AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

dated as of

May 11, 2009

among

IXIA,

JOSIE ACQUISITION COMPANY

and

CATAPULT COMMUNICATIONS CORPORATION

TABLE OF CONTENTS

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) dated as of May 11, 2009, among Catapult Communications Corporation, a Nevada corporation (the “ Company ”), Ixia, a California corporation (“ Parent ”), and Josie Acquisition Company, a Nevada corporation and a direct and wholly-owned subsidiary of Parent (“ Merger Subsidiary ”).

     WHEREAS, the respective boards of directors of Parent and Merger Subsidiary have determined that it is in the best interests of their respective shareholders, and the board of directors of the Company (the “ Board of Directors ”) has determined that it is advisable, for Parent to acquire the Company on the terms and conditions set forth herein;

     WHEREAS, on the terms and conditions set forth herein, Merger Subsidiary has agreed to commence a tender offer (as it may be amended from time to time as permitted by this Agreement, the “ Offer ”) to purchase all outstanding shares of common stock, par value $0.001 per share, of the Company (“ Shares ”) at a price of $9.25 per Share, net to the holder thereof in cash without interest (such price, or any higher price as may be paid in the Offer in accordance with this Agreement, the “ Offer Price ”);

     WHEREAS, following consummation of the Offer, Merger Subsidiary will be merged with and into the Company (the “ Merger ”), with the Company surviving the Merger as a direct or indirect wholly owned subsidiary of Parent in accordance with the Nevada Revised Statutes (“ Nevada Law ”), and each Share that is not tendered and accepted pursuant to the Offer (other than Shares owned by Parent or any direct or indirect wholly owned subsidiary of Parent or the Company) will thereupon be canceled and converted into the right to receive cash in an amount equal to the Offer Price, in each case, on the terms and conditions set forth herein;

     WHEREAS, the Board of Directors (A) has, by unanimous vote, (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are advisable and in the best interests of the Company and its stockholders on the terms and conditions set forth herein and (ii) adopted this Agreement and approved the transactions contemplated hereby, including the Offer and the Merger, on the terms and conditions substantially as set forth herein, and (B) has unanimously resolved to recommend that the Company’s stockholders accept the Offer, tender their Shares into the Offer and, if required by Applicable Law, approve this Agreement and the Merger;

     WHEREAS, simultaneously with the execution of this Agreement and in furtherance of the transactions contemplated hereby, certain stockholders of the Company are entering into support agreements (the “ Support Agreements ”) with Parent and Merger Subsidiary providing that such stockholders shall, among other things, tender their Shares in the Offer and otherwise support the Offer, the Merger and the other transactions contemplated hereby, on the terms and subject to the conditions set forth in the Support Agreements; and

     WHEREAS, the respective boards of directors of Parent and Merger Subsidiary have adopted, approved and declared advisable, and Parent has caused the sole stockholder of Merger Subsidiary to approve, this Agreement providing for the Offer and the Merger in accordance with Nevada Law upon the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE 1
DEFINITIONS

     Section 1.1 Definitions . As used herein, the following terms have the following meanings:

     “ 1933 Act ” means the Securities Act of 1933, as amended.

     “ 1934 Act ” means the Securities Exchange Act of 1934, as amended.

     “ Acquisition Proposal ” means, other than the transactions contemplated by this Agreement, any offer or proposal (other than an offer or proposal by Parent or Merger Subsidiary) relating to (i) any acquisition or purchase, direct or indirect, of 15% or more of any class of equity or voting securities of the Company or 15% or more of the consolidated assets of the Company, (ii) any tender offer (including a self-tender offer) or exchange offer that, if consummated, would result in such Third Party beneficially owning 15% or more of any class of equity or voting securities of the Company, or (iii) a merger, consolidation, share exchange, business combination, sale of substantially all the assets, reorganization, recapitalization, liquidation, dissolution or other similar transaction involving the Company or any of its Subsidiaries whose assets, individually or in the aggregate, constitute 15% or more of the consolidated assets of the Company.

     “ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.

     “ Applicable Law ” means, with respect to any Person, any foreign, federal, state or local law (statutory, common or otherwise), constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person, as the same may be amended from time to time unless expressly specified otherwise herein.

     “ Business Day ” means a day other than Saturday, Sunday or other day on which commercial banks in New York, New York are authorized or required by Applicable Law to close.

     “ Code ” means the Internal Revenue Code of 1986, as amended.

     “ Company Balance Sheet ” means the consolidated balance sheet of the Company and its Subsidiaries as of December 31, 2008 and the footnotes thereto set forth in the Company First Quarter 10-Q.

     “ Company Balance Sheet Date ” means December 31, 2008.

     “ Company Common Stock ” means the common stock, $0.001 par value, of the Company.

     “ Company Disclosure Letter ” means the disclosure letter dated the date hereof regarding this Agreement that has been provided by the Company to Parent and Merger Subsidiary.

     “ Company First Quarter 10-Q ” means the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2008.

     “ Company Intellectual Property ” means all Intellectual Property that is used by the Company or any of its Subsidiaries in the conduct of their respective businesses as currently conducted or as contemplated to be conducted (as evidenced by a written business plan, written development plan, product roadmap or computer software code) by the Company or any of its Subsidiaries as of the Closing.

     “ Company Owned Intellectual Property ” means all Intellectual Property owned or claimed to be owned by the Company or any of its Subsidiaries.

     “ Contract ” means any legally binding contract, agreement, obligation, commitment, arrangement, understanding, instrument, permit, lease or license.

     “ Environmental Laws ” means any Applicable Laws relating to (i) the control of any potential Hazardous Substance or protection of the air, water or land, (ii) solid, gaseous or liquid waste generation, handling, treatment, storage, disposal or transportation of a Hazardous Substance, (iii) human health and safety with respect to exposures to Hazardous Substances, and (iv) the environment.

     “ Environmental Permits ” means all permits, licenses, franchises, certificates, approvals and other similar authorizations of Governmental Authorities required by Environmental Laws and affecting, or relating to, the business of the Company or any of its Subsidiaries as currently conducted.

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended.

     “ ERISA Affiliate ” of any entity means any other entity that, together with such entity, would be treated as a single employer under Section 414 of the Code.

     “ GAAP ” means United States generally accepted accounting principles consistently applied.

     “ Governmental Authority ” means any transnational, domestic or foreign federal, state or local governmental, quasi-governmental, regulatory or administrative authority, department, court, agency, commission or official, including any political subdivision thereof, or any non-governmental self-regulatory agency, commission or authority.

     “ Hazardous Substance ” means any chemical, substance, waste or material listed or defined as a “pollutant”, “contaminant”, “toxic”, “radioactive”, “ignitable”, “corrosive”,

“reactive”, or “hazardous” and regulated by a Governmental Authority under any Environmental Law.

     “ HSR Act ” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.

