AGREEMENT AND PLAN OF MERGER

Exhibit 2.2

Execution Copy

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

NETLOGIC MICROSYSTEMS, INC.

ATHENA MERGER CORPORATION

AELUROS, INC.

AND

THE REPRESENTATIVE OF THE HOLDERS OF ALL OF THE

CAPITAL STOCK OF AELUROS, INC.

Dated as of October 23, 2007

TABLE OF CONTENTS

(i)

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(ii)

TABLE OF CONTENTS

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(iii)

TABLE OF CONTENTS

(continued)

(iv)

TABLE OF CONTENTS

EXHIBITS

(v)

INDEX OF DEFINED TERMS

(vi)

INDEX OF DEFINED TERMS

(continued)

(vii)

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made as of October 23, 2007 (this “ Agreement ”) by and among NetLogic Microsystems, Inc., a Delaware corporation (“ Parent ”), Athena Merger Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), Aeluros, Inc., a Delaware corporation (the “ Company ”), and 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 Stockholders ,” and the Company Stockholders, together with the holders of all other equity securities of the Company, including securities convertible into, or exercisable or exchangeable for, equity securities of the Company (the “ Company Securities ”), are collectively referred to herein as the “ Company Securityholders .”

WHEREAS, the board of directors of the Company has 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 Stockholders; has approved, in accordance with the applicable provisions of the General Corporation Law of the State of Delaware (the “ DGCL ” or “ Delaware Law ”), and the General Corporation Law of the State of California (the “ CGCL ”) this Agreement and each of the transactions contemplated hereby, including the Merger; and has unanimously recommended that the Company Stockholders approve this Agreement and each of the transactions contemplated hereby, including the Merger; and

WHEREAS, the board of directors of Merger Sub has determined that it is advisable and in the best interests of Merger Sub to enter into a business combination with the Company upon the terms and subject to the conditions set forth herein; and

WHEREAS, in furtherance of such combination, the board of directors of Merger Sub, and Parent, as the sole stockholder of Merger Sub, have approved this Agreement and the Merger, upon the terms and subject to the conditions set forth herein, in accordance with applicable law; and

WHEREAS, concurrently with the execution and delivery of this Agreement, the Company has delivered to Parent and Merger Sub written consents in a form approved by Parent (the “ Stockholders’ Written Consent ”) adopting this Agreement and approving the Merger and approving an amendment (the “ Charter Amendment ”) in the form attached hereto as Exhibit A to the Third Amended and Restated Certificate of Incorporation of the Company, as in effect on the date of this Agreement (the “ Charter ”), from the requisite percentage of holders of Company Preferred Stock and Company Common Stock in accordance with Delaware Law and the Charter; and

WHEREAS, as a condition and inducement to Parent’s willingness to enter into this Agreement, certain executive officers and employees of the Company are required to execute and deliver agreements and documents relating to employment that Parent requires generally of its employees, including, without limitation, a letter agreement and a Proprietary Information and Inventions Agreement (collectively, the “ Offer Package Agreements ”), the effectiveness of which are contingent upon the consummation of 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 Delaware 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 . 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 7, 8 and 9 below (other than conditions that by their nature are to be satisfied at Closing, and subject to the satisfaction or waiver of those conditions at such time) but in no event prior to October 24, 2007, 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 a certificate of merger with the Secretary of State of the State of Delaware, as contemplated by the DGCL and in the form attached hereto as Exhibit B (the “ Certificate of Merger ”) and make all other filings or recordings required by Delaware 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 Certificate of Merger with the Secretary of State of the State of Delaware, or (b) such other date and time as may be specified in the Certificate 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 Certificate of Merger and the applicable provisions of Delaware Law, including Section 259 of the DGCL. 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 Certificate of Incorporation; Bylaws; Corporate Records .

(a) Certificate of Incorporation . At the Effective Time, the Charter shall be amended and restated in its entirety to be identical to the Certificate of Incorporation of Merger Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with the DGCL and as provided in such Certificate of Incorporation, except that the name of the Surviving Corporation as stated in such Certificate of Incorporation shall be “Aeluros, 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 DGCL and such Bylaws, except that the name of the Surviving Corporation on the face of such Bylaws shall be “Aeluros, 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 hold office in accordance with the Certificate 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.

1.6 Appointment of Representative; Agreements Binding on Company Securityholders . Each (i) Company Stockholder that does not perfect his, her or its appraisal or dissenters’ rights under the DGCL or the CGCL and is otherwise entitled to receive a portion of the Total

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Equity Consideration pursuant to Section 2 of this Agreement, (ii) holder of a Warrant (each, a “ Warrant Holder ”) that has executed and delivered a consent and release agreement (a “ Warrant Holder Consent Agreement ”) in favor of the Parent Indemnified Parties (as defined in Section 14.1) in the form approved by Parent and (iii) holder of a Vested Option (as defined in Section 2.4(a)(i)) who has delivered a consent (the “ Option Holder Consent ”) in the form approved by Parent (each such option holder a “ Vested Option Holder ”) (the Company Stockholders, Warrant Holders and Vested Option Holders referenced in the foregoing (i)—(iii) being referred to as the “ Indemnifying Securityholders ”), by virtue of having approved and adopted this Agreement by executing and delivering the Stockholders’ Written Consent or, as the case may be, the Warrant Holder Consent Agreement or the Option Holder Consent will, as a specific term of the Merger, be deemed to (a) have irrevocably constituted and appointed, effective as of the Effective Time, Louis Citron (together with his, her or its permitted successors, the “ Representative ”), as their true and lawful agent, proxy and attorney-in-fact, to execute and deliver this Agreement and the Escrow Agreement on their behalf and exercise all or any of the powers, authority and discretion conferred on him or her under this Agreement (including, without limitation, Section 14 and Section 15), the Escrow Agreement or any other agreement or instrument entered into or delivered in connection with the transactions contemplated hereby, and (b) have irrevocably agreed to, and be bound by and comply with, all of the obligations of the Indemnifying Securityholders set forth herein (including, without limitation, Section 14 and Section 15) and in the Escrow Agreement. The Representative agrees to act as, and to undertake the duties and responsibilities of, such agent and attorney-in-fact. This power of attorney is coupled with an interest and is irrevocable.

SECTION 2. Conversion and Exchange of Securities .

2.1 Certain Definitions . For purposes of this Agreement, the following terms shall have the following meanings:

“ Bylaws ” shall mean the Bylaws of the Company as in effect as of the date of this Agreement.

“ Change in Control Payments ” shall mean any cash severance, retention, bonus or any other similar payment made or that becomes payable by the Company to any director, officer, employee or consultant (but such term shall not include any value with respect to any acceleration of vesting of Options) solely as a result of the Company entering into this Agreement or the consummation of the Merger.

“ Common Warrants ” shall mean the warrants to acquire shares of Company Common Stock set forth in the Securityholder Schedule.

“ Company Common Stock ” shall mean the Common Stock, Class B-1 Common Stock and Class C-1 Common Stock, each par value $.0001 per share, of the Company.

“ Company Debt ” shall mean all Indebtedness of the Company.

“ Company Organizational Documents ” shall mean the Charter and the Bylaws.

“ Company Preferred Stock ” shall mean the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Company.

“ Company Products ” shall mean any AEL1XXX, AEL2XXX or AEL3XXX 10 Gigabit Ethernet physical layer device of the Company.

“ Confidential Information ” shall mean information or materials classified as confidential under the terms of the Confidentiality Agreement.

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“ 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 hereof.

