Exhibit 2.4  AGREEMENT AND PLAN OF MERGER  BY AND AMONG  MOSYS, INC.  MLI MERGER CORPORATION  MAGNALYNX, INC.  AND  THE REPRESENTATIVE OF THE 
SHAREHOLDERS OF MAGNALYNX, INC.  Dated as of March 24,
2010


TABLE OF CONTENTS  PageSECTION 1.
  THE
  MERGER
  11.1
  The
  Merger
  11.2
  Effective
  Time; Closing
  11.3
  Effect
  of the Merger
  21.4
  Articles
  of Incorporation; Bylaws; Corporate Records
  21.5
  Directors
  and Officers
  21.6
  Appointment
  of Representative; Agreement Binding on Company Shareholders
  31.7
  Shareholder
  Approval
  31.8
  Certain
  Definitions
  3SECTION 2.
  CONVERSION
  AND EXCHANGE OF SECURITIES
  62.1
  Effect
  on Capital Stock
  62.2
  Dissenting
  Shares
  72.3
  Options
  and Warrants
  82.4
  Earn-out
  82.5
  Holdback
  and Dispute Fund Amount
  82.6
  Closing
  Payment; Surrender of Certificates
  92.7
  Payment
  of Closing Debt Payments
  102.8
  Further
  Action
  10SECTION 3.
  REPRESENTATIONS
  AND WARRANTIES OF THE COMPANY
  113.1
  Organization
  and Standing
  113.2
  Capitalization
  and Ownership of Shares
  113.3
  Allocation
  Schedules
  123.4
  Authority
  for Agreement
  133.5
  Consents
  133.6
  Financial
  Statements; No Undisclosed Liabilities
  143.7
  Absence
  of Changes
  143.8
  Taxes
  153.9
  Property
  and Sufficiency
  163.10
  Contracts
  173.11
  Benefit
  Plans
  173.12
  Intellectual
  Property
  183.13
  Accounts
  Receivable; Accounts Payable
  223.14
  Inventory
  233.15
  Suppliers and Customers
  23  i


TABLE OF CONTENTS (continued)  Page3.16
  Insurance
  233.17
  Employees
  and Consultants
  233.18
  Litigation
  243.19
  Environmental
  Matters
  243.20
  Compliance
  with Laws; Permits
  253.21
  Banking
  Relationships
  253.22
  Minute
  Books and Records
  253.23
  Brokers;
  Schedule of Fees
  253.24
  Vote
  Required
  253.25
  Company
  Determinations, Approvals and Recommendations
  263.26
  Certain
  Relationships and Related Transactions
  263.27
  Disclosures
  26SECTION 4.
  REPRESENTATIONS
  AND WARRANTIES BY PARENT AND MERGER SUB
  264.1
  Organization
  and Standing
  264.2
  Authority
  for Agreement
  264.3
  Brokers
  and Finders
  274.4
  Ownership
  and Activities of Merger Sub
  27SECTION 5.
  ADDITIONAL
  AGREEMENTS
  275.1
  Conduct
  of the Companys Business Prior to Closing
  275.2
  Confidentiality;
  Access to Information
  285.3
  Public
  Disclosure
  285.4
  Notification
  285.5
  Exclusivity
  285.6
  Reasonable
  Efforts
  295.7
  Cooperation
  295.8
  Company
  Option Plan
  295.9
  Delivery
  of Contracts for Due Diligence
  295.10
  Company
  Shareholders Consent
  295.11
  Resignation
  of Officers and Directors
  305.12
  Vacation
  and Sick Pay
  305.13
  Parent
  and Surviving Corporation Indemnification
  30  ii


TABLE OF CONTENTS (continued)  PageSECTION 6.
  CONDITIONS PRECEDENT TO THE
  OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER
  316.1
  Requisite Shareholder Approval
  316.2
  No Order
  31SECTION 7.
  ADDITIONAL
  CONDITIONS PRECEDENT TO THE OBLIGATIONS OF PARENT AND MERGER SUB
  317.1
  Representations,
  Warranties and Covenants
  317.2
  Government
  and Other Third Party Approvals
  317.3
  Satisfactory
  Review of Contracts
  317.4
  Offers
  of Employment; Non-Compete Agreements
  317.5
  Dissenting
  Shares
  317.6
  Company
  Material Adverse Effect
  317.7
  Opinion
  of Company Counsel
  327.8
  Cancellation
  of Options and Warrants
  327.9
  Loan
  Settlement Agreements
  327.11
  Shareholder
  Consent, Proxy, Release and Waiver
  327.12
  Deliveries
  32SECTION 8.
  CONDITIONS
  PRECEDENT TO OBLIGATIONS OF THE COMPANY
  328.1
  Representations,
  Warranties and Covenants
  328.2
  Parent
  Material Adverse Effect
  328.3
  Deliveries
  33SECTION 9.
  CLOSING
  DELIVERIES
  339.1
  Closing
  Deliveries of the Company
  339.2
  Closing
  Deliveries of Parent
  33SECTION 10.
  SURVIVAL
  33SECTION 11.
  TERMINATION
  3411.1
  Termination
  prior to the Effective Time of the Merger
  3411.2
  Notice
  of Termination; Effect of Termination
  35SECTION 12.
  FEES
  AND EXPENSES
  35SECTION 13.
  INDEMNIFICATION
  AND CLAIMS FOR DAMAGES
  3513.1
  Parent
  Claims Against Indemnifying Shareholders
  3513.2
  Indemnification
  Funds
  3613.3
  Limitations
  of Liability
  3613.4
  Notification
  Certification of Claims
  37  iii


TABLE OF CONTENTS (continued)  Page13.5
  Third
  Party Actions
  3713.6
  Reimbursement
  and Indemnification for Representative
  3813.7
  Definition
  of Damages
  3813.8
  Exclusive
  Remedy
  3813.9
  Treatment
  of Indemnification Payments
  3813.10
  Transfer
  and Similar Taxes
  3813.11
  Dispute
  Resolution
  38SECTION 14.
  REPRESENTATIVE
  4014.1
  Power
  and Authority
  4014.2
  Acceptance
  4014.3
  Replacement
  4014.4
  No
  Liability
  4014.5
  Notice
  4014.6
  Representations
  and Warranties
  4114.7
  Role
  of Representative
  41SECTION 15.
  RELEASE
  41SECTION 16.
  MISCELLANEOUS
  4216.1
  Notices
  4216.2
  Successors
  and Assigns
  4316.3
  Interpretation
  4316.4
  Counterparts;
  Execution
  4416.5
  Severability
  4416.6
  Third
  Parties
  4416.7
  Additional
  Definitions
  4516.8
  Governing
  Law; Submission to Jurisdiction
  4516.9
  Entire
  Agreement, Not Binding Until Executed
  4516.10
  Amendments;
  No Waiver
  46  iv


INDEX OF DEFINED TERMS  Accounts Payable
  23Accounts Receivable
  22Acquisition Proposal
  29Action
  24Active Founder Claims
  36Active Founders
  36Administaff
  18Adverse Earn-out Determination Notice
  8Affiliate
  45Agreement
  1Applicable Law
  3Articles of Merger
  2Associate
  45Basket Amount
  37Business Day
  45Closing
  2Closing Allocation Schedule
  4Closing Date
  2Closing Debt Payments
  3Closing Merger Consideration
  4Closing Shares Outstanding
  4Code
  10Company
  1Company Effect
  4Company IP
  21Company Material Adverse Effect
  4Company Noteholders
  4Company Notes
  4Company Organizational Documents
  4Company Products
  22Company Shareholders
  1Company Software
  22Company Stock
  1Confidential Information
  4Confidentiality Agreement
  28Consents
  13Consultant Confidentiality Agreements
  24Consultants
  23Contract
  17Damages
  38Disclosure Schedule
  4Dispute Fund Account
  9Dispute Fund Amount
  5Dissenting Shares
  7Earn-out Consideration
  5Earn-out Determination Date
  8Earn-out Period
  8Effective Time
  2Employee Benefit Plans
  17Employee Confidentiality Agreements
  23Employee Employment Agreements
  24Employee Loans
  5End Date
  34Environmental Laws
  25ERISA Affiliate
  17ERISA Affiliate Plans
  17Exclusivity Period
  28Financial Statements
  14Founders Agreement
  12GAAP
  14Governmental Authorities
  13Hazardous Substance
  24Holdback Amount
  5Holdback Funds
  8Holdback Period
  8IBCA
  1IDED Loan
  5Indebtedness
  5Indemnification Funds
  36Indemnified Party
  30Indemnifying Shareholders
  3Intellectual Property Rights
  22Iowa Law
  1IRS
  16JAMS
  39Knowledge
  45Knowledge of the Company
  45Leased Premises
  17Legal Requirements
  5Letter of Transmittal
  9Merger
  1Merger Sub
  1Net Merger Consideration
  5Officers Certificate
  37Option
  5Option Plan
  5Parent
  1Parent Claim
  35Parent Effect
  5Parent Indemnified Parties
  35Parent Material Adverse Effect
  5Party
  1Per Share Closing Merger Consideration
  5  v


Per Share Earn-out Consideration
  6Per Share Holdback Consideration
  6Permits
  25Permitted Encumbrances
  16Permitted Expenses
  15Person
  6Preliminary Allocation Schedule
  4Real Property Leases
  17Reference Balance Sheet
  14Registered IP
  22Related Persons
  26Representative
  3Requisite Shareholder Approval
  26Securities Act
  12Security Interest
  13Severance Payments
  6Surviving Corporation
  1Tax
  16Tax Law
  16Tax Return
  16Taxes
  16Taxing Authority
  16Total Consideration
  6Transaction Documents
  3Transaction Expenses
  6Transfer Taxes
  38Warrants
  6  vi


AGREEMENT AND PLAN OF
MERGER  THIS AGREEMENT AND PLAN OF
MERGER is made as of March 24, 2010 (this Agreement) by and among
MoSys, Inc., a Delaware corporation (Parent), MLI Merger
Corporation, an Iowa corporation and a wholly-owned subsidiary of Parent (Merger
Sub), MagnaLynx, Inc., an Iowa corporation (the Company),
and, solely with respect to Sections 1.6, 13, 14 and 16, the Representative (as
defined below).  The holders of all of
the capital stock of the Company (the Company Stock) are collectively
referred to as the Company Shareholders.  Parent, Merger Sub and the Company are
referred to collectively herein as the Parties and each individually
as a Party.  WHEREAS, the board of
directors of the Company has unanimously (i) determined that the merger of
Merger Sub with and into the Company upon the terms and subject to the
conditions set forth herein (the Merger) is desirable and in the best
interests of the Company and the Company Shareholders, (ii) approved, in
accordance with the applicable provisions of the Iowa Business Corporation Act
(the IBCA or Iowa Law) this Agreement and each of the
transactions contemplated hereby, including the Merger, and (iii) determined
to recommend that the Company Shareholders approve this Agreement and each of
the transactions contemplated hereby, including the Merger;  WHEREAS, the board of
directors of Merger Sub has unanimously (i) determined that the Merger is
advisable and in the best interests of Merger Sub and (ii) approved, in
accordance with the applicable provisions of the IBCA, this Agreement and each
of the transactions contemplated hereby, including the Merger; and  WHEREAS, in furtherance of
such combination, the board of directors of Parent, as the sole shareholder of
Merger Sub, has unanimously (i) approved this Agreement and the Merger, (ii) determined
that the Merger upon the terms and subject to the conditions set forth herein
is desirable and in the best interests of Parent and Merger Sub and (iii) approved,
in accordance with the applicable provisions of the IBCA this Agreement and
each of the transactions contemplated hereby, including the Merger.  NOW, THEREFORE, in
consideration of the foregoing and the mutual covenants and agreements herein
contained, and intending to be legally bound hereby, the parties hereby agree
as follows:  SECTION 1.The Merger.  1.1The Merger.  At the Effective Time (as defined below), and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Iowa Law, Merger Sub shall be merged with and into the
Company, the separate corporate existence of Merger Sub shall cease, and the
Company shall continue as the surviving corporation.  The Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the Surviving
Corporation.  1.2Effective Time;
Closing.  Unless this Agreement is
earlier terminated pursuant to Section 11, the closing of the transactions
contemplated by this Agreement (the


Closing)
shall take place as soon as reasonably practicable after the satisfaction or
waiver of each of the conditions set forth in Sections 6, 7 and 8 below (other
than the conditions set forth in Sections 6.2, 7.1, 7.6, 7.11, 8.1, 8.2 and
8.3, which shall be satisfied or waived at the Closing), or at such other time
as Parent and the Company shall otherwise agree (the Closing Date).  In connection with the Closing, the parties
shall cause the Merger to be consummated by filing articles of merger with the
Secretary of State of the State of Iowa, as contemplated by the IBCA (the Articles
of Merger) and make all other filings or recordings required by Iowa Law
in connection with the Merger.  The
Merger shall be effective upon the later of (a) the date and time of the
filing of the Articles of Merger with the Secretary of State of the State of
Iowa and (b) such other date and time as may be specified in the Articles
of Merger (such later date being referred to as the Effective Time).  The Closing shall take place at 10:00 a.m.,
Pacific Time, on the Closing Date at the offices of Bingham McCutchen LLP, 1900
University Avenue, East Palo Alto, California 94303.  1.3Effect of the
Merger.  At the Effective Time, the
effect of the Merger shall be as provided in this Agreement, the Articles of
Merger and the applicable provisions of Iowa Law, including Section 490.1107
of the IBCA.  Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time all the
property, rights, privileges, powers and franchises of the Company and Merger
Sub shall vest in the Surviving Corporation, and all debts, liabilities and
duties of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.  1.4Articles of
Incorporation; Bylaws; Corporate Records.  (a)Articles of
Incorporation.  At the
Effective Time, the Articles of Incorporation of the Company shall be amended
and restated in their entirety to be identical to the Articles of Incorporation
of Merger Sub, as in effect immediately prior to the Effective Time, until
thereafter amended in accordance with the IBCA and as provided in such Articles
of Incorporation, except that the name of the Surviving Corporation as stated
in such Articles of Incorporation shall be MoSys Iowa, Inc.  (b)Bylaws.  At the Effective Time, the Bylaws of the
Company shall be amended and restated in their entirety to be identical to the
bylaws of Merger Sub, as in effect immediately prior to the Effective Time,
until thereafter amended in accordance with the IBCA and such Bylaws, except
that the name of the Surviving Corporation on the face of such Bylaws shall be MoSys
Iowa, Inc.  (c)Corporate
Records.  At or prior to the Closing,
the Company shall deliver or cause to be delivered to Parent the minute books,
stock record books and, to the extent requested by Parent, all other documents,
books, records, agreements and financial data, of the Company.  1.5Directors and
Officers.  The
directors of Merger Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation, each to serve in accordance
with the Articles of Incorporation and Bylaws of the Surviving Corporation, and
the officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified, or their
earlier death, resignation or removal.  2


1.6Appointment of
Representative; Agreement Binding on Company Shareholders.  Jeffrey J. May (together with his
permitted successors, the Representative) is hereby appointed,
effective as of the Effective Time, as the representative of each Company
Shareholder that does not perfect his, her or its appraisal rights under the
IBCA and is otherwise entitled to receive a portion of the Closing Merger
Consideration pursuant to Section 2 of this Agreement (the Indemnifying
Shareholders), and shall be entitled to exercise all or any of the powers,
authority and discretion conferred on it under this Agreement (including,
without limitation, Sections 13 and 14), and any other agreement or instrument
entered into or delivered in connection with the transactions contemplated
hereby (collectively, the Transaction Documents).  The Representative agrees to act as, and to
undertake the duties and responsibilities of, such representative of the
Indemnifying Shareholders.  Each
Indemnifying Shareholder, by virtue of having approved and adopted this
Agreement shall be deemed to have irrevocably agreed to, and be bound by and
comply with, all of the obligations of the Indemnifying Shareholders set forth
herein (including, without limitation, Sections 13 and 14).  1.7Shareholder
Approval.  (a)As promptly as
practicable following the adoption of this Agreement by the Companys board of
directors, the Company, acting through its board of directors, has taken or
shall take any and all action necessary or appropriate to secure the Requisite
Shareholder Approval (by vote at a duly held meeting or through written
consent) in accordance with Iowa Law. 
Without limiting the foregoing, the Company shall prepare and deliver to
the Company Shareholders all notices, information concerning the Merger and
other written materials required to be delivered to the Company Shareholders
under Iowa Law in connection with the solicitation of written consents or
proxies, as applicable; provided that the Company shall give Parent
reasonable opportunity to review and provide comments to such written materials
before delivering them to the Company Shareholders.  Such written materials shall contain all
material facts concerning the Merger and shall include the recommendation of
the board of directors that the Company Shareholders approve the Merger.  (b)Without
limiting the Companys obligations under Section 1.7(a), at the written
request of Parent at any time, the Company shall promptly convene a meeting of
the Company Shareholders for the purpose of voting on the Merger.  (c)This Agreement
and the transactions contemplated hereunder will be deemed to have been
approved by the shareholders of the Company upon the Company obtaining written
consent of the holders of at least 90% of the outstanding Company Stock
approving this Agreement and the transactions contemplated hereunder.  1.8Certain
Definitions.  For
purposes of this Agreement, the following terms shall have the following
meanings:  Applicable Law shall mean any Legal
Requirements applicable to the Company.  Closing Debt Payments shall mean the
amounts payable by Parent pursuant to Section 2.7 hereof, as set forth on
the Closing Allocation Schedule.  3