     “ Indebtedness ” means the Company and its Subsidiaries’ liabilities for borrowed money, obligations under promissory notes, bonds, loan or credit agreements, indentures, or other evidence of indebtedness or other instruments providing for or relating to the lending of money, or under contracts relating to any interest rate, currency or commodity hedging, swaps, caps, floors, option agreements or derivative arrangements, capital lease obligations, any other liabilities accounted for as indebtedness under GAAP, and any commitments or contingent obligations of the Company and its Subsidiaries guaranteeing any indebtedness or other obligation of any Third Party.

     “ Intellectual Property ” means (i) trademarks, service marks, brand names, certification marks, trade dress, domain names and other indications of origin, the goodwill associated with the foregoing and registrations in any jurisdiction of, and applications in any jurisdiction to register, the foregoing, including any extension, modification or renewal of any such registration or application, (ii) inventions and discoveries, including know-how, whether patentable or not, in any jurisdiction, patents, applications for patents (including, without limitation, divisions, continuations, continuations-in-part and renewal applications), and any renewals, reexaminations, extensions or reissues thereof, in any jurisdiction, (iii) trade secrets and confidential information and rights in any jurisdiction to limit the use or disclosure thereof by any person (the “Trade Secrets” ), (iv) computer software and code, including assemblers, applets, compilers, source code, object code, data (including image and sound data), design tools and user interfaces, in any form or format, however fixed, including source code listings and documentation (collectively, “ Software ”) and other works of authorship, whether copyrightable or not, in any jurisdiction, and any and all copyright rights, whether registered or not, and registrations or applications for registration of copyrights in any jurisdiction, and any renewals or extensions thereof, (v) moral rights, databases and data collections (including knowledge databases, customer lists and customer databases), database rights, shop rights, design rights, industrial property rights, publicity rights and privacy rights, and (vi) any similar intellectual property or proprietary rights.

     “ IT Assets ” means computers, computer software, firmware, middleware, servers, workstations, routers, hubs, switches, data communications lines, and all other information technology equipment, and all associated documentation owned by the Company or its Subsidiaries or licensed or leased by the Company or its Subsidiaries pursuant to written agreement (excluding any public networks).

     “ knowledge of the Company ” or “ to the Company’s knowledge ” means the knowledge of David Denton, Rockee Tanimoto and the Company’s officers.

     “ knowledge of Parent ” or “ to Parent’s knowledge ” means the knowledge of Parent’s executive officers.

     “ Lien ” means, with respect to any property or asset, any mortgage, lien, pledge, charge, security interest, encumbrance or other adverse claim of any kind in respect of such property or asset. For purposes of this Agreement, a Person shall be deemed to own subject to a Lien, any property or asset that it has acquired or holds subject to the interest of a vendor or lessor under any conditional sale agreement, capital lease or other title retention agreement relating to such property or asset.

     “ Material Adverse Effect ” means, with respect to any Person, any change, effect, development or event that is or would reasonably be expected to have (i) a material adverse effect on the condition (financial or otherwise), business, assets, operations or results of operations of such Person and its Subsidiaries, taken as a whole; provided, however , that no change, effect, development or event resulting from, arising out of, or attributable to any of the following shall be deemed to be or constitute a “ Material Adverse Effect ” or be taken into account in determining whether a “ Material Adverse Effect ” has occurred: (A) any changes, effects, developments or events in the economy or the financial, credit or securities markets in general, (B) any changes, effects, developments or events in the industries in which such Person and its Subsidiaries operate, (C) any changes, effects, developments or events resulting from the announcement or pendency of the transactions contemplated by this Agreement, the identity of Parent or the performance or compliance with the terms of this Agreement, (D) any changes, effects, developments or events resulting from the failure of such Person to meet internal sales forecasts, sales targets or financial projections or fluctuations in the trading price or volume of such Person’s common stock (it being understood and agreed that the underlying change, effect, development or event giving rise to or causing such failure or fluctuations may constitute or contribute to a Material Adverse Effect and may be taken into account in making a determination as to whether there has been a Material Adverse Effect), or (E) any changes in Applicable Law or GAAP (or any interpretation thereof), unless and to the extent with respect to clauses (A), (B) or (E), such changes, effects, developments or events (x) specifically affect or relate to (or have the effect of specifically affecting or relating to) such Person and its Subsidiaries, and (y) are materially and disproportionately adverse to such Person and its Subsidiaries than to other companies operating in the industries in which such Person and its Subsidiaries operate, or (ii) a material impairment in the ability of such Person to consummate the transactions contemplated by this Agreement.

     “ NASDAQ ” means The NASDAQ Stock Market, LLC.

     “ Nevada Law ” means the Nevada Revised Statutes.

     “ Permitted Liens ” means any of the following: (i) Liens for Taxes either not yet due and payable or which are being contested in good faith by appropriate proceedings and, in either case, for which adequate reserves have been established in accordance with GAAP; (ii) mechanics’, carriers’, workmen’s, warehouseman’s, repairmen’s, materialmen’s or other Liens affecting any Leased Real Property for any construction, renovation or other work to any Leased Real Property and which are not the result of any repairs or alterations thereto by the tenant under the applicable Real Property Lease; (iii) Liens to secure obligations to landlords, lessors or renters as disclosed in any Real Property Lease; (iv) Liens imposed by Applicable Law; (v) pledges or deposits to secure obligations under workers’ compensation laws or similar legislation or to secure public or statutory obligations; and (vi) Liens that do not materially

detract from the value or materially interfere with the present use of the property or asset subject thereto or affected thereby.

     “ Person ” means an individual, corporation, partnership, limited liability company, association, trust or other legal entity, including any Governmental Authority.

     “ Sarbanes-Oxley Act ” means the Sarbanes-Oxley Act of 2002.

     “ SEC ” means the Securities and Exchange Commission.

     “ Subsidiary ” means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at any time directly or indirectly owned by such Person.

     “ Third Party ” means any Person, including as defined in Section 13(d) of the 1934 Act, other than Parent or any of its Affiliates.

     “ WARN Act” means the U.S. Worker Adjustment and Retraining Notification Act and any state or local equivalent.

     Section 1.2 Other Defined Terms (a) . Each of the following terms is defined in the Section set forth opposite such term:

     Section 1.3 Other Definitional and Interpretative Provisions . The words “hereof,” “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. References to Articles, Sections, Exhibits and Schedules are to Articles, Sections, Exhibits and Schedules of this Agreement unless otherwise specified. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein, shall have the meaning as defined in this Agreement. Any singular term in this Agreement shall be deemed to include the plural, and any plural term the singular. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation,” whether or not they are in fact followed by those words or words of like import. “Writing,” “written” and comparable terms refer to printing, typing and other means of reproducing words (including electronic media) in a visible form. Except as the context may otherwise require, references to any agreement or contract are to that agreement or contract as amended, modified or supplemented from time to time in accordance with the terms hereof and thereof, provided that with respect to any agreement or contract listed on any schedules hereto, all such amendments, modifications or supplements must also be listed in the appropriate schedule. References to any Person include the successors and permitted assigns of that Person. Any dollar thresholds set forth herein may be a factor, but shall not be determinative as to what is “material” or a “Material Adverse Effect” or any phrase of similar import under this Agreement. References from or through any date mean, unless otherwise specified, from and including or through and including such date, respectively. References to “law,” “laws” or to a particular statute or law shall be deemed also to include any Applicable Law. The parties agree that the terms and language of this Agreement were the result of negotiations between the parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.

