EXHIBIT 10.1 Merger Agreement - Execution Copy

MERGER

EXHIBIT 10.1

Merger Agreement - Execution Copy

AGREEMENT AND PLAN OF MERGER

by and among

JDS UNIPHASE CORPORATION,

JDS UNIPHASE ACQUISITION, INC.,

EPITAXX, INC. and

THE STOCKHOLDERS OF EPITAXX, INC.

October 1, 1999

LIST OF EXHIBITS

EXHIBIT A -- Form of Non-Competition and Confidentiality Agreement EXHIBIT B -- Form of Employment Agreement Amendment

AGREEMENT AND PLAN OF MERGER

This Agreement and Plan of Merger (this "Agreement") is entered into this 1st day of October, 1999 by and among JDS Uniphase Corporation, a Delaware corporation ("ACQUIROR"), JDS Uniphase Acquisition, Inc., a Delaware corporation ("Newco"), EPITAXX, INC., a Delaware corporation ("EPITAXX" or the "Company"), NSG Holding USA, Inc., a Delaware corporation and the principal stockholder of EPITAXX (the "Principal Stockholder"), and the persons executing this Agreement as stockholders of EPITAXX (together with the Principal Stockholder, the "Stockholders").

W I T N E S S E T H :

WHEREAS the Stockholders are the registered and beneficial owners of all of the issued and outstanding shares of capital stock of every kind and description of EPITAXX (said shares being herein referred to as the "EPITAXX Shares");

WHEREAS the parties wish to effect the acquisition of the Company by Acquiror through a merger of Newco with and into the Company on the terms and conditions set forth in this Agreement; and

WHEREAS this Agreement is intended to be a taxable transaction pursuant to the Internal Revenue Code of 1986, as amended (the "Code").

NOW THEREFORE, in consideration of the promises and of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, intending to be legally bound the parties hereby agree as follows:

ARTICLE I THE MERGER

SECTION 1.1 The Merger. On the basis of the representations, warranties and undertakings set forth in this Agreement, on the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the "DGCL"), Newco shall be merged with and into the Company (the "Merger"). The Merger shall occur at the Effective Time (as defined in Section 1.3). Following the Merger, the Company shall be the surviving corporation (the "Surviving Corporation") and the separate corporate existence of Newco shall cease.

SECTION 1.2 Conversion of EPITAXX Shares.

(a) At the Effective Time, by virtue of the Merger and without any action on the part of the Company, the Stockholders, Newco or Acquiror:

(i) All EPITAXX Shares outstanding immediately prior to the Effective Time shall be converted into and become the right to receive the Merger Consideration (as defined in Section 1.4 below).

(ii) Each share of the common stock of Newco, $0.001 par value per share ("Newco Common Stock"), outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of Class A Common Stock (as hereinafter defined).

(b) The Merger Consideration shall be allocated among the Stockholders in the manner set forth on Schedule 1.2(b).

SECTION 1.3 Effective Time. As soon as practicable after satisfaction or waiver of all conditions to the Merger set forth in this Agreement, but, in any event, no later than five (5) business days after such satisfaction or waiver (unless otherwise agreed in writing by the parties), the parties shall cause a certificate of merger (the "Certificate of Merger") with respect to the Merger to be filed and recorded in accordance with Section 251(c) of the DGCL, in form and content reasonably acceptable to the parties, and shall take all such further actions as may be required by law to make the Merger effective. The Merger shall be effective upon the filing and acceptance of the Certificate of Merger (the "Effective Time").

SECTION 1.4 Merger Consideration.

(a) The aggregate consideration payable by Acquiror in connection with the Merger (the "Merger Consideration") shall be (i) the number of unregistered shares of Acquiror's common stock, $0.001 par value per share ("Acquiror Common Stock"), equal to (A) Three Hundred Ninety-Nine Million Nine Hundred Ninety-Nine Thousand Dollars ($399,999,000) divided by the Market Value (as hereinafter defined) rounded to the nearest whole share (the "Total Acquiror Shares"), minus (B) the portion of such shares allocated to the outstanding Employee Options (as hereinafter defined) pursuant to subsection (f) below, and (ii) $1,000 payable in cash or cash equivalent. For the purposes of this Agreement, the term "Market Value" shall mean the average closing market price of one share of Acquiror Common Stock on the Nasdaq National Market (as reported in the Wall Street Journal, Eastern Edition) for the twenty (20) trading days ending on the third trading day prior to the Closing Date . For the purposes of this Agreement, the term "Exchange Ratio" shall mean the fraction obtained by dividing the Total Acquiror Shares by the number of EPITAXX Shares and the number of shares of the Company's capital stock subject to outstanding Employee Options.

(b) Cancellation of EPITAXX Shares Owned by EPITAXX. At the Effective Time, all shares of EPITAXX Class A Common Stock, par value $0.01 per share (the "Class A Common Stock") and EPITAXX Class B Common Stock, $0.01 par value per share (the "Class B Common Stock") that are owned by the Company as treasury stock prior to the Effective Time shall be canceled and extinguished without any conversion thereof.

(c) Adjustments to Exchange Ratio. The Exchange Ratio shall be adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Acquiror Common Stock), reorganization, recapitalization or other like change with respect to Acquiror Common Stock occurring after the date hereof and prior to the Effective Time.

(d) Fractional Shares. No fraction of a share of Acquiror Common Stock will be issued, but in lieu thereof each holder of EPITAXX Shares who would otherwise be entitled to a fraction of a share of Acquiror Common Stock (after aggregating all fractional shares of Acquiror Common Stock to be received by such holder) shall receive from Acquiror an amount of cash (rounded to the nearest whole cent) equal to the product of (i) such fraction, multiplied by (ii) the Market Value.

(e) Treatment of Restricted Shares. The EPITAXX Shares subject to restrictions pursuant to certain Restricted Stock Agreements (the "EPITAXX Stockholders' Agreements") by and between the Company and each of its individual stockholders shall be converted into shares of Acquiror Common Stock in accordance with the provisions set forth in this Section 1 without further restriction.

(f) Options. At the Effective Time, any and all outstanding and unexercised Employee Options shall cease to represent a right to acquire shares of the Company's capital stock and shall be converted automatically into options to purchase shares of Acquiror Common Stock ("Acquiror Options") in an amount and at an exercise price determined as provided below:

(i) The number of shares of Acquiror Common Stock subject to the new Acquiror Option shall be equal to the product of the number of EPITAXX Shares subject to the Employee Option and the Exchange Ratio; provided that any fractional shares of Acquiror Common Stock resulting from such multiplication shall be rounded down to the nearest share; and

(ii) The exercise price per share of Acquiror Common Stock under the Acquiror Option shall be equal to the quotient obtained by dividing the exercise price per EPITAXX Share subject to the Employee Option by the Exchange Ratio, provided that such exercise price shall be rounded to the nearest cent. For this purpose, each EPITAXX Share issuable pursuant to an Employee Option that is outstanding at the Effective Time will be deemed to be outstanding immediately prior to the Effective Time. From and after the Effective Time, the Stock Option Plans (as defined below) shall be assumed by Acquiror and shall continue in effect, provided that no further options shall be granted under the Stock Option Plans.

(iii) All shares of Acquiror Common Stock subject to each New Acquiror Option shall be included in Acquiror's Registration Statement on Form S-8 filed under the Securities Act of 1933, as amended (the "Securities Act"), which Acquiror shall file with the Securities and Exchange Commission no later than fifteen (15) days after the Effective Time, so as to permit the immediate resale of any Acquiror Common Stock issued upon exercise of a new Acquiror Option.

SECTION 1.5 Surrender of Certificates.