Closing Merger Consideration shall mean an
amount of cash equal to the Net Merger Consideration, minus the Holdback
Amount, minus the Earn-out Amount, and minus the Dispute Fund
Amount, in each case calculated as of the Closing Date.  Closing Allocation Schedule shall mean a
schedule prepared by the Company and delivered to Parent at the Effective Time
in substantially the form of Schedule 1.8 attached hereto (Schedule
1.8 is referred to as the Preliminary Allocation Schedule)
showing, in each case as of the Closing Date, (1) the total number of
shares of Company Stock outstanding, (2) the number of shares of Company
Stock held by each Company Shareholder and the corresponding pro rata ownership
percentage of such Company Shareholder, and the address of such Company
Shareholder, (3) the maximum amounts of Closing Merger Consideration,
Earn-out Amount and Holdback Amount payable to each Company Shareholder,(4) the
amounts due and payable to each Company Noteholder with respect to the Company
Notes (based on interest accrued through February 28, 2010), (5) the
amount of Severance Payments payable to specified employees of the Company, (6) the
amounts of Employee Loans due and payable to each Employee, (7) the amount
due and payable under the IDED Loan and (8) a good faith estimate of the
amount of Transaction Expenses due and payable.  Closing Shares Outstanding shall mean the
total number of shares of Company Stock outstanding as of the Closing Date, as
set forth on the Closing Allocation Schedule.  Company Material Adverse
Effect shall mean any change in, event, or effect on the Company (in each
case, a Company Effect) that, when taken individually or in the
aggregate with all other Company Effects, (i) is or are materially adverse
in relation to the Companys financial condition, properties, assets,
liabilities, business, operations or prospects, taken as a whole, or (ii) may
materially impair the ability of the Company to consummate the transactions
contemplated hereby, except to the extent that such Company Effect or Company
Effects results from (1) changes in general economic conditions and
changes affecting the industry in which the Company operates generally that do
not adversely affect the Company to a materially disproportionate degree or (2) changes
or effects caused by the execution and delivery of this Agreement, by actions
required under this Agreement, or by actions requested by Parent in writing to
be taken by the Company.  Company Noteholders
shall mean the holders of the Company Notes.  Company Notes shall
mean those 2005 Convertible Bridge Notes and 2007 Convertible Subordinated
Bridge Notes issued by the Company, in each case as amended or extended.  Company Organizational
Documents shall mean the Companys Articles of Incorporation and Bylaws.  Company
Stock shall have the meaning set forth in the preamble of this Agreement.  Confidential Information
shall mean information or materials classified as confidential under the terms
of the Confidentiality Agreement (as defined in Section 5.2(a) this
Agreement).  Disclosure Schedule
shall mean the disclosure schedule supplied by the Company to Parent, dated as
of the date of this Agreement and delivered concurrently with the execution of
this Agreement by the Company.  4


Dispute Fund Amount shall mean an amount
of cash equal to $100,000.  Dissenting Shares
shall have the meaning set forth in Section 2.2(a) of this Agreement.  Earn-out Amount shall mean an amount of
cash up to $1,000,000, payable in accordance with Section 2.4 hereof.  For purposes of calculating the Closing
Merger Consideration under this Section 1.8, the Earn-out Amount shall be
deemed to be $1,000,000.  Employee Loans
shall mean all outstanding loans to the Company by any of the Employees,
whether or not evidenced by a promissory note or any other instrument.  Holdback Amount shall mean an amount of
cash equal to $500,000, subject to adjustment in accordance with Sections 2.5
and 13 hereof.  IDED Loan shall
mean that certain loan to the Company by the Iowa Department of Economic
Development (IDED), repayable by the Company in accordance with the terms of
that certain EVA Royalty Agreement dated February 19, 2004 between the
Company and IDED.  Indebtedness shall
mean all liabilities and obligations of the Company, including any applicable
penalties (including with respect to any prepayment thereof), interest and
premiums, (i) for borrowed money, (ii) evidenced by notes, bonds,
debentures or similar instruments, (iii) for the deferred purchase price
of goods or services (other than trade payables incurred in the ordinary course
of business), (iv) under capital leases, (v) with respect to letters
of credit, (vi) in the nature of guarantees of the obligations described
in clauses (i) through (v) above of any other Person, or (vii) in
the nature of obligations of the type referred to in clauses (i) through (vi) of
any other Person secured by any Security Interest on any asset of the Company.  Legal Requirements
shall mean any United States federal, state, municipal or local or foreign
order, judgment, writ, injunction, decree, law, statute, standard ordinance,
code, resolution, promulgation, rule, regulation or any similar provision
having the force or effect of law.  Net Merger Consideration
shall mean the Total Consideration, minus the Closing Debt Payments.  Option shall mean
any option (including commitments to grant options) to acquire shares of
Company Stock, including options granted under the Option Plan, but excluding
the Warrants.  Option Plan shall
mean the Companys 2003 Stock Option Plan, as amended.  Parent Material Adverse
Effect shall mean any change in, event, or effect on the Parent or Merger
Sub (in each case, a Parent Effect) that, when taken individually or
in the aggregate with all other Parent Effects, may materially impair the
ability of the Parent or Merger Sub to consummate the transactions contemplated
hereby.  Per Share Closing Merger Consideration
shall mean the Closing Merger Consideration, divided by the Company Shares
Outstanding.  Per Share Dispute Fund Consideration shall
mean the Dispute Fund Amount, divided by the Company Shares Outstanding.  5


Per Share Earn-out Consideration shall
mean the Earn-out Amount, divided by the Company Shares Outstanding.  Per Share Holdback Consideration shall
mean the Holdback Amount, divided by the Company Shares Outstanding.  Person shall mean a person, firm, entity,
partnership, association or any business organization or division thereof.  Severance Payments
shall mean amounts payable to certain employees of the Company upon termination
of their employment with the Company, as set forth in the Closing Allocation
Schedule.  Total Consideration shall mean five
million dollars ($5,000,000).  Transaction Expenses
shall mean any and all reasonable legal, accounting, consulting and other fees
and expenses incurred by or on behalf of the Company in connection with this
Agreement, the Merger or any of the transactions contemplated hereby,
outstanding on the Closing Date.  Warrants shall mean
any warrants to acquire shares of capital stock of the Company.  SECTION 2.Conversion And
Exchange Of Securities.  2.1Effect on
Capital Stock.  (a)Conversion of
Securities.  At the
Effective Time and subject to the terms and conditions of this Agreement, by
virtue of the Merger and without any action on the part of Parent, Merger Sub,
the Company or any Company Shareholder, each share of Company Stock issued and
outstanding immediately prior to the Effective Time (other than any Dissenting
Shares), shall be cancelled, extinguished and converted automatically into the
right to receive (i) cash in the amount of the Per Share Closing Merger
Consideration, plus (ii) an additional amount of cash up to the Per
Share Earn-out Consideration, plus (iii) an additional amount of
cash up to the Per Share Holdback Consideration, plus (iv) an
additional amount of cash up to the Per Share Dispute Fund Consideration.  (b)Cancellation.  From and after the Effective Time, by virtue
of the Merger, each share of Company Stock converted pursuant to Section 2.1(a) shall
no longer be outstanding and shall be automatically cancelled and retired and
shall cease to exist, and each holder of a certificate formerly representing
each such share shall cease to have any rights with respect thereto, except the
right to receive (subject to the terms of this Agreement) the portion of the
Closing Merger Consideration, Holdback Amount, Earn-out Amount and Dispute Fund
Amount payable with respect to such Company Stock, without interest, upon the
surrender of such certificate in accordance with the terms hereof and in the
manner provided herein, or, if such share of Company Stock is a Dissenting
Share, the right, if any, to receive payment from the Surviving Corporation of
the fair value of such Dissenting Share as determined in accordance with the
applicable provisions of the IBCA.  (c)Treasury Stock.  Each share of Company Stock owned by the
Company as treasury stock or owned by Parent, Merger Sub or any direct or
indirect wholly owned subsidiary of Parent immediately prior to the Effective
Time shall, by virtue of the Merger and  6


without
any action on the part of the holder thereof, cease to be outstanding, be
canceled and retired without payment of any consideration therefor and cease to
exist.  (d)Capital Stock
of Merger Sub.  Each share
of common stock of Merger Sub issued and outstanding immediately prior to the
Effective Time shall be converted into and become, and shall represent, one
fully paid and nonassessable share of common stock of the Surviving Corporation
with the same rights, powers and privileges as the shares so converted and
shall constitute the only outstanding shares of capital stock of the Surviving Corporation.  2.2Dissenting
Shares.  (a)Notwithstanding
anything in this Agreement to the contrary, any shares of Company Stock
outstanding immediately prior to the Effective Time that are eligible under the
IBCA to exercise appraisal rights and are held by a holder who (a) has not
voted or provided written consent in favor of this Agreement and the Merger, (b) exercises
and perfects appraisal rights for such shares in accordance with Division XIII
of the IBCA and (c) does not effectively withdraw or lose such appraisal
rights (collectively, the Dissenting Shares) shall not be converted
into or represent the right to receive such consideration for Company Stock set
forth in Section 2.1(a), but rather such shares shall be converted into
the right to receive such consideration as may be determined to be due with
respect to such Dissenting Shares pursuant to the IBCA.  The Company, Parent and the Surviving
Corporation shall comply with the requirements of Division XIII of the
IBCA.  The Company shall give (i) Parent
prompt notice of any written demand for appraisal received by the Company and
provide copies of any documents or instruments delivered pursuant to the IBCA
and received by the Company and (ii) give Parent the opportunity to
participate in all negotiations and proceedings with respect to any such
demands.  Prior to the Effective Time,
the Company shall not make any payment or settlement offer with respect to any
such demand unless Parent shall have consented in writing to such payment or
settlement offer.  (b)Notwithstanding
the provisions of Section 2.2(a), if any holder of Dissenting Shares shall
effectively withdraw or lose (through failure to perfect or otherwise) such
holders appraisal rights under the IBCA then, as of the later of the Effective
Time and the occurrence of such event, such holders shares shall automatically
be converted into and represent only the right to receive the consideration for
such shares set forth in Section 2.1(a), without interest, less the
withholdable portion of the Holdback Amount, Earn-out Amount and Dispute Funds
with respect to such shares (whether or not actually withheld) as set forth in
this Section 2, upon surrender of the certificate representing such
Dissenting Shares.  (c)Any
consideration paid by Parent, the Company or the Surviving Corporation to any
Person with respect to any Dissenting Shares pursuant to Division XIII of the
IBCA in excess of the consideration that would otherwise be payable pursuant to
Section 2 for each such Dissenting Share (such consideration, unless
determined in a final, non-appealable judgment of a court, being subject to the
written approval of the Representative, which approval shall not be
unreasonably withheld, conditioned or delayed), and all interest, costs,
expenses and fees as incurred by the Company, Parent or the Surviving
Corporation in connection with the exercise of all rights under Division XIII
of the IBCA with respect to any Dissenting Shares shall constitute Damages
for purposes of this Agreement, and Parent and the Surviving Corporation, as
the case may be, shall, without limiting any other rights, be entitled to
recover such Damages from the Indemnification Funds.  7


2.3Options and
Warrants.  The Company
shall take all necessary and appropriate action such that each outstanding and
unexercised Option and each outstanding and unexercised Warrant shall be
terminated at or before the Effective Time. 
Without limiting the foregoing, the Company shall obtain written
acknowledgements and releases from the holders of Options and Warrants in a
form reasonably satisfactory to Parent releasing the Company from any liability
in connection with the termination of such Options and Warrants.  2.4Earn-out.  (a)Within 30 days
following the date that is 12 months following the Closing Date (the Earn-out
Determination Date), subject to Section 13.2 of this Agreement,
Parent shall pay the Company Shareholders, in accordance with the Closing
Allocation Schedule, an amount of cash, if any, equal to the portion of the
Earn-out Amount earned during the period between the Closing Date and the
Earn-out Determination Date (the Earn-out Period), determined in
accordance with this Section 2.4. 
In the event the Earn-out Amount is not paid by Parent when due, the
unpaid portion thereof shall bear interest at the rate of 10% per annum from
the due date until the date of payment, except to the extent that the failure
to pay any portion of the Earn-out Amount is the result of a good faith dispute
concerning the achievement of such portion of the Earn-out Amount under this Section 2.4(a) or
an unresolved Parent Claim asserted under Section 13 of this Agreement;
provided that Parent agrees to pay any undisputed portions of the Earn-out
Amount when due.  (b)The portion of the Earn-out Amount earned
by the Surviving Corporation during the Earn-out Period shall be determined as
of the Earn-out Determination Date by Parent in good faith in accordance with
the terms of Schedule 2.4(b).  In
the event Parent determines that any portion of the Earn-out Amount is not
payable, Parent shall notify the Representative in writing of such
determination within ten (10) Business Days of the corresponding Target
Date set forth on Schedule 2.4(b) (an Adverse Earn-out
Determination Notice).  The Adverse
Earn-out Determination Notice shall set forth in reasonable detail the basis
and reasons for the adverse Earn-out determination.  (c)Parent shall, and shall cause the
Surviving Corporation to, use commercially reasonable efforts to provide any
and all resources necessary or appropriate to allow achievement of the
milestones by the Earn-out Determination Date.  2.5Holdback and Dispute Fund Amount.  (a)The funds constituting the Holdback
Amount (the Holdback Funds) shall serve as security for the
indemnification obligations of the Indemnifying Shareholders under Section 13
hereof, in accordance with the terms of Section 13.  At the end of the 18-month period commencing
as of the Closing Date (the Holdback Period), Parent shall release any
and all remaining Holdback Funds and pay, or cause to be paid, such Holdback
Funds to the Indemnifying Shareholders in accordance with the allocation set
forth on the Closing Allocation Schedule; provided, however, that
the portion of the Holdback Funds, which, in the reasonable judgment of Parent,
subject to the objection of the Representative and the subsequent resolution of
the matter in the manner provided in Section 13.9, is necessary to satisfy
any unsatisfied claims specified in any Officers Certificate delivered to the
Representative prior to termination of the Holdback Period with respect to
Damages incurred or litigation pending prior to expiration of the Holdback
Period, shall continue to be held back until such claims have been finally
resolved, or, if earlier, until released in accordance with Section 13.9
below. In the event any portion of the Holdback Funds shall not be paid by
Parent when due, the unpaid portion thereof shall bear interest at the rate of
10% per annum from the due date until the date of payment,except to the
extent that the failure to pay any portion of the Holdback Funds is the result
of a good faith dispute  8


concerning
whether (or how much) of such portion is required to be paid hereunder;
provided that Parent agrees to pay any undisputed portions of the Holdback
Funds when due.  (b)At the Closing, the funds constituting
the Dispute Fund Amount shall be paid by Parent by wire transfer into an account
identified by the Representative at least two Business Days prior to the
Closing (the Dispute Fund Account). 
The Representative shall have control over the Dispute Fund Account but
the Dispute Fund Account will be set up in such a manner as to require the
signature of at least one former member of the board of directors of the
Company other than the Representative (or an affiliate of the Representative)
before any funds may be withdrawn.  At
such time as Parent releases all remaining Holdback Funds, the Representative
shall cause any and all remaining Dispute Fund Amounts to be paid to the
Indemnifying Shareholders in amounts equal to the pro rata portion of such
remaining Dispute Fund Amounts to which such Indemnifying Shareholders are
entitled.  2.6Closing
Payment; Surrender of Certificates.  (a)Surrender Procedures. 
On or after the Closing Date, the Surviving Corporation shall mail to
each Company Shareholder (i) a letter of transmittal substantially in the
form agreed upon by Parent, the Representative and the Company (Letter of
Transmittal), which shall include, among other things, the agreement of
the surrendering Company Shareholders to the appointment of the Representative,
the indemnification of the Representative, the payment of expenses of the
Representative pursuant to the terms of this Agreement and a release of claims
as set forth in Section 15 of this Agreement and (ii) instructions
for use in effecting the surrender of certificate(s) representing all of
the shares of Company Stock held by such Company Shareholder in exchange for
such Company Shareholders pro rata portion of the Closing Merger Consideration
and the right to receive future payment of any Earn-out Amount and Holdback
Amount.  The payment of the Closing
Merger Consideration and any future Earn-out Amount and Holdback Amount with
respect to each such certificate is conditioned upon (A) the execution and
delivery of the Letter of Transmittal, (B) a representation by the Company
Shareholder that such Company Shareholder owns all right, title and interest to
all shares of Company Stock registered in the name of such Company Shareholder
and (C) the delivery of such certificates related thereto (or an affidavit
of loss with respect to such certificates). 
As soon as practicable after receipt by Parent of such certificate(s),
properly endorsed or otherwise in proper form for transfer, for cancellation
(or affidavit, as applicable), together with such duly executed Letter of
Transmittal, Parent shall, in exchange therefor, pay to such Company
Shareholder the Closing Merger Consideration payable in respect of the shares
of Company Stock formerly represented by the certificate(s) surrendered in
accordance with the Closing Allocation Schedule, but without any interest
earned thereon, and the certificate(s) so surrendered shall forthwith be
canceled.  (b)Transfer Books;
No Further Ownership Rights in the Shares.  At the Effective Time, the stock transfer
books of the Company shall be closed, and thereafter there shall be no further
registration of transfers of the shares of Company Stock on the records of the
Company.  From and after the Effective
Time, the holders of certificates formerly evidencing ownership of the shares
of Company Stock outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such shares, except as otherwise
provided for herein or by Applicable Law. 
After the Effective Time, Parent or the Surviving Corporation shall
cancel and exchange, as provided in this Section 2, any presented
certificate representing shares of Company Stock outstanding immediately prior
to the Effective Time.  (c)No Liability.  Neither Parent nor the Surviving Corporation
shall be liable to any holder of a certificate formerly representing shares of
Company Stock for any amounts  9