ARTICLE 2
THE OFFER

     Section 2.1 The Offer.

          (a) Provided that nothing shall have occurred and be continuing that, had the Offer been commenced, would give rise to a right to terminate the Offer pursuant to any of the conditions set forth in Annex I , as promptly as practicable after the date hereof and in any event within ten (10) Business Days after the date hereof, Merger Subsidiary shall (and Parent shall cause Merger Subsidiary to) commence (within the meaning of Rule 14d-2 under the 1934 Act)

the Offer to purchase any and all of the outstanding Shares at the Offer Price. The Offer shall be subject only (1) to the condition that there shall be validly tendered and not withdrawn in accordance with the terms of the Offer, prior to the Expiration Date (as defined below), a number of Shares that, together with the Shares then owned by Parent and/or Merger Subsidiary, represents at least a majority of the total number of Shares outstanding on a fully diluted basis, calculated in accordance with Section 3.5(b) (the “ Minimum Condition ”), and (2) to the other conditions set forth in Annex I . Merger Subsidiary expressly reserves the right to waive any of the conditions to the Offer and to make any change in the terms of or conditions to the Offer; provided, that without the prior written consent of the Company, (i) the Minimum Condition may not be waived and (ii) no change may be made that changes the form of consideration to be paid, decreases the Offer Price or the number of Shares sought in the Offer, imposes conditions to the Offer in addition to those set forth in Annex I or modifies the conditions set forth in Annex I , or amends any other term of the Offer in any manner adverse to the holders of Shares in the reasonable judgment of the Company. The initial expiration date of the Offer shall be the twentieth (20th) business day after commencement of the Offer (determined in accordance with Rule 14d-1(g)(3) under the Exchange Act) (such date, or such subsequent date to which the expiration of the Offer is extended pursuant to and in accordance with the terms of this Agreement, the “ Expiration Date ”). Notwithstanding the foregoing, (x) Merger Subsidiary shall extend the Offer for any period required by any rule, regulation, interpretation or position of the SEC or the staff thereof applicable to the Offer or any period required by Applicable Law and (y) if any condition to the Offer is not satisfied or waived on any scheduled Expiration Date, Merger Subsidiary shall, subject to the rights of the parties in Article 11, extend the Offer for one or more periods (each in the reasonable judgment of Merger Subsidiary for the minimum period of time reasonably expected by Merger Subsidiary to be required to satisfy such conditions but in any event not in excess of twenty (20) business days each) until such conditions are satisfied or waived; provided , in each case, that Merger Subsidiary shall not be required to extend the Offer beyond the termination of this Agreement. If upon the acceptance for payment of, and payment for, all Shares validly tendered and not withdrawn pursuant to the Offer, Merger Subsidiary has not acquired the Requisite Short Form Merger Shares, Merger Subsidiary may, in its sole discretion, provide a subsequent offering period (“ Subsequent Offering Period ”) in accordance with Rule 14d-11 of the 1934 Act of not less than three (3) nor more than ten (10) business days immediately following the Expiration Date. Merger Subsidiary shall not terminate or withdraw the Offer prior to its Expiration Date, unless this Agreement is terminated in accordance with Article 11 hereof. Subject to the foregoing, including the requirements of Rule 14d-11, and upon the terms and subject to the conditions of the Offer, Merger Subsidiary shall, and Parent shall cause it to (including by providing or causing to be provided to Merger Subsidiary on a timely basis the necessary funds), accept for payment and pay for, as promptly as practicable after the expiration of the Offer, all Shares (i) validly tendered and not withdrawn pursuant to the Offer (the time at which Shares are first accepted for payment under the Offer, the “ Acceptance Time ”) and (ii) validly tendered in the Subsequent Offering Period.

          (b) On the date of commencement of the Offer, Parent and Merger Subsidiary shall file with the SEC a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments and supplements thereto and including exhibits thereto, the “ Schedule TO ”) that shall include the summary term sheet required thereby and, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement and other appropriate ancillary Offer documents (collectively, together with any amendments or

supplements thereto, the “ Offer Documents ”), and shall cause the Offer Documents to be disseminated to all holders of Shares. The Company shall promptly upon request of Parent and Merger Subsidiary provide Parent in writing with all information concerning the Company that is required to be included in the Schedule TO or the Offer Documents. Each of Parent, Merger Subsidiary and the Company agrees promptly to correct any information provided by it for use in the Schedule TO or the Offer Documents if and to the extent that such information shall have become (or shall become known to be) false or misleading in any material respect. Parent and Merger Subsidiary shall cause the Schedule TO as so corrected to be filed with the SEC and the Offer Documents as so corrected to be disseminated to holders of Shares, in each case, as and to the extent required by applicable U.S. federal securities laws. The Company and its counsel shall be given a reasonable opportunity to review and comment on the Schedule TO and the Offer Documents each time before any such document is filed with the SEC, and Parent and Merger Subsidiary shall give reasonable and good faith consideration to any comments made by the Company and its counsel (it being understood that the Company and its counsel shall provide any comments thereon as soon as reasonably practicable). Parent and Merger Subsidiary shall provide the Company and its counsel with (i) any comments or other communications, whether written or oral, that Parent, Merger Subsidiary or their counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO or Offer Documents promptly after receipt of those comments or other communications and (ii) a reasonable opportunity to participate in the response of Parent and Merger Subsidiary to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given, it being understood that the Company and its counsel shall provide any comments thereon as soon as reasonably practicable).

     Section 2.2 Company Action.

          (a) The Company hereby consents to the Offer and represents that the Board of Directors, at a meeting duly called and held, has unanimously (i) determined that this Agreement and the transactions contemplated hereby, including the Offer and the Merger, are fair and in the best interests of the Company and its stockholders, (ii) adopted this Agreement and approved the transactions contemplated hereby, including the Offer and the Merger, in accordance with the requirements of Nevada Law, (iii) resolved, subject to Section 7.3(a), to recommend acceptance of the Offer and, if required by Applicable Law, approval of this Agreement and the Merger by its stockholders and (iv) taken all other actions necessary to exempt the Offer, the Merger, this Agreement and the transactions contemplated hereby from any “fair price,” “moratorium,” “control share acquisition,” “interested stockholder,” “business combination” or other similar statute or regulation promulgated by a Governmental Authority (“ Takeover Statute ”). Subject to Section 7.3(a), the Company hereby consents to the inclusion in the Schedule TO and Offer Documents of the recommendations of the Board of Directors as described in this Section 2.2(a). The Company shall as soon as practicable after the date of this Agreement furnish Parent with a list of its stockholders, mailing labels and any available listing or computer file containing the names and addresses of all record holders of Shares and lists of securities positions of Shares held in stock depositories, in each case true and correct to the knowledge of the Company as of the most recent practicable date, and shall provide to Parent such additional information (including updated lists of stockholders, mailing labels and lists of securities positions) and such other assistance as Parent may reasonably request in order to

disseminate the Offer Documents or otherwise communicate the Offer to the stockholders of the Company.

