Rainbow to Acquire Chrysalis-ITS

Enters its letter of intent to purchase the hardware security manufacturer for cash

Enters its letter of intent to purchase the hardware security manufacturer for cash

Irvine, CA, and Ottawa, Ontario — August 19, 2003 — Rainbow Technologies Inc., a provider of digital content and access control security for the Internet, SSL-VPNs, Instant Private Webs (IPWs) and software security, today announced it has entered into a letter of intent to acquire, for cash, Chrysalis-ITS Inc., a hardware security manufacturer.

The transaction is subject to certain conditions, including approval by shareholders of Chrysalis-ITS. If approved, the company expects the transaction to close in about 45 days.

Chrysalis-ITS' Ultimate Trust hardware security and acceleration solutions are designed to reduce the cost of deploying secure applications, according to Rainbow. The company's products are focused on the PKI and SSL-based Web application markets and represent a complementary fit with the Rainbow products. Chrysalis-ITS, with its PKI root key protection hardware, serves about 84 percent of Fortune 500 companies.

"Today's announcement is great news for our customers, business partners and employees," said Dave Longbottom, president and CEO, Chrysalis-ITS. "We look forward to working closely with the Rainbow team to solve our customers' security needs."

Rainbow Technologies Inc. is involved with several security markets, including USB authentication tokens; SSL acceleration devices; software security and licensing products; and high assurance security products used by the U.S. government for applications in the DoD, NSA and Homeland Security.