Exhibit 2.1











AGREEMENT AND PLAN OF REORGANIZATION

BY AND AMONG

PLX TECHNOLOGY, INC.

NC ACQUISITION SUB, INC.

NETCHIP TECHNOLOGY, INC.

AND

WEI-TI LIU, AS SHAREHOLDERS' AGENT

March 8, 2004



Morrison & Foerster LLP

755 Page Mill Road

Palo Alto, CA 94304









ARTICLE 1	THE MERGER	
2

1.1	The Merger	
2

1.2	Closing; Effective Time	
2

1.3	Effect of the Merger	
2

1.4	Articles of Incorporation; Bylaws	                          2

1.5	Directors and Officers	
2

1.6	Effect on Capital Stock	
3

1.7	Purchase Consideration Adjustment	                          6

1.8	Earn-Out	
8

1.9	Surrender of Certificates	
10

1.10	Tax and Accounting Consequences	                        12

1.11	Withholding Rights	
12

1.12	Company Shareholder Loans	
13

1.13	Private Placement; Legends	
13

1.14	Taking of Necessary Action; Further Action	            14

ARTICLE 2	REPRESENTATIONS AND WARRANTIES OF COMPANY	14

2.1	Organization, Standing and Power	                        14

2.2	Capital Structure	
14

2.3	Authority	
16

2.4	Financial Statements	
16

2.5	Absence of Certain Changes	
17

2.6	Absence of Undisclosed Liabilities	                        19

2.7	Proceedings; Orders	
19

2.8	Restrictions on Business Activities	                        19

2.9	Governmental Authorization	
20

2.10	Title to Personal Property.	
20

2.11	Intellectual Property	
20

2.12	Environmental Matters.	
22

2.13	Taxes.	
23

2.14	Employee Benefit Plans	
25

2.15	Certain Agreements Affected by the Merger	            27

2.16	Employee Matters	
27

2.17	Interested Party Transactions	
29

2.18	Insurance	
29

2.19	Compliance With Laws	
29

2.20	Minute Books	
29

2.21	Brokers' and Finders' Fees	
29

2.22	Voting Agreements; Irrevocable Proxies	            29

2.23	Vote Required	
30

2.24	Board Approval	
30

2.25	Inventory	
30

2.26	Accounts Receivable	
30

2.27	Customers and Suppliers	                                    30

2.28	Material Contracts	
31

2.29	No Breach of Material Contracts	                        32

2.30	Material Third Party Consents	
32

2.31	Real Property	
32

2.32	Information Statement	
33

2.33	Export Control Laws	
33

2.34	Bank Accounts	
34

2.35	No Trading	
34

2.36	Representations Complete	
34

ARTICLE 3	REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER
SUB	34

3.1	Organization, Standing and Power	                        34

3.2	Capital Structure	
35

3.3	Authority	
35

3.4	SEC Documents; Financial Statements	                        36

3.5	Litigation	
36

3.6	Broker's and Finders' Fees	
36

ARTICLE 4	CONDUCT PRIOR TO THE EFFECTIVE TIME	37

4.1	Conduct of Business of Company	                        37

4.2	Restriction on Conduct of Business of Company           37

4.3	No Solicitation	
39

ARTICLE 5	ADDITIONAL AGREEMENTS	40

5.1	Registration Exemption; Blue Sky	                        40

5.2	Access to Information; Disclosure Schedule Updates	40

5.3	Confidentiality	
41

5.4	Public Disclosure	
42

5.5	Consents; Cooperation	
42

5.6	Affiliate Voting Agreement and Proxies; Holder Representation and
Lock-Up Agreement	42

5.7	Legal Requirements	
42

5.8	Company Options	
42

5.9	Employees	
43

5.10	Termination of Employee Plans	
44

5.11	Escrow Agreement	
44

5.12	Form S-8	
44

5.13	Expenses	
44

5.14	Treatment as Reorganization	
45

5.15	Best Efforts and Further Assurances	                        45

5.16	Takeover Statutes	
45

5.17	Notices	
45

5.18	Waivers of Rights of First Refusal	                        46

5.19	Listing of Additional Shares	
46

5.20	Further Assurances	
46

5.21	FIRPTA Certificate	
46

5.22	Resignation of Directors and Officers	
46

5.23	Issuance of Restricted Securities; Shareholders' Consent	46

5.24	Registration Rights Agreement	
48

5.25	Transfer Restrictions; No Trading	                        48

5.26	Spreadsheet	
48

ARTICLE 6	CONDITIONS TO THE MERGER	48

6.1	Conditions to Obligations of Each Party to Effect the Merger	48

6.2	Additional Conditions to Obligations of Company	49

6.3	Additional Conditions to the Obligations of Parent	49

ARTICLE 7	TERMINATION, AMENDMENT AND WAIVER	52

7.1	Termination	
52

7.2	Effect of Termination	
53

7.3	Amendment	
53

7.4	Extension; Waiver	
53

ARTICLE 8	ESCROW AND INDEMNIFICATION	53

8.1	Indemnification	
53

8.2	Limits on Indemnification	                                   54

8.3	Escrow Fund	
54

8.4	Payment for Parent Damages	
54

8.5	Escrow Period	
55

8.6	Claims upon Escrow Fund	                                   55

8.7	Objections to Claims	
55

8.8	Resolution of Conflicts; Arbitration	                       56

8.9	Shareholders' Agent	
57

8.10	Actions of the Shareholders' Agent	                       57

8.11	Third-Party Claims	
58

8.12	Voting Rights and Cash Distributions With Respect to Escrow
Shares	58

ARTICLE 9	GENERAL PROVISIONS	           58

9.1	Non-Survival at Effective Time	
58

9.2	Notices	
58

9.3	Interpretation	
59

9.4	Counterparts; Facsimile Delivery	                       59

9.5	Entire Agreement; Nonassignability; Parties in Interest	60

9.6	Severability	
60

9.7	Remedies Cumulative	
60

9.8	Governing Law	
60

9.9	Dispute Resolution.	
60

9.10	Rules of Construction	
61

APPENDICES AND SCHEDULES

Appendix 1	-	Index of Certain Definitions

Company Disclosure Schedule

Schedule 2.2	-	Company Shareholders

Schedule 2.3	-	Authority

Schedule 2.4	-	Financial Statements

Schedule 2.5	-	Absence of Certain Changes

Schedule 2.6	-	Undisclosed Liabilities

Schedule 2.7	-	Proceedings; Orders

Schedule 2.9	-	Governmental Authorizations

Schedule 2.10	-	Title to Personal Property

Schedule 2.11	-	Intellectual Property

Schedule 2.13		Tax Returns

Schedule 2.14	-	Employee Benefit Plans

Schedule 2.16	-	Employee Matters

Schedule 2.18	-	Insurance

Schedule 2.22	-	Named Shareholders

Schedule 2.28	-	Material Contracts

Schedule 2.30	-	Material Third Party Consents

Schedule 2.31	-	Real Property

Schedule 2.34	-	Bank Accounts

Other Schedules

Schedule 4.2	-	Restrictions on Conduct of Business of Company

Schedule 5.7(a)	-	List of Company Affiliates

Schedule 5.8(a)	-	Holders of Outstanding Company Options

Schedule 5.26	-	Exchange Ratio Spreadsheet



EXHIBITS

Exhibit A		-	Agreement of Merger

Exhibit B		-	Affiliate Voting Agreement

Exhibit C		-	Confidentiality Agreement

Exhibit D		-	Holder Representation and Lock-Up Agreement

Exhibit E		-	Employment and Noncompetition Agreement

Exhibit F		-	Noncompetition Agreement

Exhibit G		-	Escrow Agreement

Exhibit H		-	FIRPTA Notice

Exhibit I		-	IRS Notice

Exhibit J		-	Registration Rights Agreement

Exhibit K		-	Legal Opinion of Morrison & Foerster LLP

Exhibit L		-	Legal Opinion of Staskus Venture Law

AGREEMENT
AND PLAN OF REORGANIZATION

THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement")
is made as of March 8, 2004 (the "Execution Date") by and among PLX
Technology, Inc., a Delaware corporation ("Parent"), NC Acquisition Sub,
Inc., a California corporation and wholly owned subsidiary of Parent ("Merger
Sub"), NetChip Technology, Inc., a California corporation
("Company"), and Wei-Ti Liu in his capacity as the shareholders' agent
("Shareholders' Agent"). Certain terms used in this Agreement are defined
in Appendix 1.

RECITALS

A.	The Boards of Directors of Parent, Merger Sub and Company
each have determined that the acquisition of Company by Parent through the
merger of Merger Sub with and into Company pursuant to the terms and subject to
the conditions set forth herein (the "Merger") is in the best interests
of their respective companies and stockholders and shareholders.

B.	Merger Sub is a wholly-owned subsidiary of Parent.

C.	Pursuant to the Merger, among other things, each outstanding share of
capital stock of Company shall be converted into the consideration set forth
herein.

D.	Company and Parent desire to make certain representations, warranties,
covenants and other agreements in connection with the Merger.

E.	For federal income tax purposes, it is intended that the Merger shall
qualify as a "reorganization" within the meaning of Section 368(a) of the Code,
and this Agreement shall constitute a plan of reorganization pursuant to Section
368 of the Code, with respect to the Merger.

F.	The parties intend that for financial accounting purposes, the Merger
shall be accounted for as a purchase transaction.

G.	As an inducement to Parent to enter into this Agreement, (a) the
officers and directors of the Company and certain of the Company Shareholders
have concurrently herewith entered into an agreement to vote the shares of
Company Capital Stock owned by such Persons to approve the Merger and (b) the
Key Shareholders have concurrently herewith entered into the Noncompetition
Agreement and the Employment and Noncompetition Agreements, as applicable.

NOW, THEREFORE, in consideration of the covenants and representations set
forth herein, and for other good and valuable consideration, the parties agree
as follows:

1. THE MERGER
2. The Merger. Subject to and in accordance
with the terms and conditions set forth in this Agreement, at the Effective
Time, the Merger Sub shall be merged with and into Company, which shall be the
surviving corporation (the "Surviving Corporation") in the Merger, and
the separate existence of the Merger Sub shall thereupon cease. The name of the
Surviving Corporation shall remain "NetChip Technology, Inc." The Merger shall
have the effects set forth in the applicable provisions of the CGCL.
3. Closing; Effective Time. The closing of the
transactions contemplated hereby (the "Closing") shall take place as soon
as practicable after the satisfaction or waiver of each of the conditions set
forth in Article 6 hereof or at such other time as the parties hereto agree (the
"Closing Date"). The Closing shall take place at the offices of Morrison
& Foerster, LLP, 755 Page Mill Road, Palo Alto, California, or at such other
location as the parties hereto agree. In connection with the Closing, the
parties hereto shall cause the Merger to be consummated by duly filing a
properly executed Agreement of Merger in the form attached hereto as Exhibit
A (the "Agreement of Merger"), together with any required officers'
certificates, with the Secretary of State of the State of California, in
accordance with the relevant provisions of the CGCL (the time of such filing
with the Secretary of State of California being the "Effective Time").
4. Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in this Agreement, the Agreement
of Merger and the applicable provisions of the CGCL. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of Company and the Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of Company and the Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
5. Articles of Incorporation; Bylaws.
6. At the Effective Time, the Articles of Incorporation of Company, as in
effect immediately prior to the Effective Time, shall be the Articles of
Incorporation of the Surviving Corporation until thereafter amended as provided
by the CGCL and such Articles of Incorporation; provided, that as of the
Effective Time, the Company's Articles of Incorporation shall be amended as set
forth in Annex A to the Agreement of Merger.
7. At the Effective Time, the Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Bylaws of the Surviving Corporation
until thereafter amended as provided by the CGCL and such Bylaws.
8. Directors and Officers. At the Effective Time,
the directors of Merger Sub, as in effect immediately prior to the Effective
Time, shall be the directors of the Surviving Corporation, until their
respective successors are duly elected or appointed and qualified. At the
Effective Time, the officers of Merger Sub, as in effect immediately prior to
the Effective Time, shall be the officers of the Surviving Corporation, until
their respective successors are duly elected or appointed and
qualified.
9. Effect on Capital Stock.
10. Conversion of Company Capital Stock
11. each share of Company Series A Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any shares cancelled pursuant
to Section 1.6(b) and excluding any Dissenting Shares (as defined in
Section 1.6(f) below)) will be cancelled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such shares of Company Series A Preferred Stock:
12. that number of shares (or fraction thereof) of Parent Common Stock equal to
the Series A Preferred Share Exchange Ratio; and
13. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(i)(A) in accordance with Section 1.6(e).
14. each share of Company Series B Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any shares cancelled pursuant
to Section 1.6(b) and excluding any Dissenting Shares (as defined in
Section 1.6(f) below)) will be cancelled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such shares of Company Series B Preferred Stock:
15. that number of shares (or fraction thereof) of Parent Common Stock equal to
the Series B Preferred Share Exchange Ratio; and
16. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(ii)(A) in accordance with Section 1.6(e).
17. each share of Company Series C Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any shares cancelled pursuant
to Section 1.6(b) and excluding any Dissenting Shares (as defined in
Section 1.6(f) below)) will be cancelled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such shares of Company Series C Preferred Stock:
18. that number of shares (or fraction thereof) of Parent Common Stock equal to
the Series C Preferred Share Exchange Ratio; and
19. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(iii)(A) in accordance with Section 1.6(e).
20. each share of Company Series D Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any shares cancelled pursuant
to Section 1.6(b) and excluding any Dissenting Shares (as defined in
Section 1.6(f) below)) will be cancelled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such shares of Company Series D Preferred Stock:
21. that number of shares (or fraction thereof) of Parent Common Stock equal to
the Series D Preferred Share Exchange Ratio; and
22. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(iv)(A) in accordance with Section 1.6(e).
23. each share of Company Series E Preferred Stock issued and outstanding
immediately prior to the Effective Time (excluding any shares cancelled pursuant
to Section 1.6(b) and excluding any Dissenting Shares (as defined in
Section 1.6(f) below)) will be cancelled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such shares of Company Series E Preferred Stock:
24. that number of shares (or fraction thereof) of Parent Common Stock equal to
the Series E Preferred Share Exchange Ratio; and
25. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(v)(A) in accordance with Section 1.6(e).
26. each share of Company Common Stock issued and outstanding immediately prior
to the Effective Time (excluding any shares cancelled pursuant to
Section 1.6(b) and excluding any Dissenting Shares (as defined in
Section 1.6(f) below)) will be cancelled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such shares of Company Common Stock
27. that number of shares (or fraction thereof) of Parent Common Stock equal to
the Share Exchange Ratio;
28. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(vi)(A) in accordance with Section 1.6(e);
29. a right to receive the Earn-Out Share Exchange Ratio; and
30. cash in lieu of fractional shares issuable pursuant to
Section 1.6(a)(vi)(C) in accordance with Section 1.6(e).
31. To the extent that any Company Shareholder holds shares of Company Capital
Stock issued and outstanding immediately prior to the Effective Time that are
subject to restrictions (with respect to vesting or otherwise) ("Restricted
Stock"), the shares of Parent Common Stock issued to such holder in the
Merger in exchange for such holder's shares of Restricted Stock shall be subject
to the same restrictions, terms and conditions post-Merger.
32. No adjustment shall be made in the number of shares of Parent Common Stock
issued in the Merger as a result of (A) any increase or decrease in the
market price of Parent Common Stock prior to the Effective Time, or (B) any
cash proceeds received by Company from the date hereof to the Closing Date
pursuant to the exercise of currently outstanding Company Options or Company
Warrants.
33. Cancellation of Company Capital Stock Owned by Company
34. Company Options and Company Warrants
35. Adjustments to Exchange Ratios
36. Fractional Shares
37. Dissenters' Rights
38. Capital Stock of Merger Sub
39. Purchase Consideration Adjustment. The Total
Value of Share Consideration shall be subject to adjustment as follows:
40. The Company shall deliver to Parent at least three (3) calendar days
prior to the expected Closing Date a statement ("Accounting Statement")
setting forth the Company's estimate of the Closing Date Net Assets. The
"Closing Date Net Assets" shall mean the remainder, as of the Closing
Date, of the Company's current assets less its current liabilities; provided,
however, the current liabilities shall only include legal fees in excess of the
Legal Fee Cap and provided further, for the avoidance of doubt, the Company's
liabilities shall include all unpaid Taxes attributable to the income, business,
property, or operations of the Company, or for which the Company may otherwise
be liable, for all taxable periods or portions thereof through the Closing Date
and with respect to all transactions occurring through Closing Date, whether or
not such Taxes are currently due and payable as of the Closing Date. The Closing
Date Net Assets as set forth on the Accounting Statement shall be prepared in
accordance with GAAP applied on a basis consistent with the application of GAAP
to the preparation of the Company Financial Statements. If the Accounting
Statement is acceptable to Parent, the Total Value of Share Consideration shall
be increased, dollar for dollar, by the amount by which the Closing Date Net
Assets is greater than the Baseline Net Assets and shall be decreased, dollar
for dollar, by the amount by which the Closing Date Net Assets is less than such
amount. If the Closing Date Net Assets as set forth on the Accounting Statement
are not acceptable to Parent, Parent shall deliver to the Company, prior to the
Effective Time, a certificate containing a statement that: (i) Parent believes
that the actual Closing Date Net Assets of the Company are different than the
estimated Closing Date Net Assets as set forth on the Accounting Statement; (ii)
a brief description of the facts and circumstances supporting such belief; and
(iii) Parent's good faith estimate of the actual Closing Date Net Assets of the
Company.
41. In the event there is a dispute between Parent and the Company at the
Effective Time regarding the Closing Date Net Assets of the Company, such
disputed amount shall not be included in any adjustment to the Total Value of
Share Consideration at the Closing; provided, however, that the Total Value of
Share Consideration shall be adjusted at the Closing to reflect any amount of
the Closing Date Net Assets reflected in the Accounting Statement that are not
in dispute between Parent and the Company. If Parent determines, in good faith,
that the actual Closing Date Net Assets of the Company is less than the
estimated Closing Date Net Assets of the Company set forth on the Accounting
Statement, to the extent the Company disputes Parent's calculation, such
disputed amount shall be placed in the Escrow Fund pending the determination of
Closing Date Net Assets as set forth below (the "Escrowed Purchase Price
Adjustment").
42. If (i) there is a dispute between Parent and the Company regarding the
Closing Date Net Assets of the Company, or (ii) Parent, at its option chooses to
prepare an Audited Closing Balance Sheet (as defined below), then Parent shall
cause the following to be prepared and delivered to Shareholders' Agent
(collectively, no later than sixty (60) days following the Closing Date):
(A) an audited balance sheet of the Company as of the Closing Date (the
"Audited Closing Balance Sheet"), together with an audit report thereon
by a nationally-recognized independent accounting firm hired by Parent
("Parent's Accountant"), prepared in accordance with GAAP on a basis
consistent with prior periods; and (B) a statement based on such Audited
Closing Balance Sheet which sets forth in detail a calculation of the Closing
Date Net Assets. Parent shall, and shall cause the Parent's Accountant to,
provide Shareholders' Agent any and all work papers used in the preparation of
the Audited Closing Balance Sheet. Except as set forth below, the Audited
Closing Balance Sheet and the accompanying Closing Date Net Assets calculation
shall be deemed to be and shall be final, binding and conclusive on the parties
upon the earlier of (the "Final Resolution Date"): (1) Shareholders'
Agent delivery of a written notice to Parent of its approval of the Audited
Closing Balance Sheet; (2) the failure of Shareholders' Agent to notify
Parent in writing of a dispute with the Audited Closing Balance Sheet within
fifteen (15) days of the delivery of such documents to Shareholders' Agent;
(3) the resolution of all disputes, pursuant to Section 1.7(d), by
Parent Accountant and Shareholders' Accountant; and (4) the resolution of
all disputes, pursuant to Section 1.7(d), by the Independent Accounting
Firm.
43. Shareholders' Agent may dispute any amounts reflected on the Audited Closing
Balance Sheet by delivery of a written notice to Parent (the "Audited Closing
Balance Sheet Dispute Notice"). If Shareholders' Agent delivers an Audited
Closing Balance Sheet Dispute Notice to Parent, Parent's Accountant and an
accountant designated by Shareholders' Agent ("Shareholders' Accountant")
shall attempt to reconcile the parties' differences, and any resolution by them
as to any disputed amounts shall be final, binding and conclusive on the
parties. If Parent's Accountant and Shareholders' Accountant are unable to reach
a resolution within fifteen (15) days after the delivery of the Audited
Closing Balance Sheet Dispute Notice, Parent's Accountant and Shareholders'
Accountant shall submit their respective determinations and calculations and the
items remaining in dispute for resolution to an independent accounting firm
mutually acceptable to Parent and Shareholders' Agent (the "Independent
Accounting Firm"). The parties shall cause the Independent Accounting Firm
to submit a report to Parent and Shareholders' Agent with a determination
regarding the remaining disputed items, within thirty (30) days after
submission of the matter, and such report shall be final, binding and conclusive
on Parent and Shareholders' Agent. Parent and the Company Shareholders shall be
responsible for the fees, costs and expenses of the Independent Accounting Firm
in the same proportion that the aggregate amount of such remaining disputed
items so submitted to the Independent Accounting Firm that is unsuccessfully
disputed by each such party as finally determined by the Independent Accounting
Firm bears to the total amount of such remaining disputed items. All such fees
shall be paid to such Independent Accounting Firm by Parent; provided, however,
that the portion of any such payment that is the responsibility of the Company
Shareholder shall constitute "Parent Damages" recoverable from the Escrow Fund
pursuant to the Escrow Agreement without regard to the Damage Threshold (as
defined in Section 8.2 hereof).
44. If the actual Closing Date Net Assets determined in accordance with this
Section 1.7 is less than the estimated Closing Date Net Assets set forth in
the Accounting Statement, Parent shall entitled to withdraw the amount by which
the estimated Closing Date Net Assets exceeds the actual Closing Date Net Assets
from the Escrow Fund (the "Parent's Shortfall") without regard to the
Damage Threshold (as defined in Section 8.2). If the Parent's Shortfall is less
than the Escrowed Purchase Price Adjustment, Parent shall cause the Escrow Agent
to distribute to the Company Shareholders, within fifteen (15) business days of
the Final Resolution Date, the difference between the Escrowed Purchase Price
Adjustment and the Parent's Shortfall (it being understood that if the actual
Closing Date Net Assets determined in accordance with this Section 1.7 are
greater than the estimated Closing Date Net Assets set forth on the Accounting
Statement, Parent shall distribute to the Company Shareholders, on a pro rata
basis, an additional number of shares of Parent Common Stock having a value
equal to such excess amount).
45. Earn-Out.
46. Earn-Out Payment
47. Sale of Business; Change-in-Control of Parent
48. Date and Form of Earn-Out Payment.
49. Resolution of Disputes
50. Surrender of Certificates.
51. Exchange Agent
52. Parent to Provide Common Stock
53. Exchange Procedures
54. As soon as practicable, after the Effective Time, the Surviving Corporation
shall cause to be mailed to each holder of record of a certificate or
certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Capital Stock, whose
shares were converted into the right to receive the consideration set forth in
Section 1.6(a) above, (A) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon receipt of the Certificates by the Exchange Agent, and
shall be in such form and have such other provisions as Parent may reasonably
specify), and (B) instructions for use in effecting the surrender of the
Certificates in exchange for the right to receive the consideration set forth in
Section 1.6(a) (or book entries in the case of shares that have not yet
vested, if any) above, less the Escrow Shares.
55. Upon surrender of a Certificate for cancellation to the Exchange Agent or to
such other agent or agents as may be appointed by Parent, together with (A) such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, (B) a validly executed Holder Representation and Lock-
Up Agreement and (C) a validly executed Registration Rights Agreement, the
holder of such Certificate shall be entitled to receive in exchange therefor a
right to receive (1) the shares of Parent Common Stock to which such holder is
entitled to receive pursuant to Section 1.6(a) above (or a book entry in the
case of shares that have not yet vested in full, if any) less the Escrow Shares
and (2) cash in an amount sufficient to permit the payment in lieu of fractional
shares pursuant to Section 1.6(e), and the Certificate so surrendered shall
forthwith be cancelled.
56. As soon as practicable after the Effective Time, and subject to and in
accordance with the provisions of Article 8 hereof, Parent shall withhold on a
pro rata basis and cause to be distributed to the Escrow Agent (as defined in
Article 8 hereof) a certificate or certificates representing Parent Common
Stock (valued at the Parent Stock Price) (the "Escrow Shares")
representing an aggregate of $2,000,000 from the Total Value of Share
Consideration that is otherwise payable to the Company Shareholders pursuant to
Section 1.6(a). The Escrow Shares shall be registered in the name of the
Escrow Agent as nominee for each Company Shareholder holding Certificates
cancelled pursuant to this Section 1.9. The Escrow Shares shall be vested
shares not subject to any repurchase rights. The Escrow Shares shall be held in
escrow and shall be available to compensate Parent for certain damages as
provided in Article 8. To the extent not used for such purposes, such Escrow
Shares shall be released, as provided in Article 8 hereof.
57. In the event that any Certificate shall have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the Person claiming such
Certificate to be lost, stolen or destroyed, the Exchange Agent will issue or
cause to be issued to such Person in exchange for such lost, stolen or destroyed
Certificate, a new certificate into which the shares of such Person's Company
Capital Stock are converted at the Effective Time and/or deliver or cause to be
delivered to such Person a check in respect of any fractional share interests or
dividends or distributions, which such Person shall be entitled to receive
pursuant to Section 1.6. When authorizing such issuance in exchange
therefor, Parent and/or the Exchange Agent may, in its discretion and as a
condition precedent to the issuance thereof, require the owner of such lost,
stolen or destroyed Certificate to give Parent and/or the Exchange Agent a
reasonable form of indemnity, as it shall direct, against any claim that may be
made against Parent or the Exchange Agent with respect to the Certificate
alleged to have been lost, stolen or destroyed.
58. Distributions With Respect to Unexchanged Shares
59. Transfers of Ownership
60. No Liability
61. Dissenting Shares
62. No Further Ownership Rights in Company Capital Stock
63. Tax and Accounting Consequences. It is
intended by the parties hereto that the Merger shall (a) constitute a
"reorganization" within the meaning of Section 368(a) of the Code and (b)
qualify for accounting treatment as a purchase transaction. The parties to this
Agreement hereby adopt this Agreement as a "plan of reorganization" within the
meaning of sections 1.368-2(g) and 1.368-3(a) of the United States Treasury
Regulations, with respect to the Merger.
64. Withholding Rights. Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the number of shares
of Parent Common Stock and cash paid for fractional shares thereof otherwise
deliverable under this Agreement, and from any other payments made pursuant to
this Agreement, such amounts as Parent and the Surviving Corporation are
required to deduct and withhold with respect to such delivery and payment under
the Code or any provision of state, local, provincial or foreign tax law. To the
extent that amounts are so withheld, such withheld amounts shall be treated for
all purposes of this Agreement as having been delivered and paid to the holder
of shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent and the Surviving Corporation.
65. Company Shareholder Loans. In the event that
any Company Shareholder has outstanding loans from the Company as of the
Effective Time, the amount of consideration payable to such Company Shareholder
pursuant to Section 1.6 shall be reduced by an amount equal to the
outstanding principal plus accrued interest of such Company Shareholders' loans
as of the Effective Time. Such loans shall be satisfied as to the amount by
which the consideration is reduced pursuant to this Section 1.12.
66. Private Placement; Legends.
67. The shares of Parent Common Stock to be issued in the Merger shall be issued
in a private placement as "restricted securities" as defined under Rule 144 of
the Securities Act and will be subject to the following legend, which legend is
subject to approval by the Nasdaq Stock Market:
68. In addition, Parent may place on the certificates representing shares of
Parent Common Stock issued in the Merger other appropriate legends pursuant to
applicable law.
69. Taking of Necessary Action; Further Action.
If, at any time after the Effective Time, any further action is necessary or
desirable to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of Company, the officers and directors
of Company, Parent and the Surviving Corporation are fully authorized in the
name of their respective corporations or otherwise to take, and will take, all
such lawful and necessary action, so long as such action is not inconsistent
with this Agreement.
70. REPRESENTATIONS AND WARRANTIES OF Company
71. Organization, Standing and Power. Company is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization. Company has the corporate power to own its
properties and to carry on its business as now being conducted and as currently
proposed to be conducted and is duly qualified to do business and is in good
standing in each jurisdiction in which the failure to be so qualified and in
good standing would have a Company Material Adverse Effect. Company has
delivered to Parent a true and correct copy of its Articles of Incorporation and
Bylaws or other charter documents, as applicable, each as amended to date.
Company is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational documents. The Company has
no subsidiaries, and the Company does not currently own, nor has it ever owned,
directly or indirectly, any equity or similar interest in, or any interest
convertible or exchangeable or exercisable for, any equity or similar interest
in, any Person.
72. Capital Structure.
73. The authorized capital stock of Company consists of Twenty Three Million
Five Hundred Thousand (23,500,000) shares of Company Common Stock, no par value,
of which Two Million Four Hundred Sixty Three Thousand Nine Hundred Fifty Five
(2,463,955) shares are issued and outstanding, Four Million (4,000,000) shares
of Company Series A Preferred Stock, no par value, of which Four Million
(4,000,000) shares are issued and outstanding, Three Million Three Hundred Five
Thousand Five Hundred Fifty-Two (3,305,552) shares of Company Series B Preferred
Stock, no par value, of which Three Million Three Hundred Five Thousand Five
Hundred Fifty-Two (3,305,552) shares are issued and outstanding, Seven Hundred
Thousand (700,000) shares of Company Series C Preferred Stock, no par value, of
which Seven Hundred Thousand (700,000) shares are issued and outstanding, Two
Million Two Hundred Twenty Two Thousand Two Hundred Twenty-Four (2,222,224)
shares of Company Series D Preferred Stock, no par value, of which One Million
One Hundred Eleven Thousand One Hundred Twelve (1,111,112) shares are issued and
outstanding, and Seven Million Five Hundred Thousand (7,500,000) shares of
Company Series E Preferred Stock, no par value, of which Seven Million Sixty
Five Thousand (7,065,000) shares are issued and outstanding. There are no other
outstanding shares of capital stock or voting securities and no outstanding
commitments to issue any shares of capital stock or voting securities, other
than pursuant to (i) the exercise of One Million Four Hundred Eighteen Thousand
(1,418,000) Company Options outstanding as of such date under the Company Stock
Option Plan and (ii) the exercise of Company Warrants to purchase an aggregate
of One Million One Hundred Eleven Thousand One Hundred Twelve (1,111,112) shares
of Company Series D Preferred Stock. Set forth in Schedule 2.2(a) to the
Company Disclosure Schedule is a true and correct list of Company's shareholders
and any Persons with rights to acquire Company securities, which list will be
promptly updated from time to time prior to Closing to reflect any changes
thereto (which changes are in any event subject to the restrictions imposed
under Section 4.2 below).
74. All outstanding shares of Company Capital Stock are duly authorized, validly
issued, fully paid and non-assessable and are free of any liens or encumbrances,
other than any liens or encumbrances created by or imposed upon the holders
thereof, and, except as disclosed in Schedule 2.2(b) to the Company
Disclosure Schedule, are not subject to preemptive rights or rights of first
refusal created by statute, Company's Articles of Incorporation or Bylaws or any
Contract to which Company is a party or by which it is bound. All outstanding
shares of Company Capital Stock were issued in compliance with all applicable
federal and state securities laws. Company has reserved Three Million
(3,000,000) shares of Common Stock for issuance to employees, directors and
consultants pursuant to the Company Stock Option Plan, of which One Million Five
Hundred Twenty Four Thousand Three Hundred Seventy-Three (1,524,372) shares have
been issued pursuant to option exercises or direct stock purchases, One Million
Four Hundred Eighteen Thousand (1,418,000) shares are subject to outstanding,
unexercised options, and Fifty Seven Thousand Six Hundred Twenty Eight (57,628)
shares are available for issuance thereunder. Except for (i) the rights created
pursuant to this Agreement and (ii) Company's right to repurchase any unvested
shares under the Company Stock Option Plan, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
Company is a party or by which it is bound obligating Company to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of capital stock of Company or obligating Company to
grant, extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, call, right, commitment or
agreement. Except for the agreements contemplated by this Agreement and the
Contracts set forth on Schedule 2.2(b) to the Company Disclosure
Schedule, there are no outstanding Contracts relating to voting, purchase or
sale of Company Capital Stock (i) between or among Company and any of its
securityholders and (ii) to Company's Knowledge, between or among any of
Company's securityholders.
75. The terms of Company Stock Option Plans permit the assumption of Company
Options by Parent and the conversion of such options into Parent Options as
provided for in this Agreement, without the consent or approval of the holders
of Company Options, Company Shareholders, or otherwise, without any acceleration
of the exercise schedule or vesting provisions with respect to those options.
None of the outstanding Company Options permit any accelerated vesting or
exercisability of those options by reason of the Merger or any other
transactions contemplated by this Agreement. True and complete copies of all
Contracts and instruments relating to or issued under the Company Stock Option
Plan or otherwise relating to the issuance of Company Options have been provided
to Parent and such Contracts and instruments have not been amended, modified or
supplemented, and, except as otherwise expressly contemplated herein, there are
no Contracts to amend, modify or supplement such agreements or instruments in
any case from the Contracts and instruments provided to Parent.
76. Authority.
77. Company has all requisite corporate power and authority to enter into this
Agreement and the other Transaction Agreements to which it is a party and to
consummate the Transactions. The execution and delivery of this Agreement and
the other Transaction Agreements to which it is a party and the consummation of
