**Exhibit 2.4**

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 

 

 

**FIRST AMENDMENT TO AGREEMENTAND PLAN OF MERGER**

by and among: 

**APPLIED MICRO CIRCUITS CORPORATION,**

**ESPRESSO ACQUISITION CORPORATION**

**VELOCE TECHNOLOGIES, INC.**

**AND**

**JEFFREY HARRELL, as STOCKHOLDERS’ REPRESENTATIVE**

 

**
 
**

Dated as of November 8, 2010 

 

**
 
**

 

 

 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**AMENDMENT NO. 1 TO AGREEMENT AND PLAN**

**OF MERGER**

**THIS AMENDMENT NO. 1 TO AGREEMENTANDPLANOF MERGER**(this ***“Amendment”***) is made and entered into as of November 12, 2010 (**“*****Amendment Date*****”**), by and among**APPLIED MICRO CIRCUITS CORPORATION,** a Delaware corporation (***“Parent”***), **ESPRESSO ACQUISITION CORPORATION,** aDelaware corporation and a wholly-owned subsidiary of Parent (***“Merger Sub”***), **VELOCE TECHNOLOGIES, INC.,** a Delaware corporation (the ***“Company”***), andJeffrey Harrell, an individual, as representative of the stockholders of the Company pursuant to Section 9.1(a) (the ***“Stockholders’ Representative******”***). Certain capitalized terms used herein and nototherwise defined are defined in ***Exhibit A*** to this Amendment. Except as expressly set forth in this Amendment (including Exhibit A hereto), each defined term used in the Initial Agreement shall have the meaning set forth therein.

**RECITALS**

**WHEREAS,** effective May 17, 2009 (the ***“Agreement Date”***), each of (i) Parent, Merger Sub, the Company, and the Stockholders’ Representativeentered into that certain Agreement and Plan of Merger (the ***“Initial Agreement”*** and, together with this Amendment, the ***“Agreement”***) pursuant to which, among other things, Parent may or shall acquireall of the outstanding capital stock and other equity interests of the Company pursuant to a merger of Merger Sub into the Company in accordance with the Initial Agreement and the Delaware General Corporation Law upon the terms set forth therein,(ii) Parent and the Company entered into that certain Development Agreement (as amended to date, the ***“Development Agreement”***), pursuant to which, among other things, the Company agreed to develop exclusively for Parentan initial product, and (iii) Parent, the Company, the securityholders of the Company and Jeffrey Harrell, an individual, as the purchaser representative, entered into that certain Securityholder Agreement (as amended to date, the***“Securityholder Agreement”***), pursuant to which, among other things, such securityholders agreed to certain voting provisions with respect to their shares of Company Common Stock, and certain restrictions on thetransferability thereof, and the Company agreed not to issue additional equity interests in the Company except in accordance with the terms of such agreement; 

**WHEREAS,**subsequent to the Agreement Date, the parties hereto have acknowledged and agreed that it is in the best interests of Parent and the Company to modify the Initial Agreementto provide for the Company to develop an initial product, as well as to make corresponding modifications to the product requirements, delivery schedule, aggregate merger consideration and certain other terms and conditions of the Initial Agreementrelating to such project, in each case as set forth in this Amendment and the ancillary agreements referred to herein; and 

**WHEREAS,** this Amendment, and the corresponding amendments to each of the Development Agreement attached hereto as***Exhibit B***and Securityholder Agreement attached hereto as ***Exhibit C***have been approved by the respective boards of directors of Parent, Merger Sub and the Company and have been approved by Parent, as the solestockholder of Merger Sub, and it is intended that the stockholders of the Company approve this Amendment and the Merger pursuant to an Action by Written Consent in the form attached hereto as ***Exhibit D***(the***“Stockholder Written Consent”);***

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**NOW THEREFORE,** in consideration of the foregoingand the respective covenants, agreements and representations and warranties set forth herein, the parties to this Amendment, intending to be legally bound, agree as follows: 

**1 Optional Closing Right.** Section 1.2 of the Initial Agreement is hereby amended and restated in its entirety as set forth below: 

Subject to the obligations of the parties under Section 1.1, at any time during the period commencing on December 1, 2013 and endingon September 30, 2014 (the ***“Option Expiration Date”***), Parent shall have the sole and exclusive right (the ***“Optional Closing Right******”***), but not the obligation, to require the Company toeffect the Closing (as defined herein) and consummate the Merger in accordance with the terms and conditions of this Agreement (subject to the satisfaction by Parent (or written waiver by the Company) of each of the conditions set forth inSection 6) for the consideration set forth in this Section 1. 

**2 Consideration.** Section 1.8 of theInitial Agreement is hereby amended and restated in its entirety as set forth below: 

**(a) Aggregate Merger Consideration.**In the event the Closing is effected, at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any securityholder of the Company: 

**(i)**each share of Company Common Stock (other than Company Restricted Shares and Dissenting Shares (as defined herein))outstanding as of immediately prior to the Effective Time shall be converted into the right to receive: 

**(1)**at theClosing, an amount, payable (without interest) in such form as provided in Section 1.8(c), equal to the Per Share Initial Consideration; 

**(2)**provided that the Final Merger Consideration is greater than the Preliminary Merger Consideration, at the time of the determination of the Final Merger Consideration, an amount, payable(without interest) in such form as provided in Section 1.8(c), equal to the Per Share Adjustment Consideration; 

**(3)**upon the satisfaction of the First Target Reserve Consideration Conditions, an amount, payable (without interest) in such form as provided in Section 1.8(c), equal to (i) the Per Share First Target Reserve Consideration, plus(ii) the Per Share First Target Additional Reserve Consideration, minus (iii) in the event the Final Merger Consideration is less than the Preliminary Merger Consideration, the Per Share Adjustment Consideration; 

**(4)**upon the satisfaction of the Second Target Reserve Consideration Conditions, an amount, payable (without interest) in suchform as provided in Section 1.8(c), equal to (i) the Per Share Second Target Reserve Consideration, plus (ii) Per Share Second Target Additional Reserve Consideration, minus (iii) in the event the Final Merger Consideration isless than the Preliminary Merger Consideration, the Per Share Adjustment Consideration (excluding the amount of any such Per Share Adjustment Consideration previously deducted pursuant to Section 1.8(a)(i)(3)); and 

**(5)**upon release pursuant to the terms of the Escrow Agreement (as defined herein), an amount, payable (without interest) in suchform as provided in Section 1.8(c), equal to the Per Share Initial Escrow Amount - Common Stock and the Per Share Adjustment Escrow Amount - Common Stock, *provided that* such amounts shall be subject to reduction, if any, to satisfy theindemnification obligations set forth in the Escrow Agreement and Section 8 of this Agreement. 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**(ii)**Each Company Restricted Share and Company Stock Option shall be treated inthe manner, and shall entitle its respective holder to the consideration, described in Section 1.9, in each case, subject to the terms and conditions thereof and of this Agreement and the Related Agreements. 

**(iii)**Each share of common stock of Merger Sub outstanding immediately prior to the Effective Time shall be converted into oneshare of common stock of the Surviving Corporation. 

**(b) Certain Definitions**

**(i)**For purposes of this Amendment and the Initial Agreement, from and after the Amendment Date, each defined term set forthbelow, wherever such term may be located or used within the Initial Agreement or this Amendment, shall have the meaning set forth below: 

**(1)**The ***“Adjusted Per Share Consideration”*** means the quotient obtained by dividing (A) the Adjustment Amount, by (B) the Fully Diluted Company Share Amount.