          (b) On the day that the Offer is commenced and concurrently with the filing by Parent and Merger Subsidiary of the Schedule TO, the Company shall file with the SEC and disseminate to holders of Shares, in each case, as and to the extent required by applicable U.S. federal securities laws, a Solicitation/Recommendation Statement on Schedule 14D-9 (together with any amendments or supplements thereto, the “ Schedule 14D-9 ”) that, subject to Section 7.3(a), shall reflect the recommendations of the Board of Directors referred to in Section 2.2(a). Each of Parent and Merger Subsidiary shall promptly upon request of the Company provide the Company in writing with all information concerning Parent and/or Merger Subsidiary that is required to be included in the Schedule 14D-9. Each of the Company, Parent and Merger Subsidiary agrees promptly to correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become (or shall become known to be) false or misleading in any material respect. The Company shall cause the Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated to holders of Shares, in each case, as and to the extent required by applicable U.S. federal securities laws. Parent and its counsel shall be given a reasonable opportunity to review and comment on the Schedule 14D-9 each time before it is filed with the SEC, and the Company shall give reasonable and good faith consideration to any comments made by Parent, Merger Subsidiary and their counsel (it being understood that Parent, Merger Subsidiary and their counsel shall provide any comments thereon as soon as reasonably practicable). The Company shall provide Parent, Merger Subsidiary and their counsel with (i) any comments or other communications, whether written or oral, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of those comments or other communications and (ii) a reasonable opportunity to participate in the Company’s response to those comments and to provide comments on that response (to which reasonable and good faith consideration shall be given, it being understood that Parent, Merger Subsidiary and their counsel shall provide any comments thereon as soon as reasonably practicable).

     Section 2.3 Directors.

          (a) Effective upon the Acceptance Time, Parent shall be entitled to designate the number of directors, rounded up to the next whole number, on the Board of Directors that equals the product of (i) the total number of directors on the Board of Directors (giving effect to the election of any additional directors pursuant to this Section) and (ii) the percentage that the number of Shares beneficially owned by Parent and/or Merger Subsidiary (including Shares accepted for payment) bears to the total number of Shares then outstanding, and the Company shall, subject to Applicable Laws and the articles of incorporation and bylaws of the Company, cause Parent’s designees to be elected or appointed to the Board of Directors, including by increasing the number of directors and seeking and accepting resignations of incumbent directors. At such time, the Company shall also cause individuals designated by Parent to constitute the number of members, rounded up to the next whole number, on (A) each committee of the Board of Directors and (B) as requested by Parent, each board of directors of each Subsidiary of the Company (and each committee thereof) that represents the same percentage as such individuals represent on the Board of Directors, in each case, subject to Applicable Laws

          (b) The Company’s obligations to appoint Parent’s designees to the Board of Directors shall be subject to Section 14(f) of the 1934 Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its obligations under this Section. Parent shall supply to the Company in writing and be solely responsible for any information with respect to itself and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1, and the Company’s obligations under Section 2.3(b) shall be subject to the receipt of such information.

          (c) Notwithstanding the foregoing, from the Acceptance Time until the Effective Time, the Company shall use its commercially reasonable efforts to cause its Board of Directors to always have at least two (2) directors who are directors on the date hereof, who are not employed by the Company and who are not Affiliates or employees of Parent or any of its Subsidiaries, and who are independent directors for purposes of the continued listing requirements of the NASDAQ (the “Continuing Directors” ); provided, that if the number of Continuing Directors shall be reduced below two (2) for any reason whatsoever, the remaining Continuing Director shall be entitled to designate any other Person(s) who shall not be an Affiliate or employee of Parent or any of its Subsidiaries to fill such vacancies and such Person(s) shall be deemed to be a Continuing Director(s) for purposes of this Agreement; provided further , that the remaining Continuing Directors shall fill such vacancies as soon as practicable, but in any event within ten (10) Business Days, and further provided that if no such Continuing Director is appointed in such time period, Parent shall designate such Continuing Director(s); provided further , that if no Continuing Director then remains, the other directors shall designate two (2) Persons who shall not be Affiliates, consultants, representatives or employees of Parent or any of its Subsidiaries to fill such vacancies and such Persons shall be deemed to be Continuing Directors for purposes of this Agreement.

          (d) Notwithstanding anything in this Agreement to the contrary, following the election or appointment of Parent’s designees pursuant to Section 2.3(a) and until the Effective Time, the approval of a majority of the Continuing Directors shall be required to authorize (and such authorization shall constitute the authorization of the Board of Directors and no other action on the part of the Company, including any action by any other director of the Company, shall be required to authorize) any amendment or termination of this Agreement on behalf of the Company, any amendment of this Agreement requiring action by the Board of Directors, any extension of time for performance of any obligation or action hereunder by Parent or Merger Subsidiary, any exercise, enforcement or waiver of compliance with any of the agreements or conditions contained herein for the benefit of the Company, and any amendment of the articles of incorporation or bylaws of the Company that would adversely affect the holders of Shares; provided , however that following the Acceptance Time, Parent may cause its designees elected or appointed pursuant to Section 2.3(a) to withdraw or modify any Adverse Recommendation Change that may have been made prior to such time without the approval of the majority of the Continuing Directors. The Continuing Directors shall have the authority to retain counsel (which may include current counsel to the Company) at the expense of the Company for the purpose of fulfilling their obligations hereunder, and shall have the authority, after the Acceptance Date, to

institute any action on behalf of the Company to enforce the performance of this Agreement in accordance with its terms.

     Section 2.4 Top-Up Option.

          (a) Subject to Section 2.4(b), Section 2.4(c) and Section 2.4(d) and the satisfaction of the condition that Parent and Merger Subsidiary collectively own at least 70% of the Shares outstanding on a fully diluted basis, calculated in accordance with Section 3.5(b), the Company grants to Merger Subsidiary an irrevocable option, for so long as this Agreement has not been terminated pursuant to the provisions hereof (the “ Top-Up Option ”), to purchase from the Company up to the number of authorized and unissued Shares equal to the number of Shares that, when added to the number of Shares beneficially owned by Parent and/or Merger Subsidiary at the time of exercise of the Top-Up Option, constitutes one Share more than the number of Shares (the “ Requisite Short-Form Merger Shares ”) entitled to cast 90% of all the votes entitled to be cast by each group or class of shares entitled to vote as a group or class on this Agreement after the issuance of all Shares to be issued upon exercise of the Top-Up Option, calculated on a fully-diluted basis in accordance with Section 3.5(b) or, as may be elected by Parent, on a primary basis at the Effective Time (such Shares to be issued upon exercise of the Top-Up Option, the “ Top-Up Shares ”).