the Transactions have been duly authorized by all necessary corporate action on
the part of Company, other than the approval of the Company Shareholders. This
Agreement and the other Transaction Agreements to which it is a party have been
(or will be as of the Closing) duly executed and delivered by Company and
constitutes (or will constitute as of the Closing) the valid and binding
obligation of Company enforceable against Company in accordance with its terms.
78. The execution and delivery of this Agreement by Company does not, and the
execution of the Transaction Agreements and the consummation of the Transactions
will not, conflict with or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (i) any provision of the Articles of Incorporation or Bylaws of
Company, as amended, or (ii) any material mortgage, indenture, lease, Contract,
Order, or Legal Requirements applicable to Company or any of its properties or
assets.
79. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Body is required by or with respect
to Company in connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby or thereby, except for
(i) the filing of the Agreement of Merger, together with the required officers'
certificates, as provided in Section 1.2, (ii) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country, (iii) such filings as may be required under HSR or other
Antitrust Laws, (iv) any filings as may be required under applicable Legal
Requirements; and (v) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Company Material Adverse Effect and would not prevent or materially alter or
delay any of the transactions contemplated by this Agreement.
80. Financial Statements. Company has delivered to
Parent its audited financial statements at and for the twelve-month periods
ended December 31, 2001, December 31, 2002, and its unaudited
financial statements for the twelve month period ended December 31, 2003 and the
one month period ended January 31, 2004 (including a balance sheet (the
"Company Balance Sheet"), statement of operations, statement of
shareholders' equity and statement of cash flows) (collectively, the "Company
Financial Statements"), which Company Financial Statements are attached as
Schedule 2.4. Except as otherwise disclosed on Schedule 2.4, the
Company Financial Statements have been prepared in accordance with GAAP applied
on a consistent basis throughout the periods indicated and with each other. The
Company Financial Statements were complete and correct in all material respects
as of their respective dates, and fairly present the financial condition and
operating results of Company as of the dates, and for the periods, indicated
therein, subject to normal year-end audit adjustments. All reserves established
by the Company and set forth in the Company Financial Statements were, with
respect to the purposes for which they were established, reasonable when made
and represent reasonable reserves for the circumstance for which they were
established. Company maintains and will continue to maintain an adequate system
of internal controls established and administered in accordance with GAAP. There
has been no change in Company's methods of accounting or accounting policies or
practices except as described in the notes to the Company Financial
Statements.
81. Absence of Certain Changes. Since December 31,
2003 (the "Company Balance Sheet Date"), Company has conducted its
business in the ordinary course and except as disclosed in Schedule 2.5
of the Company Disclosure Schedule:
82. as of the date of this Agreement, there has not been any material adverse
change in Company's business, financial condition, assets, liabilities,
operations, or financial performance, and no event has occurred that is
reasonably likely to have a Company Material Adverse Effect;
83. as of the date of this Agreement, except as a result of ordinary wear and
tear, there has not been any loss, damage or destruction to, or any interruption
in the use of, any of Company's assets (whether or not covered by
insurance);
84. Company has not (i) declared, accrued, set aside or paid any dividend
or made any other distribution in respect of any shares of capital stock, or
(ii) repurchased, redeemed or otherwise reacquired any shares of Company
Capital Stock or other securities, except pursuant to Company repurchase rights
that arise upon an employee's termination of service with the Company;
85. Company has not sold or otherwise issued (or granted any warrants, options
or other rights to purchase) any shares of Company Capital Stock or any other
securities, except for the granting since December 31, 2003 of Company Options
for the purchase of up to Three Hundred Sixty Thousand (360,000) shares of
Company Common Stock and the issuance of shares upon exercise of such Company
Options;
86. Company has not amended its Articles of Incorporation or Bylaws and has not
effected or been a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
87. Company has not purchased, leased, licensed or otherwise acquired any asset
from any other Person, except in the ordinary course of business;
88. Company has not made any capital expenditure in excess of $5,000,
individually or in the aggregate;
89. Company has not sold, assigned or otherwise transferred, and has not leased
or licensed, any asset to any other Person, except for products sold by Company
in the ordinary course of business;
90. except in the ordinary course of business, Company has not pledged or
hypothecated any of its assets or otherwise permitted any of its assets to
become subject to any Encumbrance;
91. Company has not written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness in the amount, individually or in the aggregate, in excess of
$10,000;
92. Company has not made any loan or advance to any Person, including Company
shareholders, officers, employees and directors;
93. Company has not (i) established or adopted any Employee Benefit Plan or
increased, terminated, amended or otherwise modified any Employee Benefit Plan
or any Company Stock Option Plan, or (ii) paid any bonus or made any profit
sharing or similar payment to, or increased the amount of the wages, salary,
commissions, fringe benefits or other compensation or remuneration payable to,
any of its directors, officers or employees;
94. except in the ordinary course of business, Company has not entered into, and
none of the assets owned or used by Company has become bound by, any material
Contract;
95. no material Contract by which Company or any of the assets owned or used by
Company is or was bound, or under which Company has or had any rights or
interest, has been amended or terminated;
96. except in the ordinary course of business, there has been no borrowing or
agreement to borrow by Company or change in the contingent obligations of
Company by way of guaranty, endorsement, indemnity, warranty or otherwise or
grant of a mortgage or security interest in any property of Company, and Company
has not otherwise incurred, assumed or otherwise become subject to any Liability
in excess of $10,000, individually or in the aggregate, other than accounts
payable (of the type required to be reflected as current liabilities in the
"liabilities" column of a balance sheet prepared in accordance with GAAP)
incurred by Company in the ordinary course of business;
97. Company has not discharged any Encumbrance or discharged, paid or forgiven
any indebtedness or other Liability in excess of $10,000, individually or in the
aggregate, except for accounts payable that (i) are reflected as current
liabilities in the "liabilities" column of the Company Balance Sheet, and
(ii) have been discharged or paid in the ordinary course of business;
98. Company has not released or waived any material right or claim;
99. Company has not changed any of its methods of accounting or accounting
practices in any respect;
100. Company has not entered into any transaction or taken any other action
outside the ordinary course of business, except for the Transactions; and
101. Company has not agreed, committed or offered (in writing or otherwise) to
take any of the actions referred to in clauses (c) through (s) above,
except as described in, and pursuant to, the terms of this Agreement.
102. Absence of Undisclosed Liabilities. Company
has no Liabilities of any nature other than (a) those set forth or adequately
provided for in the Company Balance Sheet, (b) those incurred in the ordinary
course of business and not required to be set forth in the Company Balance Sheet
under GAAP, (c) those set forth in the Accounting Statement; (d) those incurred
in connection with the execution of this Agreement, and (e) those disclosed on
Schedule 2.6.
103. Proceedings; Orders.
104. Except as set forth in Schedule 2.7 of the Company Disclosure
Schedule, there are no Orders or Proceedings pending, or, to the Knowledge of
Company, threatened against Company or any of its properties or officers or
directors (in their capacities as such). There is no Proceeding or Order against
Company, or, to the Knowledge of Company, any of its directors or officers (in
their capacities as such), that could reasonably be expected to, have a Company
Material Adverse Effect. Schedule 2.7 of the Company Disclosure Schedule
also lists all Proceedings that Company has pending against other parties.
105. To Company's Knowledge, there are no claims, demands, Damages, causes of
action, or Proceedings, fixed or contingent, matured or unmatured, of whatever
nature, character, type or description that have been or in the future might be
asserted by holders of Company Capital Stock, Company Options, Company Warrants,
or other holders of other rights or interests in Company Capital Stock (or by
any other Person as successor to such holders) against Company or against Parent
or Merger Sub, or any of their respective predecessors, successors or assigns,
any past or present, direct or indirect, partner, subsidiary, or affiliated
Entity, or any past or present employee, agent, representative, attorney,
officer, director or shareholder of any of them acting in its capacity as such
an employee, agent, representative, attorney, officer, director or shareholder,
arising out of facts or circumstances occurring at any time prior to the date
hereof and relating to such Person's ownership of Company Capital Stock or any
rights or options (including warrants) to acquire Company Capital Stock (either
beneficially or of record), whether based on tort, contract (express or
implied), or any federal, state or local law, statute or regulation, at law or
in equity, or any act or omission on the part of such parties, other than any
matters relating to Dissenting Shares.
106. Restrictions on Business Activities. Company
is not a party to, nor does Company have any Knowledge of, any Contract, Order
or Proceeding binding upon Company which has or could reasonably be expected to
have the effect of prohibiting or materially impairing any current or currently
anticipated future business practice of Company, any acquisition of property by
Company or the conduct of business by Company as currently conducted or as
currently proposed to be conducted by Company.
107. Governmental Authorization. Company has
obtained each Governmental Authorization (a) pursuant to which Company currently
operates or holds any interest in any of its properties; (b) that is required
for the operation of Company's business or the holding of any such interest; or
(c) to be held by any of Company's employees and that relates to or is
reasonably necessary in connection with Company's business, except where the
failure to obtain or have any such Governmental Authorizations could not
reasonably be expected to have a Company Material Adverse Effect. Each of the
above Governmental Authorizations is listed on Schedule 2.9 of the
Company Disclosure Schedule. Company has delivered to Parent accurate and
complete copies of all such Governmental Authorizations, including all renewals
thereof and all amendments thereto. To the Knowledge of Company, each
Governmental Authorization identified or required to be identified in
Schedule 2.9 of the Company Disclosure Schedule is valid and in full
force and effect.
108. Title to Personal Property.
109. Company has good and marketable title to all of its personal properties,
interests in personal properties and assets reflected in the Company Balance
Sheet or acquired after the Company Balance Sheet Date, which assets are listed
on Schedule 2.10(a) (except properties, interests in properties and
assets sold or otherwise disposed of since the Company Balance Sheet Date in the
ordinary course of business), or with respect to leased properties and assets,
valid leasehold interests, free and clear of all Encumbrances of any kind or
character, except (i) a lien for current taxes not yet due and payable, (ii)
such imperfections of title, liens and easements as do not and will not
materially detract from or interfere with the use of the properties subject
thereto or affected thereby, or otherwise materially impair business operations
involving such properties, and (iii) liens securing debt which are reflected on
the Company Balance Sheet.
110. The plants, property and equipment of Company that are used in the
operations of its business are in good operating condition and repair, subject
to normal wear and tear. All personal properties used in the operations of
Company are reflected in the Company Balance Sheet to the extent GAAP requires
the same to be reflected. Schedule 2.10(b) of the Company Disclosure
Schedule lists all Contracts pursuant to which Company leases personal property
and, to the Company's Knowledge, all leases pursuant to which Company leases
personal property are in good standing and are valid and binding obligations of
Company and, except as identified in Schedule 2.10(b) of Company
Disclosure Schedule, to the Knowledge of Company, there exists no default
thereunder or occurrence or condition that could result in a default thereunder
or termination thereof.
111. Intellectual Property.
112. Company owns (free and clear of all Encumbrances), licenses or has valid and
marketable title in and rights to all Company Intellectual Property that is
used, proposed to be used, or necessary for the conduct of the business of
Company as currently conducted or as proposed to be conducted by Company.
Company has not (i) licensed any of its Intellectual Property in source code
form to any party, (ii) entered into any exclusive agreements relating to its
Intellectual Property with any party, or (iii) entered into any source code
escrow agreements. The source code and system documentation relating to any
software included in the Company Intellectual Property have at all times been
maintained in confidence and have been disclosed only to employees and
consultants having a "need to know" of the contents thereof in connection with
their duties to Company. Such employees and consultants have executed
appropriate confidentiality agreements in connection therewith.
113. Schedule 2.11(b)
114. There is no, nor has there been any, unauthorized use, disclosure,
infringement or misappropriation of any Company Intellectual Property rights, or
any Third Party Intellectual Property Rights, by any third party, including any
employee or former employee of Company. Company has not entered into any
agreement to indemnify any other Person against any charge of infringement of
any Intellectual Property, other than indemnification provisions contained in
purchase orders or license agreements arising in the ordinary course of
business, containing such terms as are typical for the business, services and
products of Company.
115. Company is not, nor will it be as a result of the execution and delivery of
this Agreement or the performance of its obligations under this Agreement, in
breach of any license, sublicense or other agreement to which it is a party
relating to the Company Intellectual Property or Third Party Intellectual
Property Rights.
116. All patents and registered trademarks, service marks and copyrights held by
Company are valid and subsisting. Company is not infringing and has not at any
time infringed (either through the conduct of its business or by the
manufacturing, marketing, licensing, use or sale of its products and services)
any license, patent, copyright, service mark, trademark, trade name, trade
secret or other Intellectual Property or proprietary rights of any other Person
or third party. Company has not received any notice or other communication (in
writing or otherwise) of any actual, alleged, possible or potential infringement
of any Intellectual Property or other proprietary right owned or licensed to any
other Person or third party. Company has not been sued or, to its Knowledge,
threatened to be sued in any Proceeding that involves a claim of infringement or
violation of any Intellectual Property or other proprietary right of any third
party. Company has not brought any Proceeding for infringement of Company
Intellectual Property or breach of any license or agreement involving Company
Intellectual Property against any third party.
117. Company has secured valid written assignments from all consultants and
employees who contributed to the creation or development of Company Intellectual
Property of the rights to such contributions that Company does not already own
by operation of law.
118. Company has taken necessary and appropriate steps to protect and preserve
the confidentiality of all Company Intellectual Property not otherwise protected
by patents, patent applications or copyrights that Company intends to maintain
as a trade secret ("Confidential Information"). All use, disclosure or
appropriation of Confidential Information owned by Company by or to a third
party has been pursuant to the terms of a written agreement between Company and
such third party. All use, disclosure or appropriation of Confidential
Information not owned by Company has been pursuant to the terms of a written
agreement between Company and the owner of such Confidential Information, or is
otherwise lawful.
119. Except as set forth on Schedule 2.11(h) of the Disclosure Schedule,
there are no actions that must be taken by Company within sixty (60) days of the
Closing Date that, if not taken, will result in the loss of any Company
Intellectual Property, including the payment of any application, registration,
issuance, maintenance or renewal fees or the filing of any responses to the
United States Patent and Trademark Office actions, documents, applications or
certificates for the purposes of obtaining, maintaining, perfecting or
preserving or renewing any Company Intellectual Property.
120. Environmental Matters.
121. Company represents and warrants as follows: (i) no methylene chloride
or asbestos is contained in or has been used at or released from the Facilities,
(ii) all Hazardous Materials and wastes have been disposed of in accordance
with all Environmental and Safety Laws, (iii) Company has received no
notice (verbal or written) of any Company noncompliance of the Facilities or its
past or present operations with Environmental and Safety Laws, (iv) no
notices, administrative actions or suits are pending or threatened against the
Company relating to a violation of any Environmental and Safety Laws,
(v) Company is not a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
or state analog statute, arising out of events occurring prior to the Closing
Date, (vi) there have not been in the past, and are not now, any Hazardous
Materials on, under or migrating to or from the Facilities or Property,
(vii) there have not been in the past, and are not now, any underground
tanks or underground improvements at, on or under the Property, including
without limitation, treatment or storage tanks, sumps, or water, gas or oil
wells, (viii) there are no polychlorinated biphenyls (PCBs) deposited,
stored, disposed of or located on the Property or Facilities or any equipment on
the Property containing PCBs at levels in excess of fifty (50) parts per
million, (ix) there is no formaldehyde on the Property or in the
Facilities, nor any insulating material containing urea formaldehyde in the
Facilities, (x) the Facilities and Company's uses and activities therein
have at all times complied with all Environmental and Safety Laws, and
(xi) Company has all the permits and licenses required to be issued under
Federal, State or local laws regarding Environmental and Safety Laws and is in
full compliance with the terms and conditions of those permits.
122. There have been no environmental audits or assessments or occupational heath
studies undertaken by or on behalf of Company or by any Governmental Body with
respect to Company or its business, assets, employees, Property or
Facilities.
123. Taxes.
124. Company has timely filed all Tax Returns that it was required to file, and
such Tax Returns are true, correct and complete in all respects. All Taxes shown
to be payable on such Tax Returns or on subsequent assessments with respect
thereto have been paid in full on a timely basis, and no other Taxes are payable
by Company with respect to any period ending prior to the date of this
Agreement, whether or not shown due or reportable on such Tax Returns, other
than Taxes for which adequate accruals have been provided in the Company Balance
Sheet for the period ended January 31, 2004. The Company Balance Sheet for the
period ended January 31, 2004 reflects adequate accruals in accordance with GAAP
for all unpaid Taxes of Company through January 31, 2004, and the amounts set
forth thereon as deferred Tax assets and/or deferred Tax liabilities have been
determined in accordance with GAAP. The Accounting Statement shall reflect
adequate accruals in accordance with GAAP for all unpaid Taxes of Company
through the Closing Date, and the amounts set forth thereon as deferred Tax
assets and/or deferred Tax liabilities will have been determined in accordance
with GAAP. Company does not have, and at the Closing Date will not have, any
liability for unpaid Taxes accruing after January 31, 2004 except for Taxes
incurred in the ordinary course of business for which adequate reserves have
been established. Company has withheld and paid over all Taxes required to have
been withheld and paid over, and complied with all information reporting and
backup withholding requirements, including maintenance of required records with
respect thereto, in connection with amounts paid owing to any employee,
creditor, independent contractor, or other third party. There are no liens for
Taxes on the properties of Company, other than liens for Taxes not yet due and
payable.
125. Schedule 2.13(b)
126. Company's Tax Returns have never been audited by a Governmental Body, nor is
any such audit in process, pending or threatened (in writing or, to the
Knowledge of the Company, orally). No deficiencies exist or have been asserted
(in writing, or, to the Knowledge of the Company, orally) with respect to Taxes
of the Company, and Company has not received notice (in writing or, to the
Knowledge of the Company, orally) that it has not filed a Tax Return or paid
Taxes required to be filed or paid by it. Company is neither a party to any
action or proceeding for assessment or collection of Taxes, nor has such event
been asserted or threatened (in writing, or, to the Knowledge of the Company,
orally) against the Company or any of its assets. Company has disclosed on its
federal income Tax Returns all positions taken therein that could give rise to a
substantial understatement penalty within the meaning of Code Section 6662.
Company has not participated in a "listed transaction" within the meaning of
Treasury Regulations Section 1.6011-4(b)(2) (determined without regard to
whether such transaction is a "reportable transaction" under such
regulation).
127. Company is not (nor has it ever been) a party to or bound by any tax
indemnity agreement, tax sharing agreement or similar contract. Company is not
(nor has it ever been) a party to any joint venture, partnership, or other
arrangement or contract (either in writing or orally, formally or informally),
which could be treated as a partnership or "disregarded entity" for United
States federal income tax purposes.
128. Company is not obligated under any agreement, contract or arrangement that
may result in the payment of any amount that would not be deductible by reason
of Section 280G, Section 162(m) or Section 404 of the Code.
129. Company is not a party to any safe harbor lease within the meaning of
Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax
Equity and Fiscal Responsibility Act of 1982. Company is not and 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. Company has not been the
"distributing corporation" (within the meaning of Section 355(c)(2) of the
Code) with respect to a transaction described in Section 355 of the Code
within the 3-year period ending as of the date of this Agreement. Company has
not participated in an international boycott as defined in Code
Section 999. Company has not agreed, nor is it required to make, any
adjustment under Code Section 481(a) by reason of a change in accounting
method. Company does not have a permanent establishment in any foreign country,
as defined in any applicable Tax treaty or convention between the United States
of America and such foreign country. Company is in compliance with the terms and
conditions of any applicable Tax exemptions, Tax agreements or Tax orders of any
government to which it may be subject or which it may have claimed, and the
transactions contemplated by this Agreement will not have any adverse effect on
such compliance. All Company Options designated as incentive stock options
qualify as incentive stock options pursuant to Section 422 of the Code.
130. Notwithstanding anything to the contrary in this Agreement or in any other
written or oral understanding or agreement to which the parties hereto are
parties or by which they are bound, each party to this Agreement has been and is
permitted to disclose the tax treatment and tax structure of the Merger
effective no later than the earlier of the date of the public announcement of
discussions relating to the Merger, the date of the public announcement of the
Merger, or the date of the execution of this Agreement (with or without
conditions) to enter into the Merger. This permission to disclose includes the
ability of each party to this Agreement to consult, without limitation of any
kind, any tax advisor (including a tax advisor independent from all other
entities involved in the Merger) regarding the tax treatment or tax structure of
the Merger. The parties to this Agreement acknowledge that this written
authorization does not constitute a waiver by any party of any privilege held by
such party pursuant to the attorney-client privilege or the confidentiality
privilege of Internal Revenue Code Section 7525(a).
131. Employee Benefit Plans.
132. Schedule 2.14(a)
133. None of the Company Employee Plans is a Pension Plan, and neither Company
nor any Member of the Controlled Group has ever sponsored, maintained or
contributed to, or ever been obligated to contribute to, a Pension Plan.
134. None of the Company Employee Plans is a Multiemployer Plan, and neither
Company nor any Member of the Controlled Group has ever contributed to, or ever
been obligated to contribute to, a Multiemployer Plan.
135. Company does not maintain or contribute to any plan that provides health
benefits to an employee after the employee's termination of employment or
retirement except as required under Section 4980B of the Code and
Sections 601 through 608 of ERISA or applicable state or local law.
136. Each Company Employee Plan which is an Employee Benefit Plan complies by its
terms and in operation with the requirements provided by any and all statutes,
orders or governmental rules and regulations currently in effect and applicable
to the Company Employee Plan, including but not limited to ERISA and the Code.
137. All reports, forms and other documents required to be filed with any
government entity or furnished to employees, former employees or beneficiaries
with respect to any Company Employee Plan (including without limitation, summary
plan descriptions, Forms 5500 and summary annual reports) have been timely filed
and furnished and are accurate.
138. Each of the Company Employee Plans that is intended to qualify under Section
401(a) of the Code has been timely amended to incorporate the applicable
provisions of the Uruguay Round Agreements Act of 1994, the Uniformed Services
Employment and Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996, the Taxpayers' Relief Act of 1997, the IRS Restructuring
and Reform Act of 1998, and the Community Renewal Tax Relief Act of 2000 and is
the subject of a favorable determination letter issued by the Internal Revenue
Service after January 1, 1997 approving such plans as so amended. Each trust
maintained pursuant to any such Company Employee Plan has been determined by the