(a) Acquiror to Provide Common Stock and Cash. On the Closing Date, Acquiror shall make available for exchange in accordance with this Article I, (i) the shares of Acquiror Common Stock and cash issuable and payable, respectively, pursuant to Section 1.2(a) in exchange for the EPITAXX Shares outstanding immediately prior to the Effective Time, all of which EPITAXX Shares will be surrendered by the Stockholders at the Closing, and (ii) cash in an amount sufficient to permit payment of cash in lieu of fractional shares pursuant to Section 1.4(d).

SECTION 1.6 No Further Ownership Rights in Shares. All shares of Acquiror Common Stock issued upon the surrender and exchange of EPITAXX Shares in accordance with the terms hereof (including any cash paid in lieu of fractional shares) and the cash portion of the Merger Consideration shall be deemed to have been issued and paid in full satisfaction of all rights pertaining to such EPITAXX Shares, and there shall be no further registration of transfers on the records of the Surviving Corporation of EPITAXX Shares which were outstanding immediately prior to the Effective Time.

SECTION 1.7 Lost, Stolen or Destroyed Certificates. In the event any Certificates shall have been lost, stolen or destroyed, the Acquiror shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of Acquiror Common Stock (and cash in lieu of fractional shares) as may be required pursuant to Section 1.2; provided, however, that Acquiror may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed Certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Acquiror, the Surviving Corporation or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

SECTION 1.8 Tax And Accounting Consequences. It is intended by the parties hereto that the Merger shall constitute a taxable transaction under the Code. It is intended by the parties that the Merger shall be accounted for under the purchase method of accounting.

SECTION 1.9 Exemption from Registration. The shares of Acquiror Common Stock to be issued in connection with the Merger will be issued in a transaction exempt from registration under the Securities Act by reason of Section 4(2) thereof. The shares of Acquiror Common Stock delivered at the Closing will be "restricted securities" which have not been registered under the Securities Act of 1933, as amended, and must be held until they are either registered or an exemption from registration becomes available for their resale. The certificates representing such Acquiror Common Stock shall, when issued, include such restrictive legends as reasonably required by Acquiror evidencing the foregoing restrictions and any similar restrictions required by applicable state law. Acquiror shall use reasonable efforts to cause such Acquiror Common Stock to be registered under the Securities Act as provided in Section 6.3.

SECTION 1.10 Effects of the Merger. The Merger shall have the effects set forth in Sections 259, 260 and 261 of the DGCL .

SECTION 1.11 Certificate of Incorporation and By-laws. The Certificate of Incorporation and By-laws of the Company, in each case as in effect immediately prior to the Effective Time, shall be the Certificate of Incorporation and By-laws of the Surviving Corporation immediately after the Effective Time.

SECTION 1.12 Directors and Officers. The directors and officers of Newco immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation immediately after the Effective Time.

SECTION 1.13 Closing. Subject to the satisfaction or waiver of each of the conditions set forth in Articles VII and VIII of this Agreement, the closing of the transactions contemplated by this Agreement (the "Closing") shall take place at the offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., Xxx Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx immediately prior to the Effective Time (the date of the Closing, the "Closing Date").

At the Closing:

(a) The Company and the Stockholders shall deliver or cause to be delivered to Acquiror the following:

(i) Certificates for the EPITAXX Shares duly endorsed to Acquiror, or accompanied by separate stock assignments with the signature of each Stockholder duly guaranteed by a commercial bank or trust company or by a member of the New York Stock Exchange;

(ii) The certificates required by Sections 7.2, 7.3 and 7.5;

(iii) The opinion of counsel required by Section 7.6;

(iv) A copy of the resolutions of each of the Stockholders and the Board of Directors of each of the Company and the Principal Stockholder, certified by its Secretary, authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby and the acts of the officers and employees of the Company and the Principal Stockholder in carrying out the terms and provisions hereof; and

(v) All of the books, data, documents, instruments and other records relating to the Company including without limitation the original incorporation documents, foreign qualifications, by-laws, minute book, stock record book, contracts and agreements referred to in Article II, licenses, patent applications, trademark registrations and permits identified herein and all laboratory notebooks and other notes and records relating to the Company's intellectual property.

(b) Acquiror shall deliver or cause to be delivered to the Principal Stockholder and to the Representative (as defined in Section 12.16) the following:

(i) the Merger Consideration;

(ii) The certificates required by Sections 8.1 and 8.2;

(iii) The opinion of counsel required by Section 8.3; and

(iv) A copy of the resolutions of the Board of Directors of each of Acquiror and Newco, certified by their respective Secretary, authorizing and approving the execution, delivery and performance of this Agreement and the transactions contemplated hereby and the acts of the officers and employees of Acquiror and Newco in carrying out the terms and provisions hereof.

(i) The Certificate of Merger and the Non-Competition and Confidentiality Agreements referred to in Section 5.13 hereof; and

(ii) Such further documents, resolutions, certificates and instruments as any party or his, her or its counsel reasonably requests to facilitate the consummation of the transactions contemplated hereby.

SECTION 1.14 Further Assurances. At any time and from time to time after the Closing Date, at the request of Acquiror and without further consideration, each Stockholder will execute and deliver such other instruments of sale, transfer, conveyance, assignment and confirmation as may be reasonably requested in order to more effectively transfer, convey and assign to Acquiror and to confirm Acquiror's title to the EPITAXX Shares.

ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDER AND EPITAXX

In this Agreement, any reference to any event, change, condition or effect being "material" with respect to any entity means any material event, change, condition or effect related to the condition (financial or otherwise), properties, assets (including intangible assets), liabilities, business, operations or results of operations of such entity and its subsidiaries, taken as a whole. In this Agreement, any reference to a "Material Adverse Effect" with respect to any entity means any event, change or effect that is materially adverse to the condition (financial or otherwise), properties, assets, liabilities, business, operations or results of operations of such entity and its subsidiaries, taken as a whole. In this Agreement, any reference to "Material Adverse Change" with respect to any entity means any change which is, individually or in the aggregate, materially adverse to the business, operations, properties, assets, liabilities or condition (financial or otherwise) of such entity and its subsidiaries, taken as a whole. Whenever the term "to the Company's knowledge" or similar expression appears in any representation or warranty in this Article II, it means to the actual knowledge of the officers and directors of the Company and all management employees of the Company having responsibility for the area of operations of the Company's business or the financial or legal matters as to which the issue of knowledge relates under this Agreement (all such persons, "Knowledge Parties"). Whenever the term "the Company has received no notice" or like expression appears in any representation or warranty in this Article II, it means that none of the Knowledge Parties has received actual oral or written notice of the matter to which such term is applied.

As an inducement to Acquiror to enter into this Agreement and to consummate the transactions contemplated hereby, the Principal Stockholder hereby represents and warrants to Acquiror that:

SECTION 2.1 Title to EPITAXX Shares. The Principal Stockholder owns such EPITAXX Shares beneficially and of record set forth opposite its name, free and clear of all liens, encumbrances, claims, charges, security interests, pledges, restrictions or rights in others (collectively, "Liens"), in the manner specified on Schedule 1.2(b).