“ Earn-Out Distribution Date ” means the earlier of (a) the date set forth in Section 2.6(b) and (b) the date that Parent notifies the Company Stockholders that the Earn-Out Consideration is zero.

“ Earn-Out Per Share Common Consideration ” shall mean with respect to a share of Company Common Stock the quotient obtained by dividing (a) the Total Common Earn-Out Consideration by (b) the Fully Diluted Common Share Number.

“ Earn-Out Per Share Preferred Consideration ” shall mean with respect to a share of Company Preferred Stock the quotient obtained by dividing (a) the Total Preferred Earn-Out Consideration Stock by (b) the Fully Diluted Preferred Share Number.

“ Earn-Out Period ” shall mean the 12 consecutive calendar months immediately following the Closing Date.

“ Escrow Amount ” shall mean Eight Million Five Hundred Fifty Thousand Dollars ($8,550,000).

“ Estimated Transaction Expenses ” shall mean the Company’s good faith estimate with supporting documentation of Transaction Expenses delivered to Parent in accordance with Section 6.10.

“ Fully Diluted Common Share Number ” shall mean the sum of (i) the number of shares of Company Common Stock outstanding immediately prior to the Effective Time plus (ii) the number of shares of Company Common Stock subject to Vested Options immediately prior to the Effective Time plus (iii) the number of shares of Company Common Stock subject to the Common Warrants outstanding and unexercised immediately prior to the Effective Time, assuming such Common Warrants were exercised.

“ Fully Diluted Preferred Share Number ” shall mean the sum of (i) the number of shares of Company Common Stock into which the outstanding shares of Company Preferred Stock are convertible under the provisions of Article Four, Section (B)(4) of the Charter immediately prior to the filing of the Charter Amendment plus (ii) the number of shares of Company Common Stock into which the shares of Company Preferred Stock subject to the Preferred Warrants outstanding and unexercised (but assuming such Preferred Warrants were exercised) would be convertible under the provisions of Article Four, Section (B)(4) of the Charter immediately prior to the filing of the Charter Amendment.

“ Initial Merger Consideration ” shall mean a total of Fifty-Seven Million Dollars ($57,000,000) comprised of (i) Fourteen Million Two Hundred Fifty Thousand Dollars ($14,250,000) (including the allocable portion of the Escrow Amount) which is to be paid (net of the applicable withholding for the Escrow Amount and otherwise), for the account of the holders of Company Common Stock, the holder(s) of Common Warrants and the Vested Option Holders, and (ii) Forty-Two Million Seven Hundred Fifty Thousand Dollars ($42,750,000) (including the allocable portion of the Escrow Amount) which is to be paid (net of applicable withholding for the Escrow Amount) for the account of the holders of Company Preferred Stock and the holders of Preferred Warrants.

“ Initial Per Share Common Consideration ” shall mean with respect to a share of Company Common Stock the quotient obtained by dividing (a) the Total Initial Common Consideration by (b) the Fully Diluted Common Share Number.

“ Initial Per Share Preferred Consideration ” shall mean with respect to a share of Company Preferred Stock the quotient obtained by dividing the (a) Total Initial Preferred Consideration by (b) the Fully Diluted Preferred Share Number.

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“ Net Revenue ” shall mean total gross revenue of Parent from the sale of any Company Products, or the licensing of any Company Intellectual Property, to third parties not affiliated with Parent and recognized by Parent in accordance with GAAP, consistently applied (after giving effect to any reductions for any discount, return, credit, exchange or other adjustment) in connection with the preparation of Parent’s consolidated financial statements for public reporting purposes.

“ Option ” shall mean any option (including, other than for purposes of Section 2.4, commitments to grant options) to acquire shares of Company Common Stock, including options granted under the Option Plan, but excluding the Warrants.

“ Option Plan ” shall mean the Company’s 2001 Stock Option/Stock Issuance Plan, as amended.

“ Preferred Warrants shall mean the warrants to acquire shares of Company Preferred Stock set forth in the Securityholder Schedule.

“ Restricted Stock Purchase Agreement ” shall mean a stock purchase agreement pursuant to which a holder of Company Common Stock acquired shares of Company Common Stock upon exercise of an Option and such shares of Company Common Stock are subject to the Company’s repurchase option as set forth therein.

“ Series B Preferred Stock ” shall mean the Series B-1 Preferred Stock and the Series B-2 Preferred Stock of the Company.

“ Series C Preferred Stock ” shall mean the Series C-1 Preferred Stock and the Series C-2 Preferred Stock of the Company.

“ Subsidiary ” shall mean any corporation or other organization, whether incorporated or unincorporated, of which (a) at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled such party or by any one or more of the Subsidiaries or (b) such party or any other Subsidiary of such party is a general partner (excluding any such partnership where such party or any Subsidiary of such party does not have a majority of the voting interest in such partnership).

“ Total Common Consideration ” shall mean the sum of (i) Fourteen Million Two Hundred Fifty Thousand Dollars ($14,250,000) plus (ii) the Total Common Earn-Out Consideration.

“ Total Equity Consideration ” shall mean the Initial Merger Consideration plus the Earn-Out Consideration.

“ Total Initial Common Consideration ” shall mean an amount equal to Fourteen Million Two Hundred Fifty Thousand Dollars ($14,250,000) minus Two Million One Hundred Thirty-Seven Thousand Five Hundred Dollars ($2,137,500) which is to be withheld by Parent as Escrow Funds.

“ Total Initial Preferred Consideration ” shall mean an amount equal to Forty-Two Million Seven Hundred Fifty Thousand Dollars ($42,750,000) minus Six Million Four Hundred Twelve Thousand Five Hundred Dollars ($6,412,500) which is to be withheld by Parent as Escrow Funds.

“ Total Per Share Common Consideration ” shall mean the sum of (i) the quotient obtained by dividing Fourteen Million Two Hundred Fifty Thousand Dollars ($14,250,000) by the Fully Diluted Common Share Number Consideration plus (ii) the Earn-Out Per Share Common Consideration.

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“ Total Per Share Preferred Consideration ” shall mean the sum of (i) the quotient obtained by dividing Forty-Two Million Seven Hundred Fifty Thousand Dollars ($42,750,000) by the Fully Diluted Preferred Share Number plus (ii) the Earn-Out Per Share Preferred Consideration.

“ Total Preferred Consideration ” shall mean the sum of (i) Forty-Two Million Seven Hundred Fifty Thousand Dollars ($42,750,000) plus (ii) the Total Preferred Earn-Out Consideration.

“ Transaction Expenses ” shall mean any and all legal, accounting, consulting, investment banking, financial advisory, brokerage and other fees and expenses incurred by the Company or any other Person (for which the Company may pay or reimburse others or may otherwise be obligated to pay or reimburse others or may be or may become liable) in solely in connection with this Agreement, the Merger or any of the transactions contemplated hereby, outstanding on the Closing Date including, without limitation, any fees and expenses associated with obtaining necessary or appropriate waivers, consents or approvals of any Governmental Authority or third parties on behalf of the Company, but excluding the Change in Control Payments.

“ Unvested Common Shares ” shall mean all shares of Company Common Stock that, immediately prior to the Effective Time, remain subject to the Company’s repurchase option set forth in a Restricted Stock Purchase Agreement executed in connection with the issuance of such Company Common Stock.

“ Vested Common Shares ” shall mean all shares of Company Common Stock other than Unvested Common Shares.

“ Warrants ” shall mean the Common Warrants and the Preferred Warrants to acquire shares of Company Common Stock and Company Preferred Stock set forth in the Securityholder Schedule.