Internal Revenue Service to be exempt from taxation under Section 501 of the
Code. Nothing has occurred since the date of the Internal Revenue Service's
favorable determination letter that could adversely affect the qualification of
the Company Employee Plan and its related trust. Company and each Member of the
Controlled Group have timely amended and operated each of the Company Employee
Plans to comply with the Economic Growth and Tax Relief Reconciliation Act of
2001 and subsequent legislation enacted through the date hereof, and Section 501
of the Code.
139. All contributions for all periods ending prior to the Closing Date
(including periods from the first day of the current plan year to the Closing
Date) have been timely made prior to the Closing Date by Company.
140. All insurance premiums have been paid in full, subject only to normal
retrospective adjustments in the ordinary course, with regard to the applicable
Company Employee Plans for plan years ending on or before the Closing Date.
141. With respect to each Company Employee Plan:
142. no prohibited transactions (as defined in Section 406 or 407 of ERISA
or Section 4975 of the Code) have occurred for which a statutory exemption
is not available;
143. no action or claims (other than routine claims for benefits made in the
ordinary course of Company Employee Plan administration for which Company
Employee Plan administrative review procedures have not been exhausted) are
pending, threatened or imminent against or with respect to the Company Employee
Plan, any employer who is participating (or who has participated) in any Company
Employee Plan or any fiduciary (as defined in Section 3(21) of ERISA), of
the Company Employee Plan;
144. Company has no Knowledge of any facts that could give rise to any such
action or claim;
145. it provides that it may be amended or terminated at any time and, except for
benefits protected under Section 411(d) of the Code, all benefits payable
to current, terminated employees or any beneficiary may be amended or terminated
by Company at any time without liability (other than ordinary administrative
expenses);
146. except as indicated on Schedule 2.14(j), no more than twenty (20%) of the
assets of any Company Employee Plan are currently invested in or, within the
preceding six (6) years, have been invested in a single security, debt,
mortgage, parcel of real estate, partnership or joint venture; and
147. except as indicated in Schedule 2.14(j), no Company Employee Plan or related
trust has been terminated within the current or preceding six (6)
years.
148. Neither Company nor any Member of the Controlled Group has any liability or
is threatened with any liability (whether joint or several) (i) for any
excise tax imposed by Sections 4971, 4975, 4976, 4977 or 4979 of the Code,
or (ii) to a fine under Section 502 of ERISA.
149. All of the Company Employee Plans, to the extent applicable, are in
compliance with the continuation of group health coverage provisions contained
in Section 4980B of the Code and Sections 601 through 608 of ERISA, the
requirements of the Family Medical Leave Act of 1993, as amended, the
requirements of the Health Insurance Portability and Accountability Act of 1996
(including the regulations set forth in Parts 160, 162, and 164 of Title 45 of
the Code of Federal Regulations), the requirements of the Women's Health and
Cancer Rights Act of 1998, the requirements of the Newborns' and Mothers' Health
Protection Act of 1996, and any amendment to each such act, or any similar state
law requirements.
150. Company has delivered or made available to Parent true, correct and complete
copies of: (i) all documents creating or evidencing any Company Employee Plan;
(ii) all reports, forms and other documents required to be filed with any
governmental entity or furnished to employees, former employees or beneficiaries
(including, without limitation, summary plan descriptions, Forms 5500 and
summary annual reports for all plans subject to ERISA, but excluding individual
account statements and tax forms) for the preceding three (3) years; (iii) all
IRS determination, opinion, notification and advisory letters and rulings
relating to any Company Employee Plan; (iv) all applications and correspondence
to or from the IRS, Department of Labor or any other governmental agency with
respect to any Company Employee Plan; and (v) all material written agreements
and contracts relating to each Company Employee Plan or its related trust
including, but not limited to, administrative service agreements, group annuity
contracts and group insurance contracts. There are no negotiations, demands or
proposals which are pending or have been made which concern matters now covered,
or that would be covered, by the type of agreements required to be listed in
Schedule 2.14(a).
151. All expenses and liabilities relating to all of the Company Employee Plans
have been, and will on the Closing Date be fully and properly accrued on
Company's books and records and disclosed in accordance with generally accepted
accounting principles and in Company Employee Plan financial statements.
152. Certain Agreements Affected by the Merger.
Neither the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (a) result in any payment (including,
without limitation, severance, unemployment compensation, golden parachute,
bonus or otherwise) becoming due to any director, officer, agent or employee of
Company or any other third party, (b) materially increase any benefits otherwise
payable by Company or (c) result in the acceleration of the time of payment or
vesting of any such benefits except as required under Code
Section 411(d)(3).
153. Employee Matters.
154. Schedule 2.16(a)
155. Schedule 2.16(b)
156. Company has no collective bargaining agreements, union Contracts or similar
Contracts with any of its employees. There has never been any slowdown, work
stoppage, labor dispute or union organizing activity, or any similar activity or
dispute, materially affecting Company or any of its employees. There is not now
pending, and to the Knowledge of Company no Person has threatened to commence,
any such slowdown, work stoppage, labor dispute or union organizing activity or
any similar activity or dispute, nor has any event occurred, nor does any
condition or circumstance exist, that likely would directly or indirectly give
rise to or provide a basis for the commencement of any such slowdown, work
stoppage, labor dispute or union organizing activity or any similar activity or
dispute.
157. Except as set forth in Schedule 2.16(d) of Company Disclosure
Schedule, the employment of each of Company's employees is terminable by Company
at will; no employee of Company has been granted the right to continued
employment by Company or to any material compensation following termination of
employment with Company; and no employee has any agreement or contract, written
or verbal, regarding his employment. Company has delivered to Parent accurate
and complete copies of all employee manuals and handbooks, policy statements,
employment agreements and other materials relating to the employment of the
current and former employees of Company.
158. To Company's Knowledge, no employees of Company are in violation of any term
of any employment contract, patent disclosure agreement, enforceable
noncompetition agreement, or any enforceable restrictive covenant to a former
employer relating to the right of any such employee to be employed by Company
because of the nature of the business conducted or presently proposed to be
conducted by Company or to the use of trade secrets or proprietary information
of others and the performance of Company's Contracts with its independent
contractors, will not result in any such violation. Company has not received any
notice (written or otherwise) alleging that any such violation has occurred.
Since January 1, 2003, there has been no resignation or termination of any
officer or key employee of Company. To the Knowledge of Company, no officer or
key employee, or any group of employees, intends to terminate his, her or their
employment with Company.
159. Company is in compliance in all material respects with all currently
applicable Legal Requirements respecting employment, discrimination in
employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice. Company has withheld all amounts required by law or by agreement
to be withheld from the wages, salaries, and other payments to employees; and is
not liable for any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing.
160. Company is not liable for any payment to any trust or other fund or to any
Governmental Body, with respect to unemployment compensation benefits, social
security or other benefits or obligations for employees (other than routine
payments to be made in the normal course of business and consistent with past
practice). There are no pending claims against Company under any workers
compensation plan or policy or for long term disability. There are no
controversies pending or, to the Knowledge of Company, threatened, between
Company and any of its employees, which controversies have or could reasonably
be expected to result in a Proceeding, claim, arbitration or investigation
before any Governmental Body.
161. Interested Party Transactions. Company is not
indebted to any director, officer, employee or agent of Company (except for
amounts due as normal salaries and bonuses and in reimbursement of ordinary
expenses), and no such Person is indebted to Company.
162. Insurance. Company has policies of insurance
and bonds of the type and in amounts customarily carried by Persons conducting
businesses or owning assets similar to those of Company, which policies are
listed on Schedule 2.18. There is no material claim pending under any of
such policies or bonds as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or bonds. All premiums due and
payable under all such policies and bonds have been paid and Company is
otherwise in compliance with the terms of such policies and bonds. Company has
no Knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.
163. Compliance With Laws. Company has complied
with, is not in violation of, any Legal Requirements with respect to the conduct
of its business, or the ownership of its assets or operation of its business,
except for such violations or failures to comply as, individually or in the
aggregate, could not be reasonably expected to have a Company Material Adverse
Effect. Company has not received, at any time, any notice or other communication
(in writing or otherwise) from any Governmental Body or any other Person
regarding (i) any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement by Company, or (ii) any
actual, alleged, possible or potential obligation on the part of Company to
undertake, or to bear all or any portion of the cost of, any cleanup or any
remedial, corrective or response action of any nature.
164. Minute Books. All minute books of Company have
been made available to Parent and the minute books contain a complete and
accurate summary of all meetings of directors and shareholders or actions by
written consent since the time of incorporation of Company through the date of
this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects. There are no material actions taken by
Company or its board of directors (or any committee thereof) or shareholders
which are not summarized or described in the minutes of Company provided to
Parent.
165. Brokers' and Finders' Fees. Company has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
166. Voting Agreements; Irrevocable Proxies.
Certain officers, directors and/or affiliates of Company listed on
Schedule 2.22 (collectively the "Named Shareholders") have
executed concurrently with the execution of this Agreement, an Affiliate Voting
Agreement substantially in the form attached hereto as Exhibit B
("Affiliate Voting Agreement"), and an Irrevocable Proxy attached thereto
as Attachment A ("Irrevocable Proxies") pursuant to which each such
Company Shareholder have agreed in writing to vote for approval of the
Merger.
167. Vote Required. The affirmative vote of the
holders of Company Capital Stock who collectively hold (i) more than fifty
percent (50%) of the outstanding Company Series D Preferred Stock and Company
Series E Preferred Stock, voting together as a single class, (ii) more than
fifty percent (50%) of the outstanding Company Preferred Stock; and (iii) more
than fifty percent (50%) of the outstanding Company Common Stock on the record
date set for the Company Shareholders Meeting is the only vote of the holders of
any of Company's Capital Stock necessary to approve this Agreement and the
transactions contemplated hereby.
168. Board Approval. The Board of Directors of
Company has (a) approved this Agreement and the Merger, (b) determined that the
Merger is in the best interests of the shareholders of Company and is on terms
that are fair to such shareholders, and (c) recommended that the shareholders of
Company approve this Agreement and the Merger.
169. Inventory. The inventories shown on the
Company Financial Statements or thereafter acquired by Company consist of items
of a quantity and quality useable or salable in the ordinary course of business.
Since the Company Balance Sheet Date, Company has continued to replenish
inventories in a normal and customary manner consistent with past practices.
Company has not received written or oral notice that it will experience in the
foreseeable future any difficulty in obtaining, in the desired quantity and
quality and at a reasonable price and upon reasonable terms and conditions, the
raw materials, supplies or component products required for the manufacture,
assembly or production of its products. The values at which inventories are
carried reflect the inventory valuation policy of Company, which is consistent
with its past practice and in accordance with GAAP applied on a consistent
basis. Since the Company Balance Sheet Date, due provision was made on the books
of Company in the ordinary course of business consistent with past practices to
provide for all slow-moving, obsolete, or unusable inventories to their
estimated useful or scrap values and such inventory reserves are adequate to
provide for such slow-moving, obsolete or unusable inventory and inventory
shrinkage. As of the date hereof, Company has no inventory in the distribution
channel and Company has no commitments to purchase inventory.
170. Accounts Receivable. Subject to any reserves
set forth in the Company Financial Statements, the accounts receivable shown on
the Company Financial Statements represent, to the Knowledge of Company, bona
fide claims against debtors for sales and other charges, and are not subject to
discount except for normal cash and immaterial trade discounts. The amount
carried for doubtful accounts and allowances disclosed in the Company Financial
Statements was calculated in accordance with GAAP and, in a manner consistent
with prior periods, is sufficient to provide for any losses which may be
sustained on realization of the receivables.
171. Customers and Suppliers. No customer which
individually accounted for more than five percent (5%) of Company's gross
revenues during the twelve (12) months prior to the Execution Date, and no
material supplier of Company, has cancelled or otherwise terminated or made any
written threat to Company to cancel or otherwise terminate its relationship with
Company, or has materially decreased its services or supplies to Company below
historical levels, in the case of any such supplier, or its usage of the
services or products of Company below historical levels, in the case of any such
customer, and to Company's Knowledge, no such supplier or customer intends to
cancel or otherwise terminate its relationship with Company or to materially
decrease its services or supplies to Company or its usage of the services or
products of Company below historical levels, as the case may be. Company has not
knowingly breached, so as to provide a benefit to such customer or supplier that
was not intended by the parties, any agreement with, or engaged in any
fraudulent conduct with respect to, any customer or supplier of
Company.
172. Material Contracts. Except for the Contracts
described in Schedule 2.28 (collectively, the "Material
Contracts"), Company is not a party to or bound by any material Contract,
including without limitation:
173. any distributor, sales, advertising, agency or manufacturer's representative
Contract;
174. any continuing Contract for the purchase of materials, supplies, equipment
or services involving in the case of any such Contract more than $15,000 over
the life of the Contract;
175. any Contract that expires or may be renewed at the option of any Person
other than Company so as to expire more than one (1) year after the date of this
Agreement;
176. any trust indenture, mortgage, promissory note, loan agreement or other
Contract for the borrowing of money, any currency exchange, commodities or other
hedging arrangement or any leasing transaction of the type required to be
capitalized in accordance with GAAP;
177. any Contract for capital expenditures in excess of $15,000 in the
aggregate;
178. any Contract limiting the freedom of Company to engage in any line of
business or to compete with any other Person as that term is defined in the
Exchange Act, as defined herein, or any confidentiality, secrecy or non-
disclosure Contract;
179. any confidentiality, secrecy or non-disclosure Contract, which individually
or in the aggregate, materially affects or could be reasonably anticipated to
materially affect the business or operations of Company;
180. any Contract pursuant to which Company is a lessor of real property or any
machinery, equipment, motor vehicles, office furniture, fixtures or other
personal property;
181. any Contract with any Person with whom Company does not deal at arm's
length;
182. any Contract of guarantee, support, indemnification, assumption or
endorsement of, or any similar commitment with respect to, the obligations,
liabilities (whether accrued, absolute, contingent or otherwise) or indebtedness
of any other Person; or
183. any Contract that cannot be terminated by the Company (or Parent or
Surviving Corporation after the Closing) within thirty (30) days or less prior
notice without a fee in excess of $5,000.
184. No Breach of Material Contracts. All Material
Contracts are in written form. Company has performed all of the obligations
required to be performed by it and is entitled to all benefits under, and is not
alleged to be in default in respect of any Material Contract. Each of the
Material Contracts is in full force and effect, and there exists no default or
event of default or event, occurrence, condition or act, with respect to Company
or, to Company's Knowledge, with respect to the other contracting party, which,
with the giving of notice, the lapse of time or the happening of any other event
or conditions, would become a default or event of default under any Material
Contract. True, correct and complete copies of all Material Contracts (as
amended) have been delivered to Parent.
185. Material Third Party Consents. Schedule
2.30 lists all Contracts that require a novation or consent to the Merger or
change of control, as the case may be, prior to the Effective Time so that such
Contracts may remain in full force and effect after the Closing (the
"Contracts Requiring Novation or Consent to Change of Control") and sets
forth every Contract Requiring Novation or Consent to Change of Control which,
if no novation occurs or if no consent to the Merger or change of control is
obtained, would have a Company Material Adverse Effect on Parent's ability to
operate the business in the same manner as the business was operated by Company
prior to the Effective Time.
186. Real Property.
187. Company currently does not and has never owned any real property.
188. Schedule 2.31(b)
189. With respect to the Leased Premises, (i) there are no pending or, to
the Knowledge of Company, threatened condemnation proceedings, suits or
administrative actions relating to any such parcel or other matters affecting
adversely the current use, occupancy or value thereof, (ii) all
improvements, buildings and systems on any such parcel are in good repair and
safe for their current occupancy and use, (iii) there are no Contracts
granting to any party or parties the right of use or occupancy of any such
parcel, and there are no parties (other than Company) in possession of any such
parcel, (iv) the Company has obtained all material licenses, permits, variances,
approvals and authorizations required from all governmental authorities or
private parties having jurisdiction over the Leased Premises for Company's use,
operation and occupancy of the Leased Premises, (v) there are no
outstanding options or rights of first refusal or similar rights to purchase any
such parcel or any portion thereof or interest therein, (vi) all facilities
located on each such parcel are supplied with utilities and other services
necessary for their ownership, operation or use, currently or as currently
proposed by Company, all of which services are adequate in accordance with all
applicable laws, ordinances, rules and regulations, and (vii) each such
parcel abuts on and has adequate direct vehicular access to a public road and
there is no pending or, to the Knowledge of Company, threatened termination of
such access.
190. Information Statement. The information
relating to Company included in the Rule 506 Documents shall not, at the time
the Rule 506 Information Statement is mailed to the Company Shareholders and at
all times subsequent thereto (through and including the Effective Time), contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. If, at any time prior to the Effective Time, any event or
information should be discovered by Company which should be set forth in an
amendment to the Rule 506 Documents, the Company shall promptly inform Parent.
Notwithstanding the foregoing, the Company makes no representation, warranty or
covenant with respect to any information supplied by Parent and relating to
Parent which is contained in the Rule 506 Documents.
191. Export Control Laws. The Company has conducted
its export transactions in accordance with applicable provisions of United
States export control laws and regulations, including but not limited to the
Export Administration Act and implementing Export Administration Regulations.
Without limiting the foregoing, the Company represents and warrants
that:
192. The Company has obtained all export licenses and other approvals required
for its exports of products, software and technologies from the United
States;
193. The Company is in compliance with the terms of all applicable export
licenses or other approvals;
194. There are no pending or, to the Company's Knowledge, threatened claims
against Company with respect to such export licenses or other approvals;
195. To the Company's Knowledge there are no actions, conditions or circumstances
pertaining to the Company's export transactions that may give rise to any future
claims; and
196. No consents or approvals for the transfer of export licenses to Parent are
required, or such consents and approvals can be obtained expeditiously without
material cost.
197. Bank Accounts. Schedule 2.34
accurately sets forth, with respect to each account maintained by or for the
benefit of the Company at any bank or other financial institution:
198. the name and location of the institution at which such account is
maintained;
199. the name in which such account is maintained and the account number of such
account;
200. a description of such account and the purpose for which such account is
used;
201. the balance in such account as of December 31, 2003 and March 8, 2004; and
202. the names of all individuals authorized to draw on or make withdrawals from
such account.
203. No Trading. Since February 1, 2004 through and
including the date hereof (excluding any shares of Parent Common Stock issued to
the Company Shareholders pursuant to this Agreement), neither the Company, nor,
to the Company's Knowledge, the Company Shareholders or any of their respective
beneficiaries, subsidiaries or affiliates have purchased, sold (including any
short sale) or otherwise traded any securities of the Parent, other than as
contemplated by this Agreement.
204. Representations Complete. None of the
representations or warranties made by the Company herein or in any Exhibit or
Schedule hereto, including the Company Disclosure Schedule, or in any
certificate furnished by the Company pursuant to this Agreement, when all such
documents are read together in their entirety, contains or will contain at the
Effective Time any untrue statement of a material fact, or omits or will omit at
the Effective Time to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.
205. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
206. Organization, Standing and Power. Parent
and Merger Sub are both corporations, each duly organized, validly existing and
in good standing under the laws of their respective jurisdictions of
organization. Parent and Merger Sub each have the corporate power to own their
respective properties and to carry on their respective businesses as now being
conducted and as proposed to be conducted and are each duly qualified to do
business and are in good standing in each jurisdiction in which the failure to
be so qualified and in good standing would be considered a Parent Material
Adverse Effect on Parent. Neither Parent nor Merger Sub is in violation of any
of the provisions of its respective Certificate of Incorporation, Articles of
Incorporation, Bylaws or equivalent organizational documents.
207. Capital Structure. The authorized capital
stock of Parent consists of 5,000,000 shares of preferred stock, $.001 par value
per share, of which none are issued and outstanding, and 30,000,000 shares of
common stock, $0.001 par value per share, of which 23,907,012 shares were issued
and outstanding as of the close of business on February 24, 2004. The shares of
Parent Common Stock to be issued pursuant to the Merger will be duly authorized,
validly issued, fully paid, and non-assessable.
208. Authority.
209. Parent and Merger Sub each have all requisite corporate power and authority
to enter into this Agreement and the other Transaction Agreements to which it is
a party and to consummate the Transactions. The execution and delivery of this
Agreement by Parent and Merger Sub and the other Transaction Agreements to which
it is a party and the consummation of the Transactions have been duly authorized
by all necessary corporate action on the part of each of Parent, other than the
approval of the Merger by the Parent Stockholders, and Merger Sub. This
Agreement and the other Transaction Agreements to which it is a party have been
(or will be as of the Closing) duly executed and delivered by each of Parent and
Merger Sub and constitutes (or will constitute as of the Closing) the valid and
binding obligations of Parent and Merger Sub enforceable against each in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws and equitable principles
relating to or limiting creditors' rights generally and by general principles of
equity.
210. The execution and delivery of this Agreement by Parent and Merger Sub do
not, and the consummation of the Transactions will not, conflict with, or result
in any violation of, or default under (with or without notice or lapse of time,
or both), or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of a benefit under (i) any provision of the
Certificate of Incorporation or Bylaws of Parent (other than the limitation on
the amount of authorized Parent Common Stock set forth in Parent's Certificate
of Incorporation) or Articles of Incorporation or Bylaws of Merger Sub, as
amended, or (ii) any material mortgage, indenture, lease, Contract, Order,
or Legal Requirements applicable to Parent, Merger Sub or their respective
properties or assets.
211. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Body, is required by or with
respect to Parent or Merger Sub in connection with the execution and delivery of
this Agreement by Parent and Merger Sub or the consummation by Parent and Merger
Sub of the transactions contemplated hereby, except for (i) the filing of
the Agreement of Merger, together with the required officers' certificates, as
provided in Section 1.2, (ii) the filing of a Form 8-K with the SEC,
(iii) any filings as may be required under applicable Legal Requirements,
(iv) such filings as may be required under HSR or other Antitrust Laws,
(v) the filing with the Nasdaq Stock Market of a Notification Form for
Listing of Additional Shares with respect to the shares of Parent Common Stock
issuable upon conversion of the Company Common Stock in the Merger and upon
exercise of the options formerly under the Company Stock Option Plan and
converted into Parent Options, (vi) the filing of a registration statement
on Form S-8 with the SEC, or other applicable form covering the shares of Parent