delivered
to a public official pursuant to any applicable abandoned property, escheat or
similar Legal Requirement.  (d)Withholding
Rights.  Each of Parent and the
Surviving Corporation shall be entitled to deduct and withhold from payment of
any amounts (or any portion thereof) payable pursuant to this Agreement to, or
on behalf of, any Company Shareholder or any other Person such amounts as may
be required to be deducted and withheld with respect to the making of such
payment under the Internal Revenue Code of 1986, as amended (the Code),
or any other Legal Requirement.  To the
extent that amounts are so withheld by Parent or the Surviving Corporation,
such withheld amounts shall be treated for all purposes of this Agreement as
having been paid to the Company Shareholder or such other Person to whom such
amounts would otherwise have been paid.  (e)Lost, Stolen or
Destroyed Certificates.  In
the event any certificate(s) which formerly represented shares of Company
Stock shall have been lost, stolen or destroyed, upon the making and delivery
of an affidavit of that fact by the Company Shareholder thereof in form
reasonably satisfactory to Parent and the execution and delivery of a letter of
transmittal in accordance with Section 2.6(a), Parent shall pay such
Company Shareholder the applicable Closing Merger Consideration as provided in
this Section 2; provided, however, that Parent may, in its
reasonable discretion, acting in good faith, require the owner of such lost,
stolen or destroyed certificate(s) to deliver an agreement of
indemnification in form reasonably satisfactory to Parent, against any claim
that may be made against Parent or the Surviving Corporation with respect to
the certificate(s) alleged to have been lost, stolen or destroyed.  (f)Dissenting
Shares.  The provisions of this Section 2.6
shall also apply to Dissenting Shares that lose their status as such, except
that the obligations of Parent under this Section 2.6 shall commence on
the date of loss of such status and the holder of such shares shall be entitled
to receive in exchange for such shares the applicable amounts provided in Section 2.  2.7Payment of
Closing Debt Payments.  At
or promptly following the Closing, Parent shall pay, or cause to be paid, (a) the
total amount due and payable on the Company Notes to the Company Noteholders in
accordance with the Closing Allocation Schedule (which reflects the accrual of
interest on such Company Notes up to and including February 28, 2010), and
(b) the amounts due and payable with respect to (i) the Severance
Payments, (ii) the Transaction Expenses, (iii) the Employee Loans and
(iv) the IDED Loan, in each case calculated as of the Effective Time and
as set forth on the Closing Allocation Schedule; provided, that no
payment shall be required for interest that has accrued or, but for this
Agreement would have accrued, on any Company Note, Employee Loan or the IDED
Loan between February 28, 2010 and the Closing Date; and provided
further, that the Company shall not be required to make any such payment
with respect to a Company Note, Employee Loan, Severance Payment or the IDED
Loan, unless the proposed recipient shall have entered into a settlement
agreement with Parent or the Company in a form reasonably acceptable to Parent
and the Company.  2.8Further 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 the Company and Merger Sub, Parent and the Surviving Corporation are fully
authorized to take all such action in the name of the Company and Merger Sub or
otherwise, and the officers and directors of the Company and Merger Sub
immediately prior to the Effective Time shall  10


provide such assistance as Parent and the
Surviving Corporation may reasonably request in taking such further action.  SECTION 3.Representations
and Warranties of the Company.  The Company represents and warrants to Parent
and Merger Sub that the statements in this Section 3 are true, complete
and correct as of the date hereof and will be true at the Effective Time
(unless the particular statement speaks expressly as of another date, in which
case it is true, complete and correct as of such other date), subject, in any
case, to the exceptions provided in the Disclosure Schedule, with specific
reference to the Sections hereof to which such exception relates; provided,
however, that any exception or qualification disclosed in the Disclosure
Schedule shall apply only to the identified representation or warranty and any
other subsection of this Section 3 with respect to which such disclosure
(without modification or additional notification) provides effective notice of
the nature and significance of the exception or qualification:  3.1Organization
and Standing.  (a)The Company is
a corporation duly organized and validly existing under the laws of the State
of Iowa and has all requisite corporate power and authority to conduct its
business as currently conducted.  The
Company is duly qualified to do business as a foreign corporation and is in
good standing in every jurisdiction where the properties, owned, leased or
operated, or the business conducted by it requires such qualification, except
where the failure to so qualify or be in good standing would not result in a
Company Material Adverse Effect.  (b)The Company
does not own and has never otherwise owned, directly or indirectly, any capital
stock of or any other equity or ownership interest in, or controlled, directly
or indirectly, any other Person, and the Company is not and has not otherwise
been, directly or indirectly, a party to, member of or participant in any
partnership, joint venture or similar business entity.  (c)Prior to the
date of this Agreement, the Company has furnished to Parent complete and
correct copies of the Company Organizational Documents as currently in
effect.  The Company Organizational
Documents are in full force and effect and the Company is not in violation of
any provision of its Company Organizational Documents in any material
respects.  Section 3.1(c) of
the Disclosure Schedule lists the directors and officers of the Company as of
the date hereof.  3.2Capitalization
and Ownership of Shares.  (a)The authorized
capital stock of the Company on the date hereof consists of 50,000,000 shares
of Company Stock, of which 3,170,000 shares are issued and outstanding, and
50,000,000 shares of Preferred Stock, none of which are outstanding.  All of the issued and outstanding shares of
Company Stock have been duly authorized and validly issued, and are fully paid
and nonassessable.  Except as set forth
in Section 3.2 of the Disclosure Schedule, no subscription, warrant,
option, convertible security or other right (contingent or otherwise) to
purchase or acquire any shares of capital stock of the Company is authorized or
outstanding.  From and after the
Effective Time, no holder of any Option or Warrant will have the right to any
consideration with respect thereto, except shares of Company Stock properly
acquired upon exercise thereof prior to the Effective Time.  The Company does not have any obligation
(whether written, oral, contingent or otherwise) to issue any subscription,
warrant, option, convertible security or other such right or to  11


issue
or distribute to holders of any shares of its capital stock any evidences of
indebtedness or assets of the Company. 
The Company does not have any obligation (whether written, oral,
contingent or otherwise) to purchase, redeem or otherwise acquire any shares of
its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof. 
There are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar rights with respect to the Company.  All of the issued and outstanding shares of
capital stock of the Company have been offered, issued and sold by the Company
in compliance with all Applicable Law in all material respects.  (b)           Except for that
certain Founding Shareholders Agreement by and among the Companys founders
(the Founders Agreement), there are no agreements, written or oral,
between the Company and any holder of its securities or others, or among any
holders of its securities, relating to the acquisition (including, without
limitation, rights of first refusal, anti-dilution or pre-emptive rights),
disposition, registration under the Securities Act of 1933, as amended (the Securities
Act), or voting of the capital stock of the Company.  The Founders Agreement has terminated in
accordance with its terms and is of no further force or effect.  (c)           Each of the
currently outstanding Options were granted under the Option Plan and, except
for the Option Plan, the Company has never adopted, sponsored or maintained any
stock option plan or any other plan or agreement providing for equity
compensation to any Person.  True and
complete copies of the Option Plan and all agreements and instruments relating
to or issued under each such plan (including executed copies of all Contracts
relating to each Option and the shares of Company Stock purchased under such
plan), and all agreements and instruments related to the Warrants, have been
made available or provided to Parent, and the Option Plan and such Contracts
have not been amended, modified or supplemented since being made available or
provided to Parent, and there are no Contracts to amend, modify or supplement
the Option Plan or such Contracts in any case from those made available or
provided to Parent.  Each grant of an
Option was duly authorized by all necessary corporate action no later than the
date on which the grant of such Option was by its terms to be effective.  The Option Plan may be terminated by action
of the board of directors of the Company and shall be so terminated at or prior
to the Effective Time.  3.3           Allocation
Schedules.  The Preliminary
Allocation Schedule sets forth the following information and calculations, as
of date hereof, and the Closing Allocation Schedule will set forth such
information and calculations, as of the Closing Date:  (1) the total number of shares of
Company Stock outstanding, (2) the number of shares of Company Stock held
by each Company Shareholder and the corresponding pro rata ownership percentage
of such Company Shareholder, and the address of such Company Shareholder, (3) the
maximum amounts of Closing Merger Consideration, Earn-out Amount and Holdback
Amount payable to each Company Shareholder, (4) the amounts due and
payable to each Company Noteholder in respect of the Company Notes (based on
interest accrued through February 28, 2010), (5) the amount of
Severance Payments payable to specified employees of the Company, (6) the
amounts of Employee Loans due and payable to each Employee, (7) the amount
due and payable under the IDED Loan and (8) a good faith estimate of the
amount of Transaction Expenses due and payable. 
The information set forth as of the date hereof in the Preliminary
Allocation Schedule is true, complete and accurate as of the date hereof
(except for the Transaction Expenses, which have been estimated in good faith)
and the information set forth in the Closing Allocation Schedule will be true,
complete and accurate as of the Effective Time (except for the Transaction
Expenses, which will have been estimated in good faith), and the calculations
performed to compute such information are, and will be, accurate and in
accordance with the terms  12


of
this Agreement, the Company Organizational Documents and all other agreements
and instruments among the Company and the Company Shareholders.  3.4           Authority for Agreement.  (a)           The Company has all requisite
corporate power and authority to execute and deliver this Agreement and
Transaction Documents required hereby to be executed and delivered by it and to
perform its obligations hereunder and thereunder and to consummate the
transactions hereby and thereby.  The
execution, delivery and performance by the Company of this Agreement and each
Transaction Document to which it is a party and the consummation of the
transactions contemplated to be performed by it hereby and thereby have been
duly authorized by all necessary and proper corporate action on the part of the
Company, subject to obtaining the Requisite Shareholder Approval.  This Agreement has been, and each Transaction
Document required hereby to be executed and delivered by the Company at the
Closing will be, duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent, Merger Sub
and the Representative, constitutes a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, reorganization or similar laws of general application
affecting the rights and remedies of creditors, and to general equity
principles.  (b)           Assuming the
Requisite Shareholder Approval is obtained, the execution and delivery of this
Agreement by the Company and each instrument required hereby to be executed and
delivered by the Company at the Closing, the compliance by the Company with the
provisions of this Agreement and each instrument required hereby to be executed
and delivered by the Company at the Closing and the consummation of the
transactions contemplated hereby or thereby, will not (i) conflict with or
violate the Company Organizational Documents, each as currently in effect in
any material respect, (ii) conflict with, result in a material breach of,
constitute (with or without due notice or lapse of time or both) a material
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any Contract, Permit, Security Interest or other interest to
which the Company is a party or by which the Company is bound or to which its
assets are subject, (iii) result in the creation or imposition of any
Security Interest upon any assets of the Company or any shares of Company
Stock, or (iv) violate in any material respect any Applicable Law.  For purposes of this Agreement, Security
Interest means any mortgage, security interest, pledge, encumbrance,
charge, restriction on the right to sell or dispose, lien or other adverse
claim of any kind (whether arising by contract or by operation of law and
whether voluntary or involuntary).  3.5           Consents.  No consent, notice, waiver, approval, order,
Permit or authorization of, or registration, declaration or filing with, or
notification to (together, the Consents) any United States federal,
state, municipal or local or any foreign government, or political subdivision
thereof, or any multinational organization or authority or any authority,
agency or commission entitled to exercise any administrative, executive,
judicial, legislative, police, regulatory or Taxing Authority power, or any
court or tribunal (or any department, bureau or division thereof), or any
arbitrator or arbitral body (collectively, Governmental Authorities)
is required to be obtained by the Company or any Company Shareholder in
connection with the execution and delivery of this Agreement or completion of
the Merger or the other transactions to be consummated at the Closing as
contemplated by this Agreement, except for the filing and recordation of the
Articles of Merger with the Secretary of State of the State of Iowa.  13


3.6           Financial Statements; No
Undisclosed Liabilities.  (a)           Attached hereto as Section 3.6
of the Disclosure Schedule are the following financial statements
(collectively, the Financial Statements):  (a) the Companys balance sheet as of December 31,
2009; (b) the Companys balance sheet as of February 28, 2010 (the Reference
Balance Sheet); and (c) the Companys statements of operations and
cash flows for the twelve months ended December 31, 2009 and for the two
months ended February 28, 2010. 
Except as set forth in Section 3.6 of the Disclosure Schedule, the
Financial Statements are complete and correct in all material respects, have
been prepared in accordance with United States generally accepted accounting
principles (GAAP) (except that the Financial Statements do not contain
footnotes and are subject to year end adjustments) consistently applied
throughout the periods indicated and in accordance with the books and records
of the Company.  The Financial Statements
present fairly the financial condition and results of operations of the Company
as of the dates and for the periods indicated.  (b)           The Company has no
Indebtedness or other liabilities or obligations except (i) as
specifically set forth in or fully reserved against or otherwise described in
the Reference Balance Sheet or the notes thereto, (ii) for liabilities
incurred in the ordinary course of business since the Reference Balance Sheet
Date in accordance with the terms of this Agreement, none of which is,
individually or in the aggregate, material to the Company.  3.7           Absence of
Changes.  Since December 31,
2009, there has been no Company Material Adverse Effect.  In addition, and without limiting the
generality of the foregoing, since December 31, 2009 (and since February 28,
2010 solely with respect to Section 3.7(l) below) , the Company has
not:  (a)           declared, set aside,
made or paid any dividend or other distribution in respect of its capital
stock, or agreed to do any of the foregoing, or purchased or redeemed or agreed
to purchase or redeem, directly or indirectly, any shares of its capital stock;  (b)           adopted, amended,
modified, or terminated in any material respect any Employee Benefit Plan or
collective bargaining agreement;  (c)           increased any
compensation or fringe benefits (including, but not limited to, the granting of
Options or other equity awards under the Option Plan not in the ordinary  course of business), paid any bonus, granted
or increased any severance or termination pay of amounts or otherwise changed
any of the terms of employment or service for any of its employees, officers,
directors or consultants;  (d)           subjected to any
Security Interest, any of its properties or assets, tangible or intangible
(including, without limitation, any Company IP);  (e)           granted any license
with respect to any Company IP;  (f)            acquired or
disposed of any assets or properties having a value in excess of $25,000 (singly
or in the aggregate) other than inventory in the ordinary course of business;  (g)           incurred a capital
expenditure or made a commitment to incur a capital expenditure exceeding
$25,000 individually or $50,000 in the aggregate;  14