          (b) The Top-Up Option may be exercised by Merger Subsidiary, in whole but not in part, only once, at any time following the Acceptance Time, or if any Subsequent Offering Period is provided, following the Expiration Date of the Subsequent Offering Period, and only if Merger Subsidiary shall own as of such time less than the Requisite Short-Form Merger Shares; provided, that notwithstanding anything in this Agreement to the contrary, the Top-Up Option shall not be exercisable to the extent (A) the number of Shares issuable upon exercise of the Top-Up Option would exceed the number of authorized but unissued Shares or (B) any provision of Applicable Law or judgment, injunction, order or decree shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Shares. The aggregate purchase price payable for the Top-Up Shares being purchased by Merger Subsidiary pursuant to the Top-Up Option shall be determined by multiplying the number of such Shares by the Offer Price, without interest. Such purchase price may be paid by Merger Subsidiary, at its election, either (A) entirely in cash or (B) in cash in an amount equal to the aggregate par value of the purchased Top-Up Shares and by executing and delivering to the Company a full recourse promissory note having a principal amount equal to the remainder of such purchase price. Any such promissory note shall bear interest at a rate per annum equal to the prime rate (as published in The Wall Street Journal) and may be prepaid without premium or penalty.

          (c) In the event Merger Subsidiary wishes to exercise the Top-Up Option, Merger Subsidiary shall deliver to the Company a notice (the “ Top-Up Notice ”) setting forth (i) the number of Top-Up Shares that Merger Subsidiary intends to purchase pursuant to the Top-Up Option, (ii) the manner in which Merger Subsidiary intends to pay the applicable purchase price and (iii) the place and time at which the closing of the purchase of such Top-Up Shares by Merger Subsidiary is to take place. At the closing of the purchase of the Top-Up Shares, Parent and Merger Subsidiary shall cause to be delivered to the Company the consideration required to be delivered in exchange for the Top-Up Shares, and the Company shall cause to be issued to Merger Subsidiary a certificate representing the Top-Up Shares. The parties hereto agree to use

their reasonable best efforts to cause the closing of the purchase of the Top-Up Shares to occur on the same day that the Top-Up Notice is deemed received by the Company pursuant to Section 12.1, and if not so consummated on such day, as promptly thereafter as possible. The parties further agree to use their reasonable best efforts to cause the Merger to be consummated in accordance with Section 92A-180 of Nevada Law and as contemplated by Section 9.6 as close in time as possible to (including, to the extent possible, on the same day as) the issuance of the Top-Up Shares.

          (d) Parent and Merger Subsidiary understand that the Top-Up Shares will not be registered under the 1933 Act and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Each of Parent and Merger Subsidiary represents and warrants that Merger Subsidiary is, and will be upon the purchase of such Top-Up Shares, an “accredited investor,” as defined in Rule 501 of Regulation D under the 1933 Act, and represents, warrants and agrees that the Top-Up Option is being, and the Top-Up Shares will be, acquired by Merger Subsidiary for the purpose of investment and not with a view to or for resale in connection with any distribution thereof within the meaning of the 1933 Act. Any certificates evidencing Top-Up Shares shall include any legends required by applicable securities laws.

          (e) After the Acceptance Time, Parent and the Company shall use their respective reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, and assist and cooperate with each other in doing, all things necessary or desirable to procure from NASDAQ or any other Governmental Authority any necessary waiver or other exemption from the requirements of the Rule 5000 Series of the Rules of NASDAQ or other Applicable Law in order to enable the issuance of the Top-Up Shares to occur without the need to obtain the approval of the Company’s stockholders.

ARTICLE 3
THE MERGER

     Section 3.1 The Merger .

          (a) Upon the terms and subject to the conditions set forth in this Agreement, at the Effective Time, Merger Subsidiary shall be merged with and into the Company in accordance with Nevada Law, whereupon the separate existence of Merger Subsidiary shall cease, and the Company shall be the surviving corporation (the “ Surviving Corporation ”).

          (b) Subject to the provisions of Article 10, the closing of the Merger (the “ Closing ”) shall take place in Santa Monica, California at the offices of Bryan Cave LLP, 120 Broadway, Suite 300, Santa Monica California 90401 as soon as possible, but in any event no later than two Business Days after the date the conditions set forth in Article 10 (other than conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permissible, waiver of those conditions at the Closing) have been satisfied or, to the extent permissible, waived by the party or parties entitled to the benefit of such conditions, or at such other place, at such other time or on such other date as Parent and the Company may mutually agree.

          (c) At the Closing, the Company and Merger Subsidiary shall file articles of merger with the Secretary of State of the State of Nevada and make all other filings or recordings required by Nevada Law in connection with the Merger. The Merger shall become effective on such date (the “ Effective Time ”) as the articles of merger are duly filed with the Secretary of State of the State of Nevada (or at such later time as permitted by Nevada Law as Parent and the Company shall agree and shall be specified in the articles of merger).

          (d) From and after the Effective Time, the Surviving Corporation shall possess all the properties, rights, powers, privileges and franchises and be subject to all of the obligations, liabilities, restrictions and disabilities of the Company and Merger Subsidiary, all as provided under Nevada Law.

     Section 3.2 Conversion of Shares . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Subsidiary or the Company or the holder of any shares of Company Common Stock or any shares of capital stock of Parent or Merger Subsidiary:

          (a) except as otherwise provided in Section 3.2(b), each Share outstanding immediately prior to the Effective Time shall be converted into the right to receive the Offer Price, without interest (such per share amount, the “ Merger Consideration ”). As of the Effective Time, all such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and (A) each certificate which immediately prior to the Effective Time represented any such shares of Company Common Stock (each, a “ Certificate ”) and (B) each uncertificated share of Company Common Stock (an “ Uncertificated Share ”), which immediately prior to the Effective Time was registered to a holder on the stock transfer books of the Company, shall thereafter represent only the right to receive the Merger Consideration;

          (b) each Share held by the Company or any of its Subsidiaries or owned by Parent or any of its Subsidiaries immediately prior to the Effective Time shall be canceled, and no payment shall be made with respect thereto; and

          (c) each share of common stock of Merger Subsidiary outstanding immediately prior to the Effective Time shall be converted into and become one 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.

     Section 3.3 Surrender and Payment.

          (a) Prior to the Effective Time, Parent shall appoint a commercial bank or trust company that is reasonably satisfactory to the Company (the “ Exchange Agent ”) for the purpose of exchanging Certificates or Uncertificated Shares for the Merger Consideration and shall enter into an exchange agent agreement with the Exchange Agent. At the Effective Time, Parent shall deposit, or cause the Surviving Corporation to deposit, with the Exchange Agent, for the benefit of the holders of shares of Company Common Stock, cash in an amount sufficient to pay the aggregate Merger Consideration required to be paid in respect of the Certificates and the

Uncertificated Shares pursuant to Section 3.2(a). All cash deposited with the Exchange Agent pursuant to this Section 3.3(a) shall hereinafter be referred to as the “ Exchange Fund” . Promptly after the Effective Time (and in any event within five (5) Business Days following the date of the Closing), Parent shall send, or shall cause the Exchange Agent to send, to each holder of Shares at the Effective Time a letter of transmittal and instructions (which shall specify that the delivery shall be effected, and risk of loss and title shall pass, only upon proper delivery of the Certificates or transfer of the Uncertificated Shares to the Exchange Agent) for use in such exchange.

          (b) Each holder of Shares that have been converted into the right to receive the Merger Consideration shall be entitled to receive, upon (i) surrender to the Exchange Agent of a Certificate, together with a properly completed letter of transmittal, or (ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of a book-entry transfer of Uncertificated Shares, the Merger Consideration payable for each Share represented by a Certificate or for each Uncertificated Share. Until so surrendered or transferred, as the case may be, each such Certificate or Uncertificated Share shall represent after the Effective Time for all purposes only the right to receive the Merger Consideration.

          (c) If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the surrendered Certificate or the transferred Uncertificated Share is registered, it shall be a condition to such payment that (i) either such Certificate shall be properly endorsed or shall otherwise be in proper form for transfer or such Uncertificated Share shall be properly transferred and (ii) the Person requesting such payment shall pay to the Exchange Agent any transfer or other Taxes required as a result of such payment to a Person other than the registered holder of such Certificate or Uncertificated Share or establish to the satisfaction of the Exchange Agent that such Tax has been paid or is not payable.

          (d) The stock transfer books of the Company shall be closed immediately upon the Effective Time and there shall be no further registration of transfers of Shares thereafter on the records of the Company. If, after the Effective Time, Certificates or Uncertificated Shares are presented to Parent, the Surviving Corporation or the Exchange Agent for any reason, they shall be canceled and exchanged for the Merger Consideration to the extent provided for, and in accordance with the procedures set forth, in this Article 3.

          (e) Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 3.3(a) (and any interest or other income earned thereon) that remains unclaimed by the holders of Shares six months after the Effective Time shall be returned to the Surviving Corporation upon demand, and any such holder who has not exchanged Shares for the Merger Consideration in accordance with this Section 3.3 prior to that time shall thereafter look only to the Surviving Corporation for payment of the Merger Consideration, in respect of such shares without any interest thereon. Notwithstanding the foregoing, none of Parent, the Company, the Exchange Agent, the Surviving Corporation or any of their respective Affiliates shall be liable to any holder of Shares for any amounts paid to a public official pursuant to applicable abandoned property, escheat or similar laws. Any amounts remaining unclaimed by holders of Shares two years after the Effective Time (or such earlier date immediately prior to such time when the amounts would otherwise escheat to or become property of any

Governmental Authority) shall become, to the extent permitted by Applicable Law, the property of the Surviving Corporation free and clear of any claims or interest of any Person previously entitled thereto.

          (f) The Exchange Agent shall invest the cash included in the Exchange Fund as directed by Parent. Any interest and other income resulting from such investments shall be payable to the Surviving Corporation or Parent, as Parent directs. If for any reason the cash in the Exchange Fund shall be insufficient to fully satisfy all of the payment obligations to be made in cash by the Exchange Agent hereunder, Parent shall promptly deposit cash into the Exchange Fund in an amount which is equal to the deficiency in the amount of cash required to fully satisfy such cash payment obligations. The Exchange Fund shall not be used for any other purpose except as provided in this Agreement.

     Section 3.4 Stock Options .

          (a) Parent shall not assume any option to purchase shares of Company Common Stock under any employee stock option or compensation plan or arrangement of the Company (each, a “ Company Stock Option ”) in connection with the Merger. At or immediately prior to the Effective Time, each then outstanding Company Stock Option, whether or not exercisable or vested, shall be canceled, and the Company shall pay each holder of any such option at or promptly after the Effective Time for each such canceled Company Stock Option an amount in cash determined by multiplying (i) the excess, if any, of the Merger Consideration over the applicable exercise price of such option by (ii) the number of shares of Company Common Stock such holder could have purchased (assuming full vesting of all Company Stock Options) had such holder exercised such Company Stock Option in full immediately prior to the Effective Time.

          (b) Prior to the Effective Time, each holder of the Company Stock Options shall become fully vested in and have the right to exercise all outstanding options. The Company shall (i) no less than 15 days prior to the Effective Time, provide written or electronic notice to each such holder that the award is fully vested and exercisable until the Effective Time, that the award will terminate at the Effective Time, and that any outstanding award as of the Effective Time will be cashed out as described in Section 3.4(a), and (ii) make any amendments to the terms of such equity or compensation plans or arrangements that are necessary to give effect to the transactions contemplated by this Section 3.4.

     Section 3.5 Adjustments; Ownership Percentage Calculations .

          (a) If, during the period between the date of this Agreement and the Effective Time, any change in the outstanding shares of capital stock of the Company shall occur, as a result of any reclassification, recapitalization, stock split (including reverse stock split), merger, combination, exchange or readjustment of shares, subdivision or other similar transaction, or any stock dividend thereon with a record date during such period, the Offer Price, the Merger Consideration and any other amounts payable pursuant to this Agreement shall be appropriately adjusted.

          (b) For purposes of percentage of ownership calculations under this Agreement with respect to the number of Shares outstanding, “fully diluted basis” assumes the conversion, exercise or exchange of all Company Stock Options and all other securities convertible into or exercisable or exchangeable for Shares, in each case, that are convertible, exercisable or exchangeable in accordance with their respective terms as of the date of such calculation; provided that Shares issuable upon conversion, exercise, or exchange of Company Stock Options and all other securities convertible into or exercisable or exchangeable for Shares, in each case, as to which the applicable exercise, exchange or conversion price exceeds the Offer Price shall be excluded from such number.

     Section 3.6 Withholding Rights . Each of the Exchange Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from the consideration otherwise payable to any Person pursuant to Article 2 and Article 3 such amounts as it reasonably determines that it is required to deduct and withhold with respect to the making of such payment under any provision of any Applicable Law, including federal, state, local or foreign Tax law, and if any such amounts are deducted and withheld, Parent shall, or shall cause the Surviving Corporation to, as the case may be, timely pay such amounts over to the appropriate Governmental Authority. If the Exchange Agent, Parent or the Surviving Corporation, as the case may be, so withholds amounts, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which the Exchange Agent, Parent or the Surviving Corporation, as the case may be, made such deduction and withholding.

     Section 3.7 Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed, the completion of the letter of transmittal by such Person and, if reasonably required by the Exchange Agent, the posting by such Person of a bond, in such reasonable amount as the Exchange Agent may request, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent shall pay, in exchange for such lost, stolen or destroyed Certificate, the Merger Consideration to be paid in respect of the Shares represented by such Certificate, as contemplated by this Article 3.

ARTICLE 4
THE SURVIVING CORPORATION

     Section 4.1 Articles of Incorporation . The articles of incorporation of Merger Subsidiary in effect at the Effective Time shall be the articles of incorporation of the Surviving Corporation until amended in accordance with Applicable Law.

     Section 4.2 Bylaws . The bylaws of Merger Subsidiary in effect at the Effective Time shall be the bylaws of the Surviving Corporation until amended in accordance with Applicable Law.

