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

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

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INDEX OF DEFINED TERMS

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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.

1.1                                 The 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.”

1.2                                 Effective 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.

1.3                                 Effect 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  ###-###-#### 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.

1.4                                 Articles 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.

1.5                                 Directors 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.

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1.6                                 Appointment 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).

1.7                                 Shareholder 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.

1.8                                 Certain 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.

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“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.

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“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.

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“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.

2.1                                 Effect 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

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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.

2.2                                 Dissenting 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.

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2.3                                 Options 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.

2.4                                 Earn-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.

2.5                                 Holdback 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

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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.

2.6                                 Closing 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

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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.

2.7                                 Payment 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.

2.8                                 Further Action.  If, at any time after the Effective Time, any further action is necessary or desirable to carry out the purposes of this Agreement and to vest the Surviving Corporation with full right, title and possession to all assets, property, rights, privileges, powers and franchises of 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

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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:

3.1                                 Organization 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.

3.2                                 Capitalization 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

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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

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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.

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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;

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(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

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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”).

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(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

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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)

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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

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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

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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

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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 mean all 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.

3.13                      Accounts 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.

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(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.

3.14                           Inventory.  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.

3.15                           Suppliers 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.

3.16                           Insurance.  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.

3.17                           Employees 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.