**(2)**The ***“Adjusted Total Merger Consideration”*** means (i) if the Merger is being effectedpursuant to Section 1.1, an amount equal to (A) the Preliminary Merger Consideration, minus (B) the Excess Operations Payment, minus (C) the aggregate amount of all Transaction Expenses incurred by the Company but not paid as ofthe Closing Date that are not included in calculating Excess Liabilities, minus (D) the Excess Liabilities, plus (E) $60,000, plus (F) the Aggregate Exercise Price and (ii) if the Merger is being effected pursuant toSection 1.2, an amount equal to (U) the Total Merger Consideration, minus (V) the Excess Operations Payment, minus (W) the aggregate amount of all Transaction Expenses incurred by the Company but not paid as of the Closing Datethat are not included in calculating Excess Liabilities, minus (X) the Excess Liabilities, plus (Y) $60,000, plus (Z) the Aggregate Exercise Price. 

**(3)**The ***“Adjustment Amount”*** means the absolute value of the Final Merger Consideration less the Preliminary Merger Consideration. 

**(4)**The ***“Adjustment Escrow Amount”***means the aggregate Per Share Adjustment Escrow Amount - Common Stockand Per Share Adjustment Escrow Amount - Vested Company Stock Option retained from all Entitled Holders as calculated in accordance with this Section 1.8. 

**(5)**The ***“Aggregate Exercise Price”*** means the aggregate of all amounts that would be due from Company Stock Option Holders as exercise prices if all Company Stock Options(whether Vested Company Stock Options or Unvested Company Stock Options) that were (a) granted more than 180 days prior to the First [...***...] and (b) outstanding as of immediately prior to the Effective Time (and not exercised inconnection with the Merger), were exercised in full for cash. For the avoidance of doubt, no Company Stock Option whose date of grant is 180 days before the First [...***...] or thereafter will be included in calculating the Aggregate ExercisePrice. 

**(6)**The ***“Agreement”*** means the Initial Agreement, as amended by this Amendment andthereafter from time to time. 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**(7)**The ***“Applicable Parent Share Price”*** means, as of anydate a payment is or becomes payable under Section 1.8(a) or Section 1.9 and for purposes of Section 8.3, the average closing price of Parent Common Stock as quoted on The Nasdaq Global Select Market (or such other Nasdaq StockMarket, LLC securities exchange on which Parent Common Stock is then listed) for the ten (10) trading days immediately preceding the date such payment is or becomes payable, as applicable. 

**(8)**The ***“Closing Per Share Consideration”***means the quotient obtained by dividing (A) the AdjustedTotal Merger Consideration, by (B) the Fully Diluted Company Share Amount. 

**(9)**The ***“CompanyDisclosure Schedule”*** means the disclosure schedule (dated as of the Amendment Date) delivered to Parent on behalf of the Company on the Amendment Date. 

**(10)**The ***“Company Restricted Shares”*** means any outstanding Company Common Stock that is not vested under the terms of any Contract with the Company (including any restrictedstock agreement, stock option agreement, stock option exercise agreement or restricted stock purchase agreement) as of immediately before the Effective Time. 

**(11)**The ***“Company Stock Options”*** means options to purchase Company Common Stock. 

**(12)**The ***“Company Stock Option Holders”*** means the holders of the Company Stock Options. 

**(13)**The ***“Company Stock Option Plan”*** means the Company’s Amended and Restated 2009 Stock Incentive Plan, dated October 21, 2010, as the same may be subsequentlyamended. 

**(14)**The ***“Designated Liabilities”*** means Liabilities of the Company determined inaccordance with GAAP excluding amounts payable under the Note. 

**(15)**The ***“Entitled Holder”***means (a) a holder of Company Common Stock as of immediately prior to the Effective Time, or (b) a holder of Vested Company Stock Options as of immediately prior to the Effective Time. 

**(16)**The ***“Excess Cash”*** means (i) $0.00, in the event the aggregate amount of cash and cashequivalents that the Company has on hand as of immediately prior to the Closing is equal to or less than the absolute value of the aggregate amount of any Designated Liabilities as of immediately prior to the Closing, plus any Transaction Expenses,and (ii) in the event the aggregate amount of cash and cash equivalents that the Company has on hand as of immediately prior to the Closing is greater than the absolute value of the aggregate amount of any Designated Liabilities as ofimmediately prior to the Closing, plus any Transaction Expenses, the aggregate amount of cash and cash equivalents that the Company has on hand as of immediately prior to the Closing minus the absolute value of the aggregate amount of any DesignatedLiabilities, plus any Transaction Expenses as of immediately prior to the Closing. 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**(17)**The ***“Excess Liabilities”***means (i) $0.00, inthe event the aggregate amount of cash and cash equivalents that the Company has on hand as of immediately prior to the Closing is equal to or greater than the absolute value of the aggregate amount of any Designated Liabilities as of immediatelyprior to the Closing, and (ii) in the event the aggregate amount of cash and cash equivalents that the Company has on hand as of immediately prior to the Closing is less than the absolute value of the aggregate amount of any DesignatedLiabilities as of immediately prior to the Closing, the absolute value of the aggregate amount of such Designated Liabilities as of immediately prior to the Closing minus the aggregate amount of cash and cash equivalents that the Company has on handas of immediately prior to the Closing. 

**(18)**The ***“Excess Operations Payment”***means an amountequal to (A) the aggregate of all amounts paid by Parent to Company (and accepted by the Company), pursuant to the last sentence of Section 3.3 of the Development Agreement which have not, as of the Effective Time, been repaid by theCompany to Parent in cash, plus (B) the aggregate of all amounts paid by Parent to Company in all calendar quarters after the end of the Quarterly Payment Period (as defined in the Development Agreement) during which Parent is or may berequired to make a payment to the Company pursuant to the Development Agreement. For the avoidance of doubt, the Excess Operations Payment shall not include any amounts paid to the Company (i) pursuant to the issuance of that certain SecuredPromissory Note dated May 13, 2009 issued by the Company to Parent, or (ii) in connection with that certain exclusivity letter dated as of March 23, 2009. 

**(19)**The ***“Final Merger Consideration”***means the consideration determined in accordance with Exhibit E. 

**(20)**The ***“First Target Reserve Consideration Conditions”***means the occurrence of the [...***...]Milestone. 

**(21)**The ***“Fully Diluted Company Share Amount”***means the sum of (A) the numberof shares of Company Common Stock (including, for the avoidance of doubt, Company Restricted Shares and Dissenting Shares) outstanding immediately prior to the Effective Time, (B) the number of shares of Company Common Stock issuable pursuantto all Company Stock Options (whether Vested Company Stock Options or Unvested Company Stock Options) outstanding immediately prior to the Effective Time, (C) the number of shares of Company Common Stock issuable pursuant to all CompanyWarrants outstanding immediately prior to the Effective Time, and (D) the number of shares of Company Common Stock issuable upon the exercise or conversion of any convertible securities or any other rights (other than Company Stock Options andCompany Warrants) to acquire shares of Company Common Stock that are outstanding immediately prior to the Effective Time. 

**(22)**The ***“Initial Escrow Amount”***means the aggregate Per Share Initial Escrow Amount - Common Stock andPer Share Initial Escrow Amount - Vested Company Stock Option retained from all Entitled Holders as calculated in accordance with this Section 1.8. 