     Section 4.3 Directors and Officers . From and after the Effective Time, until successors are duly elected or appointed and qualified in accordance with Applicable Law, (i) the directors of Merger Subsidiary at the Effective Time shall be the directors of the Surviving

Corporation and (ii) the executive officers of the Company at the Effective Time shall be the executive officers of the Surviving Corporation.

ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the Company Disclosure Letter (with specific reference to the particular Section or subsection of this Agreement to which the information set forth in such Section of the Company Disclosure Letter relates, provided however , the failure by the Company to cross-reference any disclosure in any particular Section of the Company Disclosure Letter shall not constitute a breach by the Company of the applicable representation or warranty as long as the matter is disclosed elsewhere in the Company Disclosure Letter and the applicability to the particular representation and warranty is described in sufficient detail to make the applicability readily apparent on its face to a reasonable person), the Company represents and warrants to Parent that:

     Section 5.1 Corporate Existence and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has all corporate powers required to carry on its business as conducted as of the date hereof. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. The Company has made available to Parent true and complete copies of the articles of incorporation and bylaws of the Company as in effect as of the date hereof.

     Section 5.2 Corporate Authorization.

          (a) The Company has all requisite corporate power and authority to execute and deliver this Agreement and, subject to receipt of affirmative vote of the holders of a majority of the outstanding Shares in connection with the Merger (the “ Company Stockholder Approval ”), to perform its obligations under this Agreement and to consummate the Offer, the Merger and the other transactions contemplated hereby. The affirmative vote of the holders of a majority of the outstanding Shares is the only vote of the holders of any of the Company’s capital stock which may be necessary in connection with the consummation of the Merger and the transactions contemplated hereby. This Agreement constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms (subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and other laws affecting creditors’ rights generally and general principles of equity).

          (b) At a meeting duly called and held prior to the date of this Agreement, the Board of Directors has (i) unanimously determined that this Agreement and the transactions contemplated hereby are fair to and in the best interests of the Company and its stockholders, (ii) unanimously approved, adopted and declared advisable this Agreement and the transactions contemplated hereby, including the Offer and the Merger, and (iii) unanimously resolved to recommend acceptance of the Offer and, if required by Applicable Law, approval of this

Agreement and the Merger by the Company’s stockholders (such recommendation, the “ Company Board Recommendation ”).

     Section 5.3 Governmental Authorization . The execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby require no action by or in respect of, or filing with, any Governmental Authority other than (i) the filing of the articles of merger with respect to the Merger with the Secretary of State of the State of Nevada and appropriate documents with the relevant authorities of other states in which the Company is qualified to do business, (ii) compliance with any applicable requirements of the HSR Act and under any comparable merger control laws of foreign jurisdictions, if applicable (the consents, approvals, orders, authorizations, registrations, declarations and filings required under or in connection with the foregoing clause (ii), the “ Required Governmental Authorizations ”), (iii) compliance with any applicable requirements of the 1933 Act, the 1934 Act, and any other applicable U.S. state or federal securities laws, and (iv) any actions or filings the absence of which would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

     Section 5.4 Non-contravention . The execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby do not and will not (i) contravene, conflict with, or result in any violation or breach of any provision of the articles of incorporation or bylaws of the Company, (ii) assuming compliance with the matters referred to in Section 5.3, contravene, conflict with or result in a violation or breach of any provision of any Applicable Law, (iii) assuming compliance with the matters referred to in Section 5.3, require any consent or other action by any Person under, constitute a default, or an event that, with or without notice or lapse of time or both, would constitute a default, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Company or any of its Subsidiaries is entitled, under any provision of any Company Material Contract or any Company Permit or (iv) result in the creation or imposition of any Lien on any asset of the Company or any of its Subsidiaries, with such exceptions, in the case of each of clauses (ii) through (iv), as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

     Section 5.5 Capitalization.

          (a) The authorized capital stock of the Company consists of (i) 40,000,000 shares of Company Common Stock and (ii) 5,000,000 shares of Preferred Stock, par value $0.001 per share (“ Company Preferred Stock ” and, collectively with the Company Common Stock, the “ Company Capital Stock ”). As of May 8, 2009, there were outstanding (i) 11,301,255 shares of Company Common Stock, (ii) no shares of Company Preferred Stock and (iii) outstanding Company Stock Options to purchase an aggregate of 2,827,866 shares of Company Common Stock (of which Company Stock Options to purchase an aggregate of 1,866,654 shares of Company Common Stock were exercisable). All outstanding shares of Company Capital Stock have been, and all shares of Company Capital Stock that may be issued pursuant to any employee stock option or other compensation plan or arrangement will be, when issued in accordance with the respective terms thereof, duly authorized and validly issued and are fully paid and nonassessable. No Subsidiary of the Company owns any shares of capital stock of the Company. Section 5.5(a) of the Company Disclosure Letter contains a complete and

correct list of each outstanding Company Stock Option, including with respect to each such option the holder, date of grant, exercise price, vesting schedule and number of shares of Company Common Stock subject thereto. There are no options to purchase shares of the Company Capital Stock other than the options issued under the Chariot Communications Corporation 1998 Stock Plan.

          (b) There are no outstanding bonds, debentures, notes or other Indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote. Except as set forth in this Section 5.5 and for changes since May 8, 2009 resulting from the exercise of Company Stock Options outstanding on such date, there are no issued, reserved for issuance or outstanding (i) shares of capital stock or other voting securities of or other ownership interest in the Company, (ii) securities of the Company convertible into or exchangeable for shares of capital stock or other voting securities of or other ownership interest in the Company, (iii) warrants, calls, options or other rights to acquire from the Company, or other obligations of the Company to issue, any capital stock, other voting securities or securities convertible into or exchangeable for capital stock or other voting securities of or other ownership interest in the Company or (iv) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other voting securities of or ownership interests in, the Company (the items in clauses (i) though (iv) being referred to collectively as the “ Company Securities ”). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Securities. Neither the Company nor any of its Subsidiaries is a party to any voting agreement with respect to the voting of any Company Securities, other than the Support Agreements.

          (c) As of the date hereof, there is no outstanding Indebtedness of the Company and its Subsidiaries.

     Section 5.6 Subsidiaries.

          (a) Each Subsidiary of the Company is a corporation or other entity duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and has all corporate or other organizational powers, as applicable, required to carry on its business as conducted as of the date hereof. Each such Subsidiary is duly qualified to do business as a foreign corporation or other entity, as applicable, and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified has not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company. Section 5.6(a) of the Company Disclosure Letter lists all of the Subsidiaries of the Company.