The Company and the Principal Stockholder, jointly and severally, represent and warrant to the Acquiror as follows:

SECTION 2.3 Capitalization. The authorized, issued and outstanding capital stock of EPITAXX consists on the date hereof, and will on the Closing Date consist solely of, 12,500,000 authorized shares of Class A Common Stock, of which 25,200 shares are issued and outstanding and owned by the Stockholders, free and clear of all Liens, as set forth on Schedule 2.3 delivered by the Company to the Acquiror concurrently with the execution of this Agreement; 7,500,000 authorized shares of Class B Common Stock, of which 5,088,000 shares are issued and outstanding and owned by the Principal Stockholder, free and clear of all Liens, as set forth on Schedule 2.3; and 5,000,000 authorized shares of Preferred Stock, of which no shares are issued and outstanding, in each case with no personal liability attaching to the ownership thereof. All of such shares are duly authorized, validly issued, fully paid and non- assessable and were issued in full compliance with all federal, state and local rules, laws and regulations. The designations, powers, preferences, rights, qualifications, limitations and restrictions in respect of each class and series of authorized capital stock of EPITAXX are as set forth in EPITAXX's Certificate of Incorporation, as amended, a true, correct and complete copy of which has been provided to Acquiror, and all such designations, powers, preferences, rights, qualifications, limitations and restrictions are valid, binding and enforceable in accordance with all applicable laws. There are, and at the Closing Date there will be, no shares held in the corporate treasury of EPITAXX and no shares reserved for issuance. Except as set forth on Schedule 2.3, as of the date hereof there are, and as of the Closing Date there will be, no outstanding subscriptions, options, warrants, rights, calls or convertible securities, stock appreciation rights (phantom or otherwise), joint venture, partnership or other commitments of any nature relating to shares of the capital stock of the Company. As of the date hereof there is, and as of the Closing Date the Company will have, no obligation (contingent or other) to purchase, redeem or otherwise acquire any of its equity securities or any interest therein or to pay any dividend or make any other distribution in respect thereof. All stock option plans maintained by the Company relating to options to purchase shares of the Company's capital stock, true, complete and correct copies of which have been previously delivered to Acquiror, are herein sometimes referred to as the "Stock Option Plans." All options to purchase shares of the capital stock of the Company issued pursuant to the Stock Option Plans, or otherwise, and listed on Schedule 2.3 are herein sometimes referred to as "Employee Options." As of the Effective Time, other than the Employee Options, the Company will have no outstanding options, warrants or other rights to purchase any shares of the Company's capital stock or any securities convertible into or exchangeable for such capital stock.

SECTION 2.4 Organization and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and is duly licensed or qualified to transact business as a foreign corporation in each jurisdiction listed on Schedule 2.4 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, such jurisdictions being the only jurisdictions in which the nature of the Company's business or the character of the properties owned or leased by the Company requires such licensing or qualification and where the failure to be so licensed or qualified would have a Material Adverse Effect on the Company.

SECTION 2.5 Subsidiaries. The Company has no subsidiaries other than a foreign sales corporation, EPITAXX FSC, Inc., a U.S. Virgin Island corporation (the `Subsidiary"), which is not a material subsidiary. The Company holds beneficially and of record all of the outstanding capital stock of the Subsidiary. Except for the Subsidiary, the Company holds no equity or other interest in any corporation, partnership, limited liability company, trust or other entity. Except as set forth on Schedule 2.5 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, the Company has not (i) made any investment in or advance of cash to any entity or (ii) entered into any joint venture arrangement or agreement with any party. The Subsidiary is a corporation duly organized, validly existing and in good standing under the laws of the United States Virgin Islands, and is and is duly licensed or qualified to transact business as a foreign corporation in each jurisdiction where the failure to be so licensed or qualified would have a Material Adverse Effect on the Company.

SECTION 2.6 Corporate Power and Authority. The Company has the corporate power and authority to own and hold its properties and to carry on its business as presently conducted and contemplated to be conducted. The Company has the corporate power and authority to execute, deliver and perform this Agreement and the other documents and instruments contemplated hereby. The execution, delivery and performance of this Agreement and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by the board of directors and stockholders of the Company, and no further corporate or stockholder action is required thereby to consummate the transactions contemplated hereby. Upon the filing of the Merger Certificate with the Secretary of State for the State of Delaware, the Merger shall be immediately and automatically effective without further action by any person or entity. This Agreement, and each of the other agreements, documents and instruments to be executed and delivered by the Company pursuant hereto have been duly executed and delivered by, and constitute the legal, valid and binding obligation of, the Company and are enforceable against the Company in accordance with their terms.

SECTION 2.7 Validity, Etc. Except as set forth on Schedule 2.7 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, neither the execution and delivery of this Agreement and the other documents and instruments contemplated hereby, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement and such other agreements in compliance with the material terms and conditions hereof and thereof will (i) violate, conflict with or result in any material breach of any trust agreement, Certificate of Incorporation, or bylaw, applicable to the Company, (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, other than any notification and approval required under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx "XXX Xxx"), (xxx) violate, conflict with or result in a material breach of, default under, amendment of, or acceleration or termination of any indebtedness, mortgage, indenture, note, license, agreement or other instrument or obligation related to the Company or any of its assets or the consummation of the transactions contemplated hereby or thereby, except for such defaults (or rights of termination, cancellation or acceleration) as to which requisite valid and binding waivers or consents have been obtained in writing and provided to Acquiror, (iv) violate any order, writ, injunction, decree, statute, law, permit, license rule or regulation applicable to the Company or (v) result in the creation of any claim upon the EPITAXX Shares or any assets of the Company.

SECTION 2.8 Financial Statements. The Company has previously furnished to Acquiror, the balance sheet of the Company at August 31, 1999 (the "Balance Sheet") and at March 31, 1998 and March 31, 1999 and the related statements of income and cash flow and notes thereto for the fiscal years ended March 31, 1998 and March 31, 1999 and for the five-month period ended August 31, 1999 . All such financial statements (the "Financial Statements") have been prepared in accordance with generally accepted accounting principles ("GAAP") consistently applied in accordance with the Company's past practices (with the exception of the lack of notes thereto for the interim Financial Statements) and were prepared from the books and records of the Company, which books and records are complete and correct in all material respects and accurately reflect in all material respects all transactions of the Company's business. The Financial Statements fairly present the financial position of the Company as of the dates thereof, and the results of its operations and cash flows for the periods ended on the dates thereof, subject to normal year-end audit adjustments. The reserves set forth in the Financial Statements are appropriate and adequate for the purposes for which they were established. Schedule 2.8 delivered by the Company to the Acquiror concurrently with the execution of this Agreement sets forth all assets which the Company believes could become impaired.

SECTION 2.9 No Undisclosed Liabilities. The Company has no liabilities or obligations of any nature except (a) liabilities which are fully reflected or reserved against in the Balance Sheet, (b) liabilities incurred in the ordinary course of business operations since the date of the Balance Sheet, and (c) liabilities or obligations occurring prior to the date of the Balance Sheet which, pursuant to GAAP consistently applied in accordance with past practices of the Company are not required to be set forth in the Balance Sheet.

SECTION 2.10 Absence of Certain Changes. Since the date of the Balance Sheet, the Company has conducted its business only in the ordinary course consistent with past practices and there has not occurred: (i) any change, event or condition (whether or not covered by insurance) that has resulted in, or might reasonably be expected to result in, a Material Adverse Effect to the Company; (ii) any acquisition, sale or transfer of any asset of the Company, other than sales of inventory in the ordinary course of business; (iii) any change in accounting methods or practices (including any change in depreciation or amortization policies or rates) by the Company or any revaluation by the Company of any of its assets; (iv) any Material Contract (as hereinafter defined) entered into by the Company, or any termination or amendment of, any Material Contract; (v) any amendment to the Company's Certificate of Incorporation or Bylaws; (vi) any increase in or modification of the compensation or benefits payable or to become payable by the Company to any of its officers, directors or employees other than in the ordinary course of business consistent with past practices; or (vii) any issuance, sale or pledge of (A) additional shares of the Company's capital stock of any class (including the Company Shares), or securities convertible into any such shares, or any rights, warrants or options to acquire any such shares or other convertible securities, or grant or accelerate any right to convert or exchange any securities of the Company for shares of capital stock of the Company, or (B) any other securities in respect of, in lieu of or in substitution for shares outstanding on the date thereof; (vii) any redemption, purchase or other acquisition of, any of the Company's outstanding securities (including the EPITAXX Shares); (viii) any declaration, set aside, or payment of any dividend or distribution (whether in cash, stock or property) on or in respect of any share of capital stock of the Company; (ix) any incurrance of any long-term debt for borrowed money or any short-term debt for borrowed money other than in the ordinary course of business consistent with past practice and not in excess of $50,000; (x) any capital expenditures or commitments thereto in excess of $100,000, individually or in the aggregate; (xi) any entering into of any new employment agreements with any officers, directors or employees; (xii) any loan or advance to any of the Company's officers, directors, consultants, agents or employees or to any member of their families or any other loan or advance otherwise than in the ordinary course of business; (xiii) any charitable contributions or any non-business expense; (xiv) mortgaging, pledging or encumbering any of its assets; (xv) any commencing, settling or compromising of any litigation; (xvi) any hiring or termination of employees, other than in the ordinary course of business consistent with past practices; (xvii) any agreement in writing or orally to take any of the foregoing actions; or (xviii) any negotiation by the Company to do any of the things described in the preceding clauses (i) through (xvii) (other than negotiations with Acquiror and its representatives regarding the transactions contemplated by this Agreement).

