managing Director
Email: c
Facsimile No.: (415) 962-4147
Telephone No.: (415) 367-9400

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If to Parent or Merger Sub, or after the Closing, to the Company, then to:

Rimage Corporation

Attn: Chief Executive Officer

7725 Washington Avenue South

Edina, MN 55439

Facsimile No.: (952) 944-7808

Telephone No.: (952) 944-8144

and

Lindquist & Vennum PLLP

4200 IDS Center

80 South Eighth Street

Attention: Charles P. Moorse

Facsimile No.: (612) 371-3207

8.3              Assignment. This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any rights, benefits or obligations set forth herein may be assigned by any of the parties hereto; provided, however, that Parent may assign any or all of its rights, interests, and obligations hereunder (i) to one or more of its Affiliates, (ii) for collateral security purposes to any lender providing financing to Parent or any of its Affiliates and any such lender may exercise all of the rights and remedies of Parent hereunder, and (iii) to any subsequent purchaser of Parent, or any material portion of its assets (whether such sale is structured as a sale of equity, a sale of assets, a merger or otherwise).

8.4              Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

8.5              No Strict Construction. The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction will be applied against any Person. The use of the word “including” in this Agreement or in any of the agreements contemplated hereby shall be by way of example rather than by limitation. The words “hereof,” “herein,” “hereby,” “herewith” and words of similar import shall, unless otherwise stated, be construed to refer to this Agreement as a whole and not to any particular provision of this Agreement, and article, section, paragraph and schedule references are to the articles, sections, paragraphs and schedules of this Agreement unless otherwise specified. The words describing the singular number shall include the plural and vice versa, words denoting either gender shall include both genders and words denoting natural persons shall include all persons and vice versa. The phrases “the date of this Agreement,” “the date hereof,” “of even date herewith” and terms of similar import, shall be deemed to refer to the date set forth in the preamble to this Agreement.

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8.6              Captions. The captions used in this Agreement are for convenience of reference only and do not constitute a part of this Agreement and shall not be deemed to limit, characterize or in any way affect any provision of this Agreement, and all provisions of this Agreement shall be enforced and construed as if no caption had been used in this Agreement.

8.7              No Third-Party Beneficiaries. Except as otherwise expressly set forth in this Agreement, nothing herein expressed or implied is intended or shall be construed to confer upon or give to any Person, other than the parties hereto and their respective permitted successors and assigns, any rights or remedies under or by reason of this Agreement, such third parties specifically including employees or creditors of the Company. Notwithstanding the foregoing, the Company Indemnified Parties shall be third-party beneficiaries of the provisions set forth in Section 7.7(a).

8.8              Complete Agreement. This document and the documents referred to herein contain the complete agreement between the parties and supersede any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way.

8.9              Counterparts. This Agreement may be executed in one or more counterparts, any one of which may be by facsimile, and all of which taken together shall constitute one and the same instrument.

8.10            Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of California, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of California. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of any state or federal court sitting in Minneapolis, Minnesota, over any suit, action or other proceeding brought by any party arising out of or relating to this Agreement, and each of the parties hereto hereby irrevocably agrees that all claims with respect to any such suit, action or other proceeding shall be heard and determined in such courts. In the event of any litigation regarding or arising from this Agreement, the prevailing party shall be entitled to recover its reasonable expenses, attorneys’ fees and costs incurred therein or in enforcement or collection of any judgment or award rendered therein.

8.11           Waiver of Jury Trial. EACH PARTY HERETO ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

8.12           Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed by Parent, Major Holders, or the Company, as applicable, in accordance with their specific terms or were otherwise breached by Parent, Major Holders, or the Company, as applicable. It is accordingly agreed that the

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parties shall be entitled to an injunction or injunctions, without any requirement to post or provide any bond or other security in connection therewith, to prevent breaches of this Agreement by any of Parent, Major Holders, or the Company, as applicable, and to enforce specifically the terms and provisions hereof against Parent, the Major Holders, or the Company, as applicable, in any court having jurisdiction, this being in addition to any other remedy to which the parties hereto are entitled at law or in equity.

8.13           Sellers’ Representative.

(a)By voting in favor of the adoption of this Agreement, the approval of the principal terms of the Merger, and the consummation of the Merger or participating in the Merger and receiving the benefits thereof, including the right to receive the consideration payable in connection with the Merger, each Seller and each Incentive Recipient shall be deemed to have appointed Shareholder Representative Services LLC as representative, agent , proxy and attorney in fact for and on behalf of the Sellers and the Incentive Recipients (the “Sellers’ Representative”). Without limiting the generality of the foregoing, the Sellers’ Representative has full power and authority, on behalf of each Seller and each Incentive Recipient and his or her successors and assigns, to (i) interpret the terms and provisions of this Agreement and the documents to be executed and delivered by Sellers and the Incentive Recipients in connection herewith, including the Escrow Agreement, (ii) execute and deliver and receive deliveries of all agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement and the Escrow Agreement, (iii) receive service of process in connection with any claims under this Agreement or the Escrow Agreement, (iv) agree to negotiate, enter into settlements, assume the defense of claims, demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of the Sellers’ Representative for the accomplishment of the foregoing, (v) give and receive notices and communications, (vi) authorize delivery to Parent of the Escrow Amount, or any portion thereof, in satisfaction of any deficiency as specified in Section 2.11(d), (vii) authorize delivery to Parent of the Escrow Amount, or any portion thereof, in satisfaction of claims brought by Parent for Losses incurred under this Agreement (except as otherwise covered by subsection (vi) hereof), (viii) authorize distribution of the Escrow Amount and any earnings and proceeds thereon otherwise payable to the Sellers, (ix) to take all actions which the Sellers’ Representative considers necessary and desirable in connection with the duties described in Sections 2.11 and 7.1(c) herein; and (x) take all actions necessary or appropriate in the judgment of the Sellers’ Representative on behalf of the Sellers and Incentive Recipients in connection with this Agreement and the Escrow Agreement. Notwithstanding the foregoing, each Seller will have the sole right to negotiate, compromise and settle any claim by Parent solely against such Seller under Section 7.1(a)(ii). Parent will be entitled to conclusively rely on the acts of the Sellers’ Representative as provided in this Section 8.13 as of the acts of Sellers. If the Sellers’ Representative shall be removed, resign or otherwise be unable to fulfill its responsibilities hereunder, the Sellers shall (by consent of those Persons entitled to at least a majority of the Escrow Amount), within 10 days after such death, removal, disability, resignation or inability, appoint a successor to the Sellers’ Representative and immediately thereafter notify Parent of the identity of such successor. Any such successor shall succeed the former Sellers’ Representative as the Sellers’ Representative hereunder. If for any reason there is no Sellers’ Representative at any time, all references herein to the Sellers’ Representative shall be deemed to refer to the Sellers.

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(b)Each Seller and each Incentive Recipient agrees that such agency and proxy are coupled with an interest and are therefore irrevocable without the consent of the Sellers’ Representative and will survive the death, incapacity, bankruptcy, dissolution or liquidation of any Seller and any Incentive Recipient. Each Seller and each Incentive Recipient hereby agrees to receive correspondence from the Sellers’ Representative, including in electronic form. All decisions and actions by the Sellers’ Representative will be binding upon all Sellers and all Incentive Recipients, and no Seller and no Incentive Recipient will have the right to object, dissent, protest or otherwise contest the same. The Sellers’ Representative will have no duties or obligations hereunder except those specifically set forth herein and such duties and obligations will be determined solely by the express provisions of this Agreement. Each Seller and each Incentive Recipient will, in accordance with its Escrow Account Allocation indemnify and hold harmless the Sellers’ Representative and its members, managers, successors and assigns against all Losses incurred by the Sellers’ Representative in connection with the performance of its duties as the Sellers’ Representative, including Losses resulting from any action, suit or proceeding to which the Sellers’ Representative is made a party by reason of the fact it is or was acting as the Sellers’ Representative under this Agreement in each case as such Loss is incurred or suffered. If not paid directly to the Sellers’ Representative by the Sellers and Incentive Recipients, any such Losses may be recovered by the Sellers’ Representative from any amounts in the Seller Expense Account; provided that while this section allows the Sellers’ Representative to be paid from the Seller Expense Account, this does not relieve the Sellers or the Incentive Recipients from their obligation to promptly pay such Losses as such Losses are suffered or incurred, nor does it prevent the Sellers’ Representative from seeking any remedies available to it at law or otherwise. Neither the Sellers’ Representative nor any agent employed by it will incur any liability to any Seller or any Incentive Recipient relating to the performance of its duties hereunder except for actions or omissions constituting fraud or bad faith. The Sellers’ Representative will have no liability in respect of any action, claim or proceeding brought against the Sellers’ Representative by any Seller or any Incentive Recipient if the Sellers’ Representative took or omitted taking any action in good faith.

(c)Each Seller and each Incentive Recipient agrees that the amount of $100,000 (the “Seller Expense Amount”) will be retained by the Sellers’ Representative from the Merger Consideration, to pay the costs and expenses incurred by the Sellers’ Representative related to performance of its duties hereunder (the “Seller Expense Account”). The Sellers and the Incentive Recipients shall not receive interest or other earnings on the Seller Expense Account and the Sellers and the Incentive Recipients irrevocably transfer and assign to the Sellers’ Representative any ownership right that they may have in any interest that may accrue on funds held in the Seller Expense Account. The Sellers and the Incentive Recipients acknowledge that the Sellers’ Representative is not providing any investment supervision, recommendations or advice. The Sellers’ Representative shall have no responsibility or liability for any loss of principal of the Seller Expense Account other than as a result of its gross negligence or willful misconduct. Sellers’ Representative shall retain the amounts in the Seller Expense Account for so long as it shall determine in its reasonable discretion. The balance of the Seller Expense Amount, if any, will be distributed by the Sellers’ Representative to the Exchange Agent for distribution to the Sellers and the Incentive Recipients in accordance with the Escrow Account Allocation. For tax purposes, the Seller Expense Account shall be treated as having been received and voluntarily set aside by the Sellers and the Incentive Recipients at the time of Closing. The parties agree that the Sellers’ Representative is not acting as a withholding agent or in any similar capacity in connection with the Seller Expense Account.

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8.14             Public Announcements.

After the Closing, no Seller shall issue any press release (or make any other public announcement) related to this Agreement or the transactions contemplated hereby without prior written approval of the Parent, except as may be necessary, in the opinion of counsel to the party seeking to make disclosure, to comply with the requirements of this Agreement or applicable law or where such disclosure merely recites the terms of this Agreement. If any such press release or public announcement is so required, the party making such disclosure shall obtain the prior written consent of Parent (which consent shall not be unreasonably delayed or withheld) prior to making such disclosure, and the parties shall use their best efforts, acting in good faith, to agree upon a text for such disclosure which is satisfactory to each party.

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

COMPANY:

QUMU, INC.

By: /s/ Raymond R. Hood

Name: Raymond R. Hood

Title: Chief Executive Officer

PARENT:

RIMAGE CORPORATION

By: /s/ Sherman Black

Name: Sherman Black

Title: President and Chief Executive Officer

MERGER SUB:

QUICK ACQUISITION CORP.

By: /s/ Sherman Black

Name: Sherman Black

Title: President and Chief Executive Officer

MAJOR HOLDERS:

Storm Ventures Fund III, L.P.

by Storm Venture Associates III, L.L.C.

its General Partner

By: /s/ [AUTHORIZED REPRESENTATIVE]

Title:  Managing Member

Storm Ventures Affiliates Fund III, L.P.

by Storm Venture Associates III, L.L.C.

its General Partner

By: /s/ [AUTHORIZED REPRESENTATIVE]

Title:  Managing Member

Storm Ventures Principals Fund III, L.L.C.

by Storm Venture Associates III, L.L.C.

its Managing Member

By: /s/ [AUTHORIZED REPRESENTATIVE]

Title:  Managing Member

ADVANCED TECHNOLOGY VENTURES VIII, L.P.

By: ATV Associates VIII, LLC, its General Partner

By:  /s/ [AUTHORIZED REPRESENTATIVE]

Title:    Managing Director

SAP Ventures Fund I Holdings, LLC,

a Delaware limited liability company

By: SAP Ventures Fund I, L.P.,

a Delaware limited partnership

its sole member

By: SAP Ventures GPE (I), L.L.C.,

a Delaware limited liability company

its general partner

By: /s/ [AUTHORIZED REPRESENTATIVE]

Title: Managing Member

By: /s/ [AUTHORIZED REPRESENTATIVE]

Title: Managing Member

SELLERS’ REPRESENTATIVE:

SHAREHOLDER REPRESENTATIVE SERVICES LLC, solely in its capacity as Sellers’ Representative

By: /s/ W. Paul Koenig

Name: W. Paul Koenig

Title: Managing Director

Annex 1

Definitions

“Accredited Investor” means an “accredited investor” as that term is defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

“Affiliate” of any particular Person means any other Person controlling, controlled by or under common control with such Person. A Person is deemed to control another Person if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such other Person, whether through the ownership of voting securities, by contract, or otherwise.