          (b) Except as set forth in Section 5.6(b) of the Company Disclosure Letter, all of the outstanding capital stock of, or other voting securities or ownership interests in, each Subsidiary of the Company, is owned by the Company or another Subsidiary of the Company, directly or indirectly, free and clear of any Lien and free of any other limitation or restriction (including any restriction on the right to vote, sell or otherwise dispose of such capital stock or

other voting securities or ownership interests). There are no issued, reserved for issuance or outstanding (i) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities of or ownership interests in any Subsidiary of the Company, (ii) warrants, calls, options or other rights to acquire from the Company or any of its Subsidiaries, or other obligations of the Company or any of its Subsidiaries to issue, any capital stock or other voting securities of or ownership interests in, or any securities convertible into or exchangeable for any capital stock or other voting securities of or ownership interests in, any Subsidiary of the Company or (iii) restricted shares, stock appreciation rights, performance units, contingent value rights, “phantom” stock or similar securities or rights that are derivative of, or provide economic benefits based, directly or indirectly, on the value or price of, any capital stock of, or other voting securities of or ownership interests in, any Subsidiary of the Company (the items in clauses (i) through (iii) being referred to collectively as the “ Company Subsidiary Securities ”). There are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any of the Company Subsidiary Securities. Except for the capital stock or other equity or voting interests of its Subsidiaries and publicly traded securities held for investment which do not exceed 5% of the outstanding securities of any entity, the Company does not own, directly or indirectly, any capital stock or other equity or voting interests in any Person.

     Section 5.7 SEC Filings and the Sarbanes-Oxley Act.

          (a) The Company has filed with or furnished to the SEC all reports, schedules, forms, statements, prospectuses, registration statements and other documents required to be filed or furnished by the Company since September 30, 2006 (collectively, together with any exhibits and schedules thereto and other information incorporated therein, the “ Company SEC Documents ”).

          (b) As of its respective filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such subsequent filing), each Company SEC Document complied, and each such Company SEC Document filed subsequent to the date of this Agreement will comply, as to form in all material respects with the applicable requirements of the 1933 Act, the 1934 Act and the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder, as the case may be.

          (c) As of its respective filing date (or, if amended or superseded by a filing prior to the date of this Agreement, on the date of such subsequent filing), each Company SEC Document filed pursuant to the 1934 Act did not, and each such Company SEC Document filed subsequent to the date of this Agreement will not, contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

          (d) Each Company SEC Document that is a registration statement, as amended or supplemented, if applicable, filed pursuant to the 1933 Act, as of the date such registration statement or amendment became effective, did not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, which individually or in the aggregate would reasonably

be expected to require an amendment, supplement or corrective filing to such Company SEC Document.

          (e) The Company is in compliance with, and has complied, in each case in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act and (ii) the applicable listing and corporate governance rules and regulations of NASDAQ.

          (f) The Company has established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the 1934 Act). Such disclosure controls and procedures are reasonably designed to ensure that material information required to be disclosed by the Company in the reports it files or submits under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC, and all such material information is made known to the Company’s principal executive officer and its principal financial officer.

          (g) The Company and its Subsidiaries have established and maintained a system of internal control over financial reporting (as defined in Rule 13a-15 under the 1934 Act) (“ internal controls ”) and the Company has disclosed, based on its most recent evaluation of internal controls prior to the date of this Agreement, to the Company’s auditors and audit committee (x) any significant deficiencies and material weaknesses in the design or operation of such internal controls which would be reasonably be expected to materially adversely affect the Company’s ability to record, process, summarize and report financial information and (y) any fraud, whether or not material, known to management that involves management or other employees who have a significant role in the Company’s internal controls. Such internal controls are sufficient or effective to provide reasonable assurance regarding the reliability of the Company’s financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with GAAP. The Company has made available to Parent prior to the date of this Agreement a summary of any such disclosure made by management to the Company’s auditors and audit committee since September 30, 2006.

          (h) Each of the principal executive officer and principal financial officer of the Company (or each former principal executive officer and principal financial officer of the Company, as applicable) have made all certifications required by Rule 13a-14 and 15d-14 under the 1934 Act and Sections 302 and 906 of the Sarbanes-Oxley Act with respect to the Company SEC Documents, and the statements contained in any such certifications are true and correct. The Company has not made any extensions of credit to its executive officers. For purposes of this Agreement, “principal executive officer,” “principal financial officer” and “extensions of credit” shall have the meanings given to such terms in Section 402 of Sarbanes-Oxley Act.

          (i) Section 5.7 (i) of the Company Disclosure Letter describes, and the Company has delivered to Parent copies of the documentation creating or governing, all securitization transactions and other off-balance sheet arrangements (as defined in Item 303 of Regulation S-K of the SEC) that existed or were effected by the Company or its Subsidiaries since September 30, 2006.

     Section 5.8 Financial Statements . The audited consolidated financial statements and unaudited consolidated interim financial statements (including, in each case, any notes thereto)

of the Company included or incorporated by reference in the Company SEC Documents filed with the SEC fairly present in all material respects, in conformity with GAAP applied on a consistent basis (except as may be indicated in the notes thereto), the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates of such financial statements and their consolidated results of operations and cash flows for the periods then ended (subject to normal and recurring year-end audit adjustments in the case of any unaudited interim financial statements).

     Section 5.9 Disclosure Documents .

          (a) Each document required to be filed by the Company with the SEC or required to be distributed or otherwise disseminated to the Company’s stockholders in connection with the transactions contemplated by this Agreement (the “ Company Disclosure Documents ”), including the Schedule 14D-9, the proxy or information statement of the Company (the “ Company Proxy Statement ”), if any, and any amendments or supplements thereto, when filed, distributed or disseminated, as applicable, will comply as to form in all material respects with the applicable requirements of the 1934 Act.

          (b) Each Company Disclosure Document, at the time of the filing of such Company Disclosure Document or any supplement or amendment thereto and at the time of any distribution or dissemination thereof and, with respect to the Company Proxy Statement, at the time such stockholders vote on approval of the Merger, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The representations and warranties contained in this Section 5.9 will not apply to statements or omissions included in the Company Disclosure Documents based upon information furnished to the Company in writing by Parent or Merger Subsidiary specifically for use therein.

          (c) The information with respect to the Company or any of its Subsidiaries that the Company furnishes to Parent or Merger Subsidiary in writing specifically for use in the Schedule TO and the Offer Documents, at the time of the filing of the Schedule TO, at the time of any distribution or dissemination of the Offer Documents and at the time of the consummation of the Offer, will not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

     Section 5.10 Absence of Certain Changes . Since the Company Balance Sheet Date, the business of the Company and its Subsidiaries has been conducted in the ordinary course consistent with past practices, and there has not been (i) any event, occurrence, development or state of circumstances or facts that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company or (ii) any action taken by the Company or any of its Subsidiaries that, if taken during the period from the date of this Agreement through the Acceptance Time without Parent’s consent, would constitute a breach of Section 7.1 (other than Section 7.1(j)).

     Section 5.11 No Undisclosed Material Liabilities . There are no liabilities or obligations of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent,

absolute, determined, determinable or otherwise, and there is no existing condition, situation or set of circumstances that could reasonably be expected to result in such a liability or obligation, other than (i) liabilities or obligations disclosed and provided for in the Company Balance Sheet or in the notes thereto, (ii) liabilities or obligations incurred since the Company Balance Sheet Date in connection with the negotiation, execution, delivery or performance of this Agreement or the consummation of the transactions contemplated hereby, and (iii) liabilities or obligations that have not had and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company.

     Section 5.12 Litigation . As of the date of this Agreement, there is n