**(23)**The ***“Outstanding Company Share Amount”*** shall mean the sum of (A) the number of shares of Company Common Stock (excluding Company Restricted Shares and including,for the avoidance of doubt, Dissenting Shares (as defined herein)) outstanding immediately prior to the Effective Time and (B) the number of shares of Company Common Stock subject to all Vested Company Stock Options outstanding immediatelyprior to the Effective Time. 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**(24)**The ***“Parent Equity Grants”*** means any and all sharesof capital stock of the Parent granted following the Effective Time to the former employees of the Company or replacement hires for such former employees who have terminated their employment with the Company or Parent following the Effective Time,which shares of capital stock or options are granted for services rendered in connection with the satisfaction of the First Target Reserve Consideration Conditions and/or the Second Target Reserve Consideration Conditions, in each case, asdetermined by Parent in its reasonable discretion. 

**(25)**The ***“Per Share Adjustment Consideration”***means the amount equal to (A) (I) the Adjusted Per Share Consideration, multiplied by (II) 0.6, less (B) the Per Share Adjustment Escrow Amount - Common Stock. 

**(26)**The ***“Per Share Adjustment Escrow Amount - Common Stock”***means an amount equal to (A) theproduct of (I) the Adjusted Per Share Consideration multiplied by (II) 0.6, multiplied by (B) 0.1. 

**(27)**The***“Per Share Adjustment Escrow Amount - Vested Company Stock Option”*** means, with respect to a particular Vested Company Stock Option, 0.1 multiplied by an amount equal to (A) the product of (I) the Adjusted Per ShareConsideration multiplied by (II) 0.6, minus (B) any portion of the per share exercise price for such Vested Company Stock Option not previously satisfied in connection with the payment of the Vested Company Stock Option Closing Per ShareConsideration. 

**(28)**The ***“Per Share First Target Additional Reserve Consideration”***means anamount equal to (A) the Adjusted Per Share Consideration, multiplied by (B) 0.20. 

**(29)**The ***“PerShare First Target Reserve Consideration”***means an amount equal to (A) the Closing Per Share Consideration, multiplied by (B) 0.20. 

**(30)**The ***“Per Share Initial Consideration”***means an amount equal to (A) (I) the Closing Per Share Consideration, multiplied by (II) 0.6, less (B) the PerShare Initial Escrow Amount - Common Stock. 

**(31)**The ***“Per Share Initial Escrow Amount - Common Stock”***means, with respect to a particular Vested Company an amount equal to (A) the product of (I) the Closing Per Share Consideration multiplied by (II) 0.6, multiplied by (B) 0.1. 

**(32)**The ***“Per Share Initial Escrow Amount - Vested Company Stock Option”*** means, with respect to aparticular Vested Company Stock Option, 0.1 multiplied by (A) the product of (I) the Closing Per Share Consideration multiplied by (II) 0.6, minus (B) the per share exercise price for such Vested Company Stock Option. 

**(33)**The ***“Per Share Second Target Additional Reserve Consideration”***means an amount equal to (A) theAdjusted Per Share Consideration, multiplied by (B) 0.20. Notwithstanding the foregoing, the multiplier referred to above shall be reduced to 0.18, 0.15, 0.11, or 0.07, respectively, if the Second Product Milestone occurs on the seventh,eighth, ninth, or tenth (or later) quarter after receipt by Parent pursuant to the Development Agreement of the First Product, in each case not including such periods of delay that are primarily caused by Parent. For the avoidance of doubt,

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
the Second Product Milestone as used in the preceding sentence means the date of delivery of the Second Product which is subsequently determined to meet each of the Second Product PerformanceSpecifications with a variance of not greater than fifteen percent (15%). 

**(34)**The ***“Per Share SecondTarget Reserve Consideration”***means an amount equal to (A) the Closing Per Share Consideration, multiplied by (B) 0.20. Notwithstanding the foregoing, the multiplier referred to above shall be reduced to 0.18, 0.15, 0.11,0.07, respectively, if the Second Product Milestone occurs on the seventh, eighth, ninth, or tenth (or later) quarter after receipt by Parent pursuant to the Development Agreement of the First Product, in each case not including such periods ofdelay that are primarily caused by Parent. For the avoidance of doubt, the Second Product Milestone as used in the preceding sentence means the date of delivery of the Second Product which is subsequently determined to meet each of the SecondProduct Performance Specifications with a variance of not greater than fifteen percent (15%). 

**(35)**The***“Preliminary Merger Consideration”***means the consideration determined by selecting the entry on the First Product Consideration Chart corresponding to the [...***...] and the First Product Consideration Date and then[...***...] corresponding to the performance of the First [...***...] in accordance with Exhibit E. 

**(36)**The ***“Second Target Reserve Consideration Conditions”***means the occurrence of: (A) the First Product Validation Milestone, (B) the achievement of the First Target Reserve Consideration Conditions, and(C) either (i) Parent terminates the Company’s development of the Second Product on or prior to the date that is ten quarters following receipt by Company pursuant to the Development Agreement of the First Product (the***“Second Product Deadline”***), or (ii) the Second Product Milestone, and, if Parent has elected the Second Product Update, the Company delivers to Parent the Second Product Update. Notwithstanding the foregoing, in theevent Parent determines a semiconductor chip based upon or incorporating the in the Second Product or the Second Product Update to be commercially viable in its reasonable discretion (which determination shall be based on factors such as obtaining asignificant customer design win for such semiconductor chip), the Second Product Milestone shall be deemed to have been met. 

**(37)**The ***“Termination Date”*** means the date, prior to the Closing and not later than the FinalDetermination Date set forth in Section 1(b) of the Amendment, on which the Initial Agreement is terminated in accordance with Section 7 thereof. 

**(38)**The ***“Transaction Expenses”*** means the sum of all fees, costs and expenses (including legal fees, accounting fees and filing fees and including the amount of all specialbonuses and other amounts that may become payable to any officers of the Company or other Persons in connection with the consummation of the transactions contemplated by this Agreement) that are incurred by or for the benefit of the Company inconnection with the transactions contemplated by this Agreement. 

**(39)**The ***“Unvested Company StockOption”*** means that Company Stock Option that is unexpired, unexercised and outstanding immediately before the Effective Time and which is unvested and not exercisable as of immediately before the Effective Time. If a Company StockOption is unvested with respect to some, but not all, of the shares underlying such Company Stock Option, then ***“Unvested Company Stock Option”*** shall refer to the unvested portion of such Company Stock Option. 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**(40)**The ***“Vested Company Stock Option”*** means eachCompany Stock Option that is unexpired, unexercised and outstanding immediately before the Effective Time and which is vested and exercisable as of immediately before the Effective Time. If a Company Stock Option is vested with respect to some, butnot all, of the shares underlying such Company Stock Option, then ***“Vested Company Stock Option”*** shall refer to the vested portion of such Company Stock Option. 

**(41)**The ***“Vested Company Stock Option Adjustment Per Share Consideration”*** means, with respect to aparticular Company Stock Option, provided that the Final Merger Consideration is greater than the Preliminary Merger Consideration, an amount equal to (A) the product of (I) the Adjusted Per Share Consideration multiplied by (II) 0.6,minus (B) any portion of the per share Applicable Exercise Price for such Vested Company Stock Option not previously satisfied in connection with the payment of the Vested Stock Option Closing Per Share Consideration, minus (C) the PerShare Adjustment Escrow Amount - Vested Company Stock Option. 