SECTION 2.11 Inventories; Products. All of the Company's inventory reflected on the Balance Sheet or thereafter acquired (and not subsequently sold in the ordinary course of business) consist of items of a quality and quantity useable or saleable in the ordinary course of the Company's business. Each item of such inventory is valued on the Balance Sheet at the lower of cost or market, by the first-in first-out method, in accordance with GAAP. The Company's inventories and supplies are on the date hereof, and will be on the Closing Date, at normal and adequate levels for the continuation of such business in the ordinary course of business consistent with past practice. There is, to the knowledge of the Company, no design defect materially adverse to the functionality of any of the Company's products which have been shipped to customers (other than products shipped for testing purposes) and, to the knowledge of the Company, each of such products contains adequate warnings, presented in a reasonably prominent manner, in accordance with applicable laws, rules and regulations and current industry practice with respect to its contents and use.

SECTION 2.12 Accounts Receivables. Subject to any reserves set forth in the Balance Sheet, the accounts receivable set forth on the Balance Sheet represent bona fide claims against debtors for sales and other charges, are collectible in the ordinary course of business consistent with past practices and are not subject to discount except for normal cash and immaterial trade discounts. The amount reserved for doubtful accounts and allowances disclosed in the Balance Sheet is sufficient to provide for any losses which may be sustained on realization of the receivables.

SECTION 2.13 Taxes.

(a) Definitions. For purposes of this Agreement:

(i) The term "Group" shall mean, individually and collectively, (1) the Company, (2) the Principal Stockholder, and (3) any individual, trust, corporation, partnership or any other entity as to which the Company is liable for Taxes incurred by such individual or entity either as transferee, pursuant to Treasury Regulations Section 1.1502-6, or pursuant to any other provision of federal, territorial, state, local or foreign law or regulations.

(ii) The term "Taxes" shall mean all taxes, however denominated, including any interest, penalties or other additions to tax that may become payable in respect thereof, imposed by any federal, territorial, state, local or foreign government or any agency or subdivision of any such government, which taxes shall include, without limiting the generality of the foregoing, all income or profits taxes (including, but not limited to, federal income taxes and state income taxes), payroll and employee withholding taxes, unemployment insurance, social security taxes, sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation, Pension Benefit Guaranty Corporation premiums and other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing, which the Group is required to pay, withhold or collect.

(iii) The term "Returns" shall mean all reports, estimates, declarations of estimated tax, information statements and returns relating to, or required to be filed in connection with, any Taxes, including information returns or reports with respect to backup withholding and other payments to third parties.

(b) Returns Filed and Taxes Paid. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement: All Returns required to be filed by or on behalf of members of the Group have been duly filed on a timely basis and such Returns are true, complete and correct. All Taxes shown to be payable on the Returns or on subsequent assessments with respect thereto have been paid in full on a timely basis, and no other Taxes are payable by the Group with respect to items or periods covered by such Returns (whether or not shown on or reportable on such Returns) or with respect to any period prior to the date of this Agreement or an adequate reserve established therefor. Each member of the Group has withheld and paid over all Taxes required to have been withheld and paid over, and complied with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with amounts paid or owing to any employee, creditor, independent contractor, or other third party.

(c) Pre-Closing Date Tax Liabilities Paid. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, the Acquiror has paid or will pay any and all taxes which are imposed on the Company in respect of its income, business, property or operations or for which the Company may otherwise be liable (i) for any taxable period ending prior to the Closing Date, (ii) for the portion of a Straddle Period (as hereinafter defined) ending on the Closing Date, (iii) resulting by reason of the several liability of the Company pursuant to Treasury Regulations section 1.1502-6 or any analogous state, local or foreign law or regulation or by reason of the Company having been a member of any consolidated, combined or unitary group on or prior to the Closing Date, (iv) resulting from the Company ceasing to be a member of the affiliated group (within the meaning of Section 1504(a) of the Code) that includes Principal Stockholder, (v) in respect of any post-Closing Date period, attributable to events, transactions, sales, deposits, services or rentals occurring, received or performed in a pre-Closing Date period, (vi) in respect of any post-Closing Date period, attributable to any change in accounting method employed by the Company during any of its four previous taxable years, (vii) in respect of any post-Closing Date period, attributable to any items of income or gain of a partnership reporting the Company as a partner, to the extent such items are properly attributable to periods of the partnership ending on or before the Closing Date, (viii) attributable to any discharge of indebtedness that may result from any capital contributions by Principal Stockholder (or an affiliate of Principal Stockholder) to the Company of any intercompany indebtedness owed by the Company to Principal Stockholder (or an affiliate of Principal Stockholder), and (ix) resulting from the making of the Code Section 338 election (or analogous provision of state, local or territorial law); provided, however, that Principal Stockholder's liability under the foregoing provisions of this paragraph shall be reduced as to any item to the extent that such item was specifically and fully reserved for in the Closing Balance Sheet. For purposes of this Agreement, "Straddle Period" means a taxable period which includes, but does not begin or end on, the Closing Date.

(d) Tax Reserves. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, the amount of the Company's liability for unpaid Taxes for all periods ending on or before the date of this Agreement does not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred Taxes) solely with respect to the Company, as such accruals are reflected on the Balance Sheet, and the amount of the Company's liability for unpaid Taxes for all periods ending on or before the Closing Date shall not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred Taxes), as such accruals are reflected on the Balance Sheet, as adjusted for operations and transactions in the ordinary course of business since the Balance Sheet date in accordance with past custom and practice.

(e) Returns Furnished. Acquiror has been furnished by Principal Stockholder or the Company true and complete copies of (i) relevant portions of income tax audit reports, statements of deficiencies, closing or other agreements received by the Group or on behalf of the Group relating to Taxes, and (ii) all federal and state income or franchise tax returns of the Company (or including the Company) for all periods ending on and after 1995. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, the Company is not obligated to file Returns in any jurisdiction other than those jurisdictions for which Returns have been furnished to Acquiror.

(f) Tax Deficiencies; Audits; Statutes of Limitations. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement: The returns of the Group have never been audited by a government or taxing authority, nor is any such audit in process, pending or threatened (either in writing or verbally, formally or informally). No deficiencies exist or have been asserted (either in writing or verbally, formally or informally) or are expected to be asserted with respect to taxes of the Group, and no member of the Group has received notice (either in writing or verbally, formally or informally) or expects to receive notice that it has not filed a return or paid taxes required to be filed or paid by it. The Group is neither a party to any action or proceeding for assessment or collection of taxes, nor has such event been asserted or threatened (either in writing or verbally, formally or informally) against the Group or any of its assets. No waiver or extension of any statute of limitations is in effect with respect to taxes or returns of the Group.

(g) Tax Sharing Agreements. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, the Company is not liable for the taxes of any person pursuant to any tax allocation or tax sharing agreement or pursuant to any other contract. The Principal Stockholder and the Company shall, as of the Closing Date, terminate all tax allocation agreements or tax sharing agreements with respect to the Company, shall cause any payments required thereunder to be made, and shall ensure that such agreements are of no further force or effect as to the Company on and after the Closing Date and there shall be no further liability of the Company under any such agreement.