2.2 Effect on Capital Stock . At the Effective Time and upon the terms and subject to the 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 Securityholder:

(a) Conversion of Securities .

(i) Subject to the provisions of this Section 2.2, each share of Company Stock issued and outstanding immediately prior to the Effective Time (other than any Dissenting Shares), shall be converted as follows:

(A) each share of Company Preferred Stock issued and outstanding immediately prior to the Effective Time other than shares held by Dissenting Holders shall be converted into the right to receive the Total Per Share Preferred Consideration (calculated on an as-converted to Company Common Stock basis and as set forth in the Securityholder Schedule), without interest, at the times payable as provided in Section 2.6, Section 2.7 and Section 2.8 upon the surrender of the certificate representing such share in accordance with the terms hereof and in the manner provided herein and subject to the deposit at the Effective Time of a portion of such Total Per Share Preferred Consideration with the Escrow Agent as a corresponding portion of the Escrow Funds pursuant to Section 2.7; and

(B) each share of Company Common Stock issued and outstanding immediately prior to the Effective Time other than shares held by Dissenting Holders shall be converted into the right to receive the Total Per Share Common Consideration (as set forth in the Securityholder Schedule), without interest, at the times payable as provided in Section 2.6, Section 2.7 and Section 2.8 upon the surrender of the certificate representing such share in accordance with the terms hereof and in the manner provided herein and subject to the deposit at the Effective Time of a portion of such Total Per Share Common Consideration with the Escrow Agent as a corresponding portion of the Escrow Funds pursuant to Section 2.7.

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(ii) From and after the Effective Time, by virtue of the Merger, each such share of Company Stock converted pursuant to Section 2.2(a)(i) 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 Total Equity Consideration 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” or “fair market value” of such Dissenting Share as determined in accordance with the applicable provisions of the DGCL and the CGCL.

(b) Cancellation . 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 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.

(c) 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.

2.3 Dissenting Holders .

(a) Notwithstanding anything in this Agreement to the contrary, any shares of Company Stock outstanding immediately prior to the Effective Time eligible under the DGCL or CGCL to exercise appraisal or dissenters’ rights and held by a holder who has not voted in favor of this Agreement and the Merger or consented thereto in writing and who has exercised and perfected appraisal or dissenters’ rights for such shares in accordance with Section 262 of the DGCL or Chapter 13 of the CGCL, as applicable, and has not effectively withdrawn or lost such appraisal or dissenters’ rights (collectively, the “ Dissenting Shares ”) shall not be converted into or represent the right to consideration for Company Stock set forth in Section 2.2(a)(i), and the holder or holders of such shares shall be entitled only to such rights as may be granted to such holder or holders in Section 262 of the DGCL or Chapter 13 of the CGCL, as applicable.

(b) Notwithstanding the provisions of Section 2.3(a), if any holder of Dissenting Shares shall effectively withdraw or lose (through failure to perfect or otherwise) such holder’s appraisal rights and dissenters’ rights under Section 262 of the DGCL or Chapter 13 of the CGCL, as applicable, 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 2.2(a)(i), without interest, less the withholdable portion of the Escrow Amount with respect to such shares (whether or not actually withheld) as set forth in Sections 2.2(a) and 2.7, upon surrender of the certificate representing such shares.

(c) The Company shall (i) comply with the requirements of Section 262 of the DGCL and Chapter 13 of the CGCL, as applicable, (ii) give Parent prompt notice of any written demand for appraisal or payment of the fair value of any shares received by the Company pursuant to Section 262 of the DGCL or Chapter 13 of the CGCL, as applicable, and of withdrawals of such demands, and provide copies of any documents or instruments served pursuant to the DGCL or CGCL

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and received by the Company and (iii) 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.

(d) Any amount paid by Parent, the Company or the Surviving Corporation to any Person with respect to Dissenting Shares pursuant to Section 262 of the DGCL or Chapter 13 of the CGCL, as applicable, in excess of the amount that would otherwise be payable pursuant to Section 2.2(a)(i) for each such Dissenting Share (such amount, 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 Section 262 of the DGCL or Chapter 13 of the CGCL, as applicable, 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 Escrow Funds.

2.4 Options .

(a) Definitions Related to the Options . For the purposes of this Agreement:

(i) A “ Vested Option ” is the portion of an Option granted under the Option Plan that is vested and immediately exercisable to acquire shares of Company Common Stock as of immediately prior to the Effective Time, giving effect to any acceleration of such Option triggered by the transactions contemplated by this Agreement; and

(ii) An “ Unvested Option ” is the portion of an Option granted under the Option Plan that is not vested and immediately exercisable to acquire shares of Company Common Stock as of immediately prior to the Effective Time.

(b) Vested Options . The Company shall take all necessary and appropriate action so that each of the Vested Options outstanding immediately prior to the Effective Time shall, at the Effective Time, be terminated and converted into the right to receive, subject to the terms and conditions of this Agreement and applicable tax withholding, an amount equal to the product of (i) the excess of the Total Per Share Common Consideration over the original per share exercise price of such Vested Option, multiplied by (ii) the number of shares of the Company Common Stock subject to such Vested Option in accordance with the Securityholder Schedule (as defined in Section 3.4(a)). Such amounts shall be paid by Parent directly to the holders of the Vested Options and shall be subject to any applicable withholding and the deposit at the Effective Time of a portion of such payment with the Escrow Agent as a corresponding portion of the Escrow Funds pursuant to Section 2.7. The Company agrees to obtain a signed Option Holder Consent from each Vested Option Holder.

(c) Unvested Option Conversion . Each Unvested Option outstanding immediately prior to the Effective Time will be assumed by Parent at the Effective Time and converted into an option to acquire, on substantially the same terms and conditions as were applicable under such Unvested Option as issued by the Company (except as provided below), the number of shares of common stock, par value $0.01 per share, of Parent (“ Parent Common Stock ”), rounded down to the nearest whole share, determined by multiplying the number of shares of Company Common Stock subject to the Unvested Option immediately prior to the Effective Time by a fraction (the “ Option Exchange Ratio ”), the numerator of which shall be $0.6802 and the denominator of which shall be the average of the closing prices of Parent Common Stock on the Global Select Market of the NASDAQ Stock Market LLC as reported on www.nasdaq.com for the five (5) trading days ending on (and inclusive of) the trading day that is two trading days prior to the Closing Date (the “ Parent Stock Price ”), at an exercise price per share of Parent Common Stock equal to (i) the per share exercise price for the shares of Company Common

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Stock otherwise purchasable pursuant to such Unvested Option divided by (ii) the Option Exchange Ratio, rounded up to the nearest whole cent. Substantially the same terms and conditions that applied to each Unvested Option immediately prior to the Effective Time (other than changes necessary to effect the assumption of such Unvested Option as provided above) will continue to govern such Unvested Option assumed pursuant to this Section 2.4(c) following the Effective Time.

2.5 Warrants . The Company shall take all necessary and appropriate action such that each Warrant outstanding and unexercised prior to the Effective Time shall be exercised immediately prior to the Effective Time for shares of Company Common Stock or Company Preferred Stock, as applicable, which shares shall participate in the Merger in the same manner as the outstanding shares as of the Effective Time of Company Common Stock and Company Preferred Stock. All Warrants outstanding and unexercised at Closing shall be terminated as of Closing.