**(42)**The ***“Vested Company Stock OptionClosing Per Share Consideration”*** means, with respect to a particular Company Stock Option, (A) the product of (I) the Closing Per Share Consideration multiplied by (II) 0.6, minus (B) the product of (I) the per shareexercise price for such Vested Company Stock Option, multiplied by (II) 0.9 (the ***“Applicable Exercise Price”***), minus (C) the Per Share Initial Escrow Amount - Vested Company Stock Option. 

**(43)**The ***“Total Merger Consideration”***means either: 

(A) if the Merger is being effected pursuant to Section 1.1, (i) the Preliminary Merger Consideration, plus(ii) the Adjustment Amount, in the event the Final Merger Consideration is greater than the Preliminary Merger Consideration, and minus (iii) the Adjustment Amount, in the event the Final Merger Consideration is less than the PreliminaryMerger Consideration; or 

(B) if the Merger is being effected pursuant to Section 1.2, (i) on orbefore [...***...], that amount, as indicated on the First Product Consideration Chart , obtained by referencing the calendar quarter in which Parent, in its sole discretion, delivers the Notice of Exercise to the Company and (A) in theevent Parent actually receives the First Product prior to the delivery of such Notice of Exercise, using the same method of price determination that would be used if the First Product Validation Milestone had been achieved prior to[...***...], which determination shall be subject to the procedures set forth in Section 9.2 in the event of the Company’s disagreement with Parent’s determination, and (B) in the event Parent has not actually received theFirst Product prior to the delivery of such Notice of Exercise or the First Product does not meet the Veloce Minimum Requirements or a price cannot otherwise be determined, by using (i) the [...***...], as indicated on the First ProductConsideration Chart, and (ii) a [...***...] in the First Product Consideration Chart; or (ii) after [...***...], $7 million. 

(ii) Certain additional capitalized terms used in this Agreement, as amended by this Amendment, have the meanings set forth in Exhibit A attached here. 

**(c) Form of Merger Consideration.** In the event the Merger is consummated and any amounts become payable by Parent to the holdersof the Company Common Stock or Vested Company Stock Options pursuant to Section 1.8(a) or Section 1.9(b), Parent may, in its sole and absolute discretion (subject to the provisions of this Section 1.8(c)), elect to pay suchconsideration in the form of all cash, in the form of shares of Parent Common Stock or in any combination of cash and shares of 

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
Parent Common Stock. In the event Parent elects to pay all or any portion of any amounts payable to the holders of Company Common Stock under Section 1.8(a) or the holders of Vested CompanyStock Options under Section 1.9(b) in cash, then such amount, when paid, shall be paid by wire transfer in immediately available funds. In the event Parent elects to pay all or any portion of any amounts payable to the holders of Company CommonStock under Section 1.8(a) or the holders of Vested Company Stock Options under Section 1.9(b) in the form of shares of Parent Common Stock, then the number of shares of Parent Common Stock to be issued as consideration therefore shall bedetermined by dividing (A) the total amount Parent elects to pay in shares of Parent Common Stock, by (B) the Applicable Parent Share Price. Such shares of Parent Common Stock will be evidenced by a Parent stock certificate and, whenpayable, delivered to the holder of Company Common Stock entitled thereto at the address provided to Parent by such holder. Upon making a determination to issue Parent Common Stock in the Merger, Parent shall reserve sufficient shares of ParentCommon Stock for issuance pursuant to this Section 1.8(c). In the event that Parent elects to pay the majority of any consideration due under this Agreement in the form of shares of Parent Common Stock (determined by value and at the time ofeach distribution of consideration pursuant to this Agreement), Parent shall use its diligent good faith reasonable efforts to cause any shares of Parent Common Stock that are issued pursuant to this Agreement to be registered on a registrationstatement(s) on Form S-3 (or similar or successor form) promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, no later than thirty (30) days after the issuance of such shares of Parent Common Stockand will exercise its commercially reasonable efforts to maintain the effectiveness of such registration statement(s) until such shares of Parent Common Stock are sold pursuant thereto. Parent shall use its diligent good faith reasonable efforts tocause any Parent Equity Grants that are issued pursuant to this Agreement to be registered on a registration statement(s) on Form S-8 (or similar or successor form) promulgated by the Securities and Exchange Commission under the Securities Act of1933, as amended, no later than thirty (30) days after the issuance of such Parent Equity Grants and will exercise its commercially reasonable efforts to maintain the effectiveness of such registration statement(s) until such Parent EquityGrants are sold pursuant thereto. 

**(d) Maximum Consideration Payable.***Notwithstanding anything herein to thecontrary, in no event shall the total consideration paid or payable by Parent in connection with the Merger exceed the amount equal to (a) the maximum amount included on page E-5 of the First Product Consideration Chart multiplied by aPerformance Index Multiplier of up to 1.5x, minus (b) the Excess Operations Payment, minus (c) the aggregate amount of all Transaction Expenses incurred by the Company but not paid as of the Closing Date that are not included incalculating Excess Liabilities, minus (D) the Excess Liabilities, plus (E) $60,000.*

**(e) Commercially Viable**[...***...].****In the event that (i) the First Product is determined to be commercially viable by Parent in its reasonable discretion (which determination shall be based on factors such as obtaining a significant customer designwin for the First Product), (ii) notwithstanding the failure to yield a [...***...] that corresponds to a price on the First Product Consideration Chart, both Parent and the Company desire to effect the Closing and consummate the Merger,then the [...***...] will be deemed to equal the [...***...] and (ii) notwithstanding the failure to meet the “Veloce Minimum Requirements” (as set forth in the First Product Consideration Chart), both Parent and theCompany desire to effect the Closing and consummate the Merger, then each distinct “Veloce Minimum Requirement” that has not been met will be deemed to have been met at the Performance Index equal to [...***...] amount unlessotherwise agreed in writing by the parties hereto, and the amount of Total Merger Consideration shall be calculated accordingly, whereupon the Closing and the Merger can be completed otherwise in accordance with the terms and provisions of theAgreement. 

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**(f) Program Review.** From and after the Amendment Date, Parent and the Companywill meet yearly, to review and discuss the status of the Project, including without limitation the status of the “Veloce Minimum Requirements” (as set forth in the First Product Consideration Chart). In connection with each such meeting,Parent and the Company may solicit input from Vendor about the First Product with respect to the status of relevant Vendor deliverable releases, other similar products in the marketplace and evolving customer needs and requirements. Based upon suchreview and input, Parent and the Company shall have the right to modify, by mutual written agreement, one or more of the Veloce Minimum Requirements and other performance features set forth in the First Product Consideration Chart, for the purposeof increasing the First Product’s competitive offering, accelerating its time to market or better conforming it to customer requirements. Such modifications may include raising or lowering particular Veloce Minimum Requirements or performancefeatures, adding new requirements and features and eliminating existing requirements and features, and may or may not result in corresponding changes to the “Spin In Value Table” or “Performance Index Table” (as set forth in theFirst Product Consideration Chart). Notwithstanding the foregoing, nothing in this Section 1.8(f) shall be deemed to require either party to agree to modify the Veloce Minimum Requirements or any other terms and provisions of the First ProductConsideration Chart. 