(h) Tax Elections and Special Tax Status. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement: (A) the Company has not entered into any compensatory agreements with respect to the performance of services which payment thereunder would result in a nondeductible expense to the Group pursuant to Sections 162(m) or 280G of the Code or an excise tax to the recipient of such payment pursuant to Section 4999 of the Code; (B) neither the Company nor its Subsidiary has participated in an international boycott as defined in Code Section 999; (C) The Company has not agreed, nor is it required to make, any adjustment under Code Section 481(a) by reason of a change in accounting method or otherwise; (D) neither the Company nor its Subsidiary has a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States of America and such foreign country; (E) neither the Company nor its Subsidiary is a party to any joint venture, partnership or other agreement, contract or arrangement (either in writing or verbally, formally or informally) which could be treated as a partnership for federal income tax purposes; (F) the Company and its Subsidiary are in compliance with the terms and conditions of any applicable Tax exemptions, Tax agreements or Tax orders of any government to which it may be subject or which it may have claimed, and the transactions contemplated by this Agreement will not have any material effect on such compliance; and (F) the Subsidiary is, and since its inception has been, an "FSC" within the meaning of Section 922 of the Code.

(i) Tax Attributes. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement: (A) no portion of any consolidated loss carryover or consolidated credit carryover of the Group is allocable to the Company; or (B) the Company has no net operating losses or other tax attributes presently subject to limitation under Code Sections 382, 383, or 384, or the federal consolidated return regulations.

(j) Section 6038A Compliance. Except as disclosed in Schedule 2.13 delivered by the Company to the Acquiror concurrently with the execution of this Agreement: (A) the Company has filed all reports and has created and/or retained all records required under Section 6038A of the Code with respect to its ownership by and transactions with related parties; (B) each related foreign person required to maintain records under Section 6038A with respect to transactions between the Company and the related foreign person has maintained such records; (C) all documents that are required to be created and/or preserved by the related foreign person with respect to transactions with the Company are either maintained in the United States, or the Company is exempt from the record maintenance requirements of Section 6038A with respect to such transactions under Treasury Regulation section 1.6038A-1; (D) the Company is not a party to any record maintenance agreement with the Internal Revenue Service with respect to Section 6038A; and (E) each related foreign person that has engaged in transactions with the Company has authorized the Company to act as its limited agent solely for purposes of Sections 7602, 7603, and 7604 of the Code with respect to any request by the Internal Revenue Service to examine records or produce testimony related to any transaction with the Company, and each such authorization remains in full force and effect.

(k) Section 338 Election. The Principal Stockholder has the authority under the Code (and under similar provisions of state law) to consent to an election under Code Section 338(h)(10) and similar state elections with respect to any transaction constituting a "qualified stock purchase" of the Company.

SECTION 2.14 Litigation. Except as set forth on Schedule 2.14 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, there is no private or governmental action, suit, proceeding, claim, arbitration or investigation pending before any agency, court or tribunal, foreign or domestic, or to the knowledge of the Company, threatened against the Company or any of its properties or any of its officers or directors (in their capacity as such). There is no judgment, decree or order against the Company, or, to the knowledge of the Company, any of its directors or officers (in their capacities as such), that could prevent, enjoin, alter or materially delay any of the transactions contemplated by this Agreement, or that could reasonably be expected to have a Material Adverse Effect on the Company. Schedule 2.14 also lists all litigation that the Company has pending against other parties.

SECTION 2.15 Certain Practices. Neither the Company nor any of its directors, officers or employees has, directly or indirectly, given or agreed to give any significant rebate, gift or similar benefit to any supplier, customer, governmental employee or other person who was, is or may be in a position to help or hinder the Company (or assist in connection with any actual or proposed transaction) which (i) could subject the Company or Acquiror to any damage or penalty in any civil, criminal or governmental litigation or proceeding, or (ii) if not continued in the future, could reasonably be expected to have a Material Adverse Effect on the Company.

SECTION 2.16 Compliance with Law. The Company is not subject to any judgment, order, writ, injunction, or decree that materially adversely affects, individually or in the aggregate, its businesses, operations, properties, assets or condition (financial or otherwise). The Company has complied with and is not in default under, all laws, ordinances, legal requirements, rules, regulations and orders applicable to it, its operations, properties, assets, products and services except where the lack of compliance could not have a Material Adverse Effect on the Company. There is no existing law, rule, regulation or order, and the Company is not aware of any proposed law, rule, regulation or order, whether federal or state, which would prohibit or materially restrict the Company or Acquiror from, or otherwise have a Material Adverse Effect on the Company or Acquiror in, conducting the Company's business in any jurisdiction in which such business is now conducted or proposed to be conducted.

SECTION 2.17 Licenses, Permits and Regulatory Approvals. The Company has obtained each federal, state, county, local or foreign governmental consent, license, permit, grant or other authorization (i) pursuant to which the Company currently operates or holds any interest in any of its properties or (ii) that is required for the operation of its business or the holding of any such interest (the forgoing collectively called the "Governmental Authorizations"), and all of such Governmental Authorizations are in full force and effect, except where the failure to obtain or have any such Governmental Authorizations could not reasonably be expected to have a Material Adverse Effect on the Company.

SECTION 2.18 Labor and Employee Relations. The Company is not a party to or bound by any collective bargaining agreement with any labor organization, group or association covering any of its employees, and the Company has no knowledge of any attempt to organize any of its employees by any person, unit or group seeking to act as their bargaining agent. There are no pending or threatened charges (by employees, their representatives or governmental authorities) of unfair labor practices or of employment discrimination or of any other wrongful action with respect to any aspect of employment of any person employed or formerly employed by the Company. No union representation elections relating to employees of the Company have been scheduled by any governmental agency or authority, no organizational effort is being made with respect to any of such employees, and there is no investigation of the Company's employment policies or practices by any governmental agency or authority pending or threatened. The Company is not currently, and has not within the last three years been, involved in labor negotiations with any unit or group seeking to become the bargaining unit for any of its employees. The Company has not experienced any work stoppages during the last three years, and no work stoppage is planned.

SECTION 2.19 Certain Employees. Schedule 2.19 delivered by the Company to the Acquiror concurrently with the execution of this Agreement sets forth a list of all of the Company's current employees and consultants, together with the title or job classification of each such person and the base annual and the total compensation of such person as of September 22, 1999. The increases, if any, in the base annual and the total compensation to be paid to such person in fiscal year 2000 shall be consistently given in the ordinary course of business, in accordance with past practices. Except as specifically described on Schedule 2.19, none of such persons has an employment agreement or understanding, whether oral or written, with the Company which is not terminable on notice by the Company without cost or other liability to the Company. No person listed on Schedule 2.19 with an annual salary of at least $75,000 has indicated that he or she intends to terminate his or her employment with the Company or seek a material change in his or her duties or status. All employees and consultants of the Company have executed and delivered to the Company nondisclosure and proprietary inventions agreements, in the forms previously provided to the Acquiror by the Company, all of which agreements are, and after the Effective Time will be, in full force and effect, binding upon and enforceable against the parties thereto.

SECTION 2.20 Employee Benefits.

(a) Schedule 2.20 delivered by the Company to the Acquiror concurrently with the execution of this Agreement lists (i) all "employee benefit plans" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), (ii) all employment agreements, including, but not limited to, any individual benefit arrangement, policy or practice with respect to any current or former employee or director of the Company, and (iii) all other employee benefit, bonus or other incentive compensation, stock option, stock purchase, stock appreciation, severance pay, lay-off or reduction in force, change in control, sick pay, vacation pay, salary continuation, retainer, leave of absence, educational assistance, service award, employee discount, fringe benefit plans, arrangements, policies or practices, whether legally binding or not, to which the Company maintains, contributes to or has any obligation to or liability for (collectively, the "Plans"). Each Plan provides that it may be amended or terminated at any time and, except for benefits protected under Section 411(d) of the Code, all benefits payable to current or terminated employees or any beneficiary may be amended or terminated by Seller at any time without liability.