Common Stock issuable pursuant to outstanding options formerly under the Company
Stock Option Plan and converted into Parent Options, (vii) the filing of a
registration statement on Form S-3 with the SEC, and (viii) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not have a Material Adverse Effect on Parent and would
not prevent, materially alter or delay any of the transactions contemplated by
this Agreement.
212. SEC Documents; Financial Statements. Parent
has made available to Company each statement, report, registration statement
(with the prospectus in the form filed pursuant to Rule 424(b) of the Securities
Act), definitive proxy statement, and other filing filed with the SEC by Parent
since December 31, 2003 (collectively, the "Parent SEC Documents") and
will promptly make available to Company all Parent SEC documents filed prior to
the Effective Time. In addition, Parent has made available to Company all
exhibits to the Parent SEC Documents filed prior to the date hereof, and will
promptly make available to Company all exhibits to any additional Parent SEC
Documents filed prior to the Effective Time. As of their respective filing
dates, the Parent SEC Documents complied in all material respects with the
requirements of the Exchange Act and the Securities Act. The financial
statements of Parent, including the notes thereto, included in the Parent SEC
Documents (the "Parent Financial Statements") were complete and correct
in all material respects as of their respective dates, complied as to form in
all material respects with applicable accounting requirements and with the
published rules and regulations of the SEC with respect thereto as of their
respective dates, and have been prepared in accordance with GAAP applied on a
basis consistent throughout the periods indicated and consistent with each other
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, included in Quarterly Reports on Form 10-Qs, as permitted by Form
10-Q of the SEC). The Parent Financial Statements fairly present the
consolidated financial condition and operating results of Parent as of the dates
and for the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments).
213. Litigation. Except as set forth in the Parent
SEC Documents, there is no Proceeding pending before any Governmental Body
against Parent or any of its properties or officers or directors (in their
capacities as such), that could reasonably be expected to have a Parent Material
Adverse Effect.
214. Broker's and Finders' Fees. Parent has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.
215. CONDUCT PRIOR TO THE EFFECTIVE TIME
216. Conduct of Business of Company. During the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Effective Time, Company agrees (except to
the extent expressly contemplated by this Agreement or as consented to in
writing by Parent), to carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted. Company further
agrees to pay all debts and Taxes when due, subject (a) to good faith
disputes over such debts or Taxes and (b) to Parent's consent to the filing
of material Tax Returns (which consent shall not be unreasonably withheld or
delayed), to pay or perform other obligations when due, and to use all
reasonable efforts consistent with past practice and policies to preserve intact
its present business organizations, keep available the services of its present
officers and key employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others having business
dealings with it, to the end that its goodwill and ongoing businesses shall be
unimpaired at the Effective Time. Company agrees to promptly notify Parent of
any event or occurrence not in the ordinary course of its business, and of any
event which could have a Company Material Adverse Effect.
217. Restriction on Conduct of Business of Company.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, except as
set forth in Schedule 4.2 to the Company Disclosure Schedule or as
expressly contemplated by this Agreement, Company shall not do, cause or permit
any of the following, without the prior written consent of Parent:
218. Charter Documents
219. Dividends; Changes in Capital Stock
220. Stock Option Plans
221. Material Contracts
222. Issuance of Securities
223. Intellectual Property
224. Exclusive Rights
225. Dispositions
226. Indebtedness
227. Leases
228. Payment of Obligations
229. Capital Expenditures
230. Insurance
231. Termination or Waiver
232. Employee Benefit Plans; New Hires; Pay Increases
233. Severance Arrangements
234. Lawsuits
235. Acquisitions
236. Taxes
237. Revaluation
238. Other
239. No Solicitation. Company and its subsidiaries
and the officers, directors, employees or other agents of Company and its
subsidiaries will not, directly or indirectly, (a) take any action to solicit,
initiate or encourage any Takeover Proposal or (b) engage in negotiations with,
or disclose any nonpublic information relating to Company or any of it
subsidiaries to, or afford access to the properties, books or records of Company
or any of its subsidiaries to, any person that has advised Company that it may
be considering making, or that has made, a Takeover Proposal. Company shall not,
and shall not permit any of its officers, directors, employees or other
representatives to agree to or endorse any Takeover Proposal. Company will
promptly notify Parent after receipt of any Takeover Proposal or any notice that
any person is considering making a Takeover Proposal or any request for
nonpublic information relating to Company or any of its subsidiaries or for
access to the properties, books or records of Company or any of its subsidiaries
by any person that has advised Company that it may be considering making, or
that has made, a Takeover Proposal and will keep Parent fully informed of the
status and details of any such Takeover Proposal notice, request or any
correspondence or communications related thereto and shall provide Parent with a
true and complete copy of such Takeover Proposal notice or request or
correspondence or communications related thereto, if it is in writing, or a
written summary thereof, if it is not in writing.
240. ADDITIONAL AGREEMENTS
241. Registration Exemption; Blue Sky. Company
shall cooperate with Parent with respect to any qualification for exemption from
registration under federal securities laws, or for qualification or exemption
under state securities or "blue sky" laws, pursued by Parent with respect to the
shares of Parent Common Stock to be issued pursuant to this Agreement. Without
limiting the generality of the foregoing, the Company shall promptly: (a)
provide to Parent all pertinent information concerning the Company, the Company
Capital Stock and the Company Shareholders; and (b) promptly review and comment
on any documents or drafts supplied by Parent.
242. Access to Information; Disclosure Schedule
Updates.
243. Upon reasonable notice, Company shall afford Parent and its accountants,
counsel and other representatives, reasonable access during normal business
hours during the period prior to the Effective Time or the earlier termination
of this Agreement in accordance with its terms, provided that such access does
not cause disruption to the day-to-day operation of Company, to (i) all of
Company's properties, books, contracts, commitments and records, and
(ii) all other information concerning the business, properties and
personnel of Company as Parent may reasonably request. Company agrees to provide
to Parent and its accountants, counsel and other representatives copies of
internal financial statements promptly upon request.
244. Subject to compliance with applicable law, from the date hereof until the
Effective Time or the earlier termination of this Agreement in accordance with
its terms, Company and Parent shall confer on a regular and frequent basis to
report operational matters of materiality and the general status of ongoing
operations of Company.
245. No information or knowledge obtained in any investigation after the
Execution Date pursuant to this Section 5.2 shall affect or be deemed to
modify any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger; provided, however that
Company shall promptly inform Parent of any such information or knowledge
obtained in its investigation which would reasonably be likely to have a Company
Material Adverse Effect. Additionally, during the period from the date hereof
and prior to the Effective Time or the earlier termination of this Agreement in
accordance with its terms, Company shall promptly notify Parent in writing
of:
246. the discovery of any event, condition, fact or circumstance which causes,
caused, constitutes or constituted a breach of any representation or warranty
made by Company in this Agreement or any other agreement contemplated hereby to
the extent that such event, condition, fact or circumstance would cause the
condition in Section 6.3(a) of this Agreement not to be satisfied;
247. any material breach of any covenant or obligation by Company; and
248. any event, condition, fact or circumstance that may make the timely
satisfaction of any of the covenants or conditions set forth in this Article 5
or Article 6 impossible or unlikely.
249. If any event, condition, fact or circumstances that is required to be
disclosed pursuant to Section 5.2(c) requires any material change in
Company's Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming Company's Disclosure Schedule
were dated as of the date of the occurrence, existence or discovery of such
event, condition, fact or circumstances, then Company shall promptly deliver to
Parent an update to its Disclosure Schedule specifying such change (a
"Disclosure Schedule Update"). Notwithstanding anything therein to the
contrary, no such update shall be deemed to supplement or amend Company's
Disclosure Schedule for the purpose of (i) determining the accuracy of any of
the representations and warranties made by such party in this Agreement, or (ii)
determining whether any of the conditions set forth in Article 6 has been
satisfied.
250. Company shall provide Parent and its accountants, counsel and other
representatives reasonable access, during normal business hours during the
period prior to the Effective Time, to all of Company's Tax Returns and other
records and workpapers relating to Taxes, provided that such access does not
cause disruption to the day-to-day operation of Company, and shall provide to
Parent and its representatives the following information promptly upon the
request of Parent: (i) the types of Tax Returns being filed by Company in
each taxing jurisdiction, (ii) the year of the commencement of the filing
of each such type of Tax Return, (iii) all closed years with respect to
each such type of Tax Return filed in each jurisdiction, (iv) all material
Tax elections filed in each jurisdiction by Company, (v) any deferred
intercompany gain with respect to transactions to which Company has been a
party, and (vi) receipts for any Taxes paid to foreign Tax authorities.
251. Confidentiality. The parties acknowledge that
Parent and Company have previously executed a non-disclosure agreement dated
April 1, 2003 (the "Confidentiality Agreement"), a copy of which is
attached hereto as Exhibit C, which Confidentiality Agreement shall
continue in full force and effect in accordance with its terms.
252. Public Disclosure. Company and Parent will
consult with each other before issuing any press releases or other public
statements and neither party, without the other party's prior consent, may issue
press releases or otherwise make any public statements or make any other public
(or non-confidential) disclosures (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby
(which consent shall not be unreasonably withheld), except as may be required by
law or by obligations pursuant to any listing agreement with any national
securities exchange or with the Nasdaq Stock Market.
253. Consents; Cooperation. Company shall use
reasonable best efforts to furnish Parent, on or prior to the Closing Date, with
evidence satisfactory to it of the consent or approval of those Persons whose
consent or approval shall be required in connection with the Merger under the
contracts of Company set forth, or required to be set forth, on
Schedule 2.30.
254. Affiliate Voting
Agreement and Proxies; Holder Representation and Lock-Up Agreement.
255. Company shall use its reasonable best efforts, on behalf of Parent, and
pursuant to the request of Parent, to cause all Named Shareholders to execute
and deliver to Parent an Affiliate Voting Agreement substantially in the form of
Exhibit B and an Irrevocable Proxy (the "Affiliate Voting
Agreement") substantially in the form of Attachment A attached thereto
concurrently with the execution of this Agreement.
256. Company shall use its reasonable best efforts to deliver or cause to be
delivered to Parent no later than five (5) days prior to the Closing from each
Company Shareholder, and from each holder of a vested Company Option (or a
Company Option which will vest on or prior to the Closing Date), an executed
Holder Representation and Lock-Up Agreement (the "Holder Representation and
Lock-Up Agreement") substantially in the form attached hereto as
Exhibit D.
257. Legal Requirements. Each of Parent and Company
shall take all reasonable actions necessary to comply promptly with all Legal
Requirements which may be imposed on them with respect to the consummation of
the transactions contemplated by this Agreement and will promptly cooperate with
and furnish information to any party hereto necessary in connection with any
such requirements imposed upon such other party in connection with the
consummation of the transactions contemplated by this Agreement and will take
all reasonable actions necessary to obtain (and will cooperate with the other
parties hereto in obtaining) any consent, approval, order or authorization of,
or any registration, declaration or filing with, any Governmental Body or other
Person, required to be obtained or made in connection with the taking of any
action contemplated by this Agreement.
258. Company Options.
259. Company Options
260. Assignment of Repurchase Options
261. Employees
262. Employment Offers
263. Employment and Noncompetition Agreements
264. Director Nomination
265. Termination of Employee Plans.
266. If requested by Parent, Company shall, immediately prior to the Closing
Date, terminate any one or more of the Company Employee Plans.
267. In the event Parent requests that any of the Company Employee Plans be
terminated, Company shall adopt resolutions and shall take all other actions
necessary to effect the termination of any such plans, to be effective no later
than the Closing Date and shall provide to Parent executed resolutions by the
Board of Directors of Company authorizing the termination of any such
plans.
268. Escrow Agreement. On or before the Effective
Time, the Escrow Agent, the Shareholders' Agent (as defined in Article 8
hereto), Company and Parent will execute the Escrow Agreement contemplated by
Article 8 in substantially the form attached hereto as Exhibit G
("Escrow Agreement").
269. Form S-8. Parent agrees to use commercially
reasonable efforts to file, no later than thirty (30) days after the Closing
(provided that Parent has received within five (5) days after the Closing all
option documentation relating to the assumed Company Options), a registration
statement on Form S-8 under the Securities Act covering the shares of
Parent Common Stock issuable pursuant to assumed Company Options (or any
successor or other appropriate forms) or on another appropriate form of
registration statement for any such shares of Parent Common Stock which are not
registrable on Form S-8and shall use its reasonable best efforts
to maintain the effectiveness of such registration statement or registration
statements (and maintain the current status of the prospectus or prospectuses
contained therein) for so long as such options remain outstanding. Company will
cooperate and assist Parent in the preparation of such registration
statement(s).
270. Expenses. All costs and expenses incurred in
connection with this Agreement, the Agreement of Merger, the other Transaction
Agreements and the Transactions shall be paid by the party incurring such
expense; provided, however, (a) the Company shall pay the fees and
expenses of the outside accountants and auditors for the audit and preparation
of the Company Financial Statements (the "Accountant Fees") (b) if the
Merger is consummated, the Company shall not incur more than $100,000 ("Legal
Fee Cap") in legal fees and expenses related to the Transactions (the
"Legal Fees"). Any Legal Fees incurred by Company in excess of the Legal
Fee Cap or any transaction fees accruing or payable following Closing that were
not included in the Accounting Statement and the calculation of the Closing Date
Net Assets shall be the obligation of the Company Shareholders. Company shall
present to Parent at the Closing a certificate ("Legal Fee Certificate"),
duly executed by the President of Company setting forth the final amount of all
legal fees and expenses incurred by the Company in connection with this
Agreement, the Agreement of Merger, the other Transaction Agreements and the
Transactions. After the Closing, if Company or Surviving Corporation receives
any invoices for (i) the amount of the Legal Fees in excess of the Legal Fee Cap
(which were not set forth in the Legal Fee Certificate), (ii) and Accountant
Fees, or (iii) any fees or expenses , payable to third parties, relating to
services performed in connection with the Transactions that are accrued by the
Company prior to Closing, either the Parent or it may, with Parent's written
approval, pay such fees; provided, however, that the amount of any such payment
(whether paid by Surviving Corporation, Company or Parent) shall constitute
"Parent Damages" recoverable from the Escrow Fund pursuant to the Escrow
Agreement.
271. Treatment as Reorganization. Prior to the
Effective Time, each party shall use its best efforts to cause the Merger to
qualify as a "reorganization" within the meaning of Section 368(a) of the Code,
and will not take any action that could cause the Merger not to so qualify. Each
party shall not take any action after the Effective Time that could cause the
Merger not to qualify as a reorganization under Section 368(a) of the Code;
provided, that it is specifically acknowledged and agreed that Parent may cause
the Surviving Corporation to be merged with and into Parent or with and into an
entity disregarded for federal income tax purposes that is wholly-owned by
Parent. Following the Merger, Parent will comply with the record-keeping and
information filing requirements of Section 1.368-3 of the Treasury Regulations
with respect to the Merger.
272. Best Efforts and Further Assurances. Each of
the parties to this Agreement shall use its reasonable best efforts to
effectuate the transactions contemplated hereby and to fulfill and cause to be
fulfilled the conditions to closing under this Agreement. Each party hereto, at
the reasonable request of another party hereto, shall execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby.
273. Takeover Statutes. If any Takeover Statute
shall become applicable to the transaction contemplated hereby, Company and the
members of the Board of Directors of Company shall grant such approvals and take
such actions as are necessary so that the Merger and the transactions
contemplated hereby may be commenced as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such statute or regulation in the transaction contemplated hereby, except, in
each such case, to the extent required in the exercise of the fiduciary duties
of the Board of Directors of Company under applicable law as advised by
independent counsel.
274. Notices. Company shall give all notices and
other information required to be given to the employees of Company, any
collective bargaining unit representing any group of employees of Company, and
any applicable government authority under the WARN Act, the National Labor
Relations Act, the Internal Revenue Code, the Consolidated Omnibus Budget
Reconciliation Act, and other applicable law in connection with the transactions
provided for in this Agreement.
275. Waivers of Rights of First Refusal. Company
shall cause any Company Shareholders or other parties with rights of first
refusal, preemptive rights, rights of first offer, co-sale rights, or other
similar rights with respect to the Company Capital Stock, to waive such rights
prior to the Closing.
276. Listing of Additional Shares. Parent shall,
prior to the Effective Time, cause all shares of Parent Common Stock to be
issued pursuant to the terms of this Agreement to be approved for listing on the
Nasdaq National Market.
277. Further Assurances. Parent, Merger Sub and
Company shall use commercially reasonable best efforts to effectuate the
Transactions contemplated hereby and to fulfill and cause to be fulfilled the
conditions to closing under this Agreement. Each party hereto, at the reasonable
request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for effecting completely the consummation of this Agreement and the
transactions contemplated hereby
278. FIRPTA Certificate. Company shall, prior to
the Closing Date, provide Parent with a properly executed FIRPTA Notification
Letter, substantially in the form of Exhibit H attached hereto, which
states that shares of capital stock of Company do not constitute "United States
real property interests" under Section 897(c) of the Code, for purposes of
satisfying Parent's obligations under Treasury Regulation Section 1.1445-
2(c)(3). In addition, simultaneously with delivery of such Notification Letter,
Company shall have provided to Parent, as agent for Company, a form of notice to
the Internal Revenue Service in accordance with the requirements of Treasury
Regulation Section 1.897-2(h)(2) and substantially in the form of
Exhibit I attached hereto, along with written authorization for Parent to
deliver such notice form to the Internal Revenue Service on behalf of Company
upon the Closing of the Merger.
279. Resignation of Directors and Officers. The
directors and officers of Company in office immediately prior to the Effective
Time shall have resigned as directors and officers, as applicable, of Company
effective as of the Effective Time.
280. Issuance of Restricted Securities; Shareholders'
Consent.
281. The Company shall take all action necessary in accordance with the CGCL and
its Articles of Incorporation and Bylaws to call, give notice of, convene and
hold a meeting of the Company's Shareholders (the "Company Shareholders
Meeting") or, if requested by Parent, to secure the written consent of its
Company Shareholders as soon as possible but no later than forty-five (45) days
following the date of this agreement. The Company shall consult with Parent
regarding the date of the Company Shareholders Meeting and shall not postpone or
adjourn (other than for the absence of a quorum) the Company Shareholders
Meeting without the consent of Parent. The Company shall use its reasonable best
efforts to solicit from the Company Shareholders proxies or consents in favor of
the Merger and shall take all other action necessary or advisable to secure the
vote or consent of Shareholders required to effect the Merger.
282. The Parent, in consultation with the Company, will prepare an Information
Statement in compliance with the requirements under the CGCL and Rule 506 under
the Securities Act (the "Rule 506 Information Statement"), which shall
also include an offering circular prepared by Parent, which shall comply as to
form and substance in all material respects with the applicable provisions of
the Securities Act, the Blue Sky Laws and all rules and regulations promulgated
thereunder (the "Offering Circular," and, collectively with the Rule 506
Information Statement, the "Rule 506 Documents") to be used in connection
with obtaining the approval by the Company Shareholders of this Agreement. The
Company shall not distribute the Rule 506 Documents without Parent's approval;
provided, that Parent shall in no way be responsible for any of the content of
the Rule 506 Documents except for the Offering Circular and content in the Rule
506 Information Statement as it pertains to and is supplied by Parent. Each of
the Company and Parent shall ensure that the Rule 506 Documents do 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 therein, in
light of the circumstances under which they were made, not misleading with
respect to the Company or Parent, as the case may be. For these purposes, the
Company may, in consultation with Parent, amend or supplement the Rule 506
Documents, to the extent necessary, to incorporate all information and
disclosures required by Rule 506 promulgated under the Securities Act. Whenever
either of Company or Parent, as the case may be, obtains any knowledge of any
event that should be set forth in an amendment or a supplement to the Rule 506
Documents or Parent disclosure documents, the Company or Parent, as the case may
be, will promptly inform Parent or the Company, as the case may be, and will
cooperate in mailing to the Company Shareholders as requested by Parent such
amendment or supplement.
283. Company, acting through its Board of Directors, shall, in accordance with
its fiduciary duties and all applicable legal requirements and Company's charter
and bylaws:
284. cause the Rule 506 Information Statement, the Offering Circular, and any
other disclosure documents deemed appropriate by Parent to be mailed to the
Company Shareholders promptly upon completion thereof and duly call, give notice
of, convene and hold as soon as practicable a meeting (or, if requested by
Parent, solicit an action by written consent in lieu thereof) of such Company
Shareholders for the purpose of voting to approve and adopt this Agreement to
the extent required in accordance with legal requirements, and use its best
efforts to obtain such Company Shareholder approval;
285. recommend approval and adoption of this Agreement and the other transaction
agreements to which Company is a party by the Company Shareholders and include
in the Rule 506 Information Statement such recommendation, and take all lawful
action to solicit such approval.
286. Parent may at its discretion request Company to pursue either a Company
Shareholders Meeting or a solicitation of written consents, and Parent'
requesting of either such method shall not preclude a request for the other. The
timing and procedures of such meeting (or consent solicitation) shall be subject
to the reasonable approval of Parent and, shall be completed as promptly as
practicable.
287. Registration Rights Agreement. Parent and each
Company Shareholder shall execute and deliver a Registration Rights and
Investment Representations Agreement in the form of Exhibit J attached
hereto ("Registration Rights Agreement").
288. Transfer Restrictions; No Trading. Each share
of Parent Common Stock issued at the Closing to any Company Shareholder shall be
subject to the transfer restrictions described, and all other provisions set
forth, in the form of the Holder Representation and Lock-Up Agreement as if all
such restrictions and provisions were set forth in full in the body of this
Agreement, whether or not the Company Shareholder executes and delivers the
Holder Representation and Lock-Up Agreement.
289. Spreadsheet. The Company shall deliver a
spreadsheet, (the "Exchange Ratio Spreadsheet") substantially in the form
attached hereto as Schedule 5.26, which spreadsheet shall be
certified as complete and correct by the Chief Executive Officer and Chief
Financial Officer of the Company as of the Closing and which shall separately
list, as of the Closing, all Company Shareholders and their respective
addresses, the number of shares of Company Stock held by such persons (including
whether such shares are Company Common Stock or Company Preferred Stock) and the
respective certificate numbers, the date of acquisition of such shares, the
number of shares of Parent Common Stock to be issued to each holder, the number
of shares, if any, to be paid by the Company Shareholder in settlement of
outstanding Company Shareholder loans, the number of shares of Parent Common
Stock to be deposited into the Escrow Fund on behalf of each holder, and such
other information relevant thereto or which the Exchange Agent may reasonably
request. The Company shall deliver to Parent the Spreadsheetthree (3) business daysprior to the Closing
Date.
290. CONDITIONS TO THE MERGER
291. Conditions to Obligations of Each Party to
Effect the Merger. The respective obligations of each party to this
Agreement to consummate and effect this Agreement and the transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Effective Time of each of the following conditions, any of which may be waived,
in writing, by agreement of all the parties hereto:
292. Shareholder Approval
293. No Injunctions or Restraints; Illegality
294. Governmental Approval
295. Escrow Agreement
296. Additional Conditions to Obligations of