**3 Certain Company Securities.******Section 1.9 of the Initial Agreement is hereby amendedand restated in its entirety as set forth below: 

**(a) Company Restricted Shares.** In the event the Closing is effected,at the Effective Time, by virtue of the Merger and without any further action on the part of Parent, Merger Sub, the Company or any securityholder of the Company each Company Restricted Share (other than Dissenting Shares (as defined herein))outstanding as of immediately prior to the Effective Time shall be assumed by Parent and converted into that number of shares of Parent Common Stock determined by multiplying each Company Restricted Share by the Exchange Ratio. For purposes of theAgreement, the term ***“Exchange Ratio”*** shall mean the maximum consideration payable to a single share of Company Common Stock under Section 1.8(a) (valued as of the Effective Time) divided by the Applicable Parent SharePrice. Any vesting restrictions, forfeiture provisions or other contractual restrictions burdening a Company Restricted Share shall remain in effect and unaffected by the occurrence of the Merger or any event connected with the Merger, except asexpressly provided for by the terms and conditions under which Company Restricted Shares were granted. To the extent that the application of the Exchange Ratio would result in the issuance of a fractional share of Parent Common Stock to a holder ofCompany Restricted Shares (after aggregating all shares held by such holder), the number of shares of Parent Common Stock shall be rounded down to the nearest whole share. In addition, all conditions and restrictions imposed on the determination ofthe consideration finally paid for a share of Company Common Stock under Section 1.8(a) (taking into account all other applicable sections of the Agreement, including without limitation, Section 1.8(d), but excluding any provisionsrelating to the establishment of the escrow under Section 1.13, which shall not apply to Company Restricted Shares) shall apply proportionally to the shares of Parent Common Stock issued in exchange for Company Restricted Shares. Therefore tothe degree that the consideration finally paid to a share of Company Common Stock is less than the maximum consideration payable to such share under the Agreement, disregarding any adjustments made under the escrow established underSection 1.13, the shares of Parent Common Stock finally issued to the holder of Company Restricted Shares shall be reduced to the same degree. Parent shall make all required payments to former holders of Company Restricted Shares no later thanthe end of the calendar quarter during which such amounts shall become payable in accordance with this Section (provided that if such date shall fall within fifteen (15) days prior to the end of a calendar quarter, then Parent may, in its solediscretion, make such payment no later than the end of the next succeeding 

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
calendar quarter), and in Parent’s discretion may make such payments through a paying agent authorized by the Parent to administer such payments on the Parent’s behalf. All amountspayable pursuant to this Section 1.9(a) shall be subject to any required withholding of Taxes and shall be paid without interest. 

**(b) Company Stock Options.** In the event the Closing is effected, at the Effective Time: 

**(i)**each Vested Company Stock Option outstanding as of immediately prior to the Effective Time shall be cancelled in exchange for the right to receive from Parent the following with respect to eachshare of Company Common Stock for which such Vested Company Stock Option is exercisable as of immediately prior to the Effective Time (the ***“Per Vested Company Stock Option Consideration”***): 

(1) at the Closing, an amount, payable (without interest) in such form as provided in Section 1.8(c), equal to the Vested CompanyStock Option Closing Per Share Consideration calculated with respect to such particular Vested Company Stock Option; 

(2)provided that the Final Merger Consideration is greater than the Preliminary Merger Consideration, at the time of the determination of the Final Merger Consideration, an amount, payable (without interest) in such form as provided inSection 1.8(c), equal to the Vested Company Stock Option Adjustment Per Share Consideration calculated with respect to such particular Vested Company Stock Option; 

(3) upon the satisfaction of the First Target Reserve Consideration Conditions, an amount, payable (without interest) in such form as provided in Section 1.8(c), equal to (i) the Per Share FirstTarget Reserve Consideration, plus (ii) the Per Share First Target Additional Reserve Consideration, minus (iii) in the event the Final Merger Consideration is less than the Preliminary Merger Consideration, the Per Share AdjustmentConsideration, minus (iv) any portion of the per share Applicable Exercise Price for such Vested Company Stock Option not previously paid through an adjustment in Sections 1.9(b)(i)(1) or (2) above; 

(4) upon the satisfaction of the Second Target Reserve Consideration Conditions, an amount, payable (without interest) in such form asprovided in Section 1.8(c), equal to (i) the Per Share Second Target Reserve Consideration, plus (ii) Per Share Second Target Additional Reserve Consideration, minus (iii) in the event the Final Merger Consideration is less thanthe Preliminary Merger Consideration, the Per Share Adjustment Consideration (excluding the amount of any such Per Share Adjustment Consideration previously deducted pursuant to Section 1.9(b)(i)(3)), minus (iv) any portion of the pershare Applicable Exercise Price for such Vested Company Stock Option not previously paid through an adjustment in Sections 1.9(b)(i)(1), (2) or (3) above; and 

(5) upon release pursuant to the terms of the Escrow Agreement (as defined herein), an amount, payable (without interest) in such form as provided in Section 1.8(c), equal to the Per Share InitialEscrow Amount - Vested Company Stock Option and the Per Share Adjustment Escrow Amount - Vested Company Stock Option, *provided that* such amounts shall be subject to reduction, if any, to satisfy the indemnification obligations set forth inthe Escrow Agreement and Section 8 of this Agreement, minus any portion of the per share Applicable Exercise Price for such Vested Company Stock Option not previously paid through an adjustment in Sections 1.9(b)(i)(1), (2), (3) or(4) above. 

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**(ii)**each Unvested Company Stock Option outstanding as of immediately prior tothe Effective Time shall be assumed by Parent and converted into an option to purchase that number of shares of Parent Common Stock determined by multiplying each share of Company Common Stock subject to such Unvested Company Stock Option by theUnvested Option Exchange Ratio. For purposes of the Agreement, the term ***“Unvested Option Exchange Ratio”*** shall mean the maximum consideration payable to a single share of Company Common Stock under Section 1.8(a) (valuedas of the Effective Time) divided by the Applicable Parent Share Price. The application of the Unvested Option Exchange Ratio shall comply with the provisions of Section 424(a) of the Code and the regulations promulgated thereunder. To theextent that the application of the Unvested Option Exchange Ratio results in an exercise price for a share of Parent Common Stock expressed in terms of a fraction of a cent, such exercise price shall be rounded up to the next whole cent. To theextent that the application of the Unvested Option Exchange Ratio would result in an option to acquire a fractional share of Parent Common Stock (after aggregating all shares held by such holder), the number of shares of Parent Common Stock subjectto such option shall be rounded down to the nearest whole share. Any vesting restrictions, forfeiture provisions or other contractual restrictions burdening an Unvested Company Stock Option shall remain in effect and unaffected by the occurrence ofthe Merger or any event connected with the Merger, except as expressly provided for by the terms and conditions under which such Unvested Company Stock Option was granted. In addition, all conditions and restrictions imposed on the determination ofthe consideration finally paid for a share of Company Common Stock under Section 1.8(a) (taking into account all other applicable sections of the Agreement, including without limitation Section 1.8(d), but excluding any provisions relatingto the establishment of the escrow under Section 1.13, which shall not apply to Unvested Company Stock Options) shall apply proportionally to the option to purchase shares of Parent Common Stock issued in exchange for the Unvested Company StockOption. Therefore to the degree that the consideration finally paid to a share of Company Common Stock is less than the maximum consideration payable to such share under the Agreement, disregarding any adjustments made under the escrow establishedunder Section 1.13, the shares of Parent Common Stock finally issued to the holder of Unvested Company Stock Options shall be reduced to the same degree. Parent shall make all required payments to former holders of Unvested Company StockOptions no later than the end of the calendar quarter during which such amounts shall become payable in accordance with this Section (provided that if such date shall fall within fifteen (15) days prior to the end of a calendar quarter, thenParent may, in its sole discretion, make such payment no later than the end of the next succeeding calendar quarter), and in Parent’s discretion may make such payments through a paying agent authorized by the Parent to administer such paymentson the Parent’s behalf. All amounts payable pursuant to Section 1.9(b) shall be paid without interest. The terms of the agreement governing an Unvested Company Stock Option shall remain the same as those terms in effect immediately priorto the Effective Time, except to reflect the substitution of Parent for the Company as the grantor of the option and the issuance of Parent Common Stock instead of Company Common Stock upon the exercise of such option. 