2.6 Earn-Out Consideration .

(a) The holders of the Company Common Stock immediately prior to the Effective Time, the Vested Option Holders, and the holders of the Company Preferred Stock immediately prior to the Effective Time (other than the holders of Dissenting Shares) shall be entitled to receive in the aggregate, the respective amounts of the “ Total Common Earn-Out Consideration ” and “ Total Preferred Earn-Out Consideration ” (collectively, “ Earn-Out Consideration ”) on the Earn-Out Distribution Date as follows:

(i) If the Net Revenue during the Earn-Out Period is less than $*, the Total Common Earn-Out Consideration will be zero and the Total Preferred Earn-Out Consideration will be zero;

(ii) If the Net Revenue during the Earn-Out Period is equal to or greater than $* but less than $*, the Total Common Earn-Out Consideration will be $750,000 and the Total Preferred Earn-Out Consideration will be $2,250,000;

(iii) If the Net Revenue during the Earn-Out Period is equal to or greater than $* but less than $*, the Total Common Earn-Out Consideration will be $1,000,000 and the Total Preferred Earn-Out Consideration will be $4,000,000;

(iv) If the Net Revenue during the Earn-Out Period is equal to or greater than $* but less than $*, the Total Common Earn-Out Consideration will be $1,313,000 and the Total Preferred Earn-Out Consideration will be $6,188,000;

(v) If the Net Revenue during the Earn-Out Period is equal to or greater than $* but less than $*, the Total Common Earn-Out Consideration will be $2,000,000 and the Total Preferred Earn-Out Consideration will be $11,000,000;

(vi) If the Net Revenue during the Earn-Out Period is equal to or greater than $* but less than $*, the Total Common Earn-Out Consideration will be $2,313,000 and the Total Preferred Earn-Out Consideration will be $13,188,000;

(vii) If the Net Revenue during the Earn-Out Period is equal to or greater than $* but less than $*, the Total Common Earn-Out Consideration will be $2,625,000 and the Total Preferred Earn-Out Consideration will be $15,375,000; and

(viii) If the Net Revenue during the Earn-Out Period is equal to or greater than $*, the Total Common Earn-Out Consideration will be $2,875,000 and the Total Preferred Earn-Out Consideration will be $17,125,000;

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provided, however, that with respect to * units *, if the total number of * units * during the four calendar quarters of 2008 (the “ * Determination Period ”) is *% or more of the combined number of * units sold * during the * Determination Period, then the Earn-Out Consideration shall be reduced (but in no event to less than zero) by (y) $2,000,000, in the case of Sections 2.6(a)(iii) and 2.6(a)(iv), and (z) $5,000,000, in the case of Sections 2.6(a)(v) through 2.6(a)(viii), respectively. Such reduction to the Earn-Out Consideration shall be proportionately made to each of the Total Common Earn-Out Consideration and the Total Preferred Earn-Out Consideration based on the percentages that the Total Common Earn-Out Consideration and Total Preferred Earn-Out Consideration would bear to the Earn-Out Consideration if the full Earn-Out Consideration were earned without any reductions.

For the avoidance of doubt, under no circumstances shall the total amount of Earn-Out Consideration additionally payable by Parent pursuant to this Section 2.6 exceed $20,000,000.

(b) Within 30 days after receipt by Parent of all reports detailing the number of * and * products shipped by all * during the * Determination Period (the “ Earn-Out Distribution Date ”), Parent shall deposit with the “Paying Agent” (as defined in Section 2.8(a)) the total amount of Earn-Out Consideration, if any, to which the former holders of Company Common Stock, and the former holders of Company Preferred Stock are entitled pursuant to Section 2.6(a) shall be distributed. On such date, (i) the amount of Earn-Out Per Share Common Consideration shall be paid by the Paying Agent in cash to each former holder of Company Common Stock with respect to each share of Company Common Stock (other than Dissenting Shares) based on the percentages set forth in the Securityholder Schedule, provided, however , that the portion of the Earn-Out Per Share Common Consideration attributable to the then Unvested Common Shares shall not be so delivered until those shares vest pursuant to the applicable Restricted Stock Purchase Agreement in accordance with the schedule thereof incorporated in the disbursement agreement between Parent and the Paying Agent; and each former holder of Company Preferred Stock shall be paid the Earn-Out Per Share Preferred Consideration in cash with respect to each share of Company Preferred Stock on an as-converted to Company Common Stock basis (other than Dissenting Shares) based on the percentages set forth in the Securityholder Schedule and (ii) the amount of Earn-Out Per Share Common Consideration shall be paid by Parent in cash to each former holder of each Vested Option with respect to each share of Company Common Stock subject to such Vested Option based on the percentages set forth in the Securityholder Schedule.

(c) Parent shall prepare (or cause to be prepared) and deliver to the Representative no later than 30 days after receipt by Parent of all reports detailing the number of * and * units shipped by all * during the entire * Determination Period, a calculation of the Net Revenue of the Surviving Corporation for the Earn-Out Period, and the number of all * units (including details on the * and *) sold during the * Determination Period and a statement of the amount, if any, of Earn-Out Consideration to be delivered to the Company Securityholders for the applicable period.

(d) Parent shall cause the Surviving Corporation to (i) devote substantially similar resources to the development and sale of the Company Products as were normal and customary by the Company prior to the Effective Time, (ii) devote substantially similar resources to the marketing, distribution and sale of such Company Products as is normal and customary by Parent in connection with the marketing, distribution and sale of similar products and (iii) otherwise use commercially reasonable efforts to afford the Company Securityholders the reasonable opportunity to maximize the Earn-out Consideration paid to such Company Securityholders hereunder.

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(e) The adoption of this Agreement and the approval of the Merger by the Company Stockholders shall constitute approval of the Earn-Out terms and conditions specified in this Section 2.6, and the Stockholders’ Written Consent, the Warrant Holder Consent Agreement, and the Option Holder Consent shall so provide.

2.7 Escrow . At the Effective Time, cash in an amount equal to the Escrow Amount shall be delivered or caused to be delivered by Parent to The Bank of New York Trust Company, N.A., as escrow agent (the “ Escrow Agent ”) pursuant to the provisions of the escrow agreement in the form attached as Exhibit C hereto, subject to any amendments to such form requested by the Escrow Agent and mutually agreed to by Parent and the Representative (the “ Escrow Agreement ”); provided, however, that the allocable portion of the Escrow Amount attributable to the Unvested Common Shares shall not be delivered to the Escrow Agent until the Initial Merger Consideration with respect to those shares has vested pursuant to the applicable Restricted Stock Purchase Agreement in accordance with the schedule thereof incorporated in the disbursement agreement between Parent and the Paying Agent. The Escrow Agreement shall be entered into prior to or concurrently with the Effective Time, by and among Parent, the Representative, on behalf of the Indemnifying Securityholders, and the Escrow Agent, and shall provide Parent with recourse against amounts held in escrow by the Escrow Agent (the “ Escrow Funds ”) with respect to any and all Parent Claims made under Section 14, subject to the terms and conditions set forth in the Escrow Agreement and in such Section 14 of this Agreement. The Escrow Amount (or any portion thereof) shall be distributed to the Indemnifying Securityholders, and Parent at the times, and upon the terms and conditions, set forth in the Escrow Agreement. All interest earned on the Escrow Funds shall be payable to Parent and all such interest income shall be reported by the Escrow Agent to Parent. Upon any release of the Escrow Funds payable to the Indemnifying Stockholders, Parent shall pay to the Escrow Agent for further distribution to the Indemnifying Stockholders an amount equal to the interest actually earned on the amount of Escrow Funds so released. The escrow described above shall commence on the Effective Time and terminate on the 18-month anniversary thereof (the “ Expiration Date ”) and the period between the Effective Time and the Expiration Date shall be referred to as the “ Escrow Period ”), provided, however , that the portion of the Escrow 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 14.9, is necessary to satisfy any unsatisfied claims specified in any Officer’s Certificate theretofore delivered to the Escrow Agent and the Representative prior to termination of the Escrow Period with respect to Damages incurred or litigation pending prior to expiration of the Escrow Period, shall remain in the foregoing escrow until such claims have been finally resolved, or, if earlier, until released in accordance with Section 14.9 below. The terms and provisions of the Escrow Agreement and the transactions contemplated thereby are specific terms of the Merger, and the approval and adoption of this Agreement and approval of the Merger by the Indemnifying Securityholders pursuant to the Stockholders’ Written Consent, the Warrant Holder Consent Agreement, and the Option Holder Consent, as the case may be, shall constitute approval by such Indemnifying Securityholders, as specific terms of the Merger, and the irrevocable agreement of such Indemnifying Securityholders to be bound by and comply with, the Escrow Agreement and all of the arrangements and provisions of this Agreement relating thereto, including, without limitation, the deposit of the Escrow Amount into escrow, the indemnification obligations set forth in Section 14 hereof and the appointment and sole authority to act on behalf of the Indemnifying Securityholders of the Representative, as provided for herein and in the Escrow Agreement.

