State Pension Fund Has Now Invested $17.5 Million in Three NYC-based Companies Through Paladin Fund
New York, NY - May 19, 2006

New York City-based Application Security, a company that specializes in protecting electronic databases in the financial, government and telecom industries, is expanding thanks to a $7 million investment by private equity fund Paladin Homeland Security and the New York State Common Retirement Fund, State Comptroller Alan G. Hevesi announced today. Paladin and the New York State Common Retirement Fund are each investing $3.5 million in the company.

Application Security, Inc. produces and distributes products that protect computer databases by continuously assessing, discovering and protecting against rapidly changing security threats.

The investment is the third New York City-based cyber-security firm to receive financing through Paladin Capital and the State Pension Fund since May 2004 when the Pension Fund committed $20 million to Paladin. The other companies to receive funding were Orchestria Corporation, which received a total of $7.5 million in December 2005 and provides policy management software to businesses; and CounterStorm, Inc., which received $3 million in May 2005 and provides technology to protect computer networks from attack.

The Pension Fund's $8.7 million invested in these three companies leveraged an additional $8.8 million from Paladin for a total of $17.5 million invested through this partnership to date.

"Cyber-security is a rapidly growing field and companies such as Application Security Inc. CounterStorm, Inc. and Orchestria Corp. are at the cutting edge of this type of technology. I am happy to play a role in their growth. At the same time, I expect them to provide the Pension Fund with a strong return," Hevesi said.

The Common Retirement Fund (CRF) investment is part of the Pension Fund's program to commit private equity capital specifically to New York State businesses. Currently, the Pension Fund has committed $425 million to 15 private equity funds to invest in New York State companies. Of the amount committed, $145.6 million has actually been invested in 64 companies, which is more than three times the amount invested three years ago.

"We are honored to co-invest with the New York State Common Retirement Fund in providing the capital necessary to allow these New York-based companies to grow, prosper and create new jobs in the State of New York," says Mark Maloney, Managing Director at Paladin. "We are confident that these companies will continue to provide new and important security solutions for the business community."

Given that 53 million personnel records have been compromised in just the past thirteen months, there is no question that database security tops the agenda at most organizations, both corporate and government," said Application Security President and CEO Jack Hembrough. "As a rapidly expanding company establishing global leadership in this market, we can't think of a better place to be headquartered than New York."

"The overwhelming response we received from the venture capital community allowed us to seek strategic money and select the optimal set of investors to support our aggressive growth strategy," said Orchestria CEO Bo Manning. "We are confident that Orchestria is currently well positioned to extend its established product, brand and customer satisfaction leadership."

"Organizations are increasingly being targeted by cyber criminals seeking to steal or delete critical data for financial gain. These attacks have increasingly become stealthier and more sophisticated causing much more damage than we have ever seen before," says Gil Arbel, CEO of CounterStorm. "We are proud that Paladin's Homeland Security Fund and the New York State Common Retirement Fund recognize our groundbreaking technologies and solutions by investing in us."

About the New York State Common Retirement Fund
Comptroller Hevesi is sole trustee of the $140 billion New York State Common Retirement Fund, which has developed an in-state investment program to provide capital to New York State businesses. The program provides market rate returns to the Pension Fund while providing capital for New York businesses.

About Paladin Capital Group
Headquartered in Washington D.C., Paladin Capital Group is a premier private equity firm that provides expansion capital for growing companies. Paladin has over $440 million under management and operates two funds with 21 portfolio companies. Paladin's Homeland Security Fund invests in enterprises whose principal business centers on products and services that address homeland security issues and needs. Importantly, the fund's leadership is comprised of individuals with a proven track record of financial expertise, national security experience and specialized technical competence. For more information, please visit www.paladincapitalgroup.com

About Application Security
Application Security Inc. is a leading provider of database security solutions for businesses. Application Security products proactively secure enterprise applications at more than 400 organizations around the world by discovering, assessing, and protecting the database against rapidly changing security threats. By securing data at its source, Application Security enables organizations to more confidently extend their business with customers, partners and suppliers.

About Orchestria
Orchestria enables companies to control their electronic communication to defend against confidential data leakage, enforce regulatory compliance, protect intellectual property, adhere to critical financial and legal controls, and ensure appropriate employee behavior.

Orchestria adds controls to the use of electronic communication such as e-mail, instant messages, web transactions and mobile devices and is used by Fortune 500 companies to implement and maintain good messaging governance. It is relied on by 90 customers in 33 countries including organizations such as Goldman Sachs, Merrill Lynch and St. Paul Travelers, which require the speed and flexibility of e-mail and other forms of electronic communication without exposing themselves to the risks inherent in these uncontrolled interactions.

Orchestria's approach works in real-time and is unique in its ability to analyze all common electronic communication channels to determine their context and content with unparalleled accuracy and to discern the user's intent. It prevents inappropriate communication from ever being sent ensuring they are not archived for later discovery. Orchestria also guides and advises end-users while preserving workflow. It is integrated with leading archive vendors including Symantec, ZANTAZ, IBM and Iron Mountain Digital.

The company was founded in 2000 and is headquartered in New York. More details can be found at www.orchestria.com.

About CounterStorm
CounterStorm, based in New York City, is the maker of CounterStorm-1, the only internal network security solution that effectively stops unanticipated attacks in seconds. CounterStorm is the first network security company to simultaneously win two Small Business Innovative Research Phase II grants from the Department of Homeland Security. For more information, please visit http://www.counterstorm.com

For more information:
Stephanie Powers
Orchestria
+1 212-402-3336
stephanie.powers@orchestria.com

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