(h)           made any payment of
any nature to any employee, director or consultant other than salary, sales
bonuses, fees or business related reimbursements payable in the ordinary course
of business consistent with past practices;  (i)            commenced or
settled any Action;  (j)            suffered any
damage, destruction or loss, whether or not covered by insurance, with respect
to its property and assets having a replacement cost of more than $25,000 for
any single loss or $50,000 for all such losses;  (k)           entered into any
transaction or Contract not otherwise provided for in this Section 3.7
other than in the ordinary course of business with an aggregate annual value in
excess of $25,000;  (l)            paid any expenses
other than of the types and amounts described in Schedule 3.7(l) (Permitted
Expenses); or  (m)          entered into any
agreement, commitment or obligation to do any of the foregoing, except as
provided for in this Agreement.  3.8           Taxes.  (a)           All Tax Returns
required to be filed by or on behalf of the Company have been duly and timely
filed with the appropriate Taxing Authority in all jurisdictions in which such
Tax Returns are required to be filed (after giving effect to any valid
extensions of time in which to make such filings), and all such Tax Returns are
true, complete and correct in all respects. 
All Taxes that have become due and payable by the Company, including but
not limited to all withholding taxes owed under any applicable Legal
Requirement, have been timely paid, and the Company is not and will not be
liable for any additional Taxes in respect of any Taxable period or any portion
thereof ending on or before the date of the Reference Balance Sheet in an
amount that exceeds the corresponding reserve therefor reflected in the
Reference Balance Sheet, and any Taxes of the Company arising after such date
and at or before the Effective Time have been or will be incurred in the
ordinary course of the business of the Company.  (b)           The Company has
complied in all material respects with all Applicable Laws relating to the
withholding of Taxes and payment of such withheld amounts and has duly and
timely withheld and paid over to the appropriate Taxing Authority all amounts
required to be so withheld and paid under all Applicable Laws.  There are no outstanding rulings of, or
requests for rulings by, any Taxing Authority addressed to the Company that
are, or if issued would be, binding on the Company.  There are no liens as a result of any unpaid
Taxes upon any of the assets of the Company, other than with respect to Taxes
that are not yet due and payable.  (c)           Parent has been
furnished complete copies of all Tax Returns of, or including, the Company for
all Tax periods since its date of formation and all relevant documents and
information with respect thereto, including, without limitation, work papers,
records, examination reports and statements of deficiencies proposed, assessed
against or agreed to by the Company.  (d)           No claim has been
made by a Taxing Authority in a jurisdiction where the Company does not file a
Tax Return that it is or may be subject to taxation in that  15


jurisdiction.  No deficiency or adjustment in respect of
Taxes has been proposed, asserted in writing or assessed by any Taxing
Authority against the Company.  (e)           The Company is not a
party to or bound by any Tax sharing, allocation, indemnity or similar
agreement or arrangement.  The Company
has never been a member of a group of corporations with which it has filed (or
been required to file) consolidated, combined or unitary Tax Returns, other
than a group of which the common parent is the Company.  (f)            All persons who
have purchased shares of the Companys capital stock that will be subject to a
substantial risk of forfeiture under Section 83 of the Code at the
Effective Time have, to the Companys Knowledge, timely filed elections under Section 83(b) of
the Code and any analogous provisions of applicable state and local Tax Laws.  (g)           For purposes of this
Agreement:  Tax or Taxes
means (i) all federal, state, local or foreign taxes, charges, fees,
imposts, levies or other assessments imposed by any Taxing Authority, including
without limitation all income, gross receipts, capital, sales, use, ad valorem,
value added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, and (ii) all
interest, penalties, fines, additions to Tax or additional amounts imposed by
any Taxing Authority in connection with any item described in clause (i).  Taxing Authority
means the Internal Revenue Service (the IRS) or any other governmental
body (whether state, local or foreign) responsible for the administration of
any Tax.  Tax Law means any
Legal Requirement (whether domestic or foreign) relating to Taxes.  Tax Return means
any return, report or statement required to be filed with respect to any Tax
(including any elections, declarations, schedules or attachments thereto, and
any amendment thereof) including any information return, estimate, claim for
refund, amended return or declaration of estimated Tax, and including, where permitted
or required, affiliated, combined, consolidated or unitary returns for any
group of entities that includes the Company.  3.9           Property and
Sufficiency.  (a)           Except as set forth
on Schedule 3.9(a), the Company has good and marketable title to, or, in the
case of leases of properties and assets, a valid leasehold interest in, all of
the properties and assets (whether real, personal, tangible or intangible) (i) reflected
on the Reference Balance Sheet (other than assets sold in the ordinary course
of business since the date of the Reference Balance Sheet) or acquired
thereafter and (ii) necessary to conduct all of the businesses and
operations of the Company as currently conducted, and none of such properties
or assets is subject to any Security Interest, except for(A) mechanics, materialmen,
suppliers, vendors or similar liens arising in the ordinary course of business
securing amounts that are not delinquent, (B) liens for current Taxes,
assessments or governmental charges not yet due and delinquent, or (C) such
minor encumbrances, charges and imperfections which do not, individually or in
the aggregate detract from, in any material way, the value or use of any asset,
or otherwise interfere with, in any material way, the quiet enjoyment of any
asset under any lease or leasehold interest (collectively, Permitted
Encumbrances).  16


(b)           The Company does not
own any real property or any interest in real property, except for the
leaseholds created under the real property lease(s) identified in Section 3.9(b) of
the Disclosure Schedule (Real Property Leases).  The facilities subject to a Real Property
Lease (Leased Premises) and the personal property owned or leased by
the Company are in good operating condition and repair, reasonable wear and
tear excepted, and are suitable for the uses for which they are being used.  3.10         Contracts.  Section 3.10 of the Disclosure Schedule
sets forth a complete and accurate list of all Contracts to which the Company
is a party, except for such Contracts that are not, individually or in the
aggregate, material to the Company.  Section 3.10
of the Disclosure Schedule lists any Contract that would be required to be
disclosed on Section 3.7 of the Disclosure Schedule, if such Contract had
been entered into after December 31, 2009. 
All of such Contracts are in full force and effect, and neither the
Company nor, to the Companys Knowledge, any other party to such Contracts is
in material breach of or in material default under any of them, nor does any
event or condition exist that after notice or lapse of time or both could
reasonably be expected to constitute a material breach of or material default
under such Contracts on the part of the Company or, to the Companys Knowledge,
any other party to such Contracts.  The
Company has delivered to Parent true and complete copies of all such
Contracts.  Each Contract is a valid and
binding agreement and is in full force and effect in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws.  No party to any of the Contracts has
exercised any termination rights with respect thereto by written notification
to the Company, and no party has given notice of any material dispute with
respect to any of the foregoing Contracts. 
As used in this Agreement, a Contract shall mean any written or
binding oral agreement, understanding, contract, deed, mortgage, lease,
sublease, license, sublicense, instrument, commitment, promise, undertaking or
other binding arrangement.  3.11         Benefit Plans.  (a)           Section 3.11(a) of
the Disclosure Schedule sets forth a complete and correct list of (i) all employee
benefit plans, as defined in Section 3(3) of ERISA, and all other
oral or written employment agreements, employee benefit arrangements or payroll
practices, including bonus plans, consulting or other compensation agreements,
incentive, equity or equity based compensation, or deferred compensation
arrangements, stock purchase, severance pay, sick leave, vacation pay, salary
continuation, disability, hospitalization, medical insurance, life insurance,
scholarship programs maintained by the Company or to which the Company
contributed or is obligated to contribute thereunder for current or former
employees of the Company or that cover Employees or with respect to which the
Company has any actual or contingent liability (the Employee Benefit Plans),
and (ii) all employee pension plans, as defined in Section 3(2) of
ERISA, subject to Title IV of ERISA or section 412 of the Code, maintained by
the Company and any trade or business (whether or not incorporated) which are
or have ever been under common control, or which are or have ever been treated
as a single employer, with the Company under Sections 414(b), (c), (m) or (o) of
the Code (ERISA Affiliate) or to which the Company and any ERISA
Affiliate contributed or has ever been obligated to contribute thereunder (the ERISA
Affiliate Plans).  No Employee
Benefit Plan or ERISA Affiliate Plan is a multiemployer plan as defined in Section 3(37)
of ERISA, or has been subject to Sections 4063 or 4064 of ERISA.  (b)           Each of the Employee
Benefit Plans and ERISA Affiliate Plans has been maintained, in all material
respects, in accordance with its terms and all provisions of  17


Applicable
Laws.  True, correct and complete copies
of all Employee Benefit Plans and ERISA Affiliate Plans have been made
available to Parent.  (c)           Except as set forth
in Section 3.17(e) of the Disclosure Schedule, the execution of this
Agreement and the consummation of the transactions contemplated herein will
not, by itself or in combination with any other event (regardless of whether
that other event has or will occur), result in any payment (whether of
severance pay or otherwise) becoming due from or under any Employee Benefit
Plan to any current or former director, officer, consultant or employee of the
Company or result in the vesting, acceleration of payment or increases in the
amount of any benefit payable to or in respect of any such current or former
director, officer, consultant or employee. 
The Company is not party to, or otherwise obligated under, any contract,
agreement, plan or arrangement (other than this Agreement) covering any person
that, individually or collectively could give rise to the payment of any amount
that would not be deductible by Parent or the Company by reason of Section 280G
of the Code or that could be subject to Section 4999 of the Code.  (d)           Each plan, program,
arrangement or agreement that constitutes in any part a nonqualified deferred
compensation plan within the meaning of Section 409A of the Code has been
operated and maintained in accordance in all material respects with Section 409A
of the Code and applicable Treasury Regulations, and the Company has no
unsatisfied liability for Taxes thereunder.  (e)           Except as set forth
in the Preliminary Allocation Schedule, no Employee is entitled to any
severance payments upon termination of employment with Administaff Companies
II, LP (Administaff) or with the Company.  3.12         Intellectual
Property.  (a)          Registered IP.  Section 3.12(a) of the Disclosure
Schedule accurately identifies (i) each item of Registered IP in which the
Company has an ownership interest of any nature (whether exclusively, jointly
with another Person, or otherwise); (ii) the jurisdiction in which such
item of Registered IP has been registered or filed and the applicable
registration or serial number; and (iii) any other Person that has an
ownership interest in such item of Registered IP and the nature of such
ownership interest.  The Company has
delivered or made available to Parent complete and accurate copies of all applications,
material correspondence, and other material documents related to each such item
of Registered IP.  (b)          Inbound Licenses.  Section 3.12(b) of the Disclosure
Schedule (i) accurately identifies each Contract under which Intellectual
Property Rights are licensed to any Company (other than any commercially
available third-party software that (A) is licensed to the Company solely
in executable or object code form pursuant to a non-exclusive, internal use
software license, and (B) is not incorporated into, or used directly in
the development, manufacturing, testing, distribution, or support of, any
Company Product); and (ii) specifies whether the rights licensed to the
Company are exclusive or non-exclusive. 
The Company has delivered or made available to Parent an accurate and
complete copy of each Contract identified, or required to be identified, in Section 3.12(b) of
the Disclosure Schedule.  (c)          Outbound Licenses.  Section 3.12(c) of the Disclosure
Schedule accurately identifies each Contract pursuant to which any Person has
been granted any license under, or otherwise has received or acquired any right
(whether or not currently exercisable) or interest in (i)  18


any
Intellectual Property Rights in any Company Products, (ii) any Company IP that
is Registered IP, or (iii) any other Company IP that is material to the
business of any Company.  For each of the
Contracts required to be identified as set forth above, Section 3.12(c) of
the Disclosure Schedule identifies whether the rights granted are exclusive or
nonexclusive.  The Company has delivered
or made available to Parent an accurate and complete copy of each Contract
identified, or required to be identified, in Section 3.12(a) of the
Disclosure Schedule.  The Company is not
bound by, and no Company IP is subject to, any Contract containing any covenant
or other provision that in any way limits or restricts the ability of any
Company to use, exploit, assert, or enforce any Company IP, or compete or
engage in any kind of business, anywhere in the world (other than restrictions
or limitations imposed on intellectual property licensed or assigned as work
for hire by Applicable Law).  All
Contracts pursuant to which the Company has licensed or assigned intellectual
property as work for hire are identified as such in Section 3.12(c) of
the Disclosure Schedule.  (d)          Other Commercial
and IP Agreements.  The Company has
delivered or made available to Parent a complete and accurate copy of (i) the
most current version of the Companys standard terms of sale with respect to
any semiconductor or semiconductor design component services; (ii) the
Companys standard purchase terms with all suppliers of design tools and
services related to the Companys semiconductor or semiconductor component
design services, including development, manufacturing, testing, wafer-sorting,
packaging, and assembly; (iii) all Contracts (other than those identified
in Section 3.12(c) of the Disclosure Schedule) pursuant to which any
Person has a currently enforceable or exercisable right to sublicense or
otherwise transfer rights in any Company IP to any other Person; (iv) each
joint marketing, joint development, strategic alliance, and similar Contract to
which any Company is a party and which is currently in effect; (v) every
other Contract that is currently in effect and pertains to the Companys
services or any Intellectual Property used in connection with any such
services.  Section 3.12(d) of
the Disclosure Schedule accurately identifies each Contract described in
clauses (iii), (iv) and (v) above. 
No Contract provides any Person any rights whatsoever with respect to
patents no. 7,167,410 or 7,599,396 or any serial memory or low power
Serializer/Deserializer CEI Intellectual Property of the Company.  (e)          Ownership Free and
Clear.  The Company exclusively owns
all right, title, and interest to and in the Company IP (other than
Intellectual Property Rights licensed to the Company, as identified in Section 3.12(b) of
the Disclosure Schedule) free and clear, to the Companys Knowledge, of any
Security Interests (other than licenses granted pursuant to the Contracts
listed in Schedule 3.12(c)).  Without
limiting the generality of the foregoing:  (i)         Perfection of Rights. 
All documents and instruments necessary to vest or perfect the rights of
the Company in the Company IP that is Registered IP have been validly executed,
delivered, and filed in a timely manner with the appropriate Governmental
Authority.  (ii)        Employees and Contractors.  Each Person who is or was an employee or
contractor of any Company and who is or was an inventor, author, or creator of
Intellectual Property Rights in any Company Product has signed a valid,
enforceable Employee Confidentiality Agreement or Consultant Confidentiality
Agreement, as applicable.  To the Companys
Knowledge, no current or former Company Shareholder, officer, director,
employee or contractor of any Company has any claim, right (whether or not
currently exercisable), or interest to or in any Company IP, and no such Person
has asserted any such claim against the Company.  To the Companys Knowledge, no employee of
the Company is in  19


breach of any Contract with
any former employer or other Person concerning Intellectual Property Rights or
confidentiality.  (iii)       Government or University Rights.  To the Companys Knowledge, no funding,
facilities, or personnel of any Governmental Authority or of any college,
university, or other educational institution were used, directly or indirectly,
to develop or create, in whole or in part, any Company IP.  No Governmental Authority has acquired any
rights with respect to the Company IP pursuant to any Contract to which the
Company is a party.  (iv)       Protection of Proprietary Information.  The Company has taken reasonable steps to
maintain the confidentiality of, and otherwise protect and enforce, the Companys
rights in all proprietary information that the Company holds, or purports to
hold, as a trade secret.  (v)        Standards Bodies.  The Company is not and has never been a
member or promoter of, or a contributor to, any industry standards body or
similar organization that could require or obligate any Company to grant or
offer to any other Person any license or right to any Company IP.  (f)           Valid, Subsisting,
and Enforceable.  All Company IP that
is Registered IP is valid, subsisting and enforceable.  Without limiting the generality of the
foregoing:  (i)         Requirements and Deadlines.  Each item of Company IP that is Registered IP
is in compliance with all applicable Legal Requirements and all filings,
payments, and other actions required to be made or taken to maintain such item
of Company IP that is Registered IP in full force and effect have been made or
taken by the applicable deadlines.  (ii)        Interference Actions and Similar Claims.  To the Knowledge of the Company, no
interference, opposition, reissue, reexamination, or other Action is pending or
threatened (and the Company has not received notice of any such Action), in
which the scope, validity, or enforceability of any Company IP is being, has
been, or could reasonably be expected to be contested or challenged.  To the Companys Knowledge, there is no basis
for any non-frivolous claim that any Company IP is invalid or unenforceable.  (g)          No Third-Party Infringement
of Company IP.  To the Companys
Knowledge, since its incorporation, no Person has infringed, misappropriated,
or otherwise violated, and no Person is currently infringing, misappropriating,
or otherwise violating, any Company IP. 
The Company has provided to Parent a complete and accurate copy of each
letter or other written or electronic communication or correspondence that has
been sent or otherwise delivered since the date of incorporation by or to the
Company or any representative of the Company regarding any actual, alleged, or
suspected infringement or misappropriation of any Company IP.  Section 3.12(g) of the Disclosure
Schedule provides a brief description of the current status of the matter
referred to in each such letter, communication, or correspondence.  (h)          Effects of This
Transaction.  Neither the execution,
delivery, or performance of this Agreement (or any of the ancillary agreements
entered into, or required to be entered into, in connection with the
transactions contemplated hereby) nor the consummation of any  20


of
the transactions contemplated hereby will, with or without notice or lapse of
time, result in, or give any other Person the right or option to cause or
declare, (i) a loss of, or Security Interest on, any Company IP; (ii) a
breach of any license agreement listed or required to be listed in Section 3.12(b),
(c) or (d) of the Disclosure Schedule; (iii) the release,
disclosure, or delivery of any Company IP by or to any escrow agent or other
Person; or (iv) the grant, assignment, or transfer to any other Person of
any license or other right or interest under, to, or in any Company IP.  (i)           No Infringement
of Third Party IP Rights.  To the
Companys Knowledge, the Company has never infringed (directly, contributorily,
by inducement, or otherwise), misappropriated, or otherwise violated any
Intellectual Property Right of any other Person.  To the Companys Knowledge, no claim of
infringement or misappropriation or similar claim or Action is pending or
threatened against the Company (and the Company has not received notice of any
such claim or Action) or against any other Person who may be entitled to be
indemnified, defended, held harmless, or reimbursed by the Company with respect
to such claim or Action.  Except as set
forth in Section 3.12(i) of the Disclosure Schedule, since the date
of incorporation, the Company has not received any notice or other
communication (in writing or otherwise) relating to any actual, alleged, or suspected
infringement, misappropriation, or violation of any Intellectual Property
Rights of another Person.  (j)           Harmful Code.  To the Companys Knowledge, no Company
Software contains any back door, drop dead device, time bomb, Trojan
horse, virus, or worm (as such terms are commonly understood in the
software industry) or any other code designed or intended to have, or capable
of performing, any of the following functions: (i) disrupting, disabling,
harming, or otherwise impeding in any manner the operation of, or providing
unauthorized access to, a computer system or network or other device on which
such code is stored or installed; or (ii) damaging or destroying any data
or file without the users consent.  (k)          Source Code.  Except as set forth in Section 3.12(k) of
the Disclosure Schedule, no source code for any Company Software has been
delivered, licensed, or made available to any escrow agent or other third
party.  The Company has no duty or
obligation (whether present, contingent, or otherwise) to deliver, license, or
make available the source code for any Company Software to any escrow agent or
other third party.  No event has
occurred, and no circumstance or condition exists, that (with or without notice
or lapse of time) will, or could reasonably be expected to, result in the
delivery, license, or disclosure of the source code for any Company Software to
any third party.  (l)           Open Source Code.  No Company Software (including any component
thereof) is subject to any copyleft or other obligation or condition
(including any obligation or condition under any open source license such as
the GNU Public License, Lesser GNU Public License, or Mozilla Public License)
that by its terms (i) requires, or conditions the use or distribution of
such Company Software on, the disclosure, licensing, or distribution of any
source code for any portion of such Company Software, or (ii) otherwise
imposes any limitation, restriction, or condition on the right or ability of
the Company to use or distribute any Company Product.  (m)          Definitions.  As used in this Agreement:  Company
IP shall mean all worldwide proprietary information and intellectual
property rights of the Company, including, without limitation:  (i) all patents, patent rights,
copyrights and works of authorship in any media (including, without limitation,
computer programs, software and  21