Company. The obligations of Company to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Company:
297. Representations, Warranties and Covenants
298. Certificate of Parent
299. Registration Rights Agreement
300. Opinion
301. No Material Adverse Changes
302. Additional Conditions to the Obligations of
Parent. The obligations of Parent to consummate and effect this Agreement
and the transactions contemplated hereby shall be subject to the satisfaction at
or prior to the Effective Time of each of the following conditions, any of which
may be waived, in writing, by Parent:
303. Representations, Warranties and Covenants
304. Certificates of Company
305. Third Party Consents and Waivers and Terminations
306. Injunctions or Restraints on Conduct of Business
307. Opinion
308. Tax Opinion
309. [Intentionally Omitted].
310. No Material Adverse Changes
311. Issuance of Parent Common Stock
312. Parent Stockholders holding not less than 50% of the Parent Common Stock
have approved the Merger, the issuance of the Parent Common Stock in the Merger,
and an amendment to the Parent's Certificate of Incorporation increasing the
amount of authorized Parent Common Stock to an amount sufficient for the
issuance of Parent Common Stock pursuant to this Agreement.
313. Company Shareholders holding not less than 90% of the Company Capital Stock
shall have executed and delivered to Parent a Registration Rights
Agreement;
314. The Rule 506 Documents shall have been sent to the Company Shareholders in
accordance with Section 5.23(a) via mail, courier service, facsimile,
electronic mail or in person; and
315. Parent shall reasonably be satisfied that there are no more than 35 Company
Shareholders who are not "accredited investors," and that each Company
Shareholder who is not an "accredited investor" shall, either alone or through
appropriate representation by a "purchaser representative" (as such terms used
in the Securities Act and the rules promulgated thereunder), have such knowledge
and experience in financial and business matters that such Company Shareholder
is capable of evaluating the merits and risks of the prospective investment in
the Parent Common Stock; provided that the execution and delivery of the
Registration Rights Agreement with no exceptions to the representations and
warranties and a customary investor questionnaire, with reasonably acceptable
answers thereon, shall be deemed to satisfy this condition; but provided
further, that notwithstanding the above, in the event Parent has a reasonable
belief that any relevant representation or the questionnaire is materially
untrue or contains a material misstatement of fact, Parent may demand additional
reasonable evidence from such Company Shareholder as to such Company
Shareholder's investor status.
316. Certificates of Good Standing
317. Dissenters
318. Holder Representation and Lock-Up Agreements
319. Exchange Ratio Spreadsheet
320. TERMINATION, AMENDMENT AND WAIVER
321. Termination. At any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the Company Shareholders, this Agreement may be
terminated:
322. by mutual consent duly authorized by each party's Board of Directors in
accordance with this Agreement;
323. by either Parent or Company, if the Closing shall not have occurred on or
before September 1, 2004 (provided, a later date may be agreed upon in writing
by the parties hereto, and provided further that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party
whose action or failure to act has been the cause or resulted in the failure of
the Merger to occur on or before such date and such action or failure to act
constitutes a breach of this Agreement);
324. by Parent, if (i) Company shall materially breach any obligation or
agreement hereunder and such breach shall not have been cured within fifteen
(15) days of receipt by Company of written notice of such breach provided that
the right to terminate this Agreement by Parent under this Section 7.1(c) shall
not be available to Parent where Parent is at that time in breach of this
Agreement, (ii) the Board of Directors of Company shall have withdrawn or
modified its recommendation of this Agreement or the Merger in a manner adverse
to Parent or recommended, endorsed, accepted or agreed to a Takeover Proposal or
shall have resolved to do any of the foregoing, (iii) Company or any of its
officers, directors or other agents shall have failed to comply with
Section 4.3, or (iv) for any reason Company fails to call and hold the
Company Shareholders Meeting as required by Section 5.23 hereof;
325. by Company, if (i) Parent shall materially breach any obligation or
agreement hereunder and such breach shall not have been cured within fifteen
(15) days following receipt by Parent of written notice of such breach, provided
that the right to terminate this Agreement by Company under this
Section 7.1(d) shall not be available to Company where Company is at that
time in breach of this Agreement or (ii) the Board of Directors of the Parent
shall have withdrawn or modified its recommendation that its stockholders
approve, as required, the Merger, the issuance of shares of Parent Common Stock
pursuant to the Merger and/or the amendment to the Parent's Certificate of
Incorporation, increasing the amount of authorized Parent Common Stock; or
326. by Parent or Company if (i) any permanent injunction or other order of a
court or other competent authority preventing the consummation of the Merger
shall have become final and nonappealable or (ii) if any required approval of
the Company Shareholders shall not have been obtained by reason of the failure
to obtain the required vote upon a vote held at a duly held Company Shareholders
Meeting or at any adjournment thereof (provided that the right to terminate this
Agreement under this Section 7.1(e)(ii) shall not be available to Company
where the failure to obtain Company Shareholder approval shall have been caused
by the action or failure to act of Company and such action or failure to act
constitutes a breach by Company of this Agreement).
327. Effect of Termination. In the event of
termination of this Agreement as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Parent or Company or their respective officers, directors, stockholders,
shareholders or affiliates, except to the extent that such termination results
from the breach by a party hereto of any of its covenants set forth in this
Agreement; provided that the provisions of Section 5.3 (Confidentiality),
Section 5.13 (Expenses), this Section 7.2 and Article 9 shall
remain in full force and effect and survive any termination of this
Agreement.
328. Amendment. The boards of directors of the
parties hereto may cause this Agreement to be amended at any time by execution
of an instrument in writing signed on behalf of each of the parties hereto;
provided that an amendment made subsequent to adoption of the Agreement by the
Company Shareholders shall not (a) alter or change the amount or kind of
consideration to be received on conversion of the Company Capital Stock,
(b) alter or change any term of the Certificate of Incorporation of the
Surviving Corporation to be effected by the Merger, or (c) alter or change
any of the terms and conditions of the Agreement, if such alteration or change
would materially adversely affect the holders of Company Capital Stock.
329. Extension; Waiver. At any time prior to the
Effective Time, any party hereto may, to the extent legally allowed,
(a) extend the time for the performance of any of the obligations or other
acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties made to such party contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions for the benefit of such party contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
330. ESCROW AND INDEMNIFICATION
331. Indemnification.
332. Subject to the limitations set forth in this Article 8, the Company
Shareholders shall indemnify and hold harmless Parent and its officers,
directors, agents and employees, and each Person, if any, who controls or may
control Parent within the meaning of the Securities Act (hereinafter referred to
individually as a "Parent Indemnified Person" and collectively as
"Parent Indemnified Persons") from and against any and all Damages
(collectively, "Parent Damages") arising out of (i) any
misrepresentation or breach of or default in connection with any of the
representations, warranties, covenants and agreements given or made by Company
in this Agreement, the Company Disclosure Schedules or any exhibit or schedule
to this Agreement; (ii) any Dissenting Share Payments; (iii) any Parent's
Shortfall as calculated by Section 1.7 above, (iv) any Legal Fees in excess of
the Legal Fee Cap that has not otherwise been subtracted from the Total Value of
Share Consideration pursuant to Section 1.7(a), (v) any Accountant Fees, or (vi)
any fees or expenses , payable to third parties, relating to services performed
in connection with the Transactions that are accrued by the Company prior to
Closing. Subject to Section 8.1(b), the Escrow Fund shall be the sole and
exclusive security for this indemnity obligation of the Company Shareholders.
333. Notwithstanding anything herein to the contrary, nothing in this Agreement
shall limit the liability (i) of Company for any breach of any covenant if
the Merger does not close, or (ii) of any Company Shareholder (or holder of
Company Options or Company Warrants) in connection with any breach by such
Person of such Person's Affiliate Voting Agreement or the Holder Representation
and Lock-Up Agreement. Additionally, notwithstanding anything herein to the
contrary, the limitations of the Company Shareholders provided in this Article 8
shall not apply in the event of a claim based upon fraud or willful or criminal
misconduct.
334. Limits on Indemnification. Notwithstanding the
foregoing, the Company Shareholders shall have no liability under Section 8.1(a)
and Parent may not receive any shares from the Escrow Fund unless and until an
Officer's Certificate or Certificates for an aggregate amount of Parent Damages
in excess of $50,000 (the "Damage Threshold") has been delivered to the
Shareholders' Agent and to the Escrow Agent; provided, however, that after an
Officer's Certificate or Certificates for an aggregate of $50,000 in Parent
Damages has been delivered, Parent shall be entitled to receive Escrow Shares
equal in value to the full amount of Parent Damages identified in such Officer's
Certificate or Certificates; provided, further that the indemnification
obligations of the Company Shareholders set forth in Section 8.1(a)(ii), (iii),
(iv), (v) and (vi) above shall be deducted from the Escrow Fund without regard
to the Damage Threshold in this Section 8.2.
335. Escrow Fund. As soon as practicable after the
Effective Time, the Escrow Shares shall be registered in the name of, and the
Escrow Shares shall be deposited with the Escrow Agent; such deposit to
constitute the "Escrow Fund" and to be governed by the terms set forth
herein and in the Escrow Agreement attached hereto as Exhibit G. The
Escrow Fund shall be the sole and exclusive remedy available to compensate
Parent pursuant to the indemnification obligations of the Company
Shareholders.
336. Payment for Parent Damages. Upon Parent's
delivery of an Officer's Certificate identifying Parent Damages to the Escrow
Agent, as provided in Section 8.6 below, and the determination that such
amount is payable pursuant to this Article 8, Parent shall receive shares from
the Escrow Fund equal in value to the full amount of Parent Damages; provided,
however, that in no event shall Parent receive more than the number of shares of
Parent Common Stock originally placed in the Escrow Fund. For purposes of
determining the amount of Parent Damages pursuant to this Section 8.4,
representations, warranties or covenants shall be interpreted without giving
effect to any limitations or qualifications as to "materiality," such that such
limitations or qualifications shall not affect the dollar amount measure of any
Parent Damages.
337. Escrow Period. The Escrow Period shall
terminate for all matters on the one (1) year anniversary of the Effective Time;
provided, that a portion of the Escrow Shares, which is necessary to satisfy any
unsatisfied claims specified in any Officer's Certificate theretofore delivered
to the Escrow Agent prior to the termination of the Escrow Period with respect
to facts and circumstances existing prior to the expiration of the Escrow
Period, shall remain in the Escrow Fund until such claims have been resolved.
338. Claims upon Escrow Fund.
339. Upon receipt by the Escrow Agent on or before the last day of the Escrow
Period of a certificate signed by any officer of Parent (an "Officer's
Certificate") stating, that Parent Damages exist and specifying in
reasonable detail the individual items of such Parent Damages included in the
amount so stated, the date each such item was paid, or properly accrued or
arose, the nature of the misrepresentation, breach of warranty or claim to which
such item is related, the Escrow Agent shall, subject to the provisions of
Section 8.7 and 8.8 below, deliver to Parent out of the Escrow Fund, as
promptly as practicable, Parent Common Stock held in the Escrow Fund having a
value equal to such Parent Damages.
340. For the purpose of compensating Parent for its Parent Damages pursuant to
this Agreement, the Parent Common Stock in the Escrow Fund shall be valued at
the price per share equal to the average of the closing prices for a share of
Parent Common Stock as quoted on the Nasdaq Stock Market for the ten (10)
trading days immediately preceding and ending on the trading day that is one (1)
trading day prior to the date the claim is resolved (the "Escrow Stock
Price").
341. If the value to be distributed to Parent with respect to each Company
Shareholder is not evenly divisible by the Escrow Stock Price, the number of
Escrow Shares to be delivered to Parent will be rounded down to the next highest
number of shares. The fractional interests remaining will be aggregated with
future claims against the Escrow Fund, and will be delivered to Parent when any
fractional shares in the aggregate are equal to a whole number of shares. Upon
the release of the Escrow Fund, Parent shall monetize any remaining fractional
interests in exchange for a pro rata payment of the Escrow Stock Price, to be
paid as provided with respect to fractional shares in the manner set for in
Section 1.6.
342. Objections to Claims. At the time of delivery
of any Officer's Certificate to the Escrow Agent, a duplicate copy of such
Officer's Certificate shall be delivered to the Shareholders' Agent (defined in
Section 8.9 below) and for a period of forty-five (45) days after such
delivery to the Escrow Agent of such Officer's Certificate, the Escrow Agent
shall make no delivery of Parent Common Stock or other property pursuant to
Section 8.6 hereof unless the Escrow Agent shall have received written
authorization from the Shareholders' Agent to make such delivery. After the
expiration of such forty-five (45) day period, the Escrow Agent shall make
delivery of the Parent Common Stock in the Escrow Fund in accordance with
Section 8.6 hereof, provided that no such payment or delivery may be made
if the Shareholders' Agent shall object in a written statement to the claim made
in the Officer's Certificate, and such statement shall have been delivered to
the Escrow Agent and to Parent prior to the expiration of such forty-five (45)
day period.
343. Resolution of Conflicts; Arbitration.
344. In case the Shareholders' Agent shall so object in writing to any claim or
claims by Parent made in any Officer's Certificate, Parent shall have forty-five
(45) days after receipt by the Escrow Agent of an objection by the Shareholders'
Agent to respond in a written statement to the objection of the Shareholders'
Agent. If after such forty-five (45) day period there remains a dispute as to
any claims, the Shareholders' Agent and a representative of Parent shall attempt
in good faith for sixty (60) days to agree upon the rights of the respective
parties with respect to each of such claims. If the Shareholders' Agent and
Parent should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties and shall be furnished to the Escrow Agent.
The Escrow Agent shall be entitled to rely on any such memorandum and shall
distribute the Parent Common Stock or other property from the Escrow Fund in
accordance with the terms thereof.
345. If no such agreement can be reached after good faith negotiation, either
Parent or the Shareholders' Agent may, by written notice to the other, demand
arbitration of the matter pursuant to Section 9.9 hereto, unless the amount of
the damage or loss is at issue in pending litigation with a third party, in
which event arbitration shall not be commenced until such amount is ascertained
or both parties agree to arbitration; and in either such event the matter shall
be settled by arbitration. In the event the arbitrators appointed hereunder have
not rendered a decision with forty-five (45) days after the conclusion of
hearings, either party may have the matter determined by equitable proceedings
or an action for declaratory relief in any court of competent jurisdiction.
Notwithstanding anything to the contrary contained herein, the arbitrators shall
apply and follow all applicable Legal Requirements in making his or her
decision. The decision of the arbitrators as to the validity and amount of any
claim in such Officer's Certificate shall be binding and conclusive upon the
parties to this Agreement, and notwithstanding anything in Section 8.7
hereof, the Escrow Agent shall be entitled to act in accordance with such
decision and make or withhold payments out of the Escrow Fund in accordance
therewith.
346. Judgment upon any award rendered by the arbitrators may be entered in any
court having jurisdiction. For purposes of this Section 8.8(c), in any
arbitration hereunder in which any claim or the amount thereof stated in the
Officer's Certificate is at issue, Parent shall be deemed to be the "Non-
Prevailing Party," unless the arbitrators award Parent more than one-half (1/2)
of the amount in dispute, plus any amounts not in dispute; otherwise, the
Company Shareholders for whom shares of Company Common Stock otherwise issuable
to them have been deposited in the Escrow Fund shall be deemed to be the "Non-
Prevailing Party." The Non-Prevailing Party to an arbitration shall pay its own
expenses, the fees of each arbitrator, the administrative fee of Judicial
Arbitration and Mediation Services, Inc. ("JAMS") and the expenses,
including without limitation, attorneys' fees and costs, reasonably incurred by
the other party to the arbitration. If the Company Shareholders are deemed to be
the Non-Prevailing Party, such expenses and fees shall be paid first from the
Escrow Fund, without regard to the Damage Threshold (as defined in Section 8.2
hereof), and second, by Parent.
347. Shareholders' Agent.
348. Wei-Ti Liu shall be constituted and appointed as agent ("Shareholders'
Agent") for and on behalf of the Company Shareholders to give and receive
notices and communications, to authorize delivery to Parent of the Parent Common
Stock or other property from the Escrow Fund in satisfaction of claims by
Parent, to object to such deliveries, to agree to, negotiate, enter into
settlements and compromises of, and 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 Shareholders' Agent for
the accomplishment of the foregoing. Such agency may be changed by the holders
of a majority in interest of the Escrow Fund from time to time upon not less
than ten (10) days' prior written notice to Parent. No bond shall be required of
the Shareholders' Agent, and the Shareholders' Agent shall receive no
compensation for his services. Notices or communications to or from the
Shareholders' Agent shall constitute notice to or from each of the Company
Shareholders.
349. The Shareholders' Agent shall not be liable for any act done or omitted
hereunder as Shareholders' Agent while acting in good faith and in the exercise
of reasonable judgment, and any act done or omitted pursuant to the advice of
counsel shall be conclusive evidence of such good faith. The Company
Shareholders shall severally indemnify the Shareholders' Agent and hold him
harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Shareholders' Agent and arising out
of or in connection with the acceptance or administration of his duties
hereunder.
350. The Shareholders' Agent shall have reasonable access to information about
Company and the reasonable assistance of Company's officers and employees for
purposes of performing its duties and exercising its rights hereunder, provided
that the Shareholders' Agent shall treat confidentially and not disclose any
nonpublic information from or about Company to anyone (except on a need to know
basis to individuals who agree to treat such information confidentially).
351. Wei-Ti Liu hereby agrees to act as the Shareholders' Agent pursuant to the
terms hereof.
352. Actions of the Shareholders' Agent. A
decision, act, consent or instruction of the Shareholders' Agent shall
constitute a decision of all Company Shareholders for whom shares of Parent
Common Stock otherwise issuable to them are deposited in the Escrow Fund and
shall be final, binding and conclusive upon each such Company Shareholder, and
the Escrow Agent and Parent may rely upon any decision, act, consent or
instruction of the Shareholders' Agent as being the decision, act, consent or
instruction of each and every such Company Shareholder. To the extent that
either the Escrow Agent or Parent acts in accordance with a decision, act,
consent or instruction of the Shareholders' Agent, Escrow Agent and Parent are
hereby relieved from any liability with respect to such act, to any Person,
including the Company Shareholders.
353. Third-Party Claims. In the event Parent
becomes aware of a third-party claim which Parent believes may result in a
demand against the Escrow Fund, Parent shall promptly notify the Shareholders'
Agent of such claim, and the Shareholders' Agent and the Company Shareholders
for whom shares of Parent Common Stock otherwise issuable to them are deposited
in the Escrow Fund shall be entitled, at their expense, to participate in any
defense of such claim. Parent shall have the right, in its sole discretion, to
settle any such claim; provided, however, that Parent may not effect the
settlement of any such claim without the consent of the Shareholders' Agent,
which consent shall not be unreasonably withheld. In the event that the
Shareholders' Agent has consented to any such settlement, the Shareholders'
Agent shall have no power or authority to object under Section 8.7 or any
other provision of this Article 8 to the amount of any claim by Parent against
the Escrow Fund for indemnity with respect to such settlement.
354. Voting Rights and Cash Distributions With Respect
to Escrow Shares. The Company Shareholders shall retain full voting power
over all Escrow Shares. Any cash dividends, dividends payable in securities or
other distributions of any kind (but excluding any shares of Parent capital
stock received upon a stock split or stock dividend), shall be promptly
distributed by the Escrow Agent to the beneficial holder of the Escrow Shares to
which such distribution relates, by check mailed via first class mail, to the
Company Shareholders at their addresses, and in the percentage interests set
forth in the Escrow Agreement. Any shares of Parent Common Stock received by the
Escrow Agent upon a stock split made in respect of any securities in the Escrow
Fund shall be added to the Escrow Fund and become a part thereof. The provisions
of Article 8 shall be adjusted to appropriately reflect any stock split or
reverse stock split.
355. GENERAL PROVISIONS
356. Non-Survival at Effective Time. The
representations and warranties set forth in Article 2 will survive until the
first anniversary of the Closing. The representations and warranties set forth
in Article 3 will survive until the Effective Time. The agreements set forth in
this Agreement shall terminate at the Effective Time, except that the agreements
set forth in Article 1, Section 5.3 (Confidentiality), 5.6 (Affiliate
Voting Agreement and Proxies; Holder Representation and Lock-Up Agreement), 5.10
(Termination of Employee Plans), 5.12 (Form S-8), 5.13 (Expenses) 5.20 (Further
Assurances), 5.25 (Transfer Restrictions), 7.4 (Amendment), Article 8 and this
Article 9 shall survive the Effective Time and the Closing.
357. 
358. if to Parent, to:
359. if to Company, or to the Shareholders' Agent:
360. Interpretation. When a reference is made in
this Agreement to Exhibits, such reference shall be to an Exhibit to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to the Execution Date.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
361. Counterparts; Facsimile Delivery. This
Agreement may be executed in one or more counterparts and delivered by
facsimile, all of which shall be considered one and the same agreement and shall
become effective when one or more counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all parties
need not sign the same counterpart.
362. Entire Agreement; Nonassignability; Parties in
Interest. This Agreement and the documents and instruments and other
agreements specifically referred to herein or delivered pursuant hereto,
including the Exhibits, the Schedules, including the Company Disclosure Schedule
and the Parent Disclosure Schedule, (a) constitute the entire agreement among
the parties with respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof, except for the Confidentiality Agreement,
which shall continue in full force and effect, and shall survive any termination
of this Agreement or the Closing, in accordance with its terms, (b) are not
intended to confer upon any other Person any rights or remedies hereunder,
except as set forth in Sections 1.6, 1.7, 1.8, 1.9, 5.8, 5.9, and 5.10 and (c)
shall not be assigned by operation of law or otherwise except as otherwise
specifically provided.
363. Severability. In the event that any provision
of this Agreement, or the application thereof, becomes or is declared by a court
of competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable
provision.
364. Remedies Cumulative. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy.
365. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of California without
reference to such state's principles of conflicts of law, except with respect to
the Merger and its effects which shall be governed by the laws of California.
366. Dispute Resolution.
367. Other than as set forth elsewhere in this Agreement, any dispute,
controversy or claim between the parties relating to, or arising out of or in
connection with, this Agreement (or any subsequent agreements or amendments
thereto), including as to its existence, enforceability, validity,
interpretation, performance, breach or damages, including claims in tort,
whether arising before or after the termination of this Agreement, shall be
settled only by binding arbitration pursuant to the administered by and in
accordance with the then-existing JAMS Arbitration Rules and Procedures (the
"Rules"), subject to the following:
368. The arbitration shall take place in Sunnyvale, California.
369. There shall be three (3) arbitrators, who shall be selected under the normal
procedures prescribed in the Rules, except that one such arbitrator shall be a
certified public accountant and one (1) such arbitrator (who shall chair the
arbitration panel) shall be a member of the American Board of Trial Advocates or
the American College of Trial Lawyers.
370. Subject to legal privileges, each party shall be entitled to discovery in
accordance with the Federal Rules of Civil Procedure.
371. At the arbitration hearing, each party may make written and oral
presentations to the arbitrator, present testimony and written evidence and
examine witnesses.
372. The arbitrators' decision shall be in writing, shall be binding and final
and may be entered and enforced in any court of competent jurisdiction.
373. No party shall be eligible to receive, and the arbitrators shall not have
the authority to award, exemplary or punitive damages.
374. Each party to the arbitration shall pay one-half of the fees and expenses of
the arbitrators and JAMS.
375. The arbitrators shall not have the power to amend this Agreement.
376. Notwithstanding the foregoing, the parties agree that the dispute resolution
provisions of this Section 9.9 shall not apply to the following agreements, each
of which shall be subject to the dispute resolution procedures, if any, set
forth in each such agreement: Affiliate Voting Agreement, Confidentiality
Agreement, Holder Representation and Lock-Up Agreement, and Registration Rights
Agreement.
377. Rules of Construction. The parties hereto
agree that they have been represented by counsel during the negotiation,
preparation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.