2.8 Surrender of Certificates .

(a) Paying Agent . At the Effective Time, Parent or Merger Sub shall deposit, or cause to be deposited, with The Bank of New York Trust Company, N.A., as paying agent (the “ Paying Agent ”) for the benefit of the Company Stockholders cash in an amount equal to (i) the Total Initial Common Consideration (minus the amount of the aggregate Initial Option Closing Payment) plus (ii) the Total Initial Preferred Consideration plus (iii) the aggregate allocable portion of the Escrow Amount attributable to the Unvested Common Shares. Such funds shall be invested as directed by Parent

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or the Surviving Corporation pending payment thereof by the Paying Agent to the Company Stockholders. Earnings from such investments shall be the sole and exclusive property of Parent and the Surviving Corporation, and no part of such earnings shall accrue to the benefit of the Company Stockholders.

(b) Surrender Procedures .

(i) The Company shall cause its Secretary (or such Secretary’s designee), as the holder of all certificates formerly representing Unvested Common Shares, to deliver such certificates to the Parent at the Effective Time. On or prior to the Effective Time, the Company shall mail to each Company Stockholder (A) a letter of transmittal and (B) instructions for use in effecting the surrender of certificate(s) representing all of the shares of Company Stock (other than Unvested Common Shares) held by such Company Stockholder in exchange for the Stock Closing Payment (as defined in Section 3.4 below) and the right to receive future payment of any Earn-Out Consideration. The payment of the Stock Closing Payment and future Earn-Out Consideration with respect to each such certificate is conditioned upon (1) the execution and delivery of such transmittal letter and (2) the delivery of such certificates related thereto (or an affidavit of loss with respect to such certificates). As soon as practicable after receipt by the Paying Agent 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, the Paying Agent shall, in exchange therefor, pay to such Company Stockholder the Stock Closing Payment payable in respect of the shares of Company Stock (other than Unvested Common Shares) formerly represented by the certificate(s) surrendered, but without any interest earned thereon, and the certificate(s) so surrendered shall forthwith be canceled; provided, however, that the allocable portion of the Stock Closing Payment attributable to the Unvested Common Shares shall not be payable to the holder of such shares and shall be held in escrow by the Paying Agent until the Stock Closing Payment with respect to those shares has vested pursuant to the applicable Restricted Stock Purchase Agreement in accordance with the schedule thereof and incorporated in the Securityholder Schedule and the disbursement agreement between Parent and the Paying Agent, provided, further, that, at any time prior to the Expiration Date, upon the vesting of such Unvested Common Shares and the payment of such allocable portion of the Stock Closing Payment, the allocable portion of the Escrow Amount attributable to such Unvested Common Shares previously being held in escrow by the Paying Agent shall be paid to the Escrow Agent to be held in escrow pursuant to the terms of Section 2.7. If payment of any portion of the applicable Stock Closing Payment is to be made to a person, firm, entity, partnership, association or any business organization or division thereof (each a “ Person ”) other than the Person in whose name the surrendered certificate(s) are registered, it shall be a condition of payment that the Person requesting such payment (A) shall have paid any transfer and other Taxes required by reason of the payment of those amounts to a Person other than the registered holder of the certificate(s) surrendered, and shall have established to the satisfaction of the Parent that such Tax has been paid, or (B) shall have established to the satisfaction of the Parent that such Tax is not applicable. From and after the Effective Time, until surrendered as contemplated by this Section 2.8(a), each certificate formerly representing shares of Company Stock shall be deemed to represent for all purposes only the right to receive the portion of the Total Equity Consideration as provided pursuant to Section 2.2(a) hereof, if any, in respect of such shares of Company Stock formerly represented thereby in accordance with the terms hereof and in the manner provided herein.

(ii) On or prior to the Effective Time, the Company shall distribute to each Vested Option Holder the Option Holder Consent, which shall include instructions for use in effecting the surrender of all rights in and to the Company Common Stock subject to each Vested Option held by the holder thereof in exchange for the Initial Option Closing Payment that is payable in respect of each such Vested Option. The payment of the Total Option Payment (as defined in Section 3.4 below) in respect of each such Vested Option is conditioned upon the execution and delivery of such transmittal letter and an executed Option Holder Consent. After the Effective Time, as soon as reasonably practicable after receipt by the Company of such duly executed Option Holder Consent,

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Parent shall, in exchange therefor pay to such Vested Option Holder the Initial Option Closing Payment payable in respect of each Vested Option. The portion of the Total Common Earn-Out Consideration payable to each Vested Option Holder shall be paid, subject to applicable withholding taxes, in accordance with Section 2.6(b).

(c) 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 Legal Requirements. After the Effective Time, the Surviving Corporation or the Paying Agent 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.

(d) Termination of Fund; No Liability . At any time following the Earn-Out Distribution Date, Parent or the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including, without limitation, any earnings received with respect thereto) that had been made available to the Paying Agent and that have not been disbursed to Company Securityholders and thereafter such Company Securityholders shall be entitled to look only to Parent or the Surviving Corporation (subject to abandoned property, escheat or other similar Legal Requirements) and only as general creditors thereof with respect to the applicable portion of the Total Equity Consideration, upon due surrender of their certificates formerly representing shares of Company Stock or rights to purchase such shares, without any interest thereon. Notwithstanding the foregoing, none of Parent, the Surviving Corporation or the Paying Agent shall be liable to any holder of a certificate formerly representing shares of Company Stock for any amounts delivered to a public official pursuant to any applicable abandoned property, escheat or similar Legal Requirement.

(e) Withholding Rights . Each of Parent, the Surviving Corporation and the Paying Agent 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 Securityholder, and the Escrow Agent shall be entitled to deduct and withhold from payment of any Company Securityholder’s pro rata portion of the Escrow Amount (or any portion thereof) otherwise payable pursuant to this Agreement to any Company Securityholder, 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, the Surviving Corporation, the Paying Agent or the Escrow Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the Company Securityholder to whom such amounts would otherwise have been paid.