applications therefor
(including, without limitation, source code and object code, development
documentation, programming tools, drawings, specifications, test software,
laser programs, sort programs, packaged unit test programs, characterization
programs and data)), labels and other trade rights, product displays, know-how,
inventions, invention disclosures, discoveries, improvements, designs, design
rights, masks, mask works, circuit designs, algorithms, behavior models,
hardware description language models, proprietary design tools, tooling, dies,
molds, layouts, test keys, cells, databases, libraries, customer lists, trade
secrets, technology, formulae, recipes, shop rights, development
work-in-process, graphics, artwork, photography, advertising and promotional
materials, trademarks, service marks, trade names, brand names, domain names,
logos, trade dress, source indicators, and other proprietary or confidential
technology and information, in each case, (x) including, without limitation,
all authors, moral, common law and other rights to any of the foregoing, and (y)
whether or not registrable, patentable or copyrightable; (ii) all Intellectual
Property Rights in the Company Products, (iii) all Registered IP that is
identified, or required to be identified, in Section 3.12(a) of the Disclosure
Schedule, (iv) all development or deployment tools (including scripts and
makefiles) developed by or on behalf of the Company, and (v) all other
Intellectual Property Rights developed by or on behalf of the Company or in
which the Company otherwise has, or purports to have, an ownership interest or
exclusive rights.  Company
Products shall mean and include any semiconductor chip designed or
developed by the Company, or any Serializer/Deserializer or serial memory
design or related design or development services.  Company
Software shall mean and include all software or firmware (including
microcode) that is incorporated into, or otherwise is or is a part of, any
Company Product.  Intellectual
Property Rights shall mean and include all rights of the following types,
which may exist or be created under the laws of any jurisdiction in the world: (a)
rights associated with works of authorship, including exclusive exploitation
rights, copyrights, moral rights, and mask works; (b) trademark and trade name
rights and similar rights (including domain name registrations); (c) trade
secret rights; and (d) patents and industrial property rights;.  Registered
IP shall meanall Intellectual Property Rights that are registered
or filed with, or issued under the authority of, any Governmental Authorities,
including all patents, registered copyrights, registered mask works, and
registered trademarks and all applications for any of the foregoing, and all
registrations, renewals, extensions, continuations, divisions, or reissues
thereof.  3.13Accounts
Receivable; Accounts Payable.  (a)Section 3.13(a)
of the Disclosure Schedule is a correct and complete list of all trade accounts
receivable and other rights to payment from customers of the Company (Accounts
Receivable) as of February 28, 2010. 
All Accounts Receivable are reflected on the accounting records of the
Company and represent and, as of the Closing Date, will represent valid
obligations arising from sales actually made or services actually performed by
the Company in the ordinary course of business. 
The Accounts Receivable are not and will not be as of the Closing Date
subject to any contest, claim, defense or right of setoff, other than returns
in the ordinary course of business of the Company, under any Contract with any
account debtor of an Account Receivable relating to the amount or validity of
such Account Receivable.  22


(b)Section 3.13(b)
of the Disclosure Schedule is a correct and complete list of all trade accounts
payable (Accounts Payable) of the Company as of February 28,
2010.  All Accounts Payable are reflected
on the accounting records of the Company and represent and, as of the Closing
Date will represent, valid obligations of the Company arising from purchases
actually made by or services actually performed for the Company in the ordinary
course of business.  3.14Inventory.  The Company does not manufacture, use or sell
any inventory in the conduct of its business and is not in possession of any
inventory or similar items.  3.15Suppliers and
Customers.  The
relationships of the Company with its suppliers, vendors and customers are good
commercial working relationships, and since January 1, 2009 no supplier or
customer of material importance to Company has canceled or otherwise
terminated, or threatened in writing to cancel or terminate, its relationship
with the Company or has decreased materially, or threatened in writing to
decrease or limit materially, its services, supplies or materials to the
Company or its usage or purchase of any Company Products, except for normal
cyclical changes related to customers businesses.  Section 3.15 of the Disclosure Schedule is a
correct and complete list of (a) all of the Companys customers since inception
(including the amount of sales to each such customer) and (b) all suppliers and
vendors for the Company as of the date of this Agreement.  3.16Insurance.  Section 3.16 of the Disclosure Schedule
contains a complete and correct list as of the date hereof of all insurance
policies maintained by or on behalf of the Company.  True and complete copies of each listed
policy have been made available to Parent. 
Such policies are in full force and effect, all premiums due thereon
have been paid and the Company has complied in all material respects with the
provisions of such policies.  The Company
has not received any written notices from any issuer of any of its insurance
policies canceling or amending any policies listed in Section 3.16 of the
Disclosure Schedule, materially increasing any deductibles or retained amounts
thereunder, or materially increasing premiums payable thereunder.  There is no claim by the Company pending
under any of such policies as to which coverage has been denied or disputed by
the underwriters or in respect of which the underwriters have reserved their
rights.  Neither the Company nor any
affiliate thereof has ever maintained, established, sponsored, participated in
or contributed to any self-insurance plan.  3.17Employees and
Consultants.  (a)Section 3.17(a)
of the Disclosure Schedule is a complete and accurate list of all individuals
employed by the Company as of the date of this Agreement.  Section 3.17(a) of the Disclosure Schedule
also lists all consultants and independent contractors engaged by the Company (Consultants) as of the date of
this Agreement.  Section 3.17(a) of the
Disclosure Schedule identifies the position or scope of engagement, as
applicable, held by each Employee or Consultant listed and employment
commencement date for each Employee.  (b)Except as set
forth in Section 3.17(b) of the Disclosure Schedule, all current and former
employees and consultants of the Company with access to Company IP or other
confidential or proprietary information of the Company have executed and
delivered to the Company agreements adequately protecting the confidentiality
of such information, and assigning to the Company all patents, discoveries,
inventions, works of authorship, improvements and innovations developed by such
employees and consultants in the course of performing their employment or
consulting duties (all such agreements with employees, collectively, the Employee
Confidentiality  23


Agreements; and all such agreements with consultants,
collectively, the Consultant
Confidentiality Agreements).  The
Companys standard forms of Employee Confidentiality Agreement and Consultant
Confidentiality Agreements and any material modifications of them have been
furnished to Parent.  (c)Section 3.17(c)
of the Disclosure Schedule sets forth a complete and accurate list of all
Employees who have executed and delivered to the Company employment Contracts
containing the terms and conditions of such Employees performance of their
respective employment duties (collectively, the Employee Employment Agreements),
all of which have been furnished to Parent.  (d)Each Employee
is located in the United States, is a United States citizen or has permanent
residency.  (e)The Company has
previously furnished to Parent the current salary, wages, commissions and
bonuses paid or payable by the Company to each Employee and Consultant as of
the Closing Date.  Except as set forth in
Section 3.17(e) of the Disclosure Schedule, no salary, wages, bonuses or
commissions are payable by the Company to any Employees except for wages with
respect to the current payroll period. 
The Company is not subject to any fines, penalties or other liabilities
as a result of any failure to pay salary, wages or other compensation.  Section 3.17(e) of the Disclosure Schedule
sets forth the earned and unused vacation and sick pay liability accrued by the
Company for each Employee through the Closing Date.  (f)No charge or
claim alleging any unfair labor practice, wrongful termination, employment
discrimination or any other illegal handling of any employment-related matter
is currently pending or, to the Companys Knowledge, threatened against the
Company relating to any of the Employees or Consultants.  3.18Litigation.  There is no (a) action, suit, claim, charge,
cause of action or suit (whether in contract or tort or otherwise), litigation
(whether at law or in equity, whether civil or criminal), controversy,
assessment, arbitration, investigation, hearing, complaint, demand or other
proceeding to, from, by or before any arbitrator, court, tribunal or other
Governmental Authority (individually, an Action, and collectively, Actions)
pending, or to the Companys Knowledge, threatened against the Company, or
affecting any of its properties or the Merger or the other transactions
contemplated hereby, (b) governmental inquiry or investigation pending or, to
the Companys Knowledge, threatened against the Company or affecting any of its
properties (including, without limitation, any inquiry as to the qualification
of the Company to hold or receive any license or other Permit) or (c) to the
Companys Knowledge, any Actions pending or threatened against any Related
Party in connection with the business of the Company.  The Company is not in default with respect to
any order, writ, injunction or material decree of any Governmental Authority
served upon the Company.  There is no
action or suit by the Company pending, threatened or contemplated against any
other Person.  3.19Environmental
Matters.  (a)To the Companys
Knowledge: (i) the Company is and has been in compliance in all material
respects with all Environmental Laws; (ii) there has been no release or
threatened release of any pollutant, contaminant or toxic or hazardous
material, substance or waste, or petroleum or any fraction thereof, (each a Hazardous
Substance) on, upon, into or from any site  24


currently
or heretofore owned, leased or otherwise used by the Company; (iii) there have
been no Hazardous Substances generated by the Company that have been disposed
of, or come to rest at, any site that has been included in any published U.S.
federal, state or local superfund site list or any other similar list of
hazardous or toxic waste sites published by any Governmental Authority within
or outside the United States; and (iv) the Company has made available to Parent
true and correct copies of all material environmental records, reports,
notifications, certificates of need, permits, pending permit applications,
correspondence, engineering studies and environmental studies or assessments in
the possession of the Company or any of its representatives or advisors.  (b)For purposes of
this Agreement, Environmental Laws means any applicable Legal
Requirement (whether domestic or foreign) relating to (i) releases or
threatened release of Hazardous Substances, (ii) pollution or protection of
employee health or safety, public health or the environment or (iii) the
manufacture, handling, transport, use, treatment, storage, or disposal of
Hazardous Substances.  3.20Compliance with
Laws; Permits.  The Company
is not in violation of or default under any Legal Requirement in any material
respect.  To the Companys Knowledge,
neither the Company nor any of its Related Persons, is under investigation with
respect to, nor has the Company or, to the Companys Knowledge, any Related
Party been threatened to be charged with, or has been given written notice of,
any material violation of any Legal Requirement.  All material governmental permits,
concessions, grants, franchises, licenses and other governmental authorizations
and approvals (collectively, Permits) (A) pursuant to which the
Company currently operates or holds any interest in any of its properties, or (B)
which are required for the operation of the business of the Company as
currently conducted or the holding of any such interest, have been issued or
granted to the Company, and all such Permits are in full force and effect and
constitute all Permits required to permit the Company to operate or conduct its
business or hold any interest in its properties or assets.  3.21Banking
Relationships.  Section 3.21
of the Disclosure Schedule sets forth a true and complete list of the name and
location of each bank, savings and loan or similar financial institution in
which the Company has an account or a safe deposit box.  3.22Minute Books
and Records.  The minute
books of the Company contain complete and accurate, in all material respects,
records of all meetings and other corporate actions of their respective
shareholders and the board of directors and committees thereof.  The stock records of the Company are correct
and complete, in all material respects, and reflect all issuances, transfers,
repurchases and cancellations of shares of capital stock of the Company.  Prior to execution of this Agreement, the
Company has furnished to Parent true and complete copies of (a) the Company
Organizational Documents, (b) all minute books (containing the records of
meetings of the Company Shareholders, the board of directors and any committees
of the board of directors to date) of the Company, (c) all stock certificate
and stock record books of the Company and (d) all Contracts referred to or
identified in Section 3.10 of the Disclosure Schedule.  3.23Brokers;
Schedule of Fees.  No broker,
finder or investment banker is entitled to any brokerage, finders or other fee
or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company.  3.24Vote Required.  Either the (a) vote of the holders of more
than 50% of the outstanding Company Stock at a meeting of Company Shareholders
or (b) written consent of the  25


holders
of at least 90% of the outstanding Company Stock, as applicable, is the only
vote of the holders of any of the Company Stock necessary to approve this
Agreement and the transactions contemplated hereby (the Requisite
Shareholder Approval).  3.25Company
Determinations, Approvals and Recommendations.  The board of directors of the Company, at a
meeting duly called and held prior to the execution of this Agreement, has
unanimously (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, is advisable, fair to and in the
best interests of the Company and the Company Shareholders, (ii) authorized and
approved the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, including the Merger, (iii) approved this
Agreement and the transactions contemplated hereby, including the Merger, which
approval constituted approval under the provisions of Section 490.1104 of the
IBCA and (iv) recommended the adoption of this Agreement and approval of the
Merger and the transactions contemplated hereby by Company Shareholders and
directed that this Agreement, the Merger and the transactions contemplated
hereby be submitted for consideration by the Company Shareholders.  3.26Certain
Relationships and Related Transactions.  No Employee, officer, director or member of
the Company, any member of such Persons immediate family or any of their
respective Affiliates (Related Persons) (i) owes any amount to the
Company nor does the Company owe any amount to, or has the Company committed to
make any loan or extend or guarantee credit to or for the benefit of, any
Related Person, (ii) is involved in any business arrangement or other
relationship with the Company (whether written or oral) other than employment
relationships and board memberships, (iii) owns any property or right, tangible
or intangible, that is used by the Company, (iv) has any claim or cause of
action against the Company or (v) owns any direct or indirect interest of any
kind in, or controls or is a director, officer, employee or partner of, or
consultant to, or lender to or borrower from or has the right to participate in
the profits of, any Person which is a competitor, supplier, customer, landlord,
tenant, creditor or debtor of the Company.  3.27Disclosures.  Neither this Agreement (including the
Disclosure Schedule), any Exhibit or Schedule hereto, nor any certificates
delivered or supplied by the Company hereunder contains an untrue statement of
a material fact or omits to state a material fact necessary to make the
statements contained herein or therein, in light of the circumstances under
which they were made and taken as a whole, not misleading.  SECTION 4.Representations
and Warranties by Parent and Merger Sub.  Parent and Merger Sub represent and warrant
to the Company as follows:  4.1Organization
and Standing.  Each of
Parent and Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation.  4.2Authority for
Agreement.  (a)Each of Parent
and Merger Sub has all requisite corporate power and authority to execute and
deliver this Agreement and each instrument required hereby to be executed and
delivered at Closing and subject to Section 4.3, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.  The execution and delivery
by Parent and Merger Sub of this Agreement and each instrument required hereby
to be executed and delivered by them at Closing and the consummation by Parent
and Merger Sub of the  26


transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of Parent or
Merger Sub are necessary to authorize this Agreement or to consummate the
transactions so contemplated.  This
Agreement has been and each instrument required hereby to be delivered by
Parent and Merger Sub at the Closing will be duly and validly executed and
delivered by Parent and Merger Sub and, assuming the due authorization,
execution and delivery by the Company and the Representative, constitutes a
legal, valid and binding obligation of Parent and Merger Sub, enforceable
against Parent and Merger Sub in accordance with its terms, subject to
bankruptcy, insolvency, reorganization or similar laws of general application
affecting the rights and remedies of creditors, and to general equity
principles.  (b)The execution
and delivery of this Agreement by Parent and Merger Sub, the compliance with
the provisions of this Agreement by Parent and Merger Sub and the consummation
by Parent or Merger Sub, as applicable, of the transactions contemplated hereby
or thereby, will not (i) conflict with or violate the Certificate of
Incorporation or the Bylaws of Parent, each as amended to date and currently in
effect, or the Articles of Incorporation or the Bylaws of Merger Sub, each as
amended to date and currently in effect, (ii) violate, in any material respects
Legal Requirements applicable to Parent or Merger Sub or any of their
respective properties or assets, or (iii) except as would not give rise to a
Parent Material Adverse Effect, conflict with, result in a material breach of,
constitute (with or without due notice or lapse of time or both) a material
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice, consent or
waiver under, any Contract, Permit, Security Interest or other interest to
which Parent or Merger Sub is a party or by which Parent or Merger Sub is bound
or to which their assets are subject.  4.3Brokers and
Finders.  No broker, finder or
investment banker is entitled to any brokerage, finders or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent.  4.4Ownership and
Activities of Merger Sub. 
Parent owns all of the issued and outstanding shares of capital stock of
Merger Sub.  As of the date hereof and as
of the Effective Time, except for obligations or liabilities incurred in
connection with its incorporation or organization and the transactions
contemplated by this Agreement and except for this Agreement and any other
agreements or arrangements contemplated hereby or thereby, Merger Sub (i) is a
direct, wholly owned subsidiary of Parent, (ii) was formed solely for the
purpose of engaging in the transactions contemplated hereby and (iii) has not
and at the Effective Time will not have incurred, directly or indirectly, any
obligations or liabilities or engaged in any business activities of any type or
kind whatsoever or entered into any agreements or arrangements with any Person.  SECTION 5.Additional
Agreements.  5.1Conduct of the
Companys Business Prior to Closing.  The Company covenants and agrees that, during
the period from the date hereof and continuing until the earlier of the
termination of this Agreement or the Effective Time, unless Parent shall
otherwise consent in writing (which consent shall not be unreasonably withheld
or delayed), the Company shall conduct its business and not take any action
(including, without limitation, any of the actions set forth in Section 3.7
hereof) except in the ordinary course of business and in a manner consistent
with past practices and in compliance in all material respects with all
Applicable Law.  27