[Signature page follows]

IN WITNESS WHEREOF, Parent, Merger Sub, Company, and Shareholders' Agent have
caused this Agreement to be executed and delivered by their respective officers
thereunto duly authorized, all as of the date first written above.

PARENT:

PLX Technology, Inc.

By:/s/ Michael J. Salameh

Name: Michael J. Salameh

Title: President



COMPANY:

NetChip Technology, Inc.

By: /s/ Wei-Ti Liu

Name: Wei-Ti Liu

Title: President



MERGER SUB:

NC Acquisition Sub, Inc.

By: /s/ Michael J. Salameh

Name: Michael J. Salameh

Title: President



SHAREHOLDERS' AGENT

Wei-Ti Liu

/s/ Wei-Ti Liu





[SIGNATURE PAGE TO AGREEMENT AND PLAN OF
REORGANIZATION]

APPENDIX 1

For the purposes of this Agreement (including this Appendix 1):

"Accountant Fees" shall have the meaning specified in Section
5.13.

"Accounting Statement" shall have the meaning specified in
Section 1.7(a).

"Acquisition Transaction" shall mean any transaction (other than the
transactions contemplated by this Agreement) involving: (a) the sale or other
disposition of all or any portion of Company's business or assets (other than in
the ordinary course of business); (b) the issuance, sale or other disposition,
by Company or any shareholder of Company, of (i) any capital stock of
Company (beneficially or of record), (ii) any option, call, warrant or
right (whether or not immediately exercisable) to acquire any Company Capital
Stock of Company, or (iii) any security, instrument or obligation that is
or may become convertible into or exchangeable for any Company Capital Stock;
(c) any acquisition, merger, consolidation, business combination, share exchange
or similar transaction, or any other acquisition involving Company; or (d) any
dissolution of Company.

"Affiliate Voting Agreement" shall have the meaning specified in
Section 2.22.

"Agreement" shall mean the Agreement and Plan of Reorganization to
which this Appendix 1 is attached (including the Company Disclosure Schedule and
all other Schedules and Exhibits thereto), as may be amended by the parties from
time to time.

"Agreement of Merger" shall have the meaning specified in
Section 1.2.

"Antitrust Laws" shall mean the HSR, the Sherman Act, as amended, the
Clayton Act, as amended, the Federal Trade Commission Act, as amended, and any
other Legal Requirements or Orders that are designed to prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade.

"Baseline Net Assets" shall mean $1,870,699. (Calculated as the sum of
(i) the remainder, as of December 31, 2003, of the Company's current assets less
its current liabilities, plus (ii) the sum of any payments of bonuses or other
payments not made in the ordinary course of business to officers or other
individuals during the quarter ending December 31, 2003).

"Business Sale" shall have the meaning specified in Section
1.8(b).

"Certificates" shall have the meaning specified in
Section 1.9(c)(i).

"CGCL" shall mean the California General Corporations Law, as
amended.

"Change-in-Control of Parent" shall mean (a) the acquisition of Parent
by another entity or any transaction or series of related transactions in which
the Parent's stockholders of record as constituted immediately prior to such
transaction or series of related transactions will, immediately after such
transaction or series of related transactions (by virtue of securities issued in
such transaction or series of related transactions) fail to hold at least 50% of
the voting power of the resulting or surviving corporation following such
transaction or series of related transactions; or (b) a sale of all or
substantially all of the assets of Parent.

"Closing" shall have the meaning specified in Section 1.2.

"Closing Date" shall have the meaning specified in
Section 1.2.

"Closing Date Net Assets" shall have the meaning specified in
1.7(a).

"Code" shall mean the Internal Revenue Code of 1986, as amended.

"Company" shall mean NetChip Technology, Inc., a California
corporation.

"Company Balance Sheet" shall have the meaning specified in
Section 2.4.

"Company Balance Sheet Date" shall have the meaning specified in
Section 2.5.

"Company Capital Stock" shall mean all outstanding shares of Company
Common Stock, Company Preferred Stock and all outstanding shares of any other
capital stock of Company.

"Company Common Stock" shall mean shares of the common stock of
Company, no par value.

"Company Disclosure Schedule" shall have the meaning specified in the
preamble to Article 2.

"Company Employee Plans" shall have the meaning specified in
Section 2.14(a).

"Company Financial Statements" shall have the meaning specified in
Section 2.4.

"Company Material Adverse Effect" shall mean any change, event or
effect that is materially adverse to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of Company and its subsidiaries, taken as a
whole or any material adverse effect on Company's ability to comply with or
perform any covenant or obligation under this Agreement and the other
Transaction Agreements, or have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the Transactions; provided,
however, that none of the following shall be deemed in and of themselves, either
alone or in combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Company
Material Adverse Effect: (a) any adverse change, effect, event, occurrence,
state of facts or development attributable to conditions generally affecting the
industries as a whole in which Company participates, the U.S. economy as a whole
or the foreign economies as a whole in any locations where Company has material
operations or sales; or (b) any adverse change, effect, event, occurrence, state
of facts or development arising from or relating to the public announcement of,
pendency or consummation of the transactions contemplated hereby or compliance
with the terms of, or the taking of any action required by, this Agreement.

"Company Options" shall mean all issued and outstanding options
(including commitments to grant options, but excluding Company Warrants) to
purchase or otherwise acquire Company Stock (whether or not vested) held by any
person or entity.

"Company Preferred Stock" shall mean the shares of the Company Series
A Preferred Stock, Company Series B Preferred Stock, Company Series C Preferred
Stock, Company Series D Preferred Stock and Company Series E Preferred
Stock.

"Company Products" shall mean (a) the products that the Company
currently manufactures, markets, sells or licenses as of the Closing Date, (b)
such other products that are currently in development as of the Closing Date,
and (c) subsequent versions (including any upgrades or updates) of the products
covered by the foregoing clauses (a) and (c).

"Company Series A Preferred Stock" shall mean the shares of the Series
A preferred stock of the Company, no par value.

"Company Series B Preferred Stock" shall mean the shares of the Series
B preferred stock of the Company, no par value.

"Company Series C Preferred Stock" shall mean the shares of the Series
C preferred stock of the Company, no par value.

"Company Series D Preferred Stock" shall mean the shares of the Series
D preferred stock of the Company, no par value.

"Company Series E Preferred Stock" shall mean the shares of the Series
E preferred stock of the Company, no par value.

"Company Shareholder" shall mean all holders or owners (beneficial or
otherwise) of Company Capital Stock as of the Closing Date.

"Company Shareholder Meeting" shall have the meaning specified in
Section 5.23(a).

"Company Stock Option Plan" shall have the meaning specified in
Section 1.6(c).