**(iii)**All amounts payable pursuant to this Section 1.9(b) shall be subject to any required withholding of Taxes. 

**(c) Other Company Securities.** Prior to the Effective Time, the board of directors of the Company shall approve all resolutionsrequired in order to provide that, as of immediately prior to the Effective Time, (i) each then outstanding: (A) subscription, option, call, warrant or other right (whether or not currently exercisable) to acquire any shares of capitalstock or other securities of the Company; (B) security, instrument or obligation that is or may become convertible into or exchangeable for any shares of capital stock or other securities of the Company; (C) Contract under which theCompany 

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is or may become obligated to sell or otherwise issue any shares of its capital stock or any other securities of the Company; and (D) share of restricted stock of the Company(clauses (A) through (D) above, collectively ***“Company Securities”***) (other than Company Stock Options and Company Restricted Shares), shall be accelerated in its and their entirety effective as of immediately priorto the Effective Time, and all forfeiture rights with respect thereto in favor of the Company shall lapse in their entirety as of such time, and (ii) that each Company Security that has not been exercised, or remains subject to a right offorfeiture in favor of the Company, in either case as of immediately prior to the Effective Time (but after giving effect to the acceleration, if any, provided under clause (i) hereof), shall terminate and be canceled as of the Effective Timeand the holders thereof shall have no further rights with respect thereto, except as may be provided in Section 1.9(a) with respect to Company Restricted Shares or Section 1.9(b) with respect to Company Stock Options. 

**(d)**Prior to the Closing Date, the Company shall take all actions reasonably necessary or advisable to allow for the treatment ofthe Company Securities contemplated by paragraphs (a), (b) and (c) of this Section under the terms of the Company Stock Option Plan and any and all other Contracts evidencing or governing Company Securities, including the amendment of anyof the foregoing or the giving of any notice required under the Company Stock Option Plan or any such Contract relating to the Company Securities and, without limiting the generality of the foregoing, the Company shall pass all appropriateresolutions and give all consents, approvals and waivers that are reasonably necessary to allow for the treatment of the Company Securities as contemplated by paragraphs (a), (b) and (c) of this Section, and the Company shall use itsreasonable best efforts to obtain from each holder of a Vested Company Stock Option an executed instrument pursuant to which each such holder acknowledges and agrees to its indemnification obligations hereunder and appoints of the Stockholders’Representative as its agent and attorney in fact for the same purposes, and upon the same terms (*mutatis mutandis*), as such Stockholders’ Representative is appointed under Section 9.1 with respect to the stockholders of the Company.The Stockholders’ Representative hereby accepts such appointment by such holders of Vested Company Stock Options. 

**4Termination Events****.**

(a) Section 7.1(e) of the Initial Agreement is hereby amended and rested in its entiretyas set forth below: 

by Parent, if this Agreement and the Merger shall not have been approved within twenty-four(24) hours from 11:59 p.m. Pacific Time on the Amendment Date by the vote of the stockholders of the Company holding ninety percent (90%) of the issued and outstanding shares of capital stock of the Company; 

(b) Section 7.1(g) of the Initial Agreement is hereby amended and restated in its entirety as set forth below: 

by written notice by the Company to Parent or Parent to the Company, as the case may be, in the event the Closing has not occurred on orprior to November 30, 2014 (the ***“Final Termination Date”***) for any reason other than delay or nonperformance of or breach by the party seeking such termination. 

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**5 Operation of the Company.**Section 4 of the Initial Agreement is herebyamended to add a Section 4.18 as set forth below: 

From and after the consummation of the Merger and until theachievement of the achievement of the Second Product Milestone or the Second Product Deadline, Parent shall (i) substantially maintain intact the Company’s R&D/Engineering organization and reporting structure (provided however that inno event shall voluntary departures or terminations for good cause be deemed to constitute a breach of this provision), (ii) continue to operate the Company’s R&D/Engineering organization in the ordinary course of its businessconsistent with its past practices, (iii) timely make available such resources as are reasonably required in order to achieve the [...***...] Milestone and the Second Product Milestone on or prior to the Second Product Deadline. In theevent of a material breach of this Section 4.18 which remains uncured following thirty (30) days written notice from the Company of such breach, the [...***...] Milestone or the Second Product Milestone, as applicable, shall bedeemed to be met by the Company. 

**6 Engineering Change Order Process.**Parent and the Company hereby agree that in theevent that any of the requirements or events set forth on Schedule 1 attached hereto are not completed by the date set forth next to such event, Parent and the Company will each conduct an evaluation and assessment of the impact of suchrequirement to be met or the delay of such event on the overall project, and will thereafter meet and discuss in good faith any necessary changes to the plan of record (including the impact of such changes to the schedule and funding requirements ofthe Project). Following such discussions, Parent and the Company shall make corresponding changes to the Company’s delivery schedule, funding requirements and other provisions as are reasonably necessary to contemplate the change in the plan ofrecord resulting from such failure of the applicable event to be met by the corresponding date. Any disagreement between the Company and Parent shall be handled by the dispute resolution process set forth in Section 9.2 of the Agreement.

**7 Certain Equity Matters.** Parent and the Company hereby agree that in the event shares of Parent Common Stock issuedupon the conversion of Company Restricted Shares or issuable upon the exercise of Unvested Company Stock Options are forfeited, such shares of Parent Common Stock shall be reissued as Parent Equity Grants on or prior to the achievement of the SecondProduct Milestone to those former employees of the Company or replacement hires for such former employees who have terminated their employment with the Company or Parent following the Effective Time who are then employed by the Company or Parent.The Parent Equity Grants shall vest in the recipient’s hands connection with the satisfaction of the First Target Reserve Consideration Conditions and/or the Second Target Reserve Consideration Conditions, in each case, as determined by Parentin its reasonable discretion. Any Parent Equity Grants which are forfeited subsequent to issuance, shall again be reissued in accordance with this Section. For the avoidance of doubt, this Section 7 shall require the issuance by Parent ofParent Equity Grants equal in number to those shares of Parent Common Stock which were issued upon the conversion of Company Restricted Shares or issuable upon the exercise of Unvested Company Stock Options immediately following the Effective Timewhich are forfeited following the Effective Time. 