(f) 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 Stockholder thereof in form reasonably satisfactory to Parent and the execution and delivery of a letter of transmittal in accordance with Section 2.8(a), Parent shall instruct the Paying Agent to pay such Company Stockholder the applicable Stock Closing Payment as provided in this Section 2; provided , however , that Parent may, in its reasonable discretion, acting in good faith, and as a condition precedent to issuing such instruction to the Paying Agent, require the owner of such lost, stolen or destroyed certificate(s) to deliver an agreement of indemnification in form reasonably satisfactory to Parent and, in the event that such lost, stolen or destroyed certificate(s) represent the right to receive (in the aggregate) $200,000 or more of Initial Merger Consideration, a bond in such sum as Parent may reasonably direct as indemnity, against any claim that may be made against Parent, the Surviving Corporation or the Paying Agent with respect to the certificate(s) alleged to have been lost, stolen or destroyed.

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(g) Dissenting Shares . The provisions of this Section 2.8 shall also apply to Dissenting Shares that lose their status as such, except that the obligations of Parent under this Section 2.8 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.

2.9 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, the officers and directors of the Company and Merger Sub immediately prior to the Effective Time are and will remain fully authorized in the name of the Company and Merger Sub or otherwise to take, and shall take, all such action.

2.10 Assignment of Repurchase Rights in Restricted Stock Purchase Agreements . Effective as of the Effective Time, the Company hereby assigns, and Parent accepts, the rights (including the repurchase rights thereunder) and obligations of the Company under each Restricted Stock Purchase Agreement. Pursuant to such assignment, Parent shall be entitled to enforce the provisions of each such Restricted Stock Purchase Agreement.

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 (or an updated Disclosure Schedule mutually agreed upon by the Parent and the Company, which the Company provides to the Parent prior to the Effective Time), with specific reference to the Sections hereof to which such exception relates, provided that the inclusion of an item as an exception or qualification to one section of this Agreement shall cause that item to be an exception or qualification only to any other section of this Agreement that requires the same information without modification or additional explanation in order to provide 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, validly existing and in good standing under the laws of its jurisdiction of incorporation and has all requisite corporate power and authority to conduct its business as currently conducted and as proposed to be conducted by it. 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.

(b) 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. Section 3.1 of the Disclosure Schedule lists the directors and officers of the Company as of the date hereof.

3.2 Capitalization and Ownership of Shares . The authorized capital stock of the Company consists of (a) 143,332,436 shares of Company Common Stock, of which on the date hereof, (i) 11,070,111 shares have been designated as Class B-1 Common Stock, of which on the date hereof no shares are issued outstanding, (ii) 2,262,325 shares have been designated as Class C-1 Common Stock, of which on the date hereof no shares are issued outstanding, and (iii) 130,000,000 shares have been designated as Common Stock, of which on the date hereof 17,018,765 shares are issued and outstanding, and (b) 95,697,729 shares of Company Preferred Stock, of which on the date hereof, (i) 21,274,342 shares have been designated as Series A Preferred Stock, of which on the date hereof 21,024,342 shares are

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issued outstanding, (ii) 11,070,111 shares have been designated as Series B-1 Preferred Stock, of which on the date hereof 7,270,111 shares are issued outstanding, (iii) 38,007,379 shares have been designated as Series B-2 Preferred Stock, of which on the date hereof 29,630,258 shares are issued outstanding, (iv) 2,262,325 shares have been designated as Series C-1 Preferred Stock, of which on the date hereof 1,342,325 shares are issued outstanding, and (v) 23,083,572 shares have been designated as Series C-2 Preferred Stock, of which on the date hereof 21,741,246 shares are issued outstanding. All of the issued and outstanding shares of Company Stock have been, and all of the shares of Company Stock that may be issued pursuant to any Option granted under the Option Plan or pursuant to the Warrants will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued, fully paid and nonassessable. Each recipient of any Option (whether cancelled, terminated or currently in existence) has executed an option agreement in the form attached to Section 3.2(a) of the Disclosure Schedule. Except as set forth in Section 3.2(b) of the Disclosure Schedule or for the Options and Warrants listed on the Securityholder 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 as set forth in this Agreement. 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 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 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 (collectively, “ Legal Requirements ”) applicable to the Company.

3.3 Subsidiaries . The Company does not have any Subsidiaries, and the Company does not own or control, directly or indirectly, any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for any equity or similar interest in, or have any commitment or obligation to invest in, purchase any securities or obligations of, fund, guarantee, contribute or maintain the capital of or otherwise financially support any corporation, partnership, joint venture or other business association or entity. Any former Subsidiary that is no longer in existence has been duly dissolved in accordance with its charter documents and the laws of the jurisdiction of its incorporation or organization and there are no outstanding liabilities or obligations (outstanding, contingent or otherwise), including Taxes, with respect to any such entity.

3.4 Securityholder Lists and Agreements .

(a) The information set forth as of the date hereof in Section 3.4 of the Disclosure Schedule and as updated prior to the Effective Time pursuant to Section 10.1(q) (the “ Securityholder Schedule ”), including the portion of the Total Equity Consideration to be delivered to each Company Securityholder is true, complete and accurate as of the date hereof and, as updated prior to the Effective Time, will be true, complete and accurate as of the Effective Time, and the calculations performed to compute such information are, and will be, accurate and in accordance with the terms of this Agreement, the Company Organizational Documents and all other agreements and instruments among the Company and the Company Securityholders, and no Company Securityholder shall be entitled to any amounts except as provided on the Securityholder Schedule. The Securityholder Schedule sets forth the following information with respect to each Company Securityholder:

(i) the name and the mailing address of each Company Securityholder as reflected on the stock transfer or other corporate records of the Company;

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(ii) with respect to each Company Stock certificate held by such Company Securityholder (A) the number and class or series of shares of Company Stock represented by such certificate, (B) the aggregate Initial Per Share Common Consideration to be paid to such Company Securityholder, if any, in accordance with the terms hereof and in the manner provided herein in respect of all Vested Common Shares held by such Company Securityholder immediately prior to the Effective Time, (C) the vesting schedule(s) of the Unvested Common Shares held by such Company Securityholder immediately prior to the Effective Time and (x) the aggregate Initial Per Share Common Consideration to be paid to such Company Securityholder, if any, and (y) the amounts to be deposited with the Escrow Agent, each upon each date of vesting of such Unvested Common Shares in accordance with the terms hereof and in the manner provided herein, (D) the aggregate Initial Per Share Preferred Consideration to be paid to such Company Securityholder, if any, in accordance with the terms hereof and in the manner provided herein in respect of the shares of Company Preferred Stock, if any, held by such Company Securityholder immediately prior to the Effective Time, and the (E) the applicable portion to be deposited with the Escrow Agent and (F) the amounts payable to the Company Securityholders specified in subclauses (B), (C) and/or (D) with respect to each share of Company Stock (such amounts are hereinafter referred to as the “ Stock Closing Payment ”);

(iii) with respect to each Vested Option held by such Company Securityholder (A) the number of shares of Company Common Stock subject to such Vested Option, (B) the per share exercise price of such Vested Option, (C) the date of grant of such Option, (D) whether the Option is an “incentive stock option” within the meaning of Section 422 of the Code, (E) the amount of the Initial Per Share Common Consideration payable with respect to such Option, (F) any withholding applicable to such Vested Option, (G) the applicable portion to be deposited with the Escrow Agent, and (H) the amount determined by subtracting the amounts specified in subclauses (B) and (F) from the amount specified in subclause (E) (with respect to each Vested Option, the “ Initial Option Closing Payment ” and, together with the amount derived under Section 3.4(a)(vii), the “ Total Option Payment ”);