(b) None of the Plans for any "employment benefit plan", as that term is used in Section 2.20(a), or any trade or business, whether or not incorporated, which would be treated as a single employer under Section 4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as amended (the "Code") ("Member of the Controlled Group") is (i) a plan described in Section 3(35) of ERISA or a plan subject to the minimum funding standards set forth in Section 302 of ERISA and Section 412 of the Code ("Defined Benefit Plan") or (ii) a plan described in Section 3(37) of ERISA ("Multiemployer Plan") and neither the Company nor any Member of the Controlled Group has ever sponsored, maintained or contributed to, or been obligated to contribute to, a Defined Benefit Plan or contributed to, or been obligated to contribute to, a Multiemployer Plan.

(c) The Company does not maintain or contribute to any welfare benefit plan that provides health benefits to an employee after the employee's termination of employment or retirement except as required under Section 4980B of the Code and Sections 601 through 608 of ERISA.

(d) Each Plan which is an "employee benefit plan", as defined in Section 3(3) of ERISA, has complied in all material respects since its inception by its terms and in operation with the requirements provided by any and all statutes, orders or governmental rules or regulations currently in effect and applicable to the Plan, including but not limited to ERISA and the Code. No investigations or audits by a governmental entity, or other actions, demands, proposals, negotiations or claims with respect to any Plan have occurred, or are pending, threatened or imminent against any employer who is participating (or who has participated) in any Plan or any fiduciary (as defined in Section 3(21) of ERISA) of the Plan or which otherwise concern matters covered or that would be covered by the Plans.

(e) Each Plan intended to qualify under Section 401(a) of the Code is the subject of a favorable determination letter issued by the Internal Revenue Service, which provides that it so qualifies through the last day of the "TRA 86 Remedial Amendment Period," as such term is defined in Section 3.02 of Revenue Procedure 96-55 issued by the Internal Revenue Service. To the Company's knowledge, nothing has occurred since the date of the Internal Revenue Service's favorable determination letter that could adversely affect the qualification of the Plan and its related trust. The Company has timely and properly applied for a written determination by the Internal Revenue Service on the qualification of each such Plan and its related trust under Section 401(a) of the Code, as amended by the Tax Reform Act of 1986 and subsequent legislation enacted through the date hereof, and Section 501 of the Code.

(f) True, correct and complete copies of (i) all documents creating or evidencing any Plan listed in Schedule 2.20, (ii) all reports, forms and other documents required to be filed with any governmental entity (including, without limitation, summary plan descriptions, Forms 5500 and summary annual reports for all plans subject to ERISA), and (iii) the latest favorable letters of determination from the Internal Revenue Service with respect to the Plans that are intended to qualify under Section 401(a) of the Code have been delivered to Acquiror.

(g) All expenses and liabilities relating to all of the Plans described in Schedule 2.20 have been, and will on the Closing Date be, fully and properly accrued on the Company's books and records and disclosed on the current Financial Statements and such Plans have no unfunded liabilities not reflected on such current Financial Statements.

SECTION 2.21 Title to Property. The Company has good and marketable title to all of its properties, interests in properties and assets, real and personal, reflected in the Balance Sheet or acquired after the date of the Balance Sheet (except properties, interests in properties and assets sold or otherwise disposed of since the date of the Balance Sheet in the ordinary course of business), or with respect to leased properties and assets, valid leasehold interests in, free and clear of all Liens of any kind or character, except (i) the Lien of current taxes not yet due and payable, (ii) such imperfections of title, Liens and easements as do not and will not materially detract from or interfere with the use of the properties subject thereto or affected thereby, or otherwise materially impair business operations involving such properties and (iii) Liens securing debt which is reflected on the Balance Sheet. The fixed assets, plants, property and equipment of the Company that are used in the operations of its business are in good operating condition and repair, subject to normal wear and tear. All properties used in the operations of the Company are reflected in the Balance Sheet to the extent GAAP applied on a consistent basis require the same to be so reflected. Schedule 2.21 delivered by the Company to the Acquiror concurrently with the execution of this Agreement identifies each parcel of real property owned or leased by the Company.

SECTION 2.22 Environmental Matters.

(a) Without limiting Section 2.16, at all times the Company and its Subsidiary and their businesses and operations have complied in all material respects with all applicable Environmental Laws (as hereinafter defined) adopted, imposed or promulgated by any governmental or regulatory entity having jurisdiction over any property at any time occupied, owned or leased by the Company or the Subsidiary. Except as set forth on Schedule 2.22 delivered by the Company to the Acquiror concurrently with the execution of this Agreement (i) the Company and the Subsidiary have never and do not currently generate, use, transport, handle or store any Hazardous Materials (as hereinafter defined), the proper disposal of which has or will require any material expenditure by the Company, (ii) there has been no generation, use, handling, storage or disposal of any Hazardous Materials in violation of common law or any applicable Environmental Law at any site or premises owned, occupied or leased, at any time, by the Company or the Subsidiary, nor (iii) has there been or is there threatened any release of any Hazardous Materials on or at any such site or premises in violation of common law or any applicable Environmental Law or which created or will create an obligation to report or remediate such release, which release or failure to report or remediate could have a Material Adverse Effect on the Company. All environmental licenses, permits, clearances, covenants and authorizations required for the Business have been obtained by the Company and are in full force and effect. No wastes generated by the Company or Subsidiary have ever been sent directly or, to the Company's knowledge, indirectly to any site listed or formally proposed for listing federal or state list of hazardous substances sites requiring investigation or clean-up. Except as set forth on Schedule 2.22 delivered by the Company to the Acquiror concurrently with the execution of this Agreement, the Company has no knowledge that any property at any time occupied, owned or leased by the Company or Subsidiary, including, without limitation, the soil and groundwater on or under such property, has been contaminated by Hazardous Materials. Neither the Company nor the Subsidiary has received from any governmental authority or third party any requests for information, notices of claim, demand letters, or other notification that they or it are or is or may be potentially responsible with respect to any investigation or clean-up of Hazardous Materials. There is no fact or circumstance that to the knowledge of the Company would be likely to involve the Company, Subsidiary or Acquiror in any environmental litigation or proceeding or impose any environmental liability upon the Company, Subsidiary or Acquiror.

(b) The Company has previously made available to the Acquiror copies of (i) all environmental surveys and audits, risk assessments, tests and reports in its possession (or reasonably obtainable by it) performed with respect to the property currently occupied, owned or leased by the Company or the Subsidiary by or on behalf of the Company or the Subsidiary (including, without limitation, all soil and groundwater surveys, tests and reports), (ii) all other documents in its possession (or reasonably obtainable by it) concerning any environmental or health and safety matter that could have a Material Adverse Effect on the Company, if any, and (iii) copies of any documentation in its possession (or reasonably obtainable by it) regarding off-site disposal of Hazardous Materials, spill control plans and material correspondence with any governmental agency regarding the foregoing.

(c) As used in this Agreement, the term "Hazardous Materials" shall mean any pollutant, hazardous substance, hazardous material, hazardous waste or toxic waste, as defined in or regulated by any current Environmental Law. The term "Environmental Laws" means any federal, state or local statute, law, regulation, rule or ordinance, and any judicial interpretation thereof, regulating the use, generation, handling, storage, transportation, discharge, emission, spillage or other release of Hazardous Materials or relating to the protection of the environment.