**8 Capitalization.** Section 2.5 of the Initial Agreement ishereby amended and restated in its entirety as set forth below: 

(a) The authorized capital stock of the Company consists of:(i) 12,500,000 shares of Company Common Stock, of which 6,415,030 shares have been issued and are outstanding as of the Amendment Date. There are no authorized, issued or outstanding shares of capital stock of the Company other than CompanyCommon Stock. All of the outstanding shares of Company Common Stock have been duly authorized and validly issued, and are fully paid and non assessable. All of the outstanding shares of Company Common Stock and all outstanding Company Securitieshave been issued and granted in compliance with (i) all applicable securities laws and other applicable Laws, and (ii) all requirements 

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and 240.24b-2 

 
set forth in the Company Constituent Documents and applicable Contracts. Each of the Company’s stockholders is the record and beneficial owner of the shares of the Company Common Stock asset forth opposite such stockholder’s name on Part 2.5(a) of the Company Disclosure Schedule, and such shares are free and clear of all Encumbrances (other than those Encumbrances relating to applicable securities laws). Other than shares ofCompany Common Stock and Company Stock Options, there are no other securities of the Company authorized, issued or outstanding, and the Company has not agreed to issue any such other securities (whether or not contingent upon the occurrence of anyevent or circumstance). 

(b) The Company has reserved 7,725,000 shares of Company Common Stock for issuance under the CompanyStock Option Plan, of which there are 2,667,272 outstanding options to purchase shares of Company Common Stock as of the Amendment Date. 

(i) Part 2.5(b) of the Company Disclosure Schedule accurately sets forth, with respect to each Company Security outstanding as of the Amendment Date (whether vested or unvested and whether issued pursuantto any Company Stock Option Plan or otherwise): (A) the name of the holder of such Company Security and the type of such Company Security; (B) the total number of shares of Company Common Stock that are subject to such Company Security andthe number of shares of Company Common Stock with respect to which such Company Security is immediately exercisable; (C) the date on which such Company Security was granted and the expiration date of such Company Security; (D) the vestingschedule for such Company Security, including any milestones or performance criteria upon whose achievement or satisfaction such vesting is contingent; (E) the exercise, or purchase, price per share of Company Common Stock purchasable undersuch Company Security; (F) whether (and to what extent) the vesting of such Company Security will be accelerated in any way by the transactions contemplated by this Agreement or by the termination of employment or engagement or change inposition of any holder thereof following consummation of the Merger; and (G) whether such Company Security has been designated an “incentive stock option” as defined in Section 422 of the Code. 

(ii) The Company has not issued any debt securities which grant the holder thereof any right to vote on, or veto, any actions by theCompany. The Closing Capitalization Certificate referred to in Section 4.8 is accurate and complete. 

(c) From itsinception through the Amendment Date, other than with respect to the contribution of certain shares held by Sheffield Capital, LLC, the Company has never repurchased, redeemed or otherwise reacquired any shares of capital stock or other securitiesof the Company. Part 2.5(c) of the Company Disclosure Schedule lists as of the Amendment Date all issued and outstanding shares of Company Common Stock that constitute restricted stock or that are otherwise subject to a repurchase or redemptionright or right of first refusal in favor of the Company, indicating the name of the applicable stockholder, the class of any such shares, the lapsing schedule for any such shares, including the extent to which any such repurchase or redemption rightor right of first refusal has lapsed as of the Amendment Date, whether (and to what extent) the lapsing will be accelerated in any way by the transactions contemplated by this Agreement or by termination of employment or change in position followingconsummation of the Merger, and whether such holder has the sole power to vote and dispose of such shares. 

(d) Other than theSecurityholder Agreement and the Side Letter, the Company is not a party to or bound by any, and to the Knowledge of the Company, there are no, agreements or understandings with respect to the voting (including voting trusts and proxies) or sale ortransfer (including agreements imposing transfer restrictions) of any shares of capital stock or other equity interests of the Company. 

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(e) The Company is not now, nor has it ever been, required to file with the SEC anyperiodic or other reports, or any registration statement, pursuant to the Securities Act or the Exchange Act. 

**9 CompanyStock Option Plan.**A new Section 9.19 shall be added to the Initial Agreement as follows: 

“**9.19 Assumptionof Veloce Technologies, Inc. 2009 Stock Incentive Plan.**Parent shall assume the Veloce Technologies, Inc. Amended and Restated 2009 Stock Incentive Plan, dated October 21, 2010, as amended, at the Effective Time and shall act as the sponsorof such plan on and after the Effective Time in accordance with its terms (as adjusted to reflect the role of Parent as the sponsor of the such plan and the issuance of shares of Parent Common Stock in connection with the grant of awards under suchplan).” 

**10 Representations and Warranties of the Company.** Except as set forth on the Company Disclosure Scheduledelivered by the Company within three (3) business days following the execution of this Amendment, the Company represents and warrants to and for the benefit of the Indemnified Parties that each of the representations and warranties set forthin Section 2 of the Initial Agreement are true and correct in all respects as of the Amendment Date and as of the Closing Date, provided, for the avoidance of doubt, that (i) all references to the “Agreement Date” and the“date hereof” in Section 2 of the Initial Agreement shall be deemed to also refer to the “Amendment Date,” (ii) the reference to “April 30, 2009” in Section 2.18(c) of the Initial Agreement shall bechanged to “October 31, 2010, and (iii) Section 2.5 of the Initial Agreement shall be deemed amended and restated as set forth in Section 8 above. 

**11 Representations and Warranties of Parent and Merger Sub.** Parent and Merger Sub represent and warrant to the Company that each of the representations and warranties set forth in Section 3 ofthe Initial Agreement are true and correct in all respects as of the Amendment Date and as of the Closing Date, provided that all references to the “Agreement Date” and the “date hereof” in Section 3 of the Initial Agreementshall be deemed to also refer to the “Amendment Date.” 

**12 Deliverables.** Parent shall have thirty(30) days to accept or reject a deliverable, provided however that Parent may only reject a deliverable if it can demonstrate that it does not meet the specific criteria set forth for such deliverable. Deliverables are deemed accepted if notrejected within such thirty (30) day period. Once a deliverable has been accepted, for purposes of milestones, the date of original receipt by Parent of such deliverable shall be deemed to be the date that the milestone is met; provided that nodelay by Parent during (or resulting from the evaluation of such deliverable during) such thirty (30) day period in fulfilling any obligation that is contingent on the meeting of such milestone shall be deemed a breach of the Agreement or anyagreement contemplated by the Agreement. 

**13 References to Dates.** The following Sections of the Initial Agreement shallbe amended as follows: (i) “, as of the Amendment Date” shall be inserted immediately after each instance of “Agreement Date” in Section 5.1, Section 5.7(a) and Section 6.1 and (ii) “, as of theAmendment Date” shall be inserted immediately after the first reference to “Agreement Date” in Section 8.1(e). 

**14 References in Section 1.11.**References to “Per Share Initial Escrow Amount” in Section 1.11 of the Initial Agreement shall be deemed to refer to “Per Share InitialEscrow Amount - Common Stock.” 

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**15 References to Section 1.9.** The following Sections of the InitialAgreement shall be amended as follows: “and Section 1.9” shall be inserted immediately after each instance of “Section 1.8” in Section 1.3, Section 1.12, Section 4.15 and Section 9.11. 

**16 Amendments to Section 8.** The following portions of Section 8 of the Initial Agreement shall be amended as follows:(i) the heading of Section 8.2 shall be changed to “Indemnification Obligations of the Stockholders and Vested Company Stock Option Holders” and (ii) “or holder of Vested Company Stock Options” shall be insertedimmediately after “stockholder” in Section 8.3. 

**17 Defined Terms.** If a capitalized term is defined inboth the Initial Agreement and this Amendment, the definition provided for such capitalized term in this Amendment shall be deemed to replace the definition for such capitalized term in the Initial Agreement as of and from the Amendment Date for allpurposes hereunder and thereunder. 