5.2Confidentiality;
Access to Information.  (a)Confidentiality.  The parties acknowledge that the Company and
Parent have previously executed a Mutual Non-Disclosure Agreement by and
between Parent and the Company dated as of December 23, 2009 (the Confidentiality
Agreement), which Confidentiality Agreement will continue in full force
and effect in accordance with its terms. 
Notwithstanding the terms and provisions of the Confidentiality
Agreement, the parties acknowledge and agree that the Company shall have the
right to disclose to its shareholders all material terms and provisions of the
Merger Agreement and the transactions contemplated by the Merger Agreement as
may be necessary or proper in connection with the Companys efforts to obtain
the Requisite Shareholder Approval and that this provision of this Section 5.2(a)
shall be deemed to, and shall, amend the terms of the Confidentiality Agreement
to the extent necessary to permit such disclosure.  (b)Access to
Information.  At the
reasonable request of Parent during the period prior to the Effective Time, the
Company will afford Parent and its accountants, counsel and other
representatives reasonable access during normal business hours to all of the
premises, properties, books, records, financial, tax and accounting records
(including, without limitation, the work papers of the Companys independent
accountants), Contracts, personnel, counsel, financial advisors and auditors of
the Company to obtain all information concerning the business, including,
without limitation, the status of product development efforts, properties,
results of operations and personnel of the Company for purposes of this
Agreement; provided, however, that the Company may restrict the
foregoing access to the extent that any Applicable Law requires the Company to
restrict or prohibit access to any such properties or information.  In addition, any information obtained from a
Party pursuant to the access contemplated by this Section 5.2(b) shall be
subject to the confidentiality obligations pursuant to Section 5.2(a).  No information or knowledge obtained in any
investigation pursuant to this Section 5.2 or otherwise shall affect or be
deemed to modify or quantify any representation or warranty of the Parties or
the conditions to the obligations of the parties to consummate the Merger or
the other transactions contemplated by this Agreement.  5.3Public
Disclosure.  Except as
contemplated by this Agreement or as required by Legal Requirements (including
applicable securities laws) or, as to Parent, by regulatory authority, no press
release or any public disclosure, either written or oral, of the transactions
contemplated hereby shall be made by any party hereto unless approved by Parent
and the Company prior to release, which consent will not be unreasonably
withheld.  5.4Notification.  Between the date of this Agreement and the
Closing, the Company shall promptly notify Parent in writing if it becomes
aware of (a) any fact or condition that causes or constitutes a breach of any
of the Companys representations and warranties made as of the date of this
Agreement or (b) the occurrence after the date of this Agreement of any fact or
condition that would or be reasonably likely to (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had that representation or warranty been made as of
the time of the occurrence of, or the Companys discovery of, such fact or
condition.  5.5Exclusivity.  From and after the date of this Agreement and
ending on the earlier of the Closing Date or the date this Agreement is
terminated pursuant to Section 11 (the Exclusivity Period), the
Company (including, without limitation, for this purpose its officers,
directors, representatives, affiliates, employees and agents) will not,
directly or indirectly, solicit, induce, facilitate, respond to (other than to
advise such party of the Companys obligations hereunder), initiate, engage in
or enter into discussions or negotiations with, or encourage, or provide  28


any
information to, any Person concerning any sale of the Company or sale,
exclusive license or other form of disposition of any of the Companys assets
(other than in the ordinary course of business) (an Acquisition Proposal).  During the Exclusivity Period, neither the
Company nor such designated persons will enter into any Contracts or make any
commitments to do or in connection with any of the foregoing.  For the purpose of this Section 5.5, any
license of the Company IP shall be considered a disposition of assets outside
the ordinary course of business.  The
Company represents that neither it nor any of its employees, agents,
representatives, directors or affiliates is party to or bound by any Contract
with respect to any such transaction regarding the disposition of all or a
portion of its assets other than as contemplated by this Agreement.  If the Company or any such designated person
receives an Acquisition Proposal or any request for non-public information
concerning itself or its assets, the Company shall promptly notify Parent of
such Acquisition Proposal or request (including, without limitation, the
identity of the Person making, and the terms of, such Acquisition Proposal or
request), subject to any confidentiality obligations existing as of the date
hereof.  5.6Reasonable
Efforts.  Upon the terms and subject to
the conditions set forth herein, each of the parties hereto agrees to use
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, and to assist and cooperate with the other parties in doing,
all things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including, without limitation, using all
reasonable efforts to accomplish the following: 
(i) the taking of all reasonable acts necessary to cause the conditions
precedent set forth in Sections 6, 7 and 8 to be satisfied; (ii) obtaining or
making all consents, approvals, orders or authorizations of, or registrations,
declarations or filings with any Governmental Authority and the taking of all
reasonable steps as may be necessary to avoid any Action by any Governmental
Authority; (iii) the obtaining of all consents, approvals or waivers from third
parties (provided, that the parties will discuss in good faith procedures to
pursue third party consents with respect to the Merger); (iv)to lift any restraint, injunction or
other legal bar to the Merger and(v) the executing or
delivering of any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement.  5.7Cooperation.  Subject to compliance with Applicable Law,
from the date hereof until the Effective Time, the officers of the Company and
other personnel of the Company shall make themselves reasonably available to
confer on a regular and frequent basis with one or more representatives of
Parent to report operational matters that are material and the general status
of ongoing operations, in each case with respect to the Company.  5.8Company Option Plan. 
Prior to the Effective Time, the Company shall take all action necessary
such that the Company Option Plan is terminated effective as of the Effective
Time.  5.9Delivery of
Contracts for Due Diligence.  Promptly following the execution of this
Agreement, the Company shall furnish to Parent true, correct and complete
copies of any and all Contracts between the Company and the parties indicated
on Schedule 7.3 hereto (or their affiliates), for review and evaluation
by Parent in accordance with the terms of the Confidentiality Agreement.  5.10Company
Shareholders Consent.  Promptly
following the execution of this Agreement, the Company shall submit this
Agreement and the transactions contemplated hereunder, including the Merger to
all of the Company Shareholders for approval and adoption as provided by  29


the
IBCA and the Companys Organizational Documents.  Without limiting the foregoing, the Company
shall use its best efforts to obtain the approval or consent of as many of the
Company Shareholders as possible as promptly as practicable following the date
hereof.  5.11Resignation of
Officers and Directors.  The
Company shall obtain the resignations of all officers and members of the board
of directors of the Company effective as of the Effective Time.  5.12Vacation and Sick Pay. 
At or promptly following the Closing, Parent shall pay each Employee
cash in an amount equal to theearned and unused vacation
and sick pay liability accrued by the Company for such Employee through the
Closing Date, as set forth in Section 3.17(e) of the Disclosure Schedule.  5.13Parent and Surviving Corporation
Indemnification.  (a)Parent shall cause the Surviving
Corporation to establish and maintain for a period of not less than three years
from and after the Effective Time provisions in its articles of incorporation
and by-laws concerning the indemnification and exoneration (including
provisions relating to expense advancement) of the Companys former and current
officers, directors, employees and agents that are no less favorable to those
persons than the provisions of the articles of incorporation and by-laws of the
Company as in effect as of the date hereof, and such provisions shall not be
amended, repealed or otherwise modified in any respect adverse to such former
and current officers, directors, employees and agents during such period,
except as required by Applicable Law.  (b)The rights of each present and former
director, officer and employee of the Company (each such director, officer or
employee, together with such persons heirs, executors or administrators, an Indemnified
Party and collectively, the Indemnified Parties) hereunder shall
be in addition to, and not in limitation of, any other rights such Indemnified
Party may have under the articles of incorporation or by-laws or any other
organizational documents of the Company, the indemnification arrangements in
existence as of the date of this Agreement under the IBCA or otherwise.  The provisions of this Section 5.13 shall
survive the consummation of the Merger and are expressly intended to be for the
benefit of, and shall be enforceable by, each of the Indemnified Parties and,
subject to paragraph (c) below, shall be binding on Parent, the Surviving
Corporation and their successors and assigns.  (c)The Surviving Corporation and Parent
shall reimburse all reasonable out of pocket expenses, including reasonable
attorneys fees, that may be incurred by any Indemnified Party in enforcing the
indemnity and other obligations in this Section 5.12.  (d)To the extent that Parent is required to
indemnify or reimburse expenses incurred by an Indemnified Party under this Section
5.13 with respect to a matter for which Parent is entitled to indemnification
under Section 13 in excess of the amount covered by the applicable tail
insurance policy in effect at such time, such excess amount, plus any
reasonable costs and expenses incurred by Parent in connection with such
indemnification,shall constitute Damages for purposes of this
Agreement, and Parent and the Surviving Corporation, as the case may be, shall,
without limiting any other rights, be entitled to recover such Damages from the
Indemnification Funds;
provided, however, that this paragraph (d) shall not apply in the
event that no such tail insurance is in effect at such time.  30


SECTION 6.Conditions
Precedent to the Obligations of Each Party to Effect the Merger.  The respective obligations of each party
under this Agreement to consummate the Merger and the other transactions
contemplated hereby shall be subject to the satisfaction at or prior to the
Closing Date of the following conditions:  6.1Requisite
Shareholder Approval.  The Company
shall have obtained the Requisite Shareholder Approval.  6.2No Order.  No temporary restraining order, preliminary
or permanent injunction or other order or judgment preventing the consummation
of the Merger shall have been issued by any court of competent jurisdiction and
remain in effect.  SECTION 7.Additional
Conditions Precedent to the Obligations of Parent and Merger Sub.  The obligations of Parent and Merger Sub
under this Agreement to consummate the Merger and the other transactions
contemplated hereby shall be subject to satisfaction at or prior to the Closing
Date of each of the following conditions:  7.1Representations,
Warranties and Covenants.  (a)Each of the
representations and warranties of the Company in this Agreement, shall be true,
complete and correct in all material respects as of the Effective Time as
though such representation and warranty had been made at the Effective Time
(except for those representations and warranties which address matters only as
of a particular date shall remain true, complete and correct as of such date).  (b)The Company shall not have materially
breached its covenants under this Agreement required to be performed and
complied with as of the Effective Time.  7.2Government and
Other Third Party Approvals.  All consents, approvals, orders or
authorizations of, or registrations, declarations or filings with, any
Governmental Authority or other Person identified on Schedule 7.2 shall
have been obtained or made, in a manner reasonably satisfactory in form and
substance to Parent, and no such consent, approval, order or authorization
shall have been revoked.  7.3Satisfactory
Review of Contracts.  The Company
shall have furnished to Parent copies of any Contracts between the Company and
the parties indicated on Schedule 7.3 hereto (or their affiliates), and
Parent shall have determined, in its sole discretion, that the terms of such
Contracts are satisfactory to Parent.  7.4Offers of
Employment; Non-Compete Agreements.  Each of the Employees listed on Schedule
7.4 shall have accepted offers of employment from Parent (subject to the
consummation of the Merger) and entered into (i) a Proprietary Information and
Inventions Agreement in Parents customary form and (ii) a Non-Competition
Agreement, in a form mutually agreed upon by the parties.  7.5Dissenting
Shares.  Holders of no more than 5% of
the Company Stock shall have exercised appraisal rights pursuant to the
applicable provisions of the IBCA.  7.6Company
Material Adverse Effect. 
Since the date of this Agreement no change has occurred that has had a
Company Material Adverse Effect.  31


7.7Opinion of
Company Counsel.  Parent
shall have received a legal opinion from counsel to the Company, dated as of
the Closing Date, in a form reasonably satisfactory to Parent, subject to
appropriate assumptions, qualifications and limitations, with respect to (a) the
matters warranted by the Company in Sections 3.1(a), 3.2(a) (other than with
respect to numbers of outstanding securities), 3.2(c)(only with respect to the
termination of the Option Plan and cancellation of outstanding Options), 3.4
and 3.5 of this Agreement and (b) the enforceability of Section 14.1 of this
Agreement.  7.8Cancellation of
Options and Warrants.  Each of the
Employee Benefit Plans described in Section 5.8 and all outstanding Options and
Warrants shall have been terminated and Parent shall have received
documentation reasonably satisfactory to it to the foregoing effect.  7.9Loan Settlement
Agreements.  (a)Each Employee who has loaned funds to the Company
shall have entered into a loan settlement agreement in a form to be agreed upon
by Parent and the Company pursuant to which such Employee shall agree to accept
repayment of the loan principal amount in full settlement of the Companys
indebtedness to the Employee with respect to such loan.  (b)The Company and IDED shall have entered into aloan settlement
agreement in a form reasonably satisfactory to Parent with respect to the
repayment of the IDED Loan.  7.10Shareholder
Consent, Proxy, Release and Waiver.  Company Shareholders holding at least 90% of
the outstanding shares of Company Stock (including each of the Active Founders,
as defined in Section 13.3(c)) shall have executed and delivered (and not
revoked) a Consent, Proxy, Release and Waiver providing, among other things, a
general release of the Company (subject to customary exceptions under Iowa
law), in a form to be agreed upon by Parent and the Company.  7.11Deliveries.  Parent shall have received each of the other
items listed in Section 9.1.  SECTION 8.Conditions
Precedent to Obligations of the Company.  All obligations of the Company under this
Agreement to consummate the Merger and the other transactions contemplated
hereby are subject to the satisfaction at or prior to the Closing Date of the
following conditions:  8.1Representations,
Warranties and Covenants.  (a)Each of the
representations and warranties of Parent in this Agreement, shall be true,
complete and correct in all material respects as of the Effective Time as
though such representation and warranty had been made at the Effective Time
(except for those representations and warranties which address matters only as
of a particular date shall remain true, complete and correct as of such date).  (b)Parent shall not have materially breached
its covenants under this Agreement required to be performed and complied with
as of the Effective Time.  8.2Parent Material
Adverse Effect.  Since the
date of this Agreement no event, occurrence, change, effect or condition of any
character shall have occurred that, individually or in the aggregate, has had
or would reasonably be expected to have a Parent Material Adverse Effect.  32


8.3Deliveries.  The Company shall have received the items
listed in Section 9.2.  SECTION 9.Closing
Deliveries.  9.1Closing Deliveries
of the Company.  At or prior
to the Closing, the Company shall deliver, or caused to be delivered, to Parent
the following:  (a)a certificate
executed on behalf of the Company by its Chief Executive Officer or its
Treasurer to the effect that, as of the Effective Time, each of the conditions
set forth in Section 7 has been satisfied;  (b)the Articles of
Merger, duly executed by the Company;  (c)a certificate
of the Secretary of the Company dated the Closing Date, in form and substance
reasonably satisfactory to Parent certifying as the accuracy and completeness
of the Company Organizational Documents;  (d)evidence
satisfactory to Parent of resignations of each director and officer of the
Company, effective in writing at the Effective Time in the form mutually agreed
upon by Parent and the Company;  (e)the agreements
described in Section 7.4 executed by each of the Employees identified in Schedule
7.4;  (f)the Companys
minute books, stock record books, Financial Statements and, to the extent
requested by Parent, all other documents, books, records, agreements and
financial data in the possession of the Company;  (g)evidence,
reasonably satisfactory to Parent, of obtaining the third party consents
identified on Schedule 7.2;  (h)the Closing
Allocation Schedule;  (i)the legal
opinion described in Section 7.7 of this Agreement;  (j)the agreements
and other documentation described in Sections 7.8 and 7.9 of this Agreement;
and  9.2Closing
Deliveries of Parent.  At or prior
to the Closing, Parent shall deliver, or caused to be delivered, to the Company
the following:  (a)a certificate
executed on behalf of the Parent by one of its officers to the effect that, as
of the Effective Time, the conditions set forth in Section 8.1 above have been
satisfied; and  (b)the Articles of
Merger, duly executed and delivered by Parent.  SECTION 10.Survival.  All (a) representations and warranties of the
Company and the Representative contained herein and (b) covenants and
obligations of the Representative shall survive the Closing and shall continue
for the Holdback Period; provided  that, if any claims for  33


indemnification have been asserted with respect to
inaccuracy or a breach of such representations, warranties, covenants and
obligations prior to the end of the Holdback Period, such claim shall survive
and continue in effect until final resolution of such claims; provided  further,
that the representations and warranties set forth in Sections 3.8, 3.11 and
3.12 shall survive until the applicable statute of limitations; and provided
further, that, the representations and warranties set forth in Sections
3.1, 3.2 and 3.4 shall survive indefinitely. 
All (a) representations and warranties of Parent or Merger Sub contained
herein and (b) covenants and obligations of the Parent and the Merger Sub shall
survive the Closing and shall continue for the Holdback Period; provided
that any covenants or obligations of Parent or Merger Sub which by their
terms extend beyond the Holdback Period shall extend beyond the Holdback Period
until all obligations thereunder have been performed; provided  further,
that if any claims are brought against Parent or Merger Sub within the Holdback
Period or, as the case may be within the longer period specified in the
preceding proviso, with respect to any inaccuracy or breach of such
representations, warranties, covenants and obligations, such representation,
warranty, covenant or obligation shall survive and continue in effect until the
final resolution of such claim; and provided  further that the
representations and warranties set forth in Sections 4.1 and 4.2 shall survive
indefinitely.  SECTION 11.Termination.  11.1Termination
prior to the Effective Time of the Merger.  This Agreement may be terminated at any time
prior to the Effective Time, regardless of whether this Agreement and/or the
Merger have been approved by the Company Shareholders, as follows and in no
other manner:  (a)by mutual
written consent duly authorized by the boards of directors of Parent and the
Company;  (b)by either the
Company or Parent if the Merger shall not have been consummated by June 15,
2010 (the End Date); provided that the right to terminate this
Agreement under this Section 11.1(b) shall not be available to any party whose
action or failure to act has been a principal cause of, 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;  (c)by the Company,
(i) upon a material breach of any representation, warranty, covenant or
agreement set forth in this Agreement by Parent or Merger Sub, or (ii) if any
representation or warranty of Parent or Merger Sub shall have become untrue in
any material respect, in either case such that the conditions set forth in Section
8.1 would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue;  (d)by Parent, (i) upon
a material breach of any representation, warranty, covenant or agreement set
forth in this Agreement by the Company or the Representative, or (ii) if any
representation or warranty of the Company shall have become untrue in any
material respect, in either case such that the conditions set forth in Section 7.1
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue;  (e)by Parent, if
the Requisite Shareholder Approval shall not have been obtained on or before March
24, 2010;  (f)by Parent, if a
Company Material Adverse Effect shall have occurred, or Parent first becomes
aware of a Company Material Adverse Effect, after the date hereof; and  34