"Company Warrants" shall mean any issued and outstanding warrants to
purchase Company Stock that are not exercised or cancelled prior to the
Effective Time.

"Confidential Information" shall have the meaning specified in
Section 2.11(g)

"Confidentiality Agreement" shall have the meaning specified in
Section 5.3.

"Contract" shall mean, with respect to any Person, any written, oral,
implied or other agreement, contract, understanding, arrangement, instrument,
note, guaranty, indemnity, representation, warranty, deed, assignment, power of
attorney, certificate, purchase order, work order, insurance policy, benefit
plan, commitment, covenant, assurance, obligation, promise or undertaking of any
nature to which such Person is a party or by which its properties or assets
maybe bound or affected or under which it or its business, properties or assets
receive benefits.

"Contracts Requiring Novation or Consent to Change of Control" shall
have the meaning specified in Section 2.30.

"Damage Threshold" shall have the meaning specified in
Section 8.2.

"Damages" shall mean the amount of any loss, damage, injury, decline
in value, Liability, claim, fee (including any legal fee, expert fee, accounting
fee or advisory fee), demand, settlement, judgment, award, fine, penalty, Tax,
charge, cost (including any cost of investigation) or expense of any nature
whatsoever. Damages related to a breach of the representations relating to
Company Financial Statements (other than with respect to nonrecurring penalties
or fines that are liabilities of Company) or a failure to receive accounts
receivables shall take into account the revenue reflected by that receivable as
it was taken into account by Buyer in valuing Company.

"Disclosure Schedule Update" shall have the meaning specified in
Section 5.2(d).

"Dissenting Share Payments" shall have the meaning specified in
Section 1.6(f).

"Dissenting Shareholder" shall have the meaning specified in
Section 1.6(f).

"Dissenting Shares" shall have the meaning specified in
Section 1.6(f).

"Earn-Out Payment" shall have the meaning specified in
Section 1.8(a).

"Earn-Out Payment Disagreement Notice" shall have the meaning
specified in Section 1.8(d).

"Earn-Out Period" shall have the meaning specified in
Section 1.8(a).

"Earn-Out Report" shall have the meaning specified in
Section 1.8(c).

"Earn-Out Share Exchange Ratio" shall mean a number equal to the
quotient obtained by dividing (i) the Earn-Out Shares by (ii) the Total
Outstanding Common Stock.

"Earn-Out Shares" shall have the meaning specified in
Section 1.8(c).

"Earn-Out Stock Price" shall mean the average of the closing prices
for a share of Parent Common Stock as quoted on the Nasdaq Stock Market for the
ten (10) trading days immediately preceding and ending on the trading day that
is one (1) trading day prior to the one year anniversary of the Closing Date;
provided, however, that if such average reported closing price is less than
$7.00, then the Earn-Out Stock Price shall be $7.00.

"Effective Time" shall have the meaning specified in
Section 1.2.

"Employee Benefit Plan" shall have the meaning specified in
Section 3(3) of ERISA.

"Employment and Noncompetition Agreement" shall have the meaning
specified in Section 5.9(b).

"Encumbrance" shall mean any lien, pledge, hypothecation, charge,
mortgage, security interest, encumbrance, equity, trust, equitable interest,
claim, preference, right of possession, lease, tenancy, licensee, encroachment,
covenant, infringement, interference, Order, proxy, option, right of first
refusal, preemptive right, community property interest, legend, defect,
impediment, exception, reservation, limitation, impairment, imperfection of
title, condition or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).

"Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.

"Environmental and Safety Laws" shall mean any federal, state or local
laws, ordinances, codes, regulations, rules, policies and orders that are
intended to assure the protection of the environment, or that classify,
regulate, call for the remediation of, require reporting with respect to, or
list or define air, water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or which are intended
to assure the safety of employees, workers or other persons, including the
public.

"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.

"Escrow Agent" shall mean US Bank Trust, National Association (or
another institution selected by Parent with the reasonable consent of Company)
and its successors and assigns.

"Escrow Agreement" shall have the meaning specified in
Section 5.11.

"Escrow Shares" shall have the meaning specified in
Section 1.9(c)(iii).

"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

"Exchange Agent" shall have the meaning specified in
Section 1.9(a).

"Exchange Ratio Spreadsheet" shall have the meaning specified in
Section 5.26.

"Execution Date" shall have the meaning specified in the first
paragraph of the Agreement.

"Facilities" shall mean all buildings and improvements on the
Property.

"First Earn-Out Tranche" shall have the meaning specified in Section
1.8.

"GAAP" shall mean United States generally accepted accounting
principals, consistently applied.

"Governmental Authorization" shall mean any: permit, license,
certificate, franchise, concession, approval, consent, ratification, permission,
clearance, confirmation, endorsement, waiver, certification, designation,
rating, registration, qualification or authorization that is issued, granted,
given or otherwise made available by or under the authority of any Governmental
Body or pursuant to any Legal Requirement; or right under any Contract with any
Governmental Body.

"Governmental Body" shall mean any: nation, principality, state,
commonwealth, province, territory, county, municipality, district or other
jurisdiction of any nature; federal, state, local, municipal, foreign or other
government; governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal); multinational organization or body; or individual, Entity or body
exercising, or entitled to exercise, any executive, legislative, Judicial,
administrative, regulatory, police, military or taxing authority or power of any
nature.

"Hazardous Materials" shall be broadly construed to mean any toxic or
hazardous substance, material or waste or any pollutant or contaminant, or
infectious or radioactive substance or material, including without limitation,
those substances, materials and wastes defined in or regulated under any
Environmental and Safety Laws.

"Holder Representation and Lock-Up Agreement" shall have the meaning
specified in Section 5.6(b).

"HSR" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.

"Intellectual Property" shall mean any U.S. or foreign patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, domain name, fictitious business name, service mark
(whether registered or unregistered), service mark application, copyright
(whether registered or unregistered and whether or not relating to a published
work), copyright registration application, maskwork, maskwork registration
application, trade secret, know how, rights in data or databases, invention, or
other proprietary right, all licenses, sublicenses and agreements related to the
foregoing, and any other intellectual property right or intangible asset.

"Irrevocable Proxies" shall have the meaning specified in
Section 2.22.

"JAMS" shall have the meaning specified in Section 8.8(c).

"Key Shareholders" shall have the meaning specified in Section
5.9(b).

"Knowledge" An individual shall be deemed to have "Knowledge" of a
particular fact or other matter if:

(a)	such individual is actually aware of such fact or other matter; or

(b)	a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter.

A corporation shall be deemed to have "Knowledge" of a particular fact or
matter only if a director, officer or key employee of such corporation has or
had Knowledge of such fact or matter.

"Leased Premises" shall have the meaning specified in
Section 2.31(b).

"Leases" shall have the meaning specified in Section 2.31(b).

"Legal Fee Cap" shall have the meaning specified in Section 5.13.

"Legal Fees" shall have the meaning specified in Section 5.13.

"Legal Fee Certificate" shall have the meaning specified in Section
5.13.

"Legal Requirement" shall mean any federal, state, local, municipal,
foreign or other law, statute, legislation, constitution, principle of common
law, resolution, ordinance, code, edict, decree, proclamation, treaty,
convention, rule, regulation, ruling, directive, pronouncement, Order,
requirement, specification, determination, decision, opinion or interpretation
that is or has been issued, enacted, adopted, passed, approved, promulgated,
made, implemented or otherwise put into effect by or under the authority of any
Governmental Body or any arbitrator or arbitration panel.

"Liability" shall mean any debt, obligation, duty or liability of any
nature including any unknown, undisclosed, unmatured, unaccrued, unasserted,
contingent, indirect, conditional, implied, vicarious, derivative, joint,
several or secondary liability, regardless of whether such debt, obligation,
duty or liability would be required to be disclosed on a balance sheet prepared
in accordance with generally accepted accounting principles and regardless of
whether such debt, obligation, duty or liability is immediately due and
payable.

"Liquidation Preference" shall mean a number equal to the sum of (i)
the product of the Series A Preferred Share Liquidation Preference multiplied by
the aggregate number of shares of Company Series A Preferred Stock outstanding
immediately prior to the Effective Time, (ii) the product of the Series B
Preferred Share Liquidation Preference multiplied by the aggregate number of
shares of Company Series B Preferred Stock outstanding immediately prior to the
Effective Time, (iii) the product of the Series C Preferred Share Liquidation
Preference multiplied by the aggregate number of shares of Company Series C
Preferred Stock outstanding immediately prior to the Effective Time, (iv) the
product of the Series D Preferred Share Liquidation Preference multiplied by the
aggregate number of shares of Company Series D Preferred Stock outstanding
immediately prior to the Effective Time, and (v) the product of the Series E
Preferred Share Liquidation Preference multiplied by the aggregate number of
shares of Company Series E Preferred Stock outstanding immediately prior to the
Effective Time.

"Material" (with respect to any Person) shall mean any event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
prospects, operations or results of operations of such Person which could
reasonably be deemed to be material to such Person either taken alone or in
combination with other such events, changes, conditions or effects.

"Material Contracts" shall have the meaning specified in
Section 2.28.

"Member of the Controlled Group" shall mean each trade or business,
whether or not incorporated, that would be treated as a single employer with
Company under Section 4001 of ERISA or Section 414(b), (c), (m)
or (o) of the Code.

"Merger" shall have the meaning specified in Recital A.

"Merger Sub" shall mean NC Acquisition Sub, Inc., a newly formed
California corporation and wholly-owned subsidiary of Parent.

"Multiemployer Plan" shall mean a plan described in Section 3(37)
of ERISA.

"Named Shareholders" shall have the meaning specified in
Section 2.22.

"Noncompetition Agreement" shall have the meaning specified in Section
5.9(b).

"Offering Circular" shall have the meaning specified in
Section 5.23(b).

"Officer's Certificate" shall have the meaning specified in
Section 8.6.

"Order" shall mean any: (a) order, judgment, injunction, edict,
decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award that is issued, made, entered, rendered or
otherwise put into effect by or under the authority of any court, administrative
agency or other Governmental Body or any arbitrator or arbitration panel; or (b)
Contract with any Governmental Body that is entered into in connection with any
Proceeding.

"ordinary course of business" shall mean, with respect to any
reference in the Agreement to a Person conducting its business or other affairs
or taking any action, that such conduct or action taken by or on behalf of such
Person shall not be deemed to have been taken in the "ordinary course of
business" unless such action is such action is recurring in nature, consistent
(in amount and otherwise) with the Person's past practices and taken in the
Person's normal day to day operations; and such action is not required to be
authorized by the Person's securityholders, the Person's board of directors or
any committee of the Person's board of directors and does not require any other
separate or special authorization of any nature.

"Parent" shall mean PLX Technology, Inc., a Delaware corporation.

"Parent Common Stock" shall mean shares of the common stock of Parent,
par value $0.001 per share.

"Parent Damages" shall have the meaning specified in
Section 8.1(a).

"Parent Financial Statements" shall have the meaning specified in
Section 3.4.

"Parent Indemnified Person" and "Parent Indemnified Persons"
shall have the meanings specified in Section 8.1(a).

"Parent Material Adverse Effect" shall mean any change, event or
effect that is materially adverse to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations or results of operations of Parent and its subsidiaries, taken as a
whole or any material adverse effect on Parent's ability to comply with or
perform any covenant or obligation under this Agreement and the other
Transaction Agreements, or have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the Transactions; provided,
however, that none of the following shall be deemed in and of themselves, either
alone or in combination, to constitute, and none of the following shall be taken
into account in determining whether there has been or will be, a Parent Material
Adverse Effect: (a) any change in the market price or trading volume of Parent's
stock after the date hereof; (b) any adverse change, effect, event, occurrence,
state of facts or development attributable to conditions generally affecting the
industries as a whole in which Parent participates, the U.S. economy as a whole
or the foreign economies as a whole in any locations where Parent has material
operations or sales; or (c) any adverse change, effect, event, occurrence, state
of facts or development arising from or relating to the public announcement of,
pendency or consummation of the transactions contemplated hereby or compliance
with the terms of, or the taking of any action required by, this Agreement.

"Parent Option" shall have the meaning specified in
Section 5.8(a).

"Parent SEC Documents" shall have the meaning specified in
Section 3.4.

"Parent Stockholders" shall mean the holders of the outstanding Parent
Common Stock.

"Parent Stock Option Plan" shall mean the Parent's 1999 Stock
Incentive Plan.

"Parent Stock Price" shall mean $9.78.

"Pension Plan" shall mean an employee benefit plan, fund, program,
contract or arrangement that is subject to Section 412 of the Code, Section 302
of ERISA or Title IV of ERISA.

"Permitted Liens" shall mean a lien for current taxes and assessments
not delinquent and minor Encumbrances that have arisen in the ordinary course of
business that do not (individually or in the aggregate) materially detract from
the value of the assets subject thereto or materially impair the operations of
the Company.

"Person" shall mean any individual, Entity or Governmental Body.

"Proceeding" shall mean any action, suit, litigation, arbitration,
proceeding (including any civil, criminal, administrative, investigative or
appellate proceeding and any informal proceeding), prosecution, contest,
hearing, inquiry, inquest, audit, examination or investigation, commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or any arbitrator or arbitration panel.

"Property" shall mean all real property leased or owned by Company
currently, including the Leased Premises.

"Registration Rights Agreement" shall have the meaning specified in
Section 5.24.

"Repurchase Options" shall have the meaning specified in
Section 5.8(b).

"Restricted Stock" shall have the meaning specified in
Section 1.6(a)(vii).

"Rule 506 Documents" shall have the meaning specified in
Section 5.23(b).

"Rule 506 Information Statement" shall have the meaning specified in
Section 5.23(b).

"Rules" shall have the meaning specified in Section 9.9(a).

"Second Earn-Out Tranche" shall have the meaning specified in Section
1.8.

"SEC" shall mean the Securities and Exchange Commission.

"Securities Act" shall mean the Securities Act of 1933, as
amended.

"Series A Preferred Share Exchange Ratio" shall mean a number equal to
the quotient obtained by dividing the Series A Preferred Share Liquidation
Preference by the Parent Stock Price.

"Series A Preferred Share Liquidation Preference" shall mean the
liquidation preference of the Company Series A Preferred Stock as set forth in
the Company's Articles of Incorporation immediately prior to the Effective
Time.

"Series B Preferred Share Exchange Ratio" shall mean a number equal to
the quotient obtained by dividing the Series B Preferred Share Liquidation
Preference by the Parent Stock Price.

"Series B Preferred Share Liquidation Preference" shall mean the
liquidation preference of the Company Series B Preferred Stock as set forth in
the Company's Articles of Incorporation immediately prior to the Effective
Time.

"Series C Preferred Share Exchange Ratio" shall mean a number equal to
the quotient obtained by dividing the Series C Preferred Share Liquidation
Preference by the Parent Stock Price.

"Series C Preferred Share Liquidation Preference" shall mean the
liquidation preference of the Company Series C Preferred Stock as set forth in
the Company's Articles of Incorporation immediately prior to the Effective
Time.

"Series D Preferred Share Exchange Ratio" shall mean a number equal to
the quotient obtained by dividing the Series D Preferred Share Liquidation
Preference by the Parent Stock Price.

"Series D Preferred Share Liquidation Preference" shall mean the
liquidation preference of the Company Series D Preferred Stock as set forth in
the Company's Articles of Incorporation immediately prior to the Effective
Time.

"Series E Preferred Share Exchange Ratio" shall mean a number equal to
the quotient obtained by dividing the Series E Preferred Share Liquidation
Preference by the Parent Stock Price.

"Series E Preferred Share Liquidation Preference" shall mean the
liquidation preference of the Company Series E Preferred Stock as set forth in
the Company's Articles of Incorporation immediately prior to the Effective
Time.

"Share Exchange Ratio" shall mean a number equal to the quotient
obtained by dividing (i) the quotient obtained by dividing (x) the remainder of
(A) Total Value of Share Consideration less (B) Liquidation Preference by (y)
the Parent Stock Price by (ii) Total Outstanding Common Stock on a Fully Diluted
Basis.

"Shareholders' Agent" shall have the meaning specified in
Section 8.9.

"Surviving Corporation" shall have the meaning specified in
Section 1.1.

"Surviving Corporation Gross Profit Margin" shall have the meaning
specified in Section 1.8(a).

"Takeover Proposal" means any offer or proposal for, or any indication
of interest in (whether written or oral), a merger or other business combination
involving Company or any of its subsidiaries or the acquisition of any
significant equity interest (10%) in, or a significant portion of the assets
(10% or more on a consolidated basis) of, Company or any of its subsidiaries,
other than the transactions contemplated by this Agreement.

"Takeover Statute" shall mean any "fair price," "moratorium," "control
share acquisition" or other similar anti-takeover statute under the CGCL or
otherwise applicable to Company.

"Tax" (and, with correlative meaning, "Taxes" and "Taxable") shall
mean any tax (including any income tax, franchise tax, capital gains tax,
estimated tax, gross receipts tax, value added tax, surtax, excise tax, ad
valorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business
tax, occupation tax, inventory tax, occupancy tax, withholding tax or payroll
tax), levy, assessment, tariff, impost, imposition, toll, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty, addition to tax or interest), (a) imposed, assessed or
collected by or under the authority of any Governmental Body, or (b) payable
pursuant to (i) any tax sharing agreement or similar Contract, (ii) Treasury
Regulation Section 1.1502-6 or any similar or corresponding provision of
applicable state or foreign law, or (iii) as a transferee or successor of any
person.

"Tax Return" shall mean any return (including any information return),
report, statement, declaration, estimate, schedule, notice, notification, form,
election, certificate or other document or information that is, has been or may
in the future be filed with or submitted to, or required to be filed with or
submitted to, any Governmental Body in connection with the determination,
assessment, collection or payment of any Tax or in connection with the
administration, implementation or enforcement of or compliance with any Legal
Requirement relating to any Tax.

"Third Party Intellectual Property Rights" shall have the meaning
specified in Section 2.11(b).

"Total Outstanding Common Stock" shall mean the aggregate number of
shares of Company Common Stock outstanding immediately prior to Effective
Time.

"Total Outstanding Common Stock on a Fully Diluted Basis" shall mean
the aggregate number of shares of Company Common Stock outstanding immediately
prior to Effective Time, assuming exercise or conversion of all Company
Options.

"Total Value of Share Consideration" shall mean $20,000,000, as
adjusted pursuant to Section 1.7.

"Transaction Agreements" shall mean (a) the Agreement, (b) the
Affiliate Voting Agreements, (c) the Agreement of Merger, (d) the Registration
Rights Agreement, (e) the Holder Representation and Lock-Up Agreements and (f)
the Escrow Agreement.

"Transactions" shall mean (a) the execution and delivery of each
party's respective Transaction Agreements, and (b) all of the transactions
contemplated by the respective Transaction Agreements, including the Merger and
the performance by Company and Parent and the other parties to the Transaction
Agreements of their respective obligations under the Transaction Agreements.

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