(iv) with respect to each Unvested Option held by such Company Securityholder (A) the number of shares of Company Common Stock subject to such Unvested Option, (B) the per share exercise price of such Unvested Option, (C) the date of grant of such Option, (D) whether the Option is an “incentive stock option” within the meaning of Section 422 of the Code, (E) the vesting schedule for each Unvested Option, and (F) whether vesting of the Option would be accelerated, in whole or in part, as a result of the Merger or by reason of the transactions contemplated hereby, either alone or in combination with any other event;

(v) with respect to each Warrant held by such Company Securityholder (A) the number of shares of Company Common Stock or Company Preferred Stock represented by such Warrant, (B) the per share exercise price of such Warrant, and (C) the payment with respect to such Warrant (with respect to each Warrant, the “ Warrant Closing Payment ”);

(vi) the total amount to be contributed to the Escrow Amount on behalf of such Company Securityholder pursuant to Section 2.7;

(vii) the percentage of the Total Common Earn-Out Consideration to which such Company Securityholder would be entitled in the event of an Earn-Out payment pursuant to Section 2.6(a); and

(viii) the percentage of the Total Preferred Earn-Out Consideration to which such Company Securityholder would be entitled in the event of an Earn-Out payment pursuant to Section 2.6(a).

(b) 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

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(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.

(c) Each of the currently outstanding Options were granted under the Option Plan and 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. All Options have been granted or issued at an exercise price at least equal to the fair market value of the underlying Company Common Stock at the date of grant or issuance, as determined in accordance with Section 409A of the Code and the temporary regulations and notices promulgated thereunder, and none of the Options or any other Company Securities or agreements constitute “deferred compensation” under Section 409A of the Code. 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 Common Stock purchased under such plan), and all agreements and instruments related to the Warrants, have been made available or provided to Parent, and such plans and Contracts have not been amended, modified or supplemented since being made available or provided to Parent, and there are no Contracts or understandings to amend, modify or supplement such plans or Contracts in any case from those made available or provided to Parent. Each Option intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code so qualifies. 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. Each Option may be treated in accordance with the applicable provisions of Section 2.4 without the consent of the holder of such Option.

3.5 Authority for Agreement .

(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and each instrument required hereby to be executed and delivered by the Company at the Closing and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by the Company of this Agreement and each instrument required hereby to be executed and delivered by the Company at the Closing and the consummation by the Company of the transactions contemplated hereby and thereby have been duly and validly authorized by all necessary corporate action; the Requisite Stockholder Approval has been received; and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or any instrument required hereby to be executed and delivered by the Company at the Closing or to consummate the transactions so contemplated. The board of directors of the Company duly determined that it is fair to, advisable for and in the best interests of, the Company Stockholders for the Company to enter into a business combination upon the terms and subject to the conditions of this Agreement, has unanimously approved and adopted this Agreement and the Merger and has unanimously recommended that the Company Stockholders approve and adopt this Agreement and the Merger. None of such actions by the board of directors of the Company has been amended, rescinded or modified. This Agreement has been, and each instrument 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. As of the Effective Time, the Charter will have been amended by the Charter Amendment to provide that in connection with the Merger, each Company Stockholder shall be entitled to receive the consideration as set forth in this Agreement and, subject to the provisions of Section 2, no Company Stockholder shall be entitled to receive any different or additional amount in the Merger with respect to shares of Company Stock held by such Company Stockholder. At the Effective Time, the Company will have taken all necessary and appropriate actions so that each Option and Warrant will be treated in the Merger in accordance with the provisions of Sections 2.4 and 2.5.

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(b) 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, (ii) conflict with, result in a breach of, constitute (with or without due notice or lapse of time or both) a 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 Legal Requirement applicable to the Company or any Company Securityholder or any of their respective properties or assets. For purposes of this Agreement, “ Security Interest ” means any material mortgage, security interest, pledge, license, interest, encumbrance, claim, charge, option, restriction on the right to sell or dispose (and in the case of securities, vote), lien or other adverse claim of any kind or lien (whether arising by contract or by operation of law and whether voluntary or involuntary).

3.6 Consents . No consent, 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 ”) or any Person is required to be obtained by the Company or any Company Securityholder in connection with the execution and delivery of this Agreement or the Escrow Agreement or the Merger or the other transactions to be consummated at the Closing as contemplated by this Agreement, except for (i) the Requisite Stockholder Approval and (ii) the filing and recordation of the Certificate of Merger with the Secretary of State of the State of Delaware.

3.7 Financial Statements .

(a) Attached hereto as Section 3.7 of the Disclosure Schedule are the following financial statements (collectively, the “ Financial Statements ”): (i) the audited balance sheets of the Company as of December 31, 2004, December 31, 2005 and December 31, 2006 and the related statements of operations, stockholders’ deficit and cash flows for the fiscal year then ended, including the notes thereto, and (ii) the unaudited balance sheet of the Company as of August 31, 2007 (the “ Unaudited Balance Sheet ”) and the related statements of operations, changes in stockholders’ equity and cash flows for the eight months then ended, in each case prepared in accordance with United States generally accepted accounting principles (“ GAAP ”), consistently applied throughout the periods presented except as may be indicated in the notes thereto. The Financial Statements are complete and correct, are in accordance with the books and records of the Company and 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 in place systems and processes (including the maintenance of proper books and records) that are customary for a company at the same stage of development as the Company designed to (i) provide reasonable assurances regarding the reliability of the Financial Statements and (ii) in a timely manner accumulate and communicate to the Company’s principal executive officer and principal financial officer the type of information that would be required to be disclosed in the Financial Statements (such systems and processes are herein referred to as the “ Controls ”). Neither the Company, nor the Company’s independent auditors has identified or been made aware of any complaint, allegation, deficiency, assertion or claim, whether written or oral, regarding the Controls or the Financial Statements. There have been no instances of fraud, whether or not material, that occurred during any period covered by the Financial Statements. The Company has in place a revenue recognition policy consistent with GAAP.

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3.8 Absence of Changes . Since December 31, 2006, there has been no Material Adverse Effect. In addition, and without limiting the generality of the foregoing, since December 31, 2006 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 Company Employee Plan or collective bargaining agreement (other than as may have been required by the terms of the Company Employee Plan or collective bargaining agreement, or as may have been required by applicable Legal Requirements) or announced its intention to adopt any arrangement or program which would constitute a Company Employee Plan;

(c) materially increased any compensation or fringe benefits (including, but not limited to, the granting of Options or other equity awards under the Option Plan), paid any bonus, granted or increased any severance or termination pay or otherwise changed any of the terms of employment or service for any of its employees, officers, directors or consultants;

(d) entered into any loan with, or advanced any money or other property to, any of its employees, officers, directors or consultants;

(e) mortgaged, pledged or subjected to any Security Interest, any of its properties or assets, tangible or intangible;

(f) acquired or disposed of any assets or properties having a value in excess of $50,000 (singly or in the aggregate);

(g) forgiven or canceled any debts or claims, or waived any rights, having a value in excess of $50,000;

(h) incurred a capital expenditure or made a commitment by the Company exceeding $50,000 individually or $200,000 in the aggregate;

(i) changed any accounting method or practice (including any change in depreciation or amortization policies or rates) other than as required by GAAP;

(j) changed any election in respect of Taxes, adopted or changed any accounting method in respect of Taxes, agreed or settled any claim or assessment in respect of Taxes, filed any amended Tax Return or extended or waived the limitation period applicable to any claim or assessment in respect of Taxes;

(k) revalued any of its assets (whether tangible or intangible), including, without limitation, writing down the value of inventory or writing off, discounting or otherwise compromising any notes or accounts receivable in an amount in excess of $50,000, singly or in the aggregate;

(l) made any payment of any nature to any Company employee, director or consultant other than salary or fees payable in the ordinary course of business consistent with past practices;

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(m) commenced or settled any Action;

(n) experienced any labor trouble or adverse relations with its employees;

(o) conducted its business, other than in the ordinary course consistent with past practice;

(p) 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 $75,000 for any single loss or $200,000 for all such losses;

(q) entered into any transaction or Contract other than in the ordinary course of business with an aggregate annual value in excess of $50,000;

(r) changed or modified its credit, collection or payment policies, procedures or practices, including accelerated collections or receivables (whether or not past due) or failed to pay or delayed payment of payables or other liabilities; or

(s) entered into any agreement, commitment or obligation to do any of the foregoing.