(g)by Company, if
a Parent Material Adverse Effect shall have occurred, or Company first becomes
aware of a Parent Material Adverse Effect, after the date hereof.  11.2Notice of
Termination; Effect of Termination.  If a party wishes to terminate this Agreement
pursuant to Section 11.1, then such party shall deliver to the other parties to
this Agreement a written notice stating that such party is terminating this
Agreement and setting forth a brief description of the basis on which such
party is terminating this Agreement.  Any
termination of this Agreement under Section 11.1 will be effective immediately
upon the delivery of a valid written notice of the terminating party to the
other party hereto.  In the event of the
termination of this Agreement as provided in Section 11.1, this Agreement shall
be of no further force or effect, except for Sections 5.2(a), 11, 12 and 16,
each of which shall survive the termination of this Agreement.  SECTION 12.Fees and
Expenses.  All fees,
costs and expenses of Parent or Merger Sub incurred in connection with this
Agreement and the transactions contemplated hereby, including, without
limitation, fees and expenses of financial advisors, legal counsel and other
advisors, shall be paid by Parent whether or not the Merger is consummated.  If the Merger is consummated, all reasonable
fees, costs and expenses of the Company and the Representative incurred (prior
to the Effective Time) in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, fees and expenses of
financial advisors, financial sponsors, accountants, legal counsel and other
advisors, shall be treated as Transaction Expenses under this Agreement and, to
the extent not already paid by the Company, shall be paid by Parent.  If the Merger is not consummated, the Company
shall bear all of its own expenses in connection with this Agreement and the
transactions contemplated hereby whether or not treated as Transaction Expenses.  SECTION 13.Indemnification
and Claims for Damages.  13.1Parent Claims
Against Indemnifying Shareholders.  Subject to the terms and provisions of this Section
13, each Indemnifying Shareholder who accepts payment of the applicable portion
of the Closing Merger Consideration pursuant to this Agreement shall be deemed
to have agreed, and hereby agrees, that Parent, Merger Sub and their respective
affiliates (including, without limitation, following the Effective Time, the
Surviving Corporation) and their respective directors, officers, employees,
agents, representatives, successors and assigns (collectively, the Parent
Indemnified Parties) shall be indemnified and held harmless for any and
all Damages arising from or related to any of the following (each a Parent
Claim):  (a)any
misrepresentation or breach or failure of any representation or warranty made
by the Company or the Representative in this Agreement or in any officers
certificate to be true and correct in all respects as of the date hereof and as
of the Closing Date in each case;  (b)any
post-closing claim for material breach or non-fulfillment of any covenant or
agreement made or to be performed by the Company or the Representative pursuant
to this Agreement or in any agreement or instrument entered into by the Company
or the Representative in connection with this Agreement; and  (c)any inaccuracy
in the Closing Allocation Schedule;  (d)the matters described in Schedule
13.1(d); and  35


(e)any fraud, willful breach or intentional
misrepresentation by the Company or the Representative in connection with this
Agreement or the transactions and documents contemplated hereby.  13.2Indemnification Funds.  The Holdback
Funds shall be available to reimburse the Parent Indemnified Parties for any
Damages for which they are entitled to be indemnified hereunder.  To the extent the aggregate dollar amount of
Damages asserted in claims against the Holdback Fund as of the last day of the
Earn-out Period exceeds the total amount of the Holdback Funds, Parent shall
have the right to withhold any required payments of the Earn-out Amount
otherwise payable to the Indemnifying Shareholders under Section 2.4 of this
Agreement.  Any such amounts withheld
shall be treated as additional Holdback Funds pursuant to this Section 13.  The amounts otherwise payable as Earn-out
Amount that are held back under this Section 13.2, together with the Holdback
Funds, shall be referred to as the Indemnification Funds.  The Indemnification Funds shall also be
available to satisfy Active Founder Claims (as defined in Section 13.3(c)) to
the extent provided by Section 13.3(c).  13.3Limitations of
Liability. 
Notwithstanding anything in this Agreement to the contrary:  (a)Subject to Section
13.3(c), the liability of each Indemnifying Shareholder for indemnification
hereunder in all events shall be several and not joint and in no event will any
Indemnifying Shareholder be required to provide indemnification hereunder in an
amount exceeding such Indemnifying Shareholders pro rata share of the
Indemnification Funds based on such Indemnifying Shareholders ownership
percentage as set forth on the Closing Allocation Schedule.  (b)Subject to Section
13.3(c), in no event shall the aggregate amount of Damages for which
indemnification is provided to the Parent Indemnified Parties under this
Agreement exceed the amount of the Indemnification Funds.  (c)Notwithstanding
anything to the contrary in this Agreement, in the event a Parent Indemnified
Party is entitled to a recovery based on a final determination of fraud or
intentional misrepresentation (including, without limitation, a determination
of arbitrators pursuant to Section 13.11), the liability of Scott A. Irwin,
Eric D. Groen Matthew S. Shafer and Charles W. Boecker (collectively, the Active
Founders) to any Parent Indemnified Party under this Section 13 shall not
be subject to the limitations on liability under Section 13.3(a), (b), (d) or (e)
hereof, and any Parent Indemnified Party shall be entitled to recover Damages
for which it is indemnified hereunder (whether or not the amount of Damages
exceeds the amount of remaining Indemnification Funds) from the Active Founders
directly without first seeking recovery from the Indemnification Funds; provided,
however, that the proportionate liability of an Active Founder shall not
exceed the fraction determined by dividing his ownership percentage, by the sum
of the ownership percentages of all of the Active Founders, as such ownership
percentages are set forth in the Closing Allocation Schedule.  Subject to the last sentence of this Section 13.3(c),
nothing contained in this Section 13.3(c) shall preclude the Active Founders
from pursuing claims available to them under law or equity against the Company
or Surviving Corporation (Active Founder Claims), but only to the
extent of the Indemnification Funds that would otherwise be distributed to the
shareholders of the Company and only at the time such distribution to the
shareholders would be required under this Agreement.  For the purposes of this Section 13.3(c), an
Active Founder may be entitled to recover upon Active Founder Claims only to
the extent he would be entitled to be indemnified with respect to such claims  36


if
he were an officer or director of the Company or the Surviving Corporation in
accordance with Section 490.851 of the IBCA  (d)The
Indemnifying Shareholders shall not be required to provide any indemnification
for Damages related to a Parent Claim unless and until the Parent Indemnified
Parties shall have sustained aggregate Damages as a result of one or more such
Parent Claims of Twenty-Five Thousand Dollars ($25,000) (the Basket Amount)
(and then only for Parent Claims which in the aggregate, when combined with all
other Parent Claims for Damages, result in Damages which exceed the Basket
Amount); provided that the Basket Amount limitation shall not apply to
Damages related to claims based on fraud or intentional misrepresentation.  (e)Any Damages as
to which indemnification provided for in this Agreement may apply shall be
determined net of any actual cash recovery actually received by a Parent
Indemnified Party with respect to insurance or contributions from third parties
specifically with respect to the specific matter for which indemnification is
sought, less any current or prospective costs associated with receiving such
recovery and net of any net Tax benefit resulting therefrom to the Parent
Indemnified Party (to the extent that such benefit could reasonably be expected
to be recognized by such Parent Indemnified Party).  This Section 13.3(e) shall not imply and
shall not be construed to imply any obligation on the part of any Person to
seek or pursue any such recovery and the failure to seek or pursue any such
recovery shall not be a defense to any indemnification obligation
hereunder.  Parent shall attempt to
mitigate Damages that have resulted to an Indemnification claim hereunder, provided,
however, that nothing herein shall require Parent to take any action that is
not commercially reasonable.  13.4Notification
Certification of Claims.  If
any Parent Claim has occurred, an authorized officer or an authorized
representative of the Parent Indemnified Party may provide the Representative
with a written certificate signed by such officer or representative (an Officers
Certificate) describing with reasonable specificity, and to the extent
known by the applicable Parent Indemnified Party, the nature and amount of such
Parent Claim.  Any such Officers
Certificate must be delivered during the Holdback Period.  13.5Third Party
Actions.  In the event any Action is
instituted against a Parent Indemnified Party which involves or appears
reasonably likely to involve a Parent Claim for which indemnification may be
sought, Parent will, promptly after receipt of notice of any such Action,
provide written notification to the Representative of the commencement
thereof.  The failure to so notify the
Representative of the commencement of any such Action will not relieve the
Indemnifying Shareholders from liability in connection therewith, except to the
extent that such failure materially and adversely affects the ability of the
Indemnifying Shareholders to defend their interests in such Action; provided,
however, that such written notice shall be effective only if delivered
to the Representative within the Holdback Period.  Parent shall have the right in its sole
discretion to assume and control the defense or settlement of such Action, provided
that, except with the consent (which consent may not be unreasonably
withheld, conditioned or delayed) of the Representative, no settlement of any
such Action with third party claimants shall be determinative of the amount of
Damages relating to such matter.  In the
event that the Representative has consented to any such settlement, the
Indemnifying Shareholders shall have no power or authority to object under any
provision of this Section 13 to the amount of any such Parent Claim against the
Indemnification Funds with respect to such settlement.  37


13.6Reimbursement
and Indemnification for Representative.  Subject to the terms and provisions of this Section
13, each Indemnifying Shareholder who accepts payment of the applicable portion
of the Closing Merger Consideration pursuant to this Agreement shall be deemed
to have agreed, and hereby agrees that the Representative shall be entitled to reimbursement
for any expense (including with limitation, legal or accounting fees, travel
and other costs) the Representative incurs in connection with acting as the
Representative (including without limitation any expenses incident to the
resolution of any dispute with Parent, including without limitation to defend
against claims by Parent against the Holdback Amount, to challenge claims by
Parent that Earn-out milestones have not been achieved, and for any amounts the
Representative expends in defending indemnification claims).  Subject to the provisions of Section 2.5(b),
the Representative shall have recourse against (a) the Dispute Fund Account and
(b) any portion of the Holdback Funds that would otherwise be paid to the
Company Shareholders (at the time that such payment is or would otherwise be
required to be made to the Company Shareholders under this Agreement) for
payment of such expenses.  13.7Definition of
Damages.  For purposes of this
Agreement, the term Damages shall mean the amount of any loss, Tax,
damage, deficiency, liability, judgment, fine, penalty, diminution in value,
cost or expense (including, without limitation, reasonable attorneys,
consultants and experts fees and expenses) actually incurred, paid, accrued
or sustained by the Parent Indemnified Parties, whether or not involving an
Action, including, without limitation, any reasonable costs of defending or
investigating any Actions (unless such Action is found by a trier of fact to
not be meritorious or settled or withdrawn without any consideration from
Parent) or properly enforcing the Parent Indemnified Partys rights under this
Agreement.  Notwithstanding anything to the
contrary contained in this Agreement, no party hereto shall be liable under
this Agreement to any other person, either in contract or tort, for punitive
damages of such person, including any statutory exemplary damage multiplier
relating to the breach of this Agreement or a claim based upon fraud or
intentional misrepresentation.  13.8Exclusive
Remedy.  Absent fraud or intentional
misrepresentation and subject to the right of each party to seek specific
performance and injunction to enforce the terms of any covenant in this
Agreement, the enforcement of the agreements of indemnification contained in
this Section 13 shall be, after the Closing Date, the exclusive remedy of the
parties hereto for any claims with respect to matters arising under this Agreement
or in connection with the Merger; whether sounding in tort, contract or
otherwise, and the parties hereto waive all remedies otherwise available to
such parties save only remedies which by law may not be waived.  13.9Treatment of
Indemnification Payments.  The
Company Shareholders, the Representative and Parent agree to treat (and cause
their affiliates to treat) any payments received pursuant to Section 13 as
adjustments to the Total Consideration for all Tax purposes, to the maximum
extent permitted by Legal Requirements.  13.10Transfer and
Similar Taxes.  Any sales,
use, transfer, gains, stamp, duties, recording and similar Taxes incurred by
any Company Shareholder as a result of the transactions contemplated by this
Agreement (collectively, Transfer Taxes) shall be borne by such
Company Shareholder.  13.11Dispute
Resolution.  (a)Representative
shall have 30 days after receipt (or deemed receipt) of the Officers
Certificate to deliver to Parent a written objection to all or any part of the
Officers  38


Certificate,
and such objection shall set forth in reasonable detail the basis of the
Representatives objection to the Officers Certificate and the amount of
dispute.  Parent shall have 30 days to
respond in a written statement to the objection.  If after such 30 day period there remains a
dispute as to any claims, the Representative and Parent shall attempt in good
faith for 30 days to agree upon the rights of the respective parties with
respect to each of such claims.  If the
Representative and Parent should so agree, a memorandum setting forth such
agreement shall be prepared and signed by both parties.  If no such agreement can be reached after
good faith negotiation, either Parent or the Representative may, by written
notice to the other, demand arbitration of the matter, 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 conducted by three arbitrators.  Within 15 days after such written notice is
sent, Parent (on one hand) and the Representative (on the other hand) shall
each select one arbitrator, and the two arbitrators so selected shall select a
third arbitrator.  The decision of the
arbitrators as to the validity and amount of any claim in such Officers
Certificate and as to the merits of the claim (including, without limitation, a
determination of fraud or intentional misrepresentation) shall be binding and
conclusive upon the parties to this Agreement, and notwithstanding anything
contained herein to the contrary, Parent shall be entitled to act in accordance
with such decision and make or withhold payments from the Indemnification Funds
in accordance with such decision. Judgment upon any award rendered by the
arbitrators may be entered in any court having jurisdiction.  Any such arbitration shall be conducted under
the commercial rules then in effect of the Judicial Arbitration &
Meditation Services (JAMS).  Any
arbitration shall be held inSanta Clara County, California.  The non-prevailing party to an arbitration
shall pay its own expenses, the fees of each arbitrator, the administrative fee
of the JAMS, and the expenses and costs, incurred by the prevailing party to
the arbitration (as determined by the arbitrator), but excluding attorneys
fees and costs.  (b)Any dispute,
controversy, or claim between a Parent Indemnified Party, on the one hand, and
the Indemnifying Shareholders or the Representative, on the other hand, arising
out of or relating to the provisions of this Agreement that cannot be resolved
by negotiations between Parent and the Representative (including, without
limitation, any Parent Claims with respect to which a Parent Indemnified Party
may recover directly from an Active Founder) shall also be resolved through
arbitration in the manner described in subparagraph (a) of this Section 13.11.  Notwithstanding anything to the contrary in
this Section 13.11, in the event of an alleged violation or breach of this
Agreement by a party (including, without limitation, unauthorized disclosure of
Confidential Information), the other party may seek temporary injunctive relief
from any court of competent jurisdiction.  (c)By virtue of
the adoption of this Agreement and the approval of the Merger by the
Indemnifying Shareholders, each Indemnifying Shareholder hereby (a) consents to
receipt of notice of any arbitration arising under this Section 13.11 in
accordance with the provisions of Section 16.1, provided that notice to
a Company Shareholder shall be sent to the address of such Company Shareholder
set forth in the Closing Allocation Schedule, and (b) waives any right to
receive service of process in any other manner in connection with any dispute,
controversy or claim pursuant to this Section 13.11.  39