“Affiliated Group” means an affiliated group as defined in Section 1504 of the Code (or any analogous combined, consolidated or unitary group defined under state, local or foreign income Tax law).

“Aggregate Exercise Price” means the aggregate exercise price of all Participating Options to purchase Common Stock and Participating Warrants to purchase Common Stock, but shall in all events exclude the exercise price of the Participating Warrant to purchase Series B and C Preferred Stock and Warrants issued to MMV Finance Inc. on August 19, 2010.

“Bridge Notes” means those Secured Convertible Promissory Notes identified on the Indebtedness Schedule, specifically, (i) that Secured Convertible Promissory Note, dated May 13, 2009, by the Company in favor of Storm Ventures Fund III, L.P., (ii) that Secured Convertible Promissory Note, dated May 13, 2009, by the Company in favor of Storm Ventures Affiliates Fund III, L.P., (iii) that Secured Convertible Promissory Note, dated May 13, 2009, by the Company in favor of Storm Ventures Principals Fund III, L.L.C., (iv) that Secured Convertible Promissory Note, dated May 13, 2009, by the Company in favor of Advanced Technology Ventures VIII, L.P., (v) that Secured Convertible Promissory Note, dated May 13, 2009, by the Company in favor of SAP Ventures Fund l Holdings, L.L.C., (vi) that Secured Convertible Promissory Note, dated September 30, 2009, by the Company in favor of Storm Ventures Fund III, L.P., (vii) that Secured Convertible Promissory Note, dated September 30, 2009, by the Company in favor of Storm Ventures Affiliates Fund III, L.P., (viii) that Secured Convertible Promissory Note, dated September 30, 2009, by the Company in favor of Storm Ventures Principals Fund III, L.L.C., (ix) that Secured Convertible Promissory Note, dated September 30, 2009, by the Company in favor of Advanced Technology Ventures VIII, L.P., (x) that Secured Convertible Promissory Note, dated September 30, 2009, by the Company in favor of SAP Ventures Fund l Holdings, L.L.C., (xi) that Secured Convertible Promissory Note, dated December 3, 2009, by the Company in favor of Storm Ventures Fund III, L.P., (xii) that Secured Convertible Promissory Note, dated December 3, 2009, by the Company in favor of Storm Ventures Affiliates Fund III, L.P., (xiii) that Secured Convertible Promissory Note, dated December 3, 2009, by the Company in favor of Storm Ventures Principals Fund III, L.L.C., (xiv) that Secured Convertible Promissory Note, dated December 3, 2009, by the Company in favor of Advanced Technology Ventures VIII, L.P., (xv) that Secured Convertible Promissory Note, dated December 3, 2009, by the Company in favor of SAP Ventures Fund l Holdings, L.L.C., (xvi) that Secured Convertible Promissory Note, dated March 10, 2010, by the Company in favor of Storm

A-1

Ventures Fund III, L.P., (xvii) that Secured Convertible Promissory Note, dated March 10, 2010, by the Company in favor of Storm Ventures Affiliates Fund III, L.P., (xviii) that Secured Convertible Promissory Note, dated March 10, 2010, by the Company in favor of Storm Ventures Principals Fund III, L.L.C., (xix) that Secured Convertible Promissory Note, dated March 10, 2010, by the Company in favor of Advanced Technology Ventures VIII, L.P., (xx) that Secured Convertible Promissory Note, dated March 10, 2010, by the Company in favor of SAP Ventures Fund l Holdings, L.L.C., (xxi) that Secured Convertible Promissory Note, dated June 28, 2010, by the Company in favor of Storm Ventures Fund III, L.P., (xxii) that Secured Convertible Promissory Note, dated June 28, 2010, by the Company in favor of Storm Ventures Affiliates Fund III, L.P., (xxiii) that Secured Convertible Promissory Note, dated June 28, 2010, by the Company in favor of Storm Ventures Principals Fund III, L.L.C., (xxiv) that Secured Convertible Promissory Note, dated June 28, 2010, by the Company in favor of Advanced Technology Ventures VIII, L.P., (xxv) that Secured Convertible Promissory Note, dated June 28, 2010, by the Company in favor of SAP Ventures Fund l Holdings, L.L.C., (xxvi) that Secured Convertible Promissory Note, dated May 27, 2011, by the Company in favor of Storm Ventures Fund III, L.P., (xxvii) that Secured Convertible Promissory Note, dated May 27, 2011, by the Company in favor of Storm Ventures Affiliates Fund III, L.P., (xxviii) that Secured Convertible Promissory Note, dated May 27, 2011, by the Company in favor of Storm Ventures Principals Fund III, L.L.C., (xxix) that Secured Convertible Promissory Note, dated May 27, 2011, by the Company in favor of Advanced Technology Ventures VIII, L.P., (xxx) that Secured Convertible Promissory Note, dated May 27, 2011, by the Company in favor of SAP Ventures Fund l.

“Business” means the business of the Company as conducted as of immediately prior to the Effective Time, including, without limitation, providing enterprise video webcasting software and online video streaming and related services.

“Business Day” means any day on which commercial banks are open for business in San Francisco, California.

“Cash” means cash, cash equivalents and marketable securities calculated in accordance with GAAP applied on a basis consistent with the Stub Period Balance Sheet (it being understood that such cash and cash equivalents shall be reduced by the aggregate amount of all checks that remain outstanding as of the Closing, to the extent there is Cash in the Company at Closing to make such reduction, and to the extent there is not sufficient Cash to do so, then the excess will reflected as a current liability in determining Working Capital).

“COBRA” means the requirements of Part 6 of Subtitle B of Title 1 of ERISA, Section 4980B of the Code and of any similar state law.

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

“Company Charter” means the articles of incorporation of the Company as amended and as in effect immediately prior to the Effective Time.

“Company Stock Plan” means the Company’s Amended and Restated 2003 Stock Option Plan.

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“Company Transaction Expenses” means the costs, fees and expenses owing by Sellers (to the extent the Company has a Liability therefor) or the Company, to the extent not paid by the Company prior to the Closing, in connection with the negotiation and consummation of the transactions contemplated by this Agreement including (i) pursuant to any employment severance, deferred compensation, change-in-control or other agreement entered into by the Company prior to the Closing with any employee, consultant, officer or director of the Company, whether such amounts are payable at the Closing or at a later time, excluding, however, Management Incentive Payments; (ii) the premiums for the directors’ and officers’ insurance policy as contemplated by Section 7.7; (iii) one-half of the Escrow Agents administration fee and (iv) the fees and expenses of the Sellers’ Representative.

“Deemed Value” means the average closing price of Parent Stock for the twenty (20) consecutive trading days ending three Business Days prior to the Closing Date.

“Distribution Waterfall” is defined in, and shall be calculated in accordance with, the “Distribution Waterfall Schedule” attached hereto as Exhibit D.

“Dollars” or “$” when used in this Agreement or any other agreement or document contemplated hereby, means United States dollars unless otherwise stated.

“Environmental Laws” means all applicable laws concerning public health and safety, worker health and safety, pollution or protection of the environment, including without limitation all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any hazardous materials, substances, or wastes, chemical substances or mixtures, pesticides, pollutants, contaminants, toxic chemicals, petroleum products or byproducts, asbestos, polychlorinated byphenyls, noise, or radiation.

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

“ERISA Affiliate” means each entity that is treated as a single employer with the Company for purposes of Section 414 of the Code, or Section 4001(a)(14) or 4001(b) of ERISA.

“Escrow Account” shall mean the escrow fund established pursuant to the Escrow Agreement.

“Escrow Account Allocation” shall mean, with respect to any Seller and any Incentive Recipient, a percentage equal to the fraction having a numerator equal to the aggregate amount of (i) the Merger Consideration to which such person is entitled pursuant to Sections 2.5(a) and 2.7(a) (without reduction for such Seller’s Escrow Account Allocation of the Escrow Amount and Seller Expense Amount) and (ii) the Management Incentive Payments to which such person is entitled to as set forth on the Management Incentive Payment Schedule and having a denominator equal to the sum of (i) the Merger Consideration and (ii) the Management Incentive Payments. For purposes of the foregoing calculation, (i) the price per share attributable to the Parent Stock Consideration shall be the Deemed Value and (ii) the value of the Management Incentive Payments to be paid in Parent

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Stock shall be the Deemed Value. The Escrow Account Allocation for each Seller and each Incentive Recipient shall be set forth on the Distribution Waterfall.

“Escrow Agent” means Wells Fargo, N.A.

“Escrow Agreement” means the Escrow Agreement entered into on the Closing Date by and among Parent, Sellers’ Representative and the Escrow Agent and attached hereto as Exhibit E.

“Escrow Amount” means a cash amount equal to $5.2 million.

“Exchange Agent” means Wells Fargo, N.A.

“Exchange Agent Agreement” means the Exchange Agent Agreement attached hereto as Exhibit G.

“Excluded Taxes” means (i) any Taxes of the Company for the Pre-Closing Tax Period; (ii) any Taxes of any other Person for which the Company may be liable for a Pre−Closing Tax Period under Section 1.1502−6 of the Treasury Regulations (or any similar provision of state, local or foreign Tax law), as a transferee or successor, by contract or otherwise; and (iii) Taxes, or a reduction in Tax benefits, arising as a result of a breach of a warranty or misrepresentation under Sections 4.15 (as it relates to Taxes) and 4.16. For purposes of determining a Loss that is attributable to the disallowance of a net operating loss (“NOL”) or a NOL Carryforward, the loss shall be calculated by multiplying the amount of such disallowed NOL or NOL Carryforward by the highest U.S. federal marginal tax rate on ordinary income for U.S. corporations for the taxable year of the disallowance. For purposes of this Agreement, in the case of a Straddle Period, (i) the amount of any Income Taxes or Taxes based on or measured by receipts (including sales and use Taxes and withholding Taxes) for the Pre-Closing Tax Period will be determined based on an interim closing of the books as of the close of business on the Closing Date (and for such purpose, the taxable period of any partnership or other pass-through entity in which the Company holds a beneficial interest will be deemed to terminate at such time) and (ii) the amount of other Taxes for the Pre-Closing Tax Period will be deemed to be the amount of such Tax for the entire taxable period multiplied by a fraction the numerator of which is the number of days in the taxable period ending on the Closing Date and the denominator of which is the number of days in such Straddle Period. For taxable periods ending on or prior to the Closing Date, the entire amount of Taxes shown on (or required to be shown on) Tax Returns with respect to such taxable periods shall be allocable to the Pre-Closing Tax Period.

“GAAP” means generally accepted accounting principles, consistently applied, in the United States and consistent with the Company’s past practices.

“Governmental Authority” means any government, governmental agency, department, bureau, office, commission, authority, or instrumentality, or court of competent jurisdiction, in each case whether foreign, federal, state, or local.

“Governmental Licenses” means all permits, licenses, franchises, registrations, certificates, approvals and other authorizations obtained from any Governmental Authority, including those listed on the “Governmental Licenses Schedule” attached hereto.

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“Income Tax” means any federal, state, local or foreign Tax based on, measured by or with respect to income, net worth or capital, including any interest, penalty or addition thereto.

“Indebtedness” means, with respect to any Person at any date, without duplication: (i) all Liabilities of such Person for borrowed money; (ii) all Liabilities of such Person evidenced by notes, bonds, debentures, outstanding checks, bankers’ acceptances or similar instruments; (iii) all Liabilities of such Person as lessee under leases that have been or should be recorded as capital leases in accordance with GAAP; (iv) all Liabilities of such Person created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property); (v) all Liabilities secured by a purchase money mortgage or other Lien on such Person’s property whether or not the Liabilities thereby have been assumed by such Person; (vi) all Liabilities of such Person in respect of letters of credit; (vii) all Liabilities referred to above which are directly or indirectly guaranteed by such Person or which such Person has agreed (contingently or otherwise) to purchase or otherwise acquire or in respect of which it has otherwise assured a creditor against loss; (viii) all Liabilities issued or assumed by such Person as the deferred purchase price of property or services (including all Liabilities under any acquisition agreements pursuant to which such Person is, or may be, responsible for any earn-out, note payable or other contingent payments); (ix) all management fees, board fees or other fees payable to a Seller or any Affiliate of a Seller; (x) the Cash Value, as defined in the Warrants issued to MMV Finance Inc. on August 19, 2010, and (xi) all interest, fees, penalties, prepayment premiums and other expenses owed by such Person with respect to the Liabilities referred to above or owing by such Person as a result of the transactions contemplated hereby.