The term “ Material Adverse Effect ” as used in this Agreement shall mean any circumstance, condition, change in or effect on the Company that, individually or in the aggregate with all other circumstances, conditions, changes in or effects on the Company, (i) is or could reasonably be expected to be materially adverse to the business, capitalization, operations, assets (whether tangible or intangible) or liabilities (including, without limitation, contingent liabilities), results of operations or the condition (financial or otherwise) of the Company, taken as a whole, (ii) may materially impair the ability of Parent to own or receive dividends or other distributions with respect to the stock of the Surviving Corporation or conduct the business of the Company in the manner in which it is currently operated or conducted by the Company, or (iii) may materially impair the ability of the Company to consummate the transactions contemplated hereby, except for any such circumstance, condition, change in or effect on the Company, which the Company proves to have resulted from (A) any change in general economic, regulatory, political or business conditions, in each case, which do not disproportionately affect the Company taken as a whole, as compared to similarly-situated companies; (B) this Agreement (including from the Company’s compliance with the terms of this Agreement), the execution of the transactions contemplated by this Agreement or the announcement of this Agreement, or (C) changes in Legal Requirements or GAAP.

3.9 Absence of Undisclosed Liabilities . The Company does not have any Indebtedness or other liability or obligation (whether known, unknown, mature, absolute or contingent), except for (a) liabilities or obligations shown on the Unaudited Balance Sheet and (b) liabilities which have arisen since the date of the Unaudited Balance Sheet in the ordinary course of business and which are, in nature and amount, consistent with those incurred historically and are not material to the Company, individually or in the aggregate. Except as set forth in the Unaudited Balance Sheet or Section 3.9 of the Disclosure Schedule, there is no Company Debt. For purposes of this Agreement, “ Indebtedness ” shall include all liabilities and obligations, 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.

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3.10 Taxes .

(a) (i) 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 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 Unaudited Balance Sheet in an amount that exceeds the corresponding reserve therefor separately identified in Section 3.10(a) of the Disclosure Schedule, if any, as reflected in the Unaudited 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 Company’s business.

(b) The Company has complied with all applicable Legal Requirements 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 Legal Requirements.

(c) Parent has been furnished complete copies of all Tax Returns of, or including, the Company for all Tax periods since the Company’s inception 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 such that it is or may be subject to taxation in that jurisdiction.

(e) No deficiency or adjustment in respect of Taxes has been proposed, asserted or assessed by any Taxing Authority against the Company. All deficiencies asserted or assessments made as a result of any examinations by any Taxing Authority of the Tax Returns of, or including, the Company have been fully paid. No federal, state, local or foreign audits, examinations, investigations or other administrative proceedings or court proceedings are presently in progress, pending or threatened with regard to any Taxes of the Company or Tax Returns filed by or on behalf of the Company. No issue has been raised by any Taxing Authority in any prior examination of the Company which, by application of the same or similar principles, could reasonably be expected to result in a proposed deficiency for any subsequent Tax period.

(f) Neither the Company nor any other Person on the Company’s behalf has (i) agreed to, is required to or has any application pending requesting permission to, make any adjustment pursuant to Section 481(a) of the Code or any similar provision of Tax Law or has any knowledge that any Taxing Authority has proposed any such adjustment, (ii) executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of Tax Law with respect to the Company, (iii) requested any extension of time within which to file any Tax Return, which Tax Return has since not been filed, (iv) granted any extension for the assessment or collection of Taxes, which Taxes have not since been paid or (v) granted to any Person any power of attorney that is currently in force with respect to any Tax matter.

(g) No property owned by the Company is (i) “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code, (ii) “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iii) “limited use property” within the meaning of Rev. Proc. 76-30, or (vi) subject to any provision of state, local or foreign Tax Law comparable to any of the provisions listed above.

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(h) The Company is not, nor has it been, nor will be a “U.S. real property holding corporation” within the meaning of Section 897 of the Code during the five year period ending on the Closing Date.

(i) The Company is not a party to or bound by any Tax sharing, allocation, indemnity or similar agreement or arrangement.

(j) 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.

(k) 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.

(l) The Company has never been a member of any consolidated, combined, affiliated or unitary group of corporations for any Tax purposes.

(m) The Company is not presently liable, nor does the Company have any potential liability, for the Taxes of another person (i) under Treasury Regulations Section 1.1502-6 (or comparable provision of state, local or foreign law), (ii) as transferee or successor, or (iii) by contract or indemnity or otherwise.

(n) The Company has not constituted either a “distributing corporation” or a “controlled corporation” in connection with a distribution of stock qualifying for tax-free treatment, in whole or in part, under Section 355 of the Code.

(o) There is no income of the Company that will be required under applicable Tax Law to be reported by Parent or any of its affiliates, including the Company, for a Tax period (or portion thereof) beginning after the Closing Date which taxable income was realized (and reflects economic income) arising prior to the Closing Date.

(p) The Company has disclosed on its federal income Tax Returns all positions taken therein that could give rise to substantial understatement of federal income tax within the meaning of Section 6662 of the Code.

(q) The Company has not participated in any way (i) in any “tax shelter” within the meaning of Section 6111 (as in effect prior to the enactment of P.L. 108-357 or any comparable laws of jurisdictions other than the United States) of the Code or (ii) in any “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4 (as in effect at the relevant time) (or any comparable regulations of jurisdictions other than the United States).

(r) The Company has provided to Parent all documentation relating to, and is in full compliance with all terms and conditions of, any Tax exemption, Tax holiday or other Tax reduction agreement or order of a territorial or non-U.S. government. The consummation of the transactions contemplated by this Agreement will not have any adverse effect on the continued validity and effectiveness of any such Tax exemption, Tax holiday or other Tax reduction agreement or order.

(s) The Company has in its possession official foreign government receipts for any Taxes paid by it to any foreign Tax authorities.

(t) All elections with respect to Taxes affecting the Company that were not made in the Tax Returns delivered to the Parent are described in Section 3.10(t) of the Disclosure Schedule.

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(u) The Company does not have a permanent establishment in any country with which the United States of America has a relevant Tax treaty, as defined in such relevant Tax treaty, and does not otherwise operate or conduct business through any branch in any country other than the United States.

(v) The Company has not filed any consent agreement under Section 341(f) of the Code (as in effect prior to its repeal by the Jobs and Growth Tax Relief Reconciliation Act of 2003) or agreed to have Section 341(f)(2) of the Code (as in effect prior to such repeal) apply to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the Code prior to such repeal) owned by the Company.

(w) 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 Effectiv