SECTION 14.Representative.  14.1Power and
Authority.  The
Representative shall have the power and authority, acting on behalf of the
Company Shareholders, to enter into the transactions contemplated by this
Agreement, and to: (i) give and receive notices and communications to or from
Parent (on behalf of itself or any other Parent Indemnified Party) relating to
this Agreement or any of the transactions and other matters contemplated hereby
or thereby (except to the extent that this Agreement expressly contemplates
that any such notice or communication shall be given or received by such
Indemnifying Shareholders individually); (ii) object to any claims by any
Parent Indemnified Party for Damages; (iii) consent or agree to, negotiate,
enter into settlements and compromises of, and agree to arbitration and comply
with orders of courts and awards of arbitrators with respect to such claims; (iv)
assert, negotiate, enter into settlements and compromises of, and agree to
arbitration and comply with orders of courts and awards of arbitrators with
respect to, any other claim by any Parent Indemnified Party against any such
Indemnifying Shareholder or by any such Indemnifying Shareholder against Parent
or the Surviving Corporation or any dispute between any Parent Indemnified
Party and any such Indemnifying Shareholder, in each case relating to this
Agreement or the transactions contemplated hereby; (v) amend this Agreement or
any other agreement referred to herein or contemplated hereby; and (vi) take
all actions necessary or appropriate in the judgment of the Representative for
the accomplishment of the foregoing, in each case without having to seek or
obtain the consent of any Person under any circumstance.  Notwithstanding anything to the contrary, the
Representative shall have no authority to alter any Indemnifying Shareholders
percentage interest in the Net Merger Consideration or to increase such
Indemnifying Shareholders indemnification obligations beyond those specified
in Section 13 or to take any action that would otherwise be in violation of Section
490.1102 of the IBCA.  14.2Acceptance.  Jeffrey J. May hereby accepts his appointment
as Representative.  14.3Replacement.  The Person serving as the Representative may
be replaced from time to time by a majority in interest of the Indemnifying
Shareholders upon not less than 10 days prior written notice to Parent and
with Parents written consent, which shall not be unreasonably withheld.  A majority in interest of the Indemnifying
Shareholders may appoint a replacement Representative upon the resignation,
death or incapacity of the Representative. 
No bond shall be required of the Representative, and the Representative
shall receive no compensation for his services. 
Notices or communications to or from the Representative shall constitute
notice to or from each of the Indemnifying Shareholders.  14.4No Liability.  The Representative shall not be liable to any
Indemnifying Shareholder for any act done or omitted hereunder as the
Representative while acting in good faith and any act done or omitted pursuant
to the advice of counsel shall be conclusive evidence of such good faith.  The Indemnifying Shareholders shall severally
and not jointly in accordance with his, her or its pro rata ownership
percentage (excluding any Dissenting Shares from the calculation of such
ownership percentage under this Section 14.4) indemnify the Representative and
hold him harmless against any loss, liability or expense incurred without gross
negligence or bad faith on the part of the Representative and arising out of or
in connection with the acceptance or administration of his duties hereunder.  14.5Notice.  Any notice or communication given or received
by, and any decision, action, failure to act within a designated period of
time, agreement, consent, settlement, resolution or  40


instruction
of, the Representative shall constitute a notice or communication to or by, or
a decision, action, failure to act within a designated period of time,
agreement, consent, settlement, resolution or instruction of all the
Indemnifying Shareholders and shall be final, binding and conclusive upon each
such Indemnifying Shareholder; and each Parent Indemnified Party shall be
entitled to rely upon any such notice, communication, decision, action, failure
to act within a designated period of time, agreement, consent, settlement,
resolution or instruction as being a notice or communication to or by, or a
decision, action, failure to act within a designated period of time, agreement,
consent, settlement, resolution or instruction of, each and every such
Indemnifying Shareholder.  Each Parent
Indemnified Party is hereby relieved from any liability to any Person for any
acts done by them in accordance with any such notice, communication, decision,
action, failure to act within a designated period of time, agreement, consent
or instruction of the Representative.  14.6Representations and Warranties. 
The Representative represents and warrants to Parent and Merger Sub
that: (a) this Agreement has been, and each Transaction Document required
hereby to be executed and delivered by the Representative will be, duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent, Merger Sub and the Company,
constitutes a legal, valid and binding obligation of the Representative,
enforceable against the Representative in accordance with its terms, subject to
bankruptcy, insolvency, reorganization or similar laws of general application
affecting the rights and remedies of creditors, and to general equity
principles; and (b) the execution and delivery by the Representative of this
Agreement and each of the other Transaction Documents to which it is a party,
the compliance with the provisions hereof and thereof by the Representative and
the consummation by the Representative of the transactions contemplated hereby
and thereby, will not (i) violate in any material respect the Legal
Requirements applicable to the Representative, or (ii) conflict with, result in
a material breach of or constitute (with or without due notice or lapse of time
or both) a material default under any Contract to which the Representative is a
party or by which the Representative is bound, except as would not, when taken
individually or in the aggregate with all such other events, changes or
effects, materially impair the ability of the Representative to consummate the
transactions contemplated hereby.  14.7Role of Representative.  Without
limiting the generality or effect of Section 14.1, any claims or disputes
between or among any Parent Indemnified Party, the Representative and/or any
one or more Indemnifying Shareholders relating to this Agreement or the
transactions contemplated hereby or thereby shall in the case of any claim or
dispute asserted by or against or involving any such Indemnifying Shareholder
(other than any claim against or dispute with the Representative), be asserted
or otherwise addressed solely by the Representative on behalf of such
Indemnifying Shareholder (and not by such Shareholder acting on its own
behalf).  SECTION 15.Release.  Each Company Shareholder who accepts payment
of his, her or its portion of the Closing Merger Consideration pursuant to Section
2 shall be deemed to have, and hereby does, unconditionally release and forever
discharge the Company, Parent, Merger Sub and any other subsidiary of Parent,
including their respective officers and directors, from (a) any and all
obligations or duties the Company might have to such Company Shareholder and (b)
any and all claims of liability, whether legal or equitable, of every kind and
nature, which such Company Shareholder ever had, now has or may claim against
the Company in each case arising out of facts or circumstances occurring at any
time on or prior to the date hereof; provided, however, that such release shall
exclude (i) those claims, liabilities, obligations and duties of the Company,
Parent and Merger Sub under this Agreement and the other Transaction Documents,
(ii) those claims, liabilities, obligations and duties of the Company pursuant
to any agreement with a Related Party that is not terminated pursuant to the
terms of this Agreement, (iii) any claims relating to the Company Notes or the
Employee Loans and (iv) to the extent applicable with respect to any Company
Shareholder who  41


is a director, officer or employee of the Company, (A) compensation
not yet paid to Employees for the current payroll period, (B) reimbursement
for expenses incurred by any such Company Shareholder in the ordinary course of
his or her employment which are reimbursable under the Companys expense
reimbursement policies, (C) accrued vacation, subject to the Companys
policies on accrual and carryforward, and (D) any remaining obligations of
the Company to indemnify any officer or director.  The terms and provisions of this Section 15
are specific terms of the Merger, and the approval and adoption of this
Agreement and approval of the Merger by the Company Shareholders shall
constitute approval by such Company Shareholders, as specific terms of the
Merger, and the irrevocable agreement of such Company Shareholders to be bound
by such terms and provisions.  SECTION 16.Miscellaneous.  16.1Notices.  All notices, requests, demands, consents and
communications necessary or required under this Agreement shall be delivered by
hand or sent by registered or certified mail, return receipt requested, by
overnight prepaid courier, facsimile (receipt confirmed) or by email to:  if to Parent, Merger Sub or the Surviving
Corporation:  MoSys, Inc. 755 N. Mathilda Avenue Sunnyvale, CA 94085 Facsimile No:  408-731-1892 Attention:  Chief Financial Officer Email:  jsullivan@mosys.com  With a copy to:  Bingham McCutchen LLP 1900 University Avenue, 4th Fl. East Palo Alto, CA 
94303 Facsimile No: (650) 849-4609 Attention: 
Alan B. Kalin Email: alan.kalin@bingham.com  if to the Company:  MagnaLynx, Inc. 1606 Golden Aspen Drive, Suite 102 Ames, IA 50010 Facsimile No: 515-663-8821 Attention:  Jeffrey J. May, President and CEO Email:  jeff.may@magnalynx.com  42


with a copy to:  Briggs and Morgan P.A. 80 South 8thStreet Suite 2200
Minneapolis, MN
Facsimile No: 612-977-8650Attention:  Avron L. Gordon
Email:  agordon@briggs.com  if to the Representative:  Jeffrey J. May 1606 Golden Aspen Drive, Suite 102 Ames, IA 50010 Facsimile No: 515-663-8821 Email:  jeff.may@magnalynx.com  All such notices, requests,
demands, consents and other communications shall be deemed to have been duly
given or sent three days following the date on which mailed, or one (1) day
following the date mailed if sent by overnight courier, or on the date on which
delivered by hand or by facsimile transmission (receipt confirmed) or
electronic transmission, as the case may be, and addressed as aforesaid.  Any notice to be given to any Indemnifying
Shareholders hereunder shall be given to the Representative or, if for any
reason there ceases to be a Representative, to each Indemnifying Shareholder.  16.2Successors and
Assigns.  All covenants and agreements
and other provisions set forth in this Agreement and made by or on behalf of
any of the parties hereto shall bind and inure to the benefit of the
successors, heirs and permitted assigns of such party, whether or not so
expressed.  None of the parties may
assign, transfer or delegate any of their respective rights or obligations
under this Agreement, by operation of law or otherwise, without the consent in
writing of the Company, Parent and the Representative provided, that Parent and
Merger Sub (including the Surviving Corporation) may, without obtaining the
prior written consent of Representative, assign any of its rights, or delegate
any of its obligations under this Agreement to (a) any affiliate of
Parent, (b) any successor of such party by merger or otherwise, or (c) the
purchaser of all or substantially all of the assets or stock of such
Person.  Any purported assignment or
delegation of rights or obligations in violation of this Section 16.2 is
void and of no force or effect.  16.3Interpretation.  For purposes of this Agreement, the following
rules of interpretation apply:  (a)Descriptive
Headings.  The
headings of the sections and paragraphs of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.  (b)Calculation of
Time Period.  When
calculating the period of time before which, within which or following which
any act is to be done or step taken pursuant to this Agreement, the date that
is the reference date in calculating such period is excluded.  If the last day  43


of
such period is a non-Business Day, the period in question ends on the next
succeeding Business Day.  (c)Currency.  Any reference in this Agreement to $ means
U.S. dollars.  (d)Section and
Similar References.  Unless the
context otherwise requires, all references in this Agreement to any Section, Schedule
or Exhibit are to the corresponding Section, Schedule or Exhibit of this
Agreement.  (e)Mutual Drafting.  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and have been represented by
their own legal counsel in connection with the transactions contemplated by
this Agreement, with the opportunity to seek advice as to their legal rights
from such counsel.  In the event an
ambiguity or question of intent or interpretation arises, this Agreement is to
be construed as jointly drafted by the parties hereto and no presumption or
burden of proof is to arise favoring or disfavoring any party by virtue of the
authorship of any provision of this Agreement or by reason of the extent to
which any such provision is inconsistent with any prior draft hereof.  16.4Counterparts;
Execution.  This
Agreement may be executed in counterparts and the exchange of signature pages to
this Agreement (in counterparts or otherwise) by facsimile transmission or
other electronic transmission (including in the form of a PDF file) shall be
sufficient to bind the parties to the terms and conditions of this Agreement.  16.5Severability.  In the event that any one or more of the
provisions contained herein is held invalid, illegal or unenforceable in any
respect for any reason in any jurisdiction, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions hereof shall not be in any way impaired or affected (so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party), it being intended
that each of parties rights and privileges shall be enforceable to the fullest
extent permitted by applicable Legal Requirements, and any such invalidity,
illegality and unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction (so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party).  If any court of competent jurisdiction
determines that any provision of this Agreement is invalid, illegal or
unenforceable, such court has the power to fashion and enforce another
provision (instead of the provision held to be invalid, illegal or
unenforceable) that is valid, legal and enforceable and carries out the
intentions of the parties hereto under this Agreement and, in the event that
such court does not exercise such power, the parties hereto shall negotiate in
good faith in an attempt to agree to another provision (instead of the
provision held to be invalid, illegal or unenforceable) that is valid, legal
and enforceable and carries out the parties intentions to the greatest lawful
extent under this Agreement.  16.6Third Parties.  Except as specifically set forth or referred
to herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any Person, other than the parties hereto
and their permitted successors and assigns, any rights or remedies under or by
reason of this Agreement or any other certificate, document, instrument or
agreement executed in connection herewith nor be relied upon other than the
parties hereto and their permitted successors or assigns.  The Parent Indemnified Parties not party
hereto are entitled to the rights and remedies of third party beneficiaries
with respect to Section 13. 
Notwithstanding the foregoing, the  44


Representative
shall be a third party beneficiary to all sections of this Agreement in which
it is not specifically designated as a Party.  16.7Additional
Definitions.  For
purposes of this Agreement, (a) an individual will be deemed to have Knowledge
of a particular fact or other matter if such individual is actually aware of
such fact or other matter or such individual could reasonably be expected to
discover or otherwise become aware of such fact or other matter after
reasonable inquiry into the matter, (b) Knowledge of the Company
shall mean the Knowledge of any of Scott A. Irwin, Jeffrey J. May and
Matthew S. Shafer, (c) affiliate and associate have the
meanings ascribed to them under Rule 405 promulgated by the Securities and
Exchange Commission under the Securities Act and (d) Business Day
means any day of the year on which national banking institutions in the State
of California are open to the public for conducting business and are not
required or authorized to close and shall not include Saturday.  16.8Governing Law;
Submission to Jurisdiction.  This Agreement, and all matters arising out
of or relating to this Agreement and any of the transactions contemplated
hereby, including, without limitation, the validity hereof and the rights and
obligations of the parties hereunder, shall be construed in accordance with and
governed by the laws of California applicable to contracts made and to be
performed entirely in such state (without giving effect to the conflicts of
laws provisions thereof) except as to matters pertaining to the Company as an
Iowa corporation, and to the Company Shareholders as shareholders of an Iowa
corporation, which are governed by the IBCA, and as to such matters, this
Agreement shall be governed by the IBCA. 
The parties hereto hereby irrevocably submit to the exclusive
jurisdiction of any court of competent civil jurisdiction sitting in the State
of California over any judicial Action arising out of or relating to this
Agreement or any of the transactions contemplated hereby and each party hereto
hereby irrevocably agrees that all claims in respect of such Action may be
heard and determined in such courts.  The
parties hereto hereby irrevocably waive any objection which they may now or
hereafter have to the laying of venue of such Action brought in such court or
any claim that such Action brought in such court has been brought in an
inconvenient forum.  Each of the parties
hereto agrees that a judgment in such Action may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by any
applicable Legal Requirement.  Each of
the parties hereto hereby irrevocably consents to process being served by any
party to this Agreement in any Action by delivery of a copy thereof in
accordance with the provisions of Section 16.1 and consents to the
exercise of jurisdiction of the courts of the State of California over it and
its properties with respect to any action, suit or proceeding arising out of or
in connection with this Agreement or the transactions contemplated hereby or
the enforcement of any rights under this Agreement.  16.9Entire
Agreement, Not Binding Until Executed.  This Agreement, including the Disclosure
Schedule, Schedules and Exhibits and the other agreements referred to herein,
is complete, and all promises, representations, understandings, warranties and
agreements with reference to the subject matter hereof, and all inducements to
the making of this Agreement relied upon by all the parties hereto, have been
expressed herein, including the Disclosure Schedule, Schedules, Exhibits and
such other agreements, supersede any prior understandings, negotiations, agreements
or representations by or among the parties, written or oral, to the extent they
related in any way to the subject matter hereof or thereof, with the exception
of the Confidentiality Agreement, which shall remain in full force and effect.  Neither this Agreement nor any of the terms
or provisions hereof are binding upon or enforceable against any party hereto
unless and until the same is executed and delivered by all of the parties
hereto.  45


16.10Amendments; No
Waiver.  Subject to applicable Legal
Requirements, including without limitation the provisions of Section 490.1102,
subd. 5 of the IBCA, any provision of this Agreement may be amended or waived
prior to the Effective Time if, but only if, such amendment or waiver is in
writing and is signed, in the case of an amendment, by each of the parties
hereto, or, in the case of a waiver, by each party against whom the waiver is
to be effective.  The failure of any of
the parties to this Agreement to require the performance of a term or
obligation under this Agreement or the waiver by any of the parties to this
Agreement of any breach hereunder shall not prevent subsequent enforcement of
such term or obligation or be deemed a waiver of any subsequent breach
hereunder.  No single or partial exercise
of any right, power or remedy conferred by this Agreement shall preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.  [Remainder
of page left blank intentionally]  46


IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement under seal as of the day and
year first above written.   MOSYS,
  INC.By:
  /s/
  James SullivanName:
  James
  SullivanTitle:
  CFOMLI
  MERGER CORPORATIONBy:
  /s/
  James SullivanName:
  James
  SullivanTitle:
  CFOMAGNALYNX,
  INC.By:
  /s/
  Jeffrey J. MayName:
  Jeffrey
  J. MayTitle:
  CEOREPRESENTATIVE:/s/
  Jeffrey J. MayJeffrey
  J. May