SECTION 2.23 Insurance. The Company is, and will be through the Closing, adequately insured with responsible insurers in respect of its properties, assets and businesses against risks normally insured against by companies in similar lines of business under similar circumstances. Schedule 2.23 delivered by the Company to the Acquiror concurrently with the execution of this Agreement correctly describes (by type and amount of coverage) the insurance coverage carried by the Company, which insurance will remain in full force and effect with respect to all events occurring prior to the Closing. The Company has not failed to give any notice or present any claim under any such policy or binder in due and timely fashion, has not received notice of cancellation or non-renewal of any such policy or binder, is not aware of any threatened or proposed cancellation or non-renewal of any such policy or binder, has not received notice of any insurance premiums which will be materially increased in the future, nor is aware of any insurance premiums which will be materially increased in the future. There are no outstanding claims under any such policy which have gone unpaid for more than 45 days, or as to which the insurer has disclaimed liability.

SECTION 2.24 Material Contracts.

(a) Schedule 2.24(a) delivered by the Company to the Acquiror concurrently with the execution of this Agreement sets forth a description of all Material Contracts. Except as disclosed in Schedule 2.24(a), all of the Material Contracts are valid, binding and enforceable in accordance with their terms and in full force and effect. Except as otherwise indicated on Schedule 2.24(a), the Company is not, and to the knowledge of the Company, no other party to such Material Contracts is, in material default thereunder, and to such knowledge, no event has occurred or is threatened to occur, which, with or without the lapse of time or the giving of notice or both, would constitute a material default thereunder. For the purposes of this Agreement, the term "Material Contract" shall mean:

(i) any agreement or series of related agreements requiring aggregate payments after the date hereof by or to the Company of more than $50,000;

(ii) any agreement with any labor union or association representing any employee of the Company;

(iii) any agreement for the purchase or sale of materials, supplies, equipment, merchandise or services that contains an escalation, renegotiation or redetermination clause or that obligates the Company to purchase all or substantially all of its requirements of a particular product from a supplier, or for periodic minimum purchases of a particular product from a supplier;

(iv) any agreement for sale of any of the assets or properties of the Company other than in the ordinary course of business or for the grant to any person of any options, rights of first refusal, or preferential or similar rights to purchase any such assets or properties;

(v) any partnership, joint venture or similar agreement;

(vi) any agreement of surety, guarantee or indemnification, other than agreements in the ordinary course of business with respect to obligations in an aggregate amount not in excess of $50,000;

(vii) any agreement containing covenants of the Company not to compete in any line of business, in any geographic area or with any person or covenants of any other person not to compete with the Company or in any line of business of the Company;

(viii) any license relating to Company Proprietary Rights (as hereinafter defined) and any other agreement granting or restricting the right of the Company to use any Company Proprietary Rights or other intellectual or intangible property;

(ix) any agreement relating to the acquisition by the Company of any operating business or the capital stock of any other person;

(x) any agreement requiring the payment to any person of a brokerage or sales commission or a finder's or referral fee (other than arrangements to pay commission or fees to employees in the ordinary course of business);

(xi) any agreement or note relating to or evidencing outstanding indebtedness for borrowed money;

(xii) any lease, sublease or other agreement under which the Company is lessor or lessee of any real property; and

(xiii) any lease relating to equipment or other tangible property with respect to obligations in excess of $50,000; and

(xiv) any other agreement material to the Company.

(b) Except as set forth on Schedule 2.24(b) delivered by the Company to the Acquiror concurrently with the execution of this Agreement, no consent, waiver or approval is required from, and no notification is required to be provided to, any party to a Material Contract in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated thereby.

SECTION 2.26 Proprietary Information of Third Parties. No third party has claimed or, to the knowledge of the Company, has reason to claim that any person employed by or affiliated with the Company has (i) violated or may be violating any of the terms or conditions of such person's employment, non-competition or non-disclosure agreement with such third party, (ii) disclosed or may be disclosing or utilized or may be utilizing any trade secret or proprietary information or documentation of such third party, or (iii) interfered or may be interfering in the employment relationship between such third party and any of its present or former employees. No third party has requested information from which the Company suggests that such a claim might be contemplated.

SECTION 2.27 Significant Customers and Suppliers. Set forth on Schedule 2.27 delivered by the Company to the Acquiror concurrently with the execution of this Agreement is a list of the ten (10) largest customers and the ten (10) largest suppliers of the Company as of August 31, 1999 and September 23, 1999, respectively, together with the amount of sales or payments attributable to such customers or suppliers expressed in dollars. Except as set forth on Schedule 2.27, no customer or supplier has terminated, materially reduced or threatened to terminate or materially reduce its purchases from or provision of products or services to the Company, as the case may be. Copies of the standard forms of purchase or supply contracts of the Company and sales contracts are set forth in Schedule 2.27.

SECTION 2.28 Assumptions, Guaranties, Etc. of Indebtedness of Other Persons . The Company has not assumed, guaranteed, endorsed or otherwise become directly or contingently liable on any indebtedness of any other person (including, without limitation, liability by way of agreement, contingent or otherwise, to purchase, to provide funds for payment, to supply funds to or otherwise invest in the debtor, or otherwise to assure the creditor against loss), except for guaranties by endorsement of negotiable instruments for deposit or collection in the ordinary course of business.

SECTION 2.29 Transactions With Affiliates. No director, officer or employee of the Company, or member of the family of any such person, or any corporation, partnership, trust or other entity in which any such person, or any member of the family of any such person, has a substantial interest or is an officer, director, trustee, partner or holder of any equity interest, is a party to any transaction with the Company, including any contract, agreement or other arrangement providing for the employment of, furnishing of services by, rental of real or personal property from or otherwise requiring payments or involving other obligations to any such person or firm.

SECTION 2.30 Records and Bank Accounts. The minute books, stock certificate books and stock transfer ledgers of the Company are complete and correct in all material respects with respect to the matters set forth therein and have been maintained in a manner consistent with good business practice. Schedule 2.30 delivered by the Company to the Acquiror concurrently with the execution hereof identifies all bank and brokerage accounts of the Company, whether or not such accounts are held in the name of the Company, lists the respective signatories therefor and lists the names of all persons holding a power of attorney from the Company and a summary of the terms thereof.

SECTION 2.31 Commissions and Fees. Except for fees payable to Soundview Technology Group, Inc., there are no valid claims for brokerage commissions or finder's or similar fees in connection with the transactions contemplated by this Agreement which may be now or hereafter asserted against the Acquiror resulting from any action taken by the Company or its stockholders, officers, directors or agents.

SECTION 2.32 Year 2000 Compliance. Except as set forth in Schedule 2.32 delivered by the Company to the Acquiror concurrently with the execution of this Agreement the Company has no knowledge that any of its systems (including, without limitation, the Company's telecommunications, automation and computer related systems), assets or technology, including without limitation, the Company Proprietary Rights (including, without limitation, all computer software and hardware owned or licensed by the Company or used in its business) has or will have any Year 2000 Error (as hereinafter defined). For the purposes hereof, the term "Year 2000 Error" means (a) any failure of computer hardware or software products or technology properly to record, store, process, calculate or present calendar dates falling on and after (and if applicable, spans of time including) January 1, 2000 as a result of the occurrence, or use of data consisting of, such dates; (b) any failure of computer hardware or software products or technology to calculate any information dependent on or relating to dates on or after January 1, 2000 in the same manner, and with the same functionality, data integrity and performance, as such computer hardware or software products or technology records, stores, processes, calculates and presents calendar dates on or before December 31, 1999, or information dependent on or relating to such dates; or (c) any loss of functionality or performance with respect to the introduction of records or processing of data containing dates falling on or after January 1, 2000.