**18 Miscellaneous Provisions.** Except as expressly set forth in this Amendment, eachterm and provision of the Initial Agreement shall remain in full force and effect. To the extent there is a conflict between this Amendment and the Initial Agreement, the provisions of this Amendment will control. 

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and 240.24b-2 

 
The parties hereto have caused this Amendment to be executed and delivered as of thedate first set forth above. 

 
**PARENT:**
**APPLIED MICRO CIRCUITS CORPORATION,**

a Delaware corporation
By: 
/s/ Paramesh Gopi
Name: 
Paramesh Gopi
Title: 
CEO
**MERGER SUB:**
**ESPRESSO ACQUISITION CORPORATION,**

a Delaware corporation
By: 
/s/ L. William Caraccio
Name: 
L. William Caraccio
Title: 
VP
**COMPANY:**
**VELOCE TECHNOLOGIES, INC.,**

a Delaware corporation
By: 
/s/ Balaji Bakthavatchalam
Name: 
Balaji Bakthavatchalam
Title: 
President & CEO
**STOCKHOLDERS’ REPRESENTATIVE:****JEFFREY HARRELL**By: 
/s/ Jeffrey Harrell
Name: 
Jeffrey Harrell
Title: 
 

[SIGNATURE PAGE TO AMENDMENTNO.1 TO AGREEMENTAND PLANOF MERGER] 

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Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
**EXHIBIT A**

**CERTAIN DEFINITIONS**

For purposes of the Agreement (including this Exhibit A), as amended by this Amendment, each of the capitalized terms identified below shall, from and after the Amendment Date, have themeanings set forth below. Each capitalized term set forth in Exhibit A to the Initial Agreement that is not identified below or in Section 2(b)(i) of this Amendment shall continue to have the meaning set forth in Exhibit A to the InitialAgreement. 

[...***...] means [...***...] 

[...***...] means the [...***...] to determine the actual device performance metrics, including but not limited to,[...***...] 

***“First***[...***...] means the delivery by the Company of a [...***...] forthe [...***...] with all standard sign-off checks completed [...***...]) that is ready to be included in the First Product [...***...] (the “***First***[...***...]”). 

***“First Product”*** means an [...***...] having an [...***...] and other structures designed by[...***...]. 

***“First Product Consideration Chart”*** means the tables attached as ***ExhibitE*** hereto, which shall, effective from and after the Amendment Date, replace and supersede in its entirety the First Product Consideration Chart attached to the Initial Agreement. 

***“First Product Consideration Date”***means the date of the First [...***...], *provided* that the FirstProduct [...***...] Milestone has been achieved. For the avoidance of doubt, such achievement shall not be used in the calculation of the First Product Consideration Date. 

***“First Product Interim Development Milestone”*** means the completion of [...***...] for the First[...***...]. 

***“First Product Performance Specifications”*** means the “Veloce MinimumRequirements,” as set forth in the First Product Consideration Chart. 

***“First Product***[...***...] ***Milestone”***means the actual receipt by Parent of a functional First Product that meets the [...***...] Requirements and Minimum Requirements set forth in Exhibit E and has achieved [...***...]confirmed via the procedure set forth in Exhibit E under the section entitled “Initial [...***...] Confirmation” that is not less than [...***...]. ******

***“***[...***...]***”***means [...***...] 

***“***[...***...]***”*** has the meaning set forth on page E-9 of the First Product Consideration Chart.

***“Project”*** means the development of a [...***...] as described in Section 2.1 of theDevelopment Agreement. 

 
A-1

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Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
***“Related Agreement”*** means (i) the Development Agreement, asamended, (ii) the Securityholder Agreement, as amended, (iii) the Escrow Agreement, as amended, and (iv) any other certificate, agreement, document or other instrument to be executed and delivered by the Company, Merger Sub or Parent,as applicable, in connection with the transactions contemplated hereby. 

***“Second Product Milestone”***means the actual receipt by Parent, pursuant to the Development Agreement, of the Second Product that meets each of the Second Product Performance Specifications with a variance of not greater than fifteen percent (15%). 

***“Second Product Performance Specifications”*** means the performance requirements as may be mutually agreed upon bythe Company and Parent, that are established for the Second Product with respect to [...***...] and [...***...], based upon the performance of the [...***...]. 

***“Second Product Update”*** means an optional (at Parent’s discretion) version of the Second Product createdusing a different version of the [...***...] which was current at a date which is not less than ninety (90) days prior to the occurrence of Second Product Milestone date, which [...***...] incorporates the Company’s reasonablebest efforts over a reasonable period of time to remedy any deterioration from the performance of the Second Product caused by the use of the later version of the [...***...]. Parent shall make such election not later than seven (7) daysafter delivery of the Second Product by the Company. 

***“Second Product”***means a [...***...]developed using the same version of the [...***...] as the [...***...], which implements the same design as the First [...***...], except with full [...***...] of all [...***...] consistent with the First[...***...] requirements (including but not limited to [...***...]), and which is functional. For the avoidance of doubt, the Second Product shall include a [...***...] that implements the same [...***...] as the[...***...] in the First [...***...]. 

***“***[...***...]***”*** means a[...***...], prepared by Parent prior to delivery of the Second Product in [...***...], that will be used to determine the Second Product Performance Specifications. The [...***...] will contain space available for the Company toinsert the following structures: (a) [...***...] intended to be used on the Second Product; (b) [...***...] intended to be used on the Second Product; (c) [...***...] intended to be used on the Second Product;(d) [...***...] related structures; (e) [...***...] (to be defined) for [...***...] that will be achievable on the Second Product; and (f) other Second Product structures to be determined by Parent and the Company bythe end of the quarter ending [...***...]. 

***“***[...***...]***Milestone”*** means the actual receipt by Parent of: (i) a report detailing and comparing the results from the modeled [...***...] structures and the actual [...***...] results from the [...***...] and(ii) a set of [...***...] or adjustment factors to apply to modeled data to obtain more accurate estimates of physical results of the [...***...] of the Second Product. In the event that (A) the process set forth on ExhibitE under the section entitled “[...***...]” fails to confirm the [...***...] (defined asFi on Exhibit E hereto) **and**(B) [...***...] (where [...***...] are determined in accordance with Exhibit E hereto), then the [...***...]Milestone shall be deemed not to be achieved until such time as the Company and Parent have met, discussed ingood faith and agreed (with such agreement not to be unreasonably withheld by either party) as to (i) the impact of such failure with respect to the Project and (ii) a plan of remediation which may involve adjustments to the schedule andfunding requirements of the Project as well as any additional amounts to be paid to the Company and its stockholders in connection with the Agreement and the Company’s efforts to satisfy the [...***...] Milestone and the Second ProductMilestone. 

 
A-2

*** Text Omitted and Filed Separately 

Confidential Treatment Requested 

Under 17 C.F.R. §§ 200.80(b)(4) 

and 240.24b-2 

 
***“Vendor”*** means ARM Holdings PLC. 

****** 

Omitted Schedules*: 

 
Exhibit B  -    Amendment to Development AgreementExhibit C  -    Amended and Restated Securityholder AgreementExhibit D  -    Stockholder Written ConsentExhibit E  -    First Product Consideration ChartSchedule 1  -    Certain Events
 
*Applied Micro Circuits Corporation agrees to furnish supplementally to the Securities and Exchange Commission (“SEC”) these omitted schedules upon the requestof the SEC. 
 
A-3