“Initial Cash Merger Consideration” means:

(i) $52,000,000,

(ii) plus, the Aggregate Exercise Price,

(iii) minus, the Repaid Indebtedness,

(iv) minus, the aggregate amount of the Company Transaction Expenses,

(v) plus or minus, as applicable, an amount equal to the Estimated Working Capital Adjustment (as determined pursuant to Section 2.11(a)(i)),

(vi) plus, an amount equal to the Estimated Cash,

(vii) minus, Management Incentive Payments to be paid in cash as set forth in the Management Incentive Payment Schedule,

(viii) minus, the employer portion of the payroll Taxes arising from payments made in respect of the Option and Warrant Consideration and the Management Incentive Payments,

(ix) minus, the Parent Stock Value; and

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(x) minus, the Management Incentive Stock Value.

“Initial Merger Consideration” means (i) the Initial Cash Merger Consideration and (ii) the Parent Stock Value.

“Knowledge” means (i) in the case of the Company, the actual knowledge after reasonable investigation of each of the following Persons: each of Ray Hood, Rob Stublefield, David Bukhan, Claude Dupuis, Todd Porter, Michael Ping, and Jacco Ven Der Kooij; (ii) in the case of Parent, the actual knowledge after reasonable investigation of the chief executive officer and chief financial officer (or persons serving in similar capacities) of Parent, and (iii) in the case of a Major Holder, the actual knowledge of such Major Holder.

“Leased Real Property” means all of the right, title and interest of the Company under all written leases, subleases, licenses, concessions and other agreements, pursuant to which the Company holds a leasehold or sub-leasehold estate in, or is granted the right to use or occupy, any land, buildings, improvements, or other interest in real property.

“Liability” means any liability or obligation of any kind or nature (whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due).

“Lien” means any mortgage, deed of trust, pledge, security interest, encumbrance, lien, easement or charge, assessment, lease, adverse claim, levy, restriction on transfer, conditional sale or title retention agreement or other security interest.

“Lock-Up Letter” means the Lock-up Letter executed by each Seller receiving Parent Stock and attached hereto as Exhibit F.

“Loss” means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid in settlement, Liabilities, obligations, Taxes, Liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses (without giving effect to any Material Adverse Effect or other materiality qualification or any similar qualification), excluding Losses which are not compensatory in nature or are punitive, except to the extent such Losses are sought in a third party claim.

“Management Incentive Payments” means the aggregate amount of management incentive payments payable to management of the Company in the amounts set forth opposite each such individual’s name on the Management Incentive Payment Schedule (collectively, the “Management Incentive Payments”), to such named individuals, subject to any income and employment Taxes required to be withheld in connection with such payments. The Management Incentive Payments shall be paid in cash and in Parent Stock in the amounts set forth opposite each Incentive Recipient’s name on the Management Incentive Payment Schedule.

“Management Incentive Stock Allocation” means the number of shares of Parent Stock to be issued to Incentive Recipients as set forth on the Management Incentive Payment Schedule.

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“Management Incentive Stock Value” means the Deemed Value of the Management Incentive Stock Allocation.

“Material Adverse Effect” means any event, circumstance, change, occurrence or effect (collectively, “Events”) that, individually, has or could reasonably be expected to have a material and adverse effect upon (a) the business, assets, liabilities, condition (financial or otherwise), operating results or operations of the Company, taken as a whole, or (b) the ability of the Company or any Seller to consummate the transactions contemplated by this Agreement.

“Merger Consideration” means the sum of (i) the Initial Cash Merger Consideration, (ii) plus, the Parent Stock Value, and (iii) plus or minus, as applicable, any cash payments required to be made pursuant to Section 2.11(d).

“Parent Stock” means the common stock, $0.01 par value per share, of Parent.

“Parent Stock Consideration” means a number of shares of Parent Stock determined by subtracting the Management Incentive Stock Allocation from 1,000,000, as adjusted for fractional shares as provided in this Agreement.

“Parent Stock Value” means the Parent Stock Consideration multiplied by the Deemed Value, as adjusted for fractional shares as provided in this Agreement.

“Participating Option” means a Stock Option that is vested and exercisable as of immediately prior to the Effective Time and is entitled to receive Merger Consideration as set forth on the Distribution Waterfall which exceeds the exercise price of such Stock Option.

“Participating Warrant” means a Warrant that is vested and exercisable as of immediately prior to the Effective Time and is entitled to receive Merger Consideration as set forth on the Distribution Waterfall which exceeds the exercise price of such Warrant.

“Permitted Liens” means, with respect to the real property owned or leased by the Company, (i) cashiers’, landlords’, mechanics’, materialmens’, carriers’, workmens’, repairmens’, contractors’ and warehousemens’ Liens arising or incurred in the ordinary course of business and for amounts which are not delinquent and are appropriately reflected as current liabilities in Working Capital, and (ii) Liens for Taxes not yet due and payable or for Taxes that the taxpayer is contesting and for which appropriate reserves have been established in accordance with GAAP.

“Person” means any individual, sole proprietorship, partnership, joint venture, trust, unincorporated association, corporation, limited liability company, entity or governmental entity (whether federal, state, county, city or otherwise and including any instrumentality, division, agency or department thereof).

“Pre-Closing Tax Period” means (i) any taxable period ending on or before the Closing Date and (ii) with respect to any Straddle Period, the portion of the taxable period through the end of the Closing Date.

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“Pro Rata Portion” means, with respect to a Major Holder, a percentage equal to the fraction having a numerator equal to the aggregate amount of Merger Consideration to which such Major Holder is entitled pursuant to Sections 2.5(a) and 2.7(a) (without reduction for such Major Holder’s Escrow Account Allocation of the Escrow Amount and Seller Expense Amount) and having a denominator equal to the Merger Consideration. For purposes of the foregoing calculation, the price per share attributable to the Parent Stock Consideration shall be the Parent Stock Value. Each Major Holder’s Pro Rata Portion shall be set forth on the Distribution Waterfall.

“Registration Rights Agreement” means the Registration Rights Agreement entered into at the Closing by and among Parent, and each Seller receiving Parent Stock and attached hereto as Exhibit H.

“Securities Act” means U.S. Securities Act of 1933, as amended.

“Sellers” means the Stockholders and the holders of any Participating Option or Participating Warrant.

“Seller Transaction Documents” means the documents that a Seller must duly execute and deliver to Parent in order to receive any Merger Consideration which consist of: Specifically, each Stockholder shall deliver a Certificate and execute and deliver a Letter of Transmittal. In addition, in the event a Stockholder is entitled to receive Parent Stock as part of the Merger Consideration as provided in the Distribution Waterfall, Seller Transaction Documents also include the Lock-up Letter, and a counterpart signature page to the Registration Rights Agreement and a Certificate of Accredited Status. Seller Transaction Documents with respect to a holder of a Participating Option or a Participating Warrant shall mean the Option Cancellation Agreement and the Warrant Cancellation Agreement, respectively. If applicable, the Seller Transaction Documents shall be duly executed by the spouse of each Seller to the extent such Seller is a resident of a community property state.

“Stock Option” means any option that is exercisable for shares of Company Capital Stock and that was granted under the Company Stock Plan.

“Stockholder” means a holder of Company Capital Stock.

“Straddle Period” means any taxable period beginning on or prior to and ending after the Closing Date.

“Subsidiary” means, with respect to any Person, any partnership, limited liability company, corporation, association or other business entity of which (i) if a corporation, a majority of the total voting power of shares of capital stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a partnership, limited liability company, association or other business entity, a majority of the partnership or other similar ownership interests thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. The term “Subsidiary” includes all Subsidiaries of such Subsidiary.

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“Target Working Capital” means $1,236,000.

“Tax” means any foreign, federal, state or local income, gross receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use, transfer, real property gains, registration, value added, excise, natural resources, severance, stamp, occupation, premium, windfall profit, environmental, real property, personal property, capital stock, social security, unemployment, disability, payroll, license, employee or other withholding tax, or other tax of any kind whatsoever, including any interest, penalties or additions to tax or additional amounts in respect of the foregoing.

“Tax Authority” means any Governmental Authority or any subdivision, agency, commission, or authority thereof, or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax.

“Tax Return” means any return, declaration, report, claim for refund, information return or other document (including any related or supporting schedule, statement or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax of any party or the administration of any laws, regulations or administrative requirements relating to any Tax.

“Transfer Agent” means Wells Fargo Shareowner Services, the transfer agent and registrar for the Parent Stock.

“Warrant” means any warrant that is exercisable for shares of Company Capital Stock.

“Working Capital” means the excess of current assets (excluding Cash and deferred costs) of the Company over the current liabilities (excluding accrued interest, the Bridge Notes, unearned revenue and the Silicon Valley Bank accounts receivable credit line, but including the amount of all checks that are outstanding at the Closing to the extent the amount of such checks exceed the Cash of the Company at the Closing) of the Company determined in accordance with and consistent with the Working Capital Schedule and prepared in accordance with GAAP as applied on a basis consistent with the preparation of the Stub Period Balance Sheet. For the avoidance of doubt and for the purpose of this definition, current liabilities shall exclude Company Transaction Expenses, Management Incentive Payments and Repaid Indebtedness.

In addition, each of the following terms shall have the meaning specified in the Section of this Agreement set forth opposite such term:

Term	Section
Accounting Arbitrator	2.11(c)(ii)
Actual Cash	2.11(b)
Actual Working Capital	2.11(b)
Agreement	Recitals
Alternative Arrangements	7.1(d)

A-9

Term	Section
CCC	Recitals
Certificates	2.6(c)
Agreement of Merger	2.2(a)
Claim Notice	7.1(c)(i)
Closing	2.2(a)
Closing Date	2.2(a)
Common Stock	Recitals
Company	Recitals
Company Board	Recitals
Company Capital Stock	Recitals
Company Closing Payments	2.5(a)(iv)
Company Confidential Information	7.9
Company Copyrights	4.10(b)
Company Intellectual Property	4.10(c)
Company Know-how	4.10(c)
Company Patent Applications	4.10(a)
Company Patents	4.10(a)
Confidentiality Agreement	7.3
Dispute Notice	2.11(c)(ii)
Dissenting Shares	2.10(a)
Effective Time	2.2(a)
Employee Pension Plans	4.15(a)
Employee Plans	4.15(a)
Employee Welfare Plans	4.15(a)
Estimated Cash	2.11(a)
Estimated Working Capital	2.11(a)
Estimated Working Capital Adjustment	2.11(a)
Events	1.1
Final Cash	2.11(c)(i), (c)(ii), (c)(iii), and (d)
Final Initial Cash Merger Consideration	2.11(d)
Final Working Capital	2.11(c)(i), (c)(ii) and (c)(iii)
Final Working Capital Adjustment	2.11(d)(i)
Financial Statements	4.5
Indemnification Basket	7.1(a)(iv)(B)
Indemnification Cap	7.1(a)(iv)(A)
Indemnified Party	7.1(c)(i)
Indemnifying Party	7.1(c)(i)
Insurance Policies	4.21
License Agreement	4.10(d)
Loss	7.1(a)(i)
Major Holders	Recitals
Merger	2.1
Merger Sub	Recitals

A-10

Term	Section
Multiemployer Plan	4.15(a)
NOL	1.1
NOL Carryforward	4.16(b)(ix)
Option and Warrant Consideration	2.7(a)
Other Plans	4.15(a)
Outside Date	6.1(d)
Parent	Recitals
Parent Indemnities	7.1(a)(i)
Payment Fund	2.6(b)
Proceeding	7.1(c)(i)
Participating Option	2.7(a)
Participating Warrant	Recitals
Releases	7.8
Repaid Indebtedness	2.9
Scheduled Contracts	4.7
Seller Indemnitees	7.1(b)(i)
Series A2 Stock	Recitals
Series B Stock	Recitals
Series C Stock	Recitals
Stockholders	Recitals
Stub Period Financial Statements	4.5(b)
Survival Date	7.1(a)(iii)
Surviving Corporation	Recitals
Tail D&O Insurance	7.7(a)
Written Consent	Recitals

A-11

EX-10.1

Exhibit 10.1

LOCK-UP Letter

October 10, 2011

Rimage Corporation

7725 Washington Avenue South

Minneapolis, MN 55439

Re:       Shares of Rimage Corporation

Ladies and Gentlemen:

This letter agreement (this “Agreement”) is made by the undersigned pursuant to that certain Agreement and Plan of Merger by and among Rimage Corporation, a Minnesota corporation (“Parent”), Quick Acquisition Corp., a California corporation, Qumu, Inc., a California corporation, Shareholder Representative Services LLC, a Colorado limited liability company, solely in its capacity as the “Sellers’ Representative” and the “Major Holders” identified therein (the “Merger Agreement”).

Pursuant to the Merger Agreement, the undersigned will receive shares of common stock, $0.01 par value of Parent (the “Common Stock”). In recognition of the benefits that the Merger Agreement will confer upon the undersigned, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned agrees with Parent that:

1.	The term “Effective Time” shall have the same meaning as set forth in the Merger Agreement.
2.	The term “Lock-Up Shares” shall mean the shares of Common Stock issued to the undersigned pursuant to the Merger Agreement.
3.	The term “Restricted Period” shall mean the period of time from the date hereof until the lapse of restrictions of Section 4(i), (ii) and (iii) below, which restrictions shall lapse as to 1/3rd of the Lock-Up Shares at each of 180 days, 270 days and 365 days following the Effective Time; provided that, in the case of fractional shares, the number of Lock-Up Shares calculated shall be rounded down to the nearest whole share and the final lapse of restrictions of the Lock-Up Shares calculated shall be correspondingly increased by such fractional remainders.
4.	During the Restricted Period, the undersigned will not, without the prior written consent of Parent, directly or indirectly, (i) offer, pledge, hypothecate, sell, assign, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant for the sale of, or otherwise dispose of or transfer any of the Lock-Up Shares or any securities convertible into or exchangeable or exercisable for the Lock-Up Shares; (ii) enter into any swap or any other agreement or any transaction that transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of the Lock-Up Shares, whether any such swap or transaction is to be settled by delivery of the Lock-Up Shares or other securities, in cash or otherwise; or (iii) engage in any short selling of the Lock-Up Shares.
5.	Other than the restrictions identified in Section 4, the undersigned shall have all other rights of a shareholder of Parent, including, but not limited to, the right to vote and receive dividends on the Lock-Up Shares.
6.	Notwithstanding Section 4, the undersigned may transfer the Lock-Up Shares with the prior written consent of Parent or may transfer the Lock-Up Shares without Parent’s consent: (i) as a bona fide gift or gifts, (ii) to any trust or family limited partnership for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, or (iii) (a) if the undersigned is a corporation, the corporation may transfer the Lock-Up Shares to any wholly owned subsidiary or stockholder of the undersigned; (b) if the undersigned is a partnership or limited partnership, the partnership or limited partnership may transfer the Lock-Up Shares to its partners or limited partners, as the case may be; and (c) if the undersigned is a limited liability company, the limited liability company may transfer the Lock-Up Shares to its members; provided, however, that in the case of any transfer under clause (i)-(iii), it shall be a condition to the transfer that the donee, trustee, general partner of the family limited partnership, shareholder, partner, limited partner, member or other transferee agree to be bound in writing by the restrictions set forth herein transferee execute an agreement stating that the transferee is receiving and holding the Lock-Up Shares subject to the provisions of this Agreement and there shall be no further transfer of such shares except in accordance with this Agreement. For purposes of this Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin.

Lock-Up Agreement

7.	The undersigned now has and, except as contemplated by Section 6(i) through (iii), for the duration of this Agreement will have, good and marketable title to the Lock-Up Shares, free and clear of all liens, encumbrances, and claims whatsoever.  The undersigned also agrees and consents to the entry of stop transfer instructions with Parent’s transfer agent and registrar against the transfer of the Lock-Up Shares, except in compliance with this Agreement.  In furtherance of the foregoing, Parent and its transfer agent are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Agreement.  Additionally, Parent’s transfer agent is hereby authorized to note the restrictions against transfer of the Lock-Up Shares of this Agreement in its book entry records and, if any of the Lock-Up Shares are issued in certificated form, Parent’s transfer agent is authorized to place a legend upon such certificate stating that restrictions of this Agreement.
8.	Parent agrees that, as a condition to the receipt of Common Stock pursuant to the Merger Agreement, each recipient of the Common Stock shall enter into an agreement at least as restrictive as this Agreement with respect to such shares.
9.	Parent agrees that, if and to the extent that it releases any Major Holder from any of the restrictions of this Agreement (or an agreement comparable to this Agreement providing for restrictions on the sale or transferability of the Common Stock), it will also release a proportionate portion of the shares of Common Stock subject to restriction under this Agreement.
10.	The undersigned represents and warrants that the undersigned has full power and authority to enter into this Agreement.  The undersigned agrees that the provisions of this Agreement shall be binding also upon the successors, assigns, heirs and personal representatives of the undersigned.
11.	This Agreement shall be governed by and construed in accordance with the laws of the State of Minnesota.

Very truly yours,

SHAREHOLDER

By:

Name:  

Its:

Lock-Up Agreement

EX-10.2

Exhibit 10.2

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is entered into as of October 10, 2011, by and among Rimage Corporation, a Minnesota corporation (the “Company”) and the persons and entities on the signature page hereto or who sign a joinder to this Agreement (each an “Investor” and collectively, the “Investors”).

WHEREAS, the Investors will be issued shares of the Company’s common stock, $0.01 par value (the “Common Stock”), pursuant to that certain Agreement and Plan of Merger by and among the Company, Qumu, Inc., Quick Acquisition Corp., Shareholder Representative Services LLC, and the Major Holders identified therein (the “Merger Agreement”).

WHEREAS, the Company desires to provide to the Investors certain registration rights as provided herein.

NOW, THEREFORE, in consideration of the foregoing premises, the mutual promises and covenants set forth herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereto covenant and agree as follows:

Section 1.
Definitions

1.1“Articles” shall mean the Restated Articles of Incorporation of the Company, as amended, as filed with the Secretary of State of Minnesota, as they may be further amended or amended and restated from time to time.

1.2“Effective Time” shall have the same meaning as that term in the Merger Agreement.

1.3“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

1.4“Form S-3” shall mean such form under the Securities Act as in effect on the date hereof or any registration form(s) under the Securities Act subsequently adopted by the SEC which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

1.5“Holder” shall mean any person owning or having the right to acquire Registrable Securities under this Agreement or any assignee thereof in accordance with Section 7.1 hereof.

1.6“Lock-Up Agreement” shall mean that certain letter agreement dated the date hereof entered into by each Investor in favor of the Company relating to restrictions on transfer of the Common Stock issued pursuant to the Merger Agreement.

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1.7The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document.

1.8“Registrable Securities” shall mean (a) the Common Stock issued pursuant to the Merger Agreement; and (b) any Common Stock issued (or issuable upon the conversion or exercise of any warrant, right or other security which is issued) with respect to, or in exchange for or in replacement of the shares identified in clause (a) in connection with stock split, stock dividend, exchange, recapitalization, reclassification, merger, consolidation or other similar event; excluding in all cases, however, any Common Stock (i) that may be sold without registration pursuant to Rule 144; (ii) sold by Holder to the public pursuant to a registration statement or pursuant to Rule 144 or any other exemption from registration under the Securities Act; or (iii) sold by a Holder in a transaction in which such Holder’s rights under this Agreement are not assigned.

1.9“Registration Expenses” shall mean all expenses incident to the Company’s performance of or compliance with its obligations to effect any registration pursuant to this Agreement, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and accountants for the Company, blue sky fees and expenses, fees an expenses incurred in connection with the listing or admission for trading of the Registrable Securities on any securities exchange, and reasonable fees and expenses not to exceed $25,000 of one special counsel for the selling Holder(s) of Registrable Securities (as selected by the selling Holder(s) in their sole discretion) but will not include Selling Expenses. In addition, “Registration Expenses” include all internal expenses incurred by the Company in connection with the consummation of the transactions contemplated by this Agreement.

1.10“Rule 144” shall mean Rule 144 promulgated under the Securities Act and any other similar rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration.

1.11“SEC” shall mean the Securities and Exchange Commission.

1.12“Securities Act” shall mean the Securities Act of 1933, as amended and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

1.13“Selling Expenses” shall mean all underwriting discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder (other than the fees and disbursements of counsel included in Registration Expenses).

Section 2.
Demand Registration

2.1Demand. If the Company shall receive, at any time after the one (1) year anniversary of the Effective Time, a written request from the Holders of at least 50% of the Registrable Securities held by all Holders (the “Initiating Holders”), that the Company file a registration statement under the Securities Act covering the registration of at least twenty-five percent (25%) of the Registrable Securities then outstanding (or a lesser percent if the anticipated aggregate offering price, net of underwriting discounts and commissions, would exceed $5,000,000), then the Company shall within twenty (20) days of the receipt thereof, give written notice of such request to all Holders. Each Holder shall have the right, by giving written notice to the Company within fifteen (15) days, to have included in such registration such of its Registrable Securities as Holder may request in such Holder’s notice. Following the expiration of such fifteen (15) day period, the Company shall, effect, as expeditiously as reasonably possible, the registration under the Securities Act of all Registrable Securities that the Holders request to be registered, subject to the provisions of Section 2.2.

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2.2Exceptions. Notwithstanding the foregoing, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 2.1:

(a)After the Company has effected two (2) registrations pursuant to Section 2.1 and such registrations have been declared or ordered effective; or

(b)For a period of ninety (90) days following a notice by the Company to the Initiating Holders stating the Company’s good faith intention to effect a registration subject to Section 3 and ending on a date one hundred and eighty (180) days after the effective date thereof; provided that, the Company shall notify the Initiating Holders of such proposed registration within 30 days of the receipt of the notice to the Company described in Section 2.1 and actively employ its commercially reasonable efforts to cause such registration statement to become effective.

2.3Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 2.1 and the Company shall include such information in its written notice to the Holders pursuant to Section 2.1. The underwriter will be selected by the Company and shall be reasonably acceptable to the Initiating Holders holding a majority of the Registrable Securities then held by all Initiating Holders. In such event, the right of any Holder to include such Holder’s Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company (which underwriter or underwriters shall be reasonably acceptable to the Initiating Holders holding a majority of the Registrable Securities then held by all Initiating Holders). Notwithstanding any other provision of this Section 2.3, if the underwriter advises the Company that marketing factors require a limitation of the number of securities to be underwritten (including Registrable Securities) then the Company shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares that may be included in the underwriting shall be allocated to the Holders of such Registrable Securities on a pro rata basis based on the number of Registrable Securities held by all such Holders (including the Initiating Holders); provided, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities (other than Registrable Securities held by Holders) are first entirely excluded from the underwriting. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from the registration.

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2.4Deferral Right. If the Company shall furnish to Holders requesting a registration statement pursuant to Section 2.1 a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company it would be seriously detrimental to the Company and its shareholders for such registration statement to be effected at such time, the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any 12-month period.

2.5Calculations. The Company shall have no obligation with respect to any registration requested pursuant to Section 2.1 if the number of shares or the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed the number of shares or the anticipated aggregate offering price required to originally trigger the Company’s obligation to initiate such registration as specified in Section 2.1.

2.6Inclusion of Other Securities. The Company may include in any such registration other securities for sale for its own account or for the account of any other person; provided that, if the underwriter for the offering shall determine that the number of shares proposed to be offered in such offering would be reasonably likely to adversely affect such offering, then the Registrable Securities to be sold by the Holders shall be included in such registration before any securities proposed to be sold for the account of the Company or any other person.

Section 3.
Piggyback Registration

3.1Company Registration. If the Company, at any time after the one (1) year anniversary of the Effective Time, proposes to register under the Securities Act (including for this purpose a registration effected by the Company for the Holders or for shareholders other than the Holders) any of its Common Stock or other securities in connection with the public offering of such securities solely for cash (excluding a registration relating solely to employee benefit plans, or a registration relating to a corporate reorganization or other transaction on Form S-4, or a registration on any registration form that does not permit secondary sales or a registration on any form which does not permit the inclusion of shares of selling security holders), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within fifteen (15) days after such notice by the Company, the Company shall cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered, subject to the provisions of Section 3.2.

3.2Exceptions. Notwithstanding the foregoing, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to Section 3.1:

(a)After the Company has effected two (2) registrations pursuant to Section 2 and such registrations have been declared or ordered effective; or

(b)After the Company has effected two (2) registrations pursuant to Section 3.1 and such registrations have been declared or ordered effective.

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3.3Underwriting. If the registration statement under which the Company gives notice under Section 3.1 is for an underwritten offering, the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder to be included in a registration pursuant to Section 3.1 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Agreement, if the underwriter determines in good faith that marketing factors require a limitation of the number of shares to be underwritten, the number of shares that may be included in the underwriting shall be allocated: first, to the Company; second, to all Holders who are entitled to participate and who have elected to participate in the offering pursuant to the terms of this Agreement, on a pro rata basis based upon the total number of Registrable Securities held by each such participating Holder; and third, to any other shareholder of the Company on a pro rata basis. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the underwriter, delivered at least ten (10) business days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder which is a partnership or corporation, the partners, shareholders, subsidiaries, parents and affiliates of such Holder, or the estates and Immediate Family of any such partners and shareholders and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “Holder”, and any pro rata reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder”, as defined in this sentence.

3.4Termination. The Company shall have the right to terminate or withdraw any registration initiated by it under Section 3.1 prior to the effectiveness of such registration whether or not any Holder has elected to include securities in such registration. The Registration Expenses of such withdrawn registration shall be borne by the Company in accordance with Section 4.3 hereof.

Section 4.
Obligations of the Company

4.1Company Obligations. Whenever required to effect the registration of any Registrable Securities, the Company shall:

(a)As expeditiously as reasonably possible, prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to become effective.

(b)Upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration statement effective for a period of up to 120 days or until the distribution contemplated in the Registration Statement has been completed if earlier; provided, however, that such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company.

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(c)Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

(d)At least two (2) business days before filing a registration statement, prospectus, or any amendments or supplements thereto, furnish to counsel for each Holder participating in the registration for review and approval, copies of all documents proposed to be filed. Approval by Holders’ counsel shall not be unreasonably withheld or delayed. Failure of counsel for a Holder to respond by the end of the second business day shall be deemed to be an approval.

(e)Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

(f)Use its commercially reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or “blue sky” laws of such jurisdictions as shall be reasonably requested by the Holders; provided that, the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act.

(g)In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.

(h)Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

(i)Immediately notify each Holder participating in the distribution of any stop order threatened or issued by the SEC and take all actions reasonably required to prevent the entry of a stop order, or if entered, to have it rescinded or otherwise removed.

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(j)Cause all such Registrable Securities registered pursuant hereto to be listed on each securities exchange on which similar securities issued by the Company are then listed.

(k)Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number for all such Registrable Securities not later than the effective date of such registration.

(l)Use its commercially reasonable efforts to furnish, at the request of any Holder requesting registration of Registrable Securities, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and the Holders requesting registration of Registrable Securities.

4.2Condition Precedent. It shall be a condition precedent to the obligations of the Company to take any action with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of such securities as shall be required to effect the registration of such Holder’s Registrable Securities.

4.3Expenses of Registration. Except as specifically provided herein, all Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the holders of the Registrable Securities so registered pro rata on the basis of the number of Registrable Securities so registered. The Company shall not, however, be required to pay for expenses of any registration proceeding begun pursuant to Section 2.1, the request of which has been subsequently withdrawn by the Initiating Holders or requesting Holder(s) unless (a) the withdrawal is based upon material adverse information concerning the Company that the Company had not publicly revealed at least forty-eight (48) hours prior to the request or that the Company had not otherwise notified the Initiating Holders or requesting Holders of at the time of such request or (b) the Holders of a majority of Registrable Securities then held by all Holders agree to forfeit their right to one requested registration pursuant to Section 2.1, in which event such right shall be forfeited by all Holders.  If the Holders are required to pay the Registration Expenses, such expenses shall be borne by the Holders of securities (including Registrable Securities) requesting such registration in proportion to the number of shares for which registration was requested. If the Company is required to pay the Registration Expenses of a withdrawn offering pursuant to clause (a) above, then the Holders shall not forfeit their rights pursuant to Section 2.1.

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Section 5.
Indemnification

5.1By the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (each, a “Violation”): (a) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (b) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (c) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, or any state securities law or rule; and the Company will pay to each such Holder, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 5.1 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Holder, underwriter or controlling person for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Holder, underwriter or controlling person.

5.2By the Holders. To the extent permitted by law, each selling Holder will severally and not jointly indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation that occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 5.2, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 5.2 shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further that in no event shall the aggregate amounts payable by any Holder by way of indemnity or contribution hereunder exceed the proceeds from the offering received by such Holder (net of any Selling Expenses paid by such Holder), except in the case of fraud or willful misconduct by such Holder.

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5.3Process. Promptly after receipt by an indemnified party under Section 5.1 or Section 5.2 of notice of the commencement of any action including any governmental action, such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under Section 5.1 or Section 5.2, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under Section 5.1 or Section 5.2.

5.4Contribution. If the indemnification provided for in Section 5.1 or Section 5.2 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall to the extent permitted by applicable law, contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other hand in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

5.5Conflict with Underwriting Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control.

5.6Survival. The obligations of the Company and Holders under this Section 5 shall survive the completion of any offering of Registrable Securities in a registration statement under this Agreement.

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Section 6.
Other Requirements

6.1Exchange Act Reports. With a view to making available to the Holders the benefits of Rule 144 or registration pursuant to a registration on Form S-3, the Company agrees to:

(a)make and keep public information available, as those terms are understood and defined in Rule 144, at all times so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;

(b)take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities;

(c)file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

(d)furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith upon written request (i) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 and the Exchange Act, (ii) a written statement by the Company as it its eligibility to use Form S-3 for resales of the Registrable Securities, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form.

6.2Form Type. Each registration shall be effected by a registration statement on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith).

6.3Information from Holder. If requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, each Holder shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act.

Section 7.
Miscellaneous

7.1Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Agreement may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such Registrable Securities, provided that, (a) the Company is, within a ten (10) days after such transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; (b) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act; (c) there is transferred to such transferee no less than (i) twenty thousand (20,000) shares of Registrable Securities, appropriately adjusted to reflect any stock splits, stock dividends, subdivisions, reverse splits and similar events, or (ii) ten percent (10%) of the shares of Registrable Securities held by the Investor; (d) such transferee is an affiliate, subsidiary or parent company, or member of the immediate family (that is any relationship by blood, marriage or adoption, not more remote than first cousin) of Holder, or a family trust for the benefit of a Holder, or the partners or other owners of a Holder who agree to act through a single representative; and (e) such transferee shall agree to be subject to all restrictions set forth in this Agreement.

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7.2Termination of Registration Rights. No Holder shall be entitled to exercise any right provided for in this Agreement after five (5) years from the date hereof. In addition, a Holder’s registration rights under Sections 2.1 and 3.1 of this Agreement shall expire if all Registrable Securities held by such Holder (and its affiliates) may be sold under Rule 144 during any ninety (90) day period.

7.3Successors and Assigns. Except as otherwise provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer upon any party, other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

7.4Governing Law. This Agreement, and the rights of the parties hereto, shall be governed by and construed in accordance with the laws of the State of Minnesota, without regard to the law of conflicts of law.

7.5Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

7.6Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (c) three days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (d) one day after deposit with a nationally recognized overnight courier, specifying next day delivery, with verification of receipt. All communications shall be sent to the address of the Investors on the books and records of the Company, at or at such other address as such party may designate by ten days advance written notice to the other parties hereto.

7.7Amendment. The rights and obligations of the Company and each Holder under this Agreement may be waived (either generally or in a particular instance, either retroactively or prospectively, and either for a specified period of time or indefinitely) or amended if and only if such waiver or amendment is consented to in writing by (a) the Company and (b) the Holders holding a majority of the Registrable Securities then held by all Holders. Each Holder shall be bound by any amendment or waiver effected in accordance with this Section 7.7, whether or not such Holder has consented to such amendment or waiver.

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7.8Severability. If any provision of this Agreement is held to be invalid or unenforceable, the validity and enforceability of the remaining provisions of this Agreement shall not be affected thereby.

7.9Entire Agreement. This Agreement and the documents referred to herein constitute the entire agreement among the parties with respect to the subject matter of this Agreement, and no party shall be liable or bound to any other party in any manner by any warranties, representations or covenants except as specifically set forth herein or therein.

7.10Counterparts. Counterparts of this Agreement (or joinders or applicable signature pages hereof) that are manually signed and delivered by facsimile transmission or by portable data format (pdf) file via electronic mail shall be deemed to constitute signed original counterparts hereof and shall bind the parties signing and delivering in such manner.

7.11Consent to Jurisdiction.

(a)EACH OF THE PARTIES HERETO HEREBY CONSENTS TO THE EXCLUSIVE JURISDICTION OF ALL STATE AND FEDERAL COURTS LOCATED IN THE STATE OF MINNESOTA, AS WELL AS TO THE JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY HEREBY EXPRESSLY WAIVES ANY AND ALL RIGHTS TO BRING ANY SUIT, ACTION OR OTHER PROCEEDING IN OR BEFORE ANY COURT OR TRIBUNAL OTHER THAN THE COURTS DESCRIBED ABOVE AND COVENANTS THAT IT SHALL NOT SEEK IN ANY MANNER TO RESOLVE ANY DISPUTE OR TO CHALLENGE OR SET ASIDE ANY DECISION, AWARD OR JUDGMENT OBTAINED IN ACCORDANCE WITH THE PROVISIONS HEREOF.

(b)EACH OF THE PARTIES HERETO HEREBY EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE TO VENUE, INCLUDING, WITHOUT LIMITATION, THE INCONVENIENCE OF SUCH FORUM, IN ANY OF SUCH COURTS. IN ADDITION, EACH OF THE PARTIES CONSENTS TO THE SERVICE OF PROCESS BY PERSONAL SERVICE OR ANY MANNER IN WHICH NOTICES MAY BE DELIVERED HEREUNDER IN ACCORDANCE WITH THIS AGREEMENT.

[SIGNATURES NEXT PAGE]

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IN WITNESS WHEREOF, the Company and the undersigned Investors have executed this Registration Rights Agreement as of the date first above written.

Rimage Corporation

By: 

Its:

Investors:

[Each Person Receiving Common Stock of the Company Pursuant to the Merger Agreement]

EX-10.3

Exhibit 10.3

Rimage corporation

EMPLOYMENT AGREEMENT

This employment AGREEMENT (the “Agreement”) is made as of October 10, 2011, between Rimage Corporation, a Minnesota corporation (the “Company”), and Raymond R. Hood, a Texas resident (“Employee”).

background

A.Employee and Qumu, Inc. are parties to that Employment Agreement, dated August 29, 2007 (the “Prior Agreement”).

B.This Agreement is entered into as a condition to the Agreement and Plan of Merger, dated the date hereof, among Qumu, Inc., the Company, and Quick Acquisition Corp. (the “Merger Agreement”).

C.The parties acknowledge and agree that upon the consummation of the transactions contemplated by the Merger Agreement the Prior Agreement will terminate and will no longer have any force or effect.

D.Employee acknowledges and agrees that he will substantially benefit, directly or indirectly, from the consummation of the transactions contemplated by the Merger Agreement.

E.Contemporaneous with the execution of this Agreement, Employee and the Company have entered into that Executive Letter Agreement in substantially the form attached hereto as Exhibit A (the “Letter Agreement”).

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing premises and the respective agreements of the Company and Employee set forth below, the Company and Employee, intending to be legally bound, agree as follows:

1.Employment. Subject to all terms and conditions hereof, effective upon the closing of the Merger Agreement, the Company shall employ Employee at-will, which means either the Company or Employee may end the employment relationship at any time, with or without Cause (as defined in this Agreement). Employee shall serve the Company and perform services for the Company, until Employee’s employment is terminated in accordance with Section 10 hereof.

2.Position and Duties.

a.Position with the Company. During the term of Employee’s employment with the Company, Employee shall serve as the Senior Vice President and General Manager, Qumu and shall perform such duties and responsibilities consistent with his position as the board of directors of the Company (the “Board”) shall reasonably assign to him from time to time.

b.Performance of Duties and Responsibilities. Employee shall serve the Company faithfully and to the best of his ability and shall devote his full working time, attention and efforts to the business of the Company during his employment. Employee shall report to the President and Chief Executive Officer of the Company. During his employment hereunder, Employee shall not accept other employment or engage in other material business activity, except that Employee may participate in civic, trade and charitable activities and personal investment activities to a reasonable extent, and may serve on the boards of up to two non-public companies and on the boards of not-for-profit organizations and trade groups and participate in community affairs, so long as such activities do not unreasonably interfere with the performance of his duties and responsibilities hereunder. The services of the Employee shall be performed, from time to time, at offices and facilities operated by the Company and its subsidiaries, and at other locations where the interests of the Company may be advanced or promoted; provided, Employee shall not be required to relocate his residence from Texas without the consent of Employee.

3.Compensation.

a.Base Salary. While Employee is employed by the Company hereunder, the Company shall pay to Employee a base salary at the annual rate of $300,000, which base salary shall be paid in accordance with the Company’s normal payroll policies and procedures.

b.Target Bonus. While Employee is employed by the Company hereunder, the Company shall maintain a bonus plan or program. Pursuant to the bonus plan or program, and subject to the Company’s achieving certain financial targets as determined by the management of the Company, Employee shall be eligible for bonus compensation up to a maximum of 50% of the Employee’s base salary to be paid between January 1 and March 31 of the calendar year immediately following the Company’s fiscal year to which the bonus relates.

c.Inducement Grant. Employee shall be granted 150,000 non-qualified option shares as of the date hereof, which shall vest in equal amounts over four years on each anniversary of the date of the grant and shall have a term of seven years. The stock options are issued with an exercise price equal to the fair market value of the Company’s stock on the date of the grant and will be granted outside of the Company’s 2007 Stock Incentive Plan.

d.Vacation. While Employee is employed by the Company hereunder, Employee shall be entitled to vacation and personal time consistent with the policies and procedures of the Company. Such vacation and personal time off shall be taken by Employee at times so as not to unduly disrupt the operations of the Company. During employment, Employee will accrue earned vacation according to the policies and procedures of the Company and will not forfeit any earned and accrued vacation that is not taken in a calendar year. The Company will pay Employee for any earned and accrued but unused vacation upon termination from employment.

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e.Additional Employee Benefits. While Employee is employed by the Company hereunder, Employee shall be entitled to participate in any health, disability and term life insurance plans and programs of the Company that are made generally available to other senior employees of the Company. Employee shall also be entitled to participate in such other employee benefit plans and programs of the Company to the extent that Employee meets the eligibility requirements for each individual plan or program. The Company provides no assurance as to the adoption or continuance of any such other particular employee benefit plan or program, and Employee’s participation in any such plan or program shall be subject to the provisions, rules and regulations applicable thereto.

f.Expenses. While Employee is employed by the Company hereunder, the Company shall reimburse Employee for all reasonable and necessary out-of-pocket business, travel and entertainment expenses incurred by Employee in the performance of the duties and responsibilities hereunder, subject to the Company’s normal policies and procedures for expense verification and documentation. Notwithstanding anything to the contrary in this Agreement or in any Company policy with respect to such payments, in-kind benefits and reimbursements provided under this Agreement during any taxable year of Employee that would result in taxable compensation to Employee (i) shall not affect in-kind benefits or reimbursements to be provided in any other taxable year of Employee, (ii) are not subject to liquidation or exchange for another benefit and (iii) shall be made no later than the last day of Employee’s taxable year following the taxable year in which the expense was incurred.

g.Indemnification. The Employee in any capacity on behalf of the Company or any of its subsidiaries or affiliates, shall be entitled to exculpation, indemnification, and advancement of expenses to the fullest extent permitted by Minnesota law. So long as Employee is an officer of the Company, Employee shall also be entitled to coverage under each directors’ and officers’ liability insurance policy, if any, maintained by or on behalf of the Company’s directors and officers.

4.Confidential Information. Except as permitted by the Company or in the ordinary course of the performance of the Employee’s duties hereunder, Employee shall not at any time divulge, furnish or make accessible to anyone or use in any way other than in the ordinary course of the business of the Company, any confidential, proprietary or secret knowledge or information of the Company that Employee has acquired or shall acquire about the Company, whether developed by himself or by others, concerning (i) any trade secrets, (ii) any confidential, proprietary or secret designs, programs, processes, formulae, plans, devices or material (whether or not patented or patentable) directly or indirectly useful in any aspect of the business of the Company, (iii) any customer or supplier lists, (iv) any confidential, proprietary or secret development or research work, (v) any strategic or other business, marketing or sales plans, (vi) any financial data or plans, or (viii) any other confidential or proprietary information or secret aspects of the business of the Company. Employee acknowledges that the above-described knowledge and information constitutes a unique and valuable asset of the Company and represents a substantial investment of time and expense by the Company, and that any disclosure or other use of such knowledge or information other than for the sole benefit of the Company would be wrongful and may cause irreparable harm to the Company. Employee shall take reasonable steps to protect the confidentiality of such knowledge and information. The foregoing obligations of confidentiality shall not apply to any knowledge or information that (i) is now or subsequently becomes generally publicly known, other than as a result of the breach of this Agreement, (ii) is independently made available to Employee in good faith by a third party who has not violated a confidential relationship with the Company, or (iii) is required to be disclosed by law or legal process. Employee understands and agrees that his obligations under this Agreement to maintain the confidentiality of the Company’s confidential information are in addition to any obligations of Employee under applicable statutory or common law.

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5.Ventures. If, during Employee’s employment with the Company, Employee is engaged in or provides input into the planning or implementing of any project, program or venture involving the Company, all rights in such project, program or venture shall belong to the Company. Except as approved in writing by the Board, Employee shall not be entitled to any ownership interest in any such project, program or venture or to any commission, finder’s fee or other compensation in connection therewith. Employee shall have no ownership interest, direct or indirect, in any customer or supplier that conducts business with the Company except for the passive investment in less than 5% of the outstanding shares of capital stock of any corporation listed on a national securities exchange or publicly traded in the over-the-counter market.

6.Non-solicitation Covenants. In consideration for Employee’s employment hereunder and the compensation and benefits to be provided hereunder and otherwise in connection with Employee’s employment with the Company, Employee agrees to the following restrictive covenants.

a.Agreement Not to Solicit Employees. During Employee’s employment with the Company and for a period of twelve (12) months from and after the termination of Employee’s employment, whether such termination is with or without Cause, or whether such termination is at the instance of Employee or the Company, Employee shall not, directly or indirectly, solicit or attempt to solicit any person who is then an employee, consultant or other independent contractor of the Company or who was an employee, consultant or other independent contractor of the Company at any time during the three (3) month period immediately preceding Employee’s termination of employment.

b.Agreement Not to Solicit Others. During Employee’s employment with the Company for a period of twelve (12) months from and after the termination of Employee’s employment, whether such termination is with or without Cause, or whether such termination is at the instance of Employee or the Company, Employee shall not, directly or indirectly, in any manner or capacity, including without limitation as a proprietor, principal, agent, partner, officer, director, stockholder, employee, member of any association, consultant or otherwise, (i) initiate contact with, solicit or attempt to solicit any person or entity who was a customer of the Company during the last twelve (12) months of Employee’s employment, for the purposes of selling, marketing or distributing products similar to the products sold, marketed or distributed by the Company, and (ii) solicit, request, advise or induce any supplier, distributor or other business contact of the Company to cancel, curtail or otherwise adversely change its relationship with the Company; or (iii) using the Company’s information about its clients' technical and business requirements, or other confidential client information, to solicit or obtain agreements with those clients, except that Employee may enter into agreements with the Company’s customers if the customer initiates the contact and none of the Company’s confidential information will be used in negotiating, executing, or performing the agreement.

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c.Acknowledgment. Employee hereby acknowledges that the provisions of this Section 6 are reasonable and necessary to protect the legitimate interests of the Company and that any violation of this Section 6 by Employee may cause substantial and irreparable harm to the Company to such an extent that monetary damages alone would be an inadequate remedy therefor.

d.Blue Pencil Doctrine. If the duration of, the scope of or any business activity covered by any provision of this Section 6 is in excess of what is determined to be valid and enforceable under applicable law, such provision shall be construed to cover only that duration, scope or activity that is determined to be valid and enforceable. Employee hereby acknowledges that this Section 6 shall be given the construction which renders its provisions valid and enforceable to the maximum extent, not exceeding its express terms, possible under applicable law.

7.Patents, Copyrights and Related Matters.

a.Disclosure and Assignment. Except as prohibited by California Labor Code Section 2870 (attached hereto as Schedule A), Employee shall promptly disclose to the Company any and all improvements and inventions that Employee may conceive and/or reduce to practice individually or jointly or commonly with others while he is employed with the Company with respect to (i) any methods, processes or apparatus concerned with the development, use or production of any type of products, goods or services sold or used by the Company, and (ii) any type of products, goods or services sold or used by the Company. Any such improvements and inventions shall be the sole and exclusive property of the Company and Employee shall promptly assign, transfer and set over to the Company his entire right, title and interest in and to any and all of such improvement and inventions as are specified in this Section 7(a), and in and to any and all applications for letters patent that may be filed on such inventions, and in and to any and all letters patent that may issue, or be issued, upon such applications. In connection therewith and for no additional compensation therefor, but at no expense to Employee, Employee shall sign any and all instruments reasonably deemed necessary by the Company for:

i.the filing and prosecution of any applications for letters patent of the United States or of any foreign country that the Company may desire to file upon such inventions as are specified in this Section 7(a);

ii.the filing and prosecution of any divisional, continuation, continuation-in-part or reissue applications that the Company may desire to file upon such applications for letters patent; and

iii.the reviving, re-examining or renewing of any of such applications for letters patent.

This Section 7(a) shall not apply to any invention for which no equipment, supplies, facilities, confidential, proprietary or secret knowledge or information, or other trade secret information of the Company was used and that was developed entirely on Employee’s own time, and (i) that does not relate (A) directly to the business of the Company, or (B) to the Company’s actual or demonstrably anticipated research or development, or (ii) that does not result from any work performed by Employee for the Company.

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b.Copyrightable Material. All right, title and interest in all copyrightable material that Employee shall conceive or originate individually or jointly or commonly with others, and that arise in connection with Employee’s services hereunder or knowledge of confidential and proprietary information of the Company, shall be the property of the Company and are hereby assigned by Employee to the Company, along with ownership of any and all copyrights in the copyrightable material. Where applicable, works of authorship created by Employee relating to the Company and arising out of Employee’s knowledge of confidential and proprietary information of the Company shall be considered “works made for hire,” as defined in the U.S. Copyright Act, as amended.

8.Return of Records and Property. Upon termination of Employee’s employment or at any time upon the Company’s request, Employee shall promptly deliver to the Company any and all Company records and any and all Company property in his possession or under his control, including without limitation manuals, books, blank forms, documents, letters, memoranda, notes, notebooks, reports, printouts, computer disks, computer tapes, source codes, data, tables or calculations and all copies thereof, documents that in whole or in part contain any trade secrets or confidential, proprietary or other secret information of the Company and all copies thereof, and keys, access cards, access codes, passwords, credit cards, personal computers, telephones and other electronic equipment belonging to the Company.

9.Remedies. Employee acknowledges that it would be difficult to fully compensate the Company for monetary damages resulting from any breach by him of the provisions hereof. Accordingly, in the event of any actual or threatened breach of any such provisions, the Company shall, in addition to any other remedies it may have, be entitled to injunctive and other equitable relief to enforce such provisions, and such relief may be granted without the necessity of proving actual monetary damages.

10.Termination of Employment.

a.The Employee’s employment with the Company shall terminate immediately upon:

i.Employee’s receipt of written notice from the Company of the termination of his employment, effective as of the date indicated in such notice;

ii.Employee’s abandonment of his employment or notice of his resignation from the Company;

iii.Employee’s Disability; or

iv.Employee’s death.

b.Capitalized terms used in this Section 10 and not otherwise defined in this Agreement shall have the meaning given in the Letter Agreement.

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11.Payments upon Termination of Employment.

a.Except as provided in the Letter Agreement or otherwise provided by law, the Company shall have no obligations to Employee or to his beneficiary or his estate under the terms of any other applicable agreement between Employee and the Company or under the terms of any employee benefit plans or programs then maintained by the Company in which Employee participates.

12.Miscellaneous.

a.Taxes. The Company shall deduct from any payments made to the Employee hereunder any withholding or other taxes which the Company is required to deduct under applicable law.

b.Governing Law. All matters relating to the interpretation, construction, application, validity and enforcement of this Agreement shall be governed by the laws of the State of California without giving effect to any choice or conflict of law provision or rule, whether of the State of California or any other jurisdiction, that would cause the application of laws of any jurisdiction other than the State of California.

c.Entire Agreement. This Agreement and the Letter Agreement constitute the entire agreement of the parties relating to Employee’s employment with the Company and supersede all prior agreements and understandings with respect to such subject matter, and the parties hereto have made no agreements, representations or warranties relating to the subject matter of this Agreement that are not set forth herein or in the Letter Agreement. By way of clarification, the Company and Employee agree that in calculating the average annual bonus amounts with respect to the three completed calendar years prior to the date of Employee’s termination under Section 1(a)(ii) of the Letter Agreement, if Employee is with the Company for less than three completed calendar years prior to the date of termination, the calculation shall be based upon the actual completed calendar years of employment prior to the date of Employee’s termination. In addition, if the Company provides health and/or dental benefits under a self-insured arrangement described in §105(h) of the Internal Revenue Code of 1986, as amended (“Code”), the COBRA premium amounts referenced in the Letter Agreement to be paid by the Company on Employee’s behalf will be included in Employee’s income. All disputes or claims arising out of or in any way related to this Agreement, including the making of this Agreement, shall be submitted to and determined by final and binding arbitration under the terms set forth in the Letter Agreement.

d.Section 409A. Notwithstanding anything to the contrary in this Agreement or the Letter Agreement, to the maximum extent permitted by applicable law, the severance payments payable to Employee pursuant to the Letter Agreement shall be made in reliance upon Treasury Regulation § 1.409A-1(b)(9)(iii) (relating to separation pay plans) or Treasury Regulation § 1.409A-1(b)(4) (relating to short-term deferrals). However, to the extent any such payments are treated as “non-qualified deferred compensation” subject to Code § 409A and the payments become payable pursuant to Section 2 of the Letter Agreement following a Change in Control (as defined in Schedule 1 to the Letter Agreement) that is not a “change in the ownership or effective control of a corporation, or change in the ownership of a substantial portion of the assets of a corporation” as described in each case in Treasury Regulation § 1.409A-3(i)(5), any such severance amount payable pursuant to Section 2 shall be paid at the same time and in the same manner as severance is paid pursuant to Section 1 of the Letter Agreement, but without regard to any limitations on the payments based on Employee’s subsequent employment. To the extent any severance payments provided for under the Letter Agreement are treated as “non-qualified deferred compensation” subject to Code § 409A and such payments are conditioned on Employee’s execution of a general release, the payments will be made or will commence, as the case may be, on the 60th day (or if applicable, the expiration of the six-month payment delay period or earlier death as described in Section 7 of the Letter Agreement) following Employee’s separation from service (the “Payment Date”), provided that prior to the Payment Date, Employee executes and delivers the general release to the Company and all applicable revocation periods have expired. In this regard, the Company shall provide the form of general release to Employee on or before the 5th day following his separation from service.

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e.No Violation of Other Agreements. Employee hereby represents and agrees that neither (i) Employee’s entering into this Agreement nor (ii) Employee’s carrying out the provisions of this Agreement, will violate any other agreement (oral, written or other) to which Employee is a party or by which Employee is bound.

f.Amendments. No amendment or modification of this Agreement shall be deemed effective unless made in writing and signed by the parties hereto.

g.No Waiver. No term or condition of this Agreement shall be deemed to have been waived, except by a statement in writing signed by the party against whom enforcement of the waiver is sought. Any written waiver shall not be deemed a continuing waiver unless specifically stated, shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future or as to any act other than that specifically waived.

h.Assignment. This Agreement shall not be assignable, in whole or in part, by either party without the prior written consent of the other party, except that the Company may, without the consent of Employee, assign its rights and obligations under this Agreement to any corporation or other person or business entity with which the Company may merge or consolidate or to which the Company may sell or transfer all or substantially all of its assets.

i.Counterparts. This Agreement may be executed in any number of counterparts, and such counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.

j.Severability. Subject to Section 6(d) hereof, to the extent that any portion of any provision of this Agreement shall be invalid or unenforceable, it shall be considered deleted herefrom and the remainder of such provision and of this Agreement shall be unaffected and shall continue in full force and effect.

k.Captions and Headings. The captions and paragraph headings used in this Agreement are for convenience of reference only and shall not affect the construction or interpretation of this Agreement or any of the provisions hereof.

* * * * *

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IN WITNESS WHEREOF, Employee and the Company have executed this Agreement as of the date set forth in the first paragraph.

RIMAGE CORPORATION
By:	/s/ Sherman L. Black
Name:	Sherman L. Black
Its:	President and Chief Executive Officer
/s/ Raymond R. Hood
Raymond R. Hood

EX-10.4

Exhibit 10.4

RIMAGE CORPORATION

STOCK OPTION AGREEMENT

THIS STOCK OPTION AGREEMENT (this “Agreement”) is made as of the Grant Date set forth below, by and between Rimage Corporation, a Minnesota corporation (the “Company”), and the optionee named below (“Optionee”), and is not issued pursuant to the Company’s 2007 Amended and Restated Stock Incentive Plan or any other equity incentive plan of the Company.

OPTIONEE:	Raymond R. Hood
GRANT DATE:	October 10, 2011
NUMBER OF OPTION SHARES:	150,000 shares, common stock
OPTION PRICE PER SHARE:	$11.50 per Share
EXPIRATION DATE:	October 10, 2018

1. Grant of Option. The Company hereby grants to Optionee the right and option (the “Option”) to purchase all or any part of the aggregate number of shares of common stock of the Company set forth above (the “Option Shares”), at the Option Price per Share set forth above, on the terms and conditions set forth in this Agreement. The Option is not intended to be an “incentive stock option” within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Administration of Option. The Option will be administered by the Compensation Committee (the “Committee”) of the Board of Directors of the Company (the “Board”). Any or all functions of the Committee specified in this Agreement may be exercised by the Board unless this Agreement specifically states otherwise. The Committee has the authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the Option as it may, from time-to-time, deem advisable, to interpret the terms and provisions of this Agreement and to otherwise supervise the administration of the Option. The Committee may not take any action that would be treated as a “repricing” of the Option and may not amend or alter the Option without the written consent of Optionee. All decisions made by the Committee pursuant to this Agreement will be final, conclusive and binding on all persons, including the Company, its shareholders, members of the Board, Optionee and their respective estates and beneficiaries.

3. Term and Exercise of Option.

(a)         Installment Exercise Provisions. The term of the Option shall commence on the Grant Date set forth above and shall continue until the Expiration Date set forth above, unless earlier terminated as provided herein. Except as otherwise provided herein, the Option will be exercisable in cumulative installments as follows:

(i)         Up to 25% of the Option Shares may be purchased at any time after the one-year anniversary of the Grant Date and prior to termination of the Option;

(ii)         Up to 50% of the Option Shares (less any shares previously purchased pursuant to the Option) may be purchased at any time on or after the second-year anniversary of the Grant Date and prior to termination of the Option;

(iii)         Up to 75% of the Option Shares (less any shares previously purchased pursuant to the Option) may be purchased at any time on or after the third-year anniversary of the Grant Date and prior to termination of the Option; and

(iv)         Up to 100% of the Option Shares (less any shares previously purchased pursuant to the Option) may be purchased at any time on or after the fourth-year anniversary of the Grant Date and prior to termination of the Option.

Neither Optionee nor Optionee’s legal representatives, legatees or distributees, as the case may be, will be, or will be deemed to be, a holder of any Option Shares for any purpose unless and until certificates for such shares are issued to Optionee or Optionee’s legal representatives, legatees or distributees, under the terms of this Agreement.

(b)         Method of Exercise.  The Option is exercisable by delivery of an exercise notice, in the form attached as Exhibit A (the “Exercise Notice”), which shall state the election to exercise the Option, the number of Option Shares in respect of which the Option is being exercised (the “Exercised Shares”) and such other representations and agreements as may be required by the Company. The Exercise Notice shall be signed by Optionee and shall be delivered in person or by certified mail to the principal financial officer of the Company in accordance with Section 11 of this Agreement. The Exercise Notice shall be accompanied by payment of the aggregate Option Price per Share. The Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Option Price per Share.

(c)         Method of Payment. Payment of the aggregate Option Price per Share shall be made by certified, bank check, by delivery of other Shares owned by Optionee, pursuant to a “same day sale” program exercised through a brokerage transaction as permitted under the provisions of Regulation T applicable to cashless exercises (so long as the Company’s Shares are registered under Section 12 of the Exchange Act), or by a “net exercise” arrangement pursuant to which the Company will reduce the number of Shares issued upon exercise by the largest whole number of Shares with a Fair Market Value that does not exceed the aggregate Option Price per Share (together with payment in cash or other payment from Optionee to the extent of any remaining balance) provided that any such Shares used to pay the aggregate Option Price per Share shall no longer be outstanding and exercisable under this Option. Any same day sale or cashless exercise shall comply with regulations promulgated under the Securities Exchange Act and the Federal Reserve Board. No shares of common stock of the Company and no certificates for such shares shall be issued until full payment therefore has been made.

4. Change in Control.

(a)         “Change in Control” of the Company shall mean a change in control which would be required to be reported in response to Item 5.01 of Form 8-K promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement, including without limitation, if:

(i)any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities (other than an entity owned 50% or greater by the Company or an employee pension plan for the benefit of the employees of the Company);

(ii)there ceases to be a majority of the Board comprised of (i) individuals who, on the date of this Agreement, constituted the Board of the Company; and (ii) any new director who subsequently was elected or nominated for election by a majority of the directors who held such office prior to a Change in Control; or

(iii)the Company disposes of at least 75% of its assets, other than (i) to an entity owned 50% or greater by the Company or any of its subsidiaries, or to an entity in which at least 50% of the voting equity securities are owned by the shareholders of the Company immediately prior to the disposition in substantially the same percentage or (ii) as a result of a bankruptcy proceeding, dissolution or liquidation of the Company.

(b)         Except as otherwise provided in this Agreement, if a Change in Control occurs, all previously unexercised Option Shares shall be exercisable in full, without regard to any installment exercise provisions; provided, however, that the Committee, in its sole and absolute discretion, may, with respect to any or all of such Option Shares, take any or all of the following actions to be effective as of the date of the Change in Control (or as of any other date fixed by the Committee occurring within the thirty (30) day period immediately preceding the date of the Change in Control, but only if such action remains contingent upon the effectuation of the Change in Control) (such date referred to as the “Action Effective Date”):

(i)         Unilaterally cancel such Option Shares in exchange for whole and/or fractional shares of the common stock of the Company (or whole shares of common stock and cash in lieu of any fractional share of common stock) or whole and/or fractional shares of a successor (or whole shares of a successor and cash in lieu of any fractional share) that, in the aggregate, are equal in value to the product of (1) the excess, if any, of the Fair Market Value per share on the Action Effective Date over the Exercise Price or specified price per share, multiplied by (2) the number of Option Shares.

(ii)         Unilaterally cancel such Option Shares in exchange for cash or other property equal in value to the product of (1) the excess, if any, of the Fair Market Value per share on the Action Effective Date over the Exercise Price or specified price per share, multiplied by (2) the number of Option Shares.

(iii)         Unilaterally cancel such Option Shares after providing the holder of such Option Shares with (i) an opportunity to exercise such Option Shares to the extent vested within a specified period prior to the date of the Change in Control, and (ii) notice of such opportunity to exercise prior to the commencement of such specified period. The Committee may modify or waive any condition limiting the exercise of the Option to permit a cashless exercise of the Option.

(iv)         Provide for the assumption or substitution of the Option in accordance with Section 11 below.

(c)         Notwithstanding the foregoing, payment of cash in lieu of whole or fractional shares of common stock of the Company or shares of a successor may only be made to the extent that such payment (i) has met the requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act, or (ii) is a subsequent transaction the terms of which were provided for in a transaction initially meeting the requirements of an exemption under Rule 16b-3 promulgated under the Exchange Act. The payment of cash in lieu of whole or fractional shares of common stock of the Company or in lieu of whole or fractional shares of a successor shall be considered a subsequent transaction approved by the original grant of the Option.

(d)         For the purposes of this Agreement, “Fair Market Value” of a share of the common stock of the Company shall be determined by the Committee as follows: (i) if the common stock of the Company is listed for trading on one of more national securities exchanges, the last reported sales price on such principal exchange on the date in question, or if such common stock shall not have been traded on such principal exchange on such date, the last reported sales price on such principal exchange on the first day prior thereto on which such common stock was so traded; or (b) if the common stock of the Company is not listed for trading on a national securities exchange, but is traded in the over-the-counter market, the closing bid price for such common stock on the date in question, or if there is no such bid price for such common stock on such date, the closing bid price on the first day prior thereto on which such price existed; or (c) if neither (a) or (b) is applicable, a value determined by the reasonable application of a reasonable valuation method as defined in regulations promulgated under Section 409A of Code, which determination shall be final and binding on all parties.

5. Termination of Employment.

(a)         If Optionee ceases to be employed by the Company or a subsidiary of the Company as a result of retirement for age or disability, or voluntary or involuntary separation from employment, other than a termination for Cause (as defined below), the Option may be exercised to the extent Optionee shall have been entitled to do so at the date of termination of employment, within a period of 90 days after such termination of employment, but in no case later than the Expiration Date set forth above.

(b)         If Optionee’s employment is terminated for Cause, the right of Optionee to exercise the Option shall terminate immediately upon such termination of employment. For purposes of this Agreement, “Cause” shall have the same meaning as in any employment or severance agreement between Optionee and the Company governing Optionee’s termination of employment prior to a Change in Control.

(c)         The Option will not confer upon Optionee any right with respect to continuance of employment by the Company, nor will it interfere in any way with the right of the Company or a subsidiary of the Company to terminate Optionee’s employment at any time.

6. Death of Optionee. In the event of the death of Optionee while in the employ of the Company, the Option may be exercised to the extent Optionee shall have been entitled to do so at the date of death, within a period of one year after the date of death, but in no case later than the Expiration Date set forth above. In such event, the Option shall be exercisable only by the executors or administrators of Optionee or by the person or persons to whom Optionee’s rights under the Option shall pass by Optionee’s will or the laws of descent and distribution.

7. Limitations on Exercise of Option.

(a)         Except as provided in paragraph 5 and 6 above, the Option may not be exercised unless Optionee is, at the time of such exercise, in the employ of the Company, and shall have been continuously so employed since the Grant Date of the Option.

(b)         The issuance of Option Shares upon the exercise of the Option shall be subject to all applicable laws, rules and regulations, and shares shall not be issued except upon the approval of proper government agencies or stock exchanges as may be required. Assuming compliance with such laws, rules and regulations, for income tax purposes the Option Shares shall be considered transferred to Optionee on the date the Option is exercised with respect to such Option Shares.

8. Nontransferability of Option. The Option shall not be transferable by Optionee, other than by will or the laws of descent and distribution. During the lifetime of Optionee, the Option shall be exercisable only by Optionee.

9. Registration. If any law or regulation of the Securities and Exchange Commission or of any other body having jurisdiction shall require the Company or Optionee to take any action in connection with the exercise of the Option, then, notwithstanding any contrary provision of this Agreement, the date for exercise of the Option and the delivery of the Option Shares shall be deferred until the completion of the necessary action. In the event that the Company shall deem it necessary, the Company may condition the grant or exercise of the Option upon the receipt of a satisfactory certificate that Optionee is acquiring the Option Shares for investment purposes and not with the view or intent to resell or otherwise distribute the Option or Option Shares. In such event, the stock certificate evidencing such Option Shares shall bear a legend referring to applicable laws restricting transfer of such shares. In the event that the Company deems it necessary to register under the Securities Act of 1933, as amended, or any other applicable statute, the Options or any Option Shares, then Optionee shall cooperate with the Company and take such action as is necessary to permit registration or qualification of such Option or Option Shares. It is the Company’s intent, but not its obligation, to register or qualify the offering or sale of Shares under the Securities Act of 1933 of any other applicable state, federal or foreign law.

10.         Disgorgement.

(a)         If the Company’s financial statements for the year or years in which this Option is issued or outstanding are required to be restated resulting from errors, omissions or fraud, the Committee may (in its sole discretion, but acting in good faith) direct that the Company recover all or a portion of this Option with respect to such fiscal year of the Company the financial results of which are negatively affected by such restatement. The operation of this Section 10(a) shall be in accordance with the provisions of Section 302 of Sarbanes-Oxley Act of 2002 and any applicable guidance.

(b)         Upon demand of the Company, Optionee shall disgorge all or any portion of this Option or other compensation paid or payable pursuant to this Option received within 36-month period prior to the public release of the restatement of financial information due to material noncompliance with the financial reporting requirements under the federal securities laws. The operation of this Section 10(b) shall be in accordance with the provisions of Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and any applicable guidance.

(c)         The amount to be recovered from Optionee under this Section shall be the amount by which the Option exceeded the amount that would have been paid or payable to the Optionee had the financial statements been initially filed as restated, or any greater or lesser amount (including, but not limited to, the entire Option) that the Committee shall determine. In no event shall the amount to be recovered by the Company be less than the amount required to be repaid or recovered as a matter of law.

11. Forfeiture and Recoupment. Without limiting in any way the foregoing, Optionee’s rights, payments, and benefits with respect to this Option shall be subject to reduction, cancellation, forfeiture, or recoupment by the Company upon the occurrence of any of the following events, in addition to any otherwise applicable vesting conditions: (a) failure to accept the terms of this Option, (b) termination of Optionee’s employment for Cause, (c) violation of material Company policies, (d) breach of any agreement between the Company and Optionee, or (e) other conduct by Optionee that the Committee determines is detrimental to the business or reputation of the Company or its subsidiaries.

12. Tax Withholding. Upon notification of the amount due and prior to, or concurrently with, the delivery to Optionee of a certificate representing any Option Shares purchased pursuant to the exercise of the Option, Optionee shall promptly pay to the Company any amount necessary to satisfy applicable federal, state and local withholding requirements.

13. Adjustment. In the event of a stock dividend, stock split, spin-off, rights offering, recapitalization through a large, nonrecurring cash dividend, or a similar equity restructuring of the Company, the Committee will adjust: (a) the number of Shares subject to the Option, rounding all fractions downward, and (d) the Exercise Price of the Option, or any combination thereof, in an equitable manner that will equalize the fair value of the Option before and after the equity restructuring. Furthermore, in the event of any corporate transaction described in Code Section 424(a) that provides for the substitution or assumption of this Option, the Committee will adjust the Option in a manner that satisfies the requirements of Code Section 424(a) as to: (x) the number of Shares subject to the Option, rounding all fractions downward, and (y) the Exercise Price of the Option, or any combination thereof. An adjustment made under this Section by the Committee shall be conclusive and binding on all affected persons.

14. Notices. Notices required hereunder shall be given in person or by first class mail to the address of Optionee shown on the records of the Company, and to the Company at its principal executive office.

15. Successors and Assigns. This Agreement shall apply to and bind Optionee and the Company and their respective permitted assignees and transferees, heirs, legatees, executors, administrators and legal successors.

16. Miscellaneous. This Agreement, together with Exhibit A, constitutes the entire agreement of the parties with respect to the subject matter of this Agreement and supersedes in its entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be amended or altered except by means of a writing signed by the Company and Optionee. This Agreement is governed by the internal substantive laws of but not the choice of law rules of the State of Minnesota.

* * * * *

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed in its corporate name by its duly authorized officer, and Optionee has executed this Agreement, as of the Grant Date set forth above.

COMPANY:	RIMAGE CORPORATION
	By	/s/  Sherman L. Black
		Sherman L. Black
		Chief Executive Officer
OPTIONEE:	/s/  Raymond R. Hood
	Raymond R. Hood

EX-99.1

Exhibit 99.1

 

Rimage Signs Definitive Agreement for Acquisition of Qumu

Enters Rapidly Growing Enterprise Video Communications Market

with Industry Leader

Transaction Valued at $52 Million, Consisting of $39 Million in Cash

and One Million Shares of Rimage Common Stock

Qumu Expected to Grow Revenue More Than 40% in 2012

Rimage Board Approves 70% Dividend Increase to $0.17 per Share

Conference Call Today at 11 AM ET

Minneapolis, MN – October 10, 2011 – Rimage Corporation (Nasdaq: RIMG), the industry-leading provider of on-demand CD/DVD/Blu-ray Disc™ publishing systems, today announced that it has signed a definitive agreement for the acquisition of Qumu, Inc., the leader in enterprise video communications. The acquisition provides Rimage with a strong presence in the rapidly growing video communications market with an established partner, serving 100 Global 1000 customers and generating strong revenue growth. The purchase price totals $52 million, consisting of $39 million in cash and one million shares of Rimage common stock. The transaction is not subject to any regulatory conditions or shareholder approvals and is anticipated to close within 24 hours.

“Qumu is a cornerstone acquisition for Rimage and immediately positions us as a leader in the growing market for video communications and social enterprise applications for business,” said Sherman Black, president and chief executive officer of Rimage Corporation. “The Qumu acquisition accelerates Rimage’s strategy to distribute live, on-demand, downloaded and optical media content for a broad range of applications, on any mobile or desktop device. This acquisition significantly expands our market to new enterprise customers and offers opportunities for cross-selling to the installed base of customers of both Rimage and Qumu.”

Qumu helps corporations create, manage and securely distribute video and related content and provides analytics on content usage. With an estimated total available market of $2 billion, it serves companies in banking, technology, and telecom, among other industries, as well as universities and government agencies. It sells its products through a direct sales force and through premier distribution partners, including Sony and AT&T.

Qumu’s revenue has increased more than 45% per year over the past three years. In 2010, it generated $10.3 million in revenue and it is on track to achieve approximately $15 million in 2011. Based on current opportunities and expectations, Qumu is expected to generate approximately $21 million in revenue in 2012.

“The Qumu acquisition provides customer and technology synergies with our disc publishing business and virtual publishing initiative,” continued Mr. Black. “We will continue to invest in disc publishing to provide our customers with the leading edge solutions they expect from us. The beta testing of our virtual publishing technology, a secure “push-based” delivery platform, continues to proceed well and we remain on track with validating the concept.”

With Qumu, Rimage will be able to provide its customers with comprehensive solutions for all content distribution applications. Qumu allows customers to reliably and securely offer their content across multiple platforms including the desktop, smart phones and tablets. Qumu customers will benefit from Rimage’s virtual publishing technology which will add secure push delivery capabilities to Qumu’s “pull-based” streaming solution. Rimage’s net free cash flow, global footprint and infrastructure will enable Qumu to accelerate its expansion into new markets.

Qumu will be integrated into Rimage. Its operations will remain in San Bruno, California. Ray Hood, president and chief executive officer of Qumu, will remain the leader of the Qumu team and will become a senior vice president of Rimage.

“We are extremely excited to be joining forces with Rimage to more quickly extend Qumu’s unique video communications solution to a much larger market,” said Mr. Hood. “We believe the combination of the two companies offers significant opportunities for growth in 2012 and beyond. Our optimism is demonstrated by the desire of our investors to take a portion of the purchase price in Rimage stock.”

Dividend Increase

The Rimage Board of Directors today announced an increase in the cash dividend in the fourth quarter to $0.17 per share. This will be payable on December 15, 2011 to shareholders of record on November 30, 2011. Based on the closing price on Friday, October 7, 2011, this represents a 5.0% dividend yield.

“As a result of the Qumu acquisition, Rimage is positioned to generate double digit top line growth in 2012. Overall, we anticipate cash from operations in 2012 to match the level of cash generated in 2011. Given our expected cash position post-acquisition and our confidence in generating overall growth in 2012, we believe a 70% dividend increase is warranted,” Mr. Black concluded.

Financial Outlook

With the acquisition of Qumu, the Company now expects 2011 revenues of $86 million to $88 million and earnings per share of $0.42 to $0.45. Excluding fourth quarter Qumu revenue and Qumu transaction and restructuring costs of $2.0 million, both revenue and earnings per share are in line with the financial guidance provided last quarter and at the beginning of 2011.

For 2012, the Company expects Qumu annual revenue growth to continue at greater than 40%. It also anticipates that Qumu will contribute slightly to cash flow in 2012. In disc publishing, the Company expects continued solid execution and cash generation. Technology substitution and softness in the retail segment will continue to negatively impact 2012 revenues and will only be partially offset by growth in disc publishing solutions and geographic expansion. The Company expects disc publishing revenues to decline in the low single digits over this period and to be able to maintain low double digit operating margins.

Overall, Rimage revenues are expected to increase more than 15% in 2012. The Company will continue to optimize its expense structure in disc publishing and leverage the Rimage global infrastructure to accelerate the Qumu opportunity.

Conference Call

Rimage will hold a conference call in conjunction with this announcement today, October 10, 2011, at 11:00 AM Eastern Time. The dial-in number for the conference call is 877-941-8609 for domestic participants and 480-629-9818 for international participants. Investors may also access a webcast of the live conference call by linking through the investor relations section of the Rimage website, www.rimagecorp.com. An archived webcast of the call will be available for 90 days beginning approximately one hour after the call’s conclusion.

About Rimage Corporation

Founded in 1978, Rimage Corporation (NASDAQ: RIMG) helps businesses deliver digital content directly and securely to their customers and employees. Its disc publishing business, based in Minneapolis, Minnesota, supplies more than 10,000 customers in North America, Europe and Asia with industry-leading solutions that archive, distribute and protect content on CDs, DVDs and Blu-Ray Discs™. With its acquisition of Qumu, Rimage will become a leader in the rapidly growing enterprise video communications market. The combination of Qumu and Rimage’s disc publishing business and virtual publishing initiative enables businesses to securely deliver their videos, documents, audio files and images in today’s multi-platform, multi-device world. Additional information can be found at www.rimagecorp.com.

Blu-ray Disc™ is a trademark of the Blu-ray Disc Association.

About Qumu

Qumu, Inc., based in San Bruno, California, is the leading business video platform provider, empowering organizations to better engage and inspire employees, improve productivity, and reduce costs. Video is pervasive – it appears in all business applications and is consumed on all devices. The largest Global 1000 companies depend on Qumu’s video platform to capture, manage, and distribute live and on-demand content with total reliability and security. Regardless of audience size, viewer device, or network configuration, Qumu simply makes video work. Only Qumu delivers the Freedom to work with existing infrastructure; the Power to reach everyone; and the Control to do it right.

Forward Looking Statements

This press release contains forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this press release that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” or “estimate” or comparable terminology are intended to identify forward-looking statements. Such forward-looking statements include, for example, statements about: the Company’s and Qumu’s future financial results or operating performance, the Company’s ability to quickly and efficiently integrate the business, employees, technologies and other aspects of Qumu, the Company’s ability to realize the benefits and synergies of the acquisition of Qumu, the Company’s ability to expand business with Qumu’s customers and the development and marketing of new products. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include the risk that Rimage may not realize the benefits of its acquisition of Qumu because of integration and other challenges and the technological, competitive, personnel and operational risks associated with the Qumu business, as well as the risk factors described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 and other factors set forth in the Company’s filings with the Securities and Exchange Commission.

For additional information, contact:

Investor Contacts: James Stewart, CFO Rimage Corporation 952/944-8144   Doug Sherk/Jenifer Kirtland EVC Group 415/568-4887 Other Contacts: Pete Steege, Director of Marketing Communications Rimage Corporation 612/435-6874