SECTION 2.33 Representations Complete. The representations and warranties of the Company and the Stockholders contained in this Article II do not contain any untrue statement of a material fact and do not omit to state any material fact necessary to make such representations and warranties, in light of the circumstances under which they were made, not misleading.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each of the Stockholders, severally, but not jointly, represents and warrants to Acquiror as follows:

SECTION 3.1 Ownership of EPITAXX Shares. Such Stockholder is the record and beneficial owner of all of the EPITAXX Shares listed as owned by such Stockholder on Schedule 2.3, and such EPITAXX Shares are owned by such Stockholder free and clear of all liens, claims, encumbrances, interests and rights in others. Except as set forth on Schedule 2.3, such Stockholder has no options, warrants, subscriptions, calls, convertible securities, stock appreciation rights (phantom or otherwise) or other interests or rights of any nature relating to the capital stock of the Company.

SECTION 3.2 Authority to Execute and Perform Agreement. Such Stockholder has the full legal right, capacity, power and all authority and approval required by law and its organizational documents, if applicable, to enter into this Agreement and to perform its obligations hereunder. Such Stockholder has duly executed and delivered this Agreement, and this Agreement is the legal, valid and binding obligation of such Stockholder enforceable in accordance with its terms.

SECTION 3.3 Investment Representations. Such Stockholder has had the opportunity to discuss the transactions contemplated hereby with Acquiror and has had the opportunity to obtain such information pertaining to Acquiror, its business, operations, and finances as has been requested, including but not limited to filings made by Acquiror with the SEC under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such Stockholder is an "accredited investor" within the meaning of Regulation D promulgated under the Securities Act of 1933, as amended (the "Securities Act"). Such Stockholder has such knowledge and experience in business or financial matters that he or she is capable of evaluating the merits and risks of an investment in the Acquiror. Such Stockholder (i) is acquiring the Acquiror Common Stock for purposes of investment and has no present intention to distribute such Acquiror Common Stock, (ii) it has no contract, undertaking, agreement or arrangement to sell or otherwise transfer or dispose of any Acquiror Common Stock or any portion thereof to any person or entity and (iii) he or she can bear the economic risk of losing his or her investment in the Acquiror Common Stock and has adequate means for providing for its current financial needs and contingencies.

SECTION 3.4 No Knowledge of Breach. Such Stockholder is not aware (without any investigation or inquiry) that any of the representations or warranties set forth in Article II is untrue in any material respect.

ARTICLE Iv REPRESENTATIONS AND WARRANTIES OF ACQUIROR AND NEWCO

Acquiror and Newco represent and warrant to the Company and the Stockholders as follows:

SECTION 4.1 Investment Intent. Acquiror is acquiring the EPITAXX Shares for its own account and not with the view to the distribution thereof.

SECTION 4.2 Organization. Acquiror is duly incorporated, validly existing and in good standing under the laws of the State of Delaware and is duly qualified to transact business as a foreign corporation in each jurisdiction in which the failure to so qualify would have a material adverse impact on Acquiror's ability to purchase the EPITAXX Shares. Newco is duly incorporated, validly existing and in good standing under the laws of the State of Delaware.

SECTION 4.3 Power and Authority. Each of Acquiror and Newco has the corporate power and authority to execute, deliver and perform this Agreement and the other documents and instruments contemplated hereby. Subject to the conditions set forth in Article VI which shall be satisfied prior to the Closing if Closing occurs, (i) the execution, delivery and performance of this Agreement and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by each of Acquiror and Newco and (ii) when executed and delivered by Acquiror and Newco shall have been duly executed and delivered by, and constitute the valid and binding obligation of each of Acquiror and Newco enforceable against each of them in accordance with their terms.

SECTION 4.4 Validity, Etc. Neither the execution and delivery of this Agreement and the other documents and instruments contemplated hereby, the consummation of the transactions contemplated hereby or thereby, nor the performance of this Agreement and such other agreements in compliance with the terms and conditions hereof and thereof will (i) conflict with or result in any breach of any trust agreement, certificate of incorporation, bylaw, judgment, decree, order, statute or regulation applicable to Acquiror or Newco; (ii) require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority, other than any notification and approval required under the HSR Act; (iii) result in a breach of or default (or give rise to any right of termination, cancellation or acceleration) under any law, rule or regulation or any judgment, decree, order, governmental permit, license or order or any of the terms, conditions or provisions of any mortgage, indenture, note, license, agreement or other instrument to which Acquiror or Newco is a party; or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Acquiror or Newco which in the case of any of (i) - (v), would materially impair Acquiror or Newco's ability to consummate the transactions contemplated hereby.

SECTION 4.5 Corporate Status. Each of Acquiror and Newco has the corporate power and authority to own, lease and operate all of its properties and to carry on its business as it is now being conducted.

SECTION 4.6 Acquiror Subsidiaries; Newco Common Stock. The Acquiror indirectly owns, beneficially and of record, all of the issued and outstanding shares of Newco, all of which are validly issued and outstanding, fully paid and nonassessable, free and clear of all Liens and encumbrances. The Acquiror has the corporate power to cause the endorsement and surrender such shares of Newco Common Stock for cancellation pursuant to the Plan of Merger. The Acquiror has taken all such actions as may be required in its capacity as the indirect sole stockholder of Newco. Acquiror is the sole record and beneficial owner of all of the outstanding capital stock of Uniphase Holdings, Inc., which in turn is the sole record and beneficial owner of all of the outstanding capital stock of Newco.

SECTION 4.7 Reports. Acquiror has previously furnished or made available to the Stockholders true and complete copies of (i) its most recent Annual Report on Form 10-K as filed with the Securities Exchange Commission ("SEC") for its fiscal year ended June 30 , 1999, and (ii) all other reports and registration statements filed by Acquiror with the SEC since June 30, 1999 (all such documents included in (i) and (ii) above being collectively referred to as the "Acquiror SEC Documents"). As of their respective dates, the Acquiror SEC Documents did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Since June 30, 1999, Acquiror has timely filed with the SEC all reports, registration statements and other filings required to be filed with the SEC under Section 13(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and regulations promulgated thereunder. As of their respective filing dates, the description of the business, operations and financial condition of the Acquiror contained in the Acquiror SEC Documents complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the rules and regulations promulgated under such statutes. The consolidated financial statements contained in the Acquiror SEC Documents, together with the notes thereto, have been prepared in accordance with GAAP consistently followed throughout the periods indicated therein (except as indicated in the notes to such financial statements and further subject, in the case of unaudited statements, to normal, necessary year-end adjustments). The balance sheet of the Acquiror at except as indicated in the notes to such financial statements and further included in the Acquiror's 10-K is herein referred to as the "Acquiror Balance Sheet".

SECTION 4.8 Subsequent Events. Except as disclosed in the Acquiror SEC Documents or as otherwise permitted hereunder, the Acquiror has not, since the date of the Acquiror Balance Sheet incurred any Material Adverse Change.

SECTION 4.9 Legal Proceedings. Except as described in the Acquiror SEC Documents, there is no pending litigation, governmental investigation, condemnation or other proceeding against or relating to or affecting the Acquiror or the transactions contemplated by this Plan of Merger for which the Acquiror is uninsured or which, if resolved adversely to the Acquiror, would have, individually or in the aggregate, a Material Adverse Effect on the Acquiror.

SECTION 4.10 Commissions and Fees. There are no claims for brokerage commissions, investment bankers' fees or finder's fees in connection with the transactions contemplated by this Agreement resulting from any action taken by the Acquiror or any of its stockholders, officers, directors or agents.

SECTION 4.11 Status of Acquiror Stock. Each share of Acquiror Common Stock issued to the Stockholders pursuant to this Agreement will be, when so issued, duly authorized, validly issued, fully paid and nonassessable.

SECTION 4.12 Representations Complete. The representations and warranties of the Acquiror and Newco contained in this Article IV do not contain any untrue statement of a material fact and do not omit to state any material fact necessary to make such representations and warranties, in light of the circumstances under which they were made, not misleading.

ARTICLE V COVENANTS OF EPITAXX AND THE PRINCIPAL STOCKHOLDER

EPITAXX and the Principal Stockholder covenant and agree with Acquiror as follows: