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  As Of               Filer                 Filing     As/For/On Docs:Pgs              Issuer               Agent

 9/12/03  Lionbridge Technologies Inc/DE    8-K{5,7}    9/09/03    3:44                                     RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 8-K         Current Report                                      HTML     15K 
 2: EX-2.1      Agreement and Plan of Reorginization                HTML    305K 
 3: EX-99.1     Press Release                                       HTML     19K 

Exhibit 2.1

LIONBRIDGE TECHNOLOGIES, INC.,

MOUNTAIN ACQUISITION CORP.,

MENTORIX TECHNOLOGIES, INC.

and

THE SHAREHOLDERS OF MENTORIX TECHNOLOGIES, INC.

AGREEMENT AND PLAN OF REORGANIZATION

Dated as of September 9, 2003

TABLE OF CONTENTS

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AGREEMENT AND PLAN OF REORGANIZATION

AGREEMENT AND PLAN OF REORGANIZATION, dated as of September 9, 2003 (this “Agreement “), by and among LIONBRIDGE TECHNOLOGIES, INC., a Delaware corporation (“Parent “); MOUNTAIN ACQUISITION CORP., a Delaware corporation and a wholly-owned subsidiary of Parent (“Merger Sub”); MENTORIX TECHNOLOGIES, INC., a California corporation (“Mentorix”); and the undersigned shareholders of Mentorix (the “Shareholders”).

WHEREAS, the Board of Directors of each of Mentorix and Merger Sub deems it in the best interests of their respective shareholders to consummate the Merger (as defined in Section 1.1), on the terms and subject to the conditions set forth in this Agreement, of Merger Sub with and into Mentorix in which Mentorix would become a wholly-owned subsidiary of Parent, and such Boards of Directors have approved this Agreement and declared its advisability (and, in the case of the Board of Directors of Mentorix, recommended that this Agreement be adopted by its shareholders); and

WHEREAS, Parent, Merger Sub, Mentorix and the Shareholders desire to make certain representations, warranties, covenants and agreements in connection with the Merger and also to prescribe various conditions to the Merger.

NOW, THEREFORE, intending to be legally bound, and in consideration of the mutual representations, warranties, covenants and agreements contained herein, Parent, Merger Sub, Mentorix and the Shareholders agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger. Subject to the terms and conditions hereof, and in accordance with the California General Corporation Law (the “CGCL”) and the Delaware General Corporation Law (the “DGCL”), Merger Sub will be merged with and into Mentorix (the “Merger”). Certificates of Approval of Agreements of Merger, an Agreement of Merger and a Certificate Merger and any other documents required by law (collectively, the “Merger Documents”), will be duly prepared, executed and acknowledged by Mentorix and Merger Sub and thereafter delivered to the Secretary of State of California for filing in accordance with the CGCL and Secretary of State of Delaware for filing in accordance with the DGCL contemporaneously with the Closing (as defined in Section 1.3). The Merger will become effective at such time as the Merger Documents have been filed with the Secretary of State of California and Secretary of State of Delaware or at such subsequent time as Parent and Mentorix shall agree and be specified in the Merger Documents (the “Effective Time”). Following the Merger,

Mentorix will continue as the surviving corporation of the Merger (the “Surviving Corporation”) under the laws of the State of California, and the separate corporate existence of Merger Sub will cease.

1.2 Effects of the Merger. At and after the Effective Time, (i) the Merger will have all of the effects provided by the Merger Documents and applicable law, (ii) the Articles of Incorporation of Mentorix will be amended in the form attached as Appendix A to the Mentorix Certificate of Approval of Agreement of Merger to be filed with the Secretary of State of California, (iii) the bylaws of Merger Sub will be the bylaws of the Surviving Corporation, (iv) the directors of Merger Sub will be the directors of the Surviving Corporation, to hold office in accordance with the bylaws of the Surviving Corporation, (v) the officers of Merger Sub will be the officers of the Surviving Corporation, to hold office in accordance with the bylaws of the Surviving Corporation and (vi) the issued and outstanding certificates for the capital stock of Merger Sub will be the issued and outstanding certificates initially representing all of the issued capital stock of the Surviving Corporation.

1.3 Closing. The closing of the transactions contemplated by this Agreement (the “Closing”) will take place as soon as practicable (but no more than three (3) business days) after satisfaction or waiver of the last to be fulfilled of the conditions set forth in Article IX that by their terms are not to occur at the Closing (the “Closing Date”), but in no event later than September 30, 2003, at the offices of Testa, Hurwitz & Thibeault, LLP in Boston, Massachusetts unless another date or place is agreed to in writing by Parent and Mentorix. If all of conditions set forth in Article IX hereof are determined to be satisfied (or duly waived) at the Closing, concurrently with the Closing the parties hereto will cause the Merger to be consummated by the filing of the Merger Documents with the Secretary of State of California and the Secretary of State of Delaware. The Closing will be deemed to have concluded at the Effective Time.

1.4 Approval by the Shareholders of Mentorix. Mentorix will take all action necessary in accordance with applicable law, its Charter Documents (as defined below) and any agreements to which it is a party to solicit the approval of this Agreement, the Merger and all of the transactions contemplated hereby by all shareholders of Mentorix by means of the written consent of a majority of the shareholders in accordance with the CGCL, or if it is unable to obtain such written consent, by a duly convened meeting of shareholders. Mentorix will use its best efforts to obtain such shareholder approval. Mentorix represents and warrants that its Board of Directors has duly (i) approved the Merger in accordance with the CGCL and (ii) resolved to recommend to the shareholders of Mentorix that they approve this Agreement, the Merger and all of the transactions contemplated hereby.

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ARTICLE II

MERGER CONSIDERATION; CONVERSION AND EXCHANGE OF SHARES;

DISSENTING SHARES

2.1 Merger Consideration; Conversion and Exchange of Shares.

(a) Subject, without limitation, to the provisions of Section 2.3 hereof, at the Effective Time, each share of:

(i) common stock, no par value per share, of Mentorix (“Mentorix Common Stock”) issued and outstanding immediately prior to the Effective Time (excluding any Mentorix Common Stock held by Parent or Merger Sub or any other Subsidiary (as defined in Section 3.1) of Parent, or by Mentorix or any Subsidiary of Mentorix, which shares (the “Common Excluded Shares”) will be automatically cancelled in the Merger without payment of any consideration therefor, and excluding Dissenting Shares (as defined in Section 2.3 hereof)) will automatically, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Common Per Share Amount (as defined in Section 2.1(b) below);

(ii) Series A Preferred Stock, no par value per share, of Mentorix (the “Mentorix Series A Preferred Stock”) issued and outstanding immediately prior to the Effective Time (excluding any Mentorix Series A Preferred Stock held by Parent or Merger Sub or any other Subsidiary of Parent, or by the Mentorix or any Subsidiary of the Mentorix, which shares (the “Series A Preferred Excluded Shares”) will be automatically canceled in the Merger without payment of any consideration therefor, and excluding Dissenting Shares), will automatically, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Series A Preferred Per Share Amount (as defined in Section 2.1(b) below);

(iii) Series B Preferred Stock, no par value per share, of Mentorix (the “Mentorix Series B Preferred Stock”) issued and outstanding immediately prior to the Effective Time (excluding any Mentorix Series B Preferred Stock held by Parent or Merger Sub or any other Subsidiary of Parent, or by the Mentorix or any Subsidiary of the Mentorix, which shares (the “Series B Preferred Excluded Shares”) will be automatically canceled in the Merger without payment of any consideration therefor, and excluding Dissenting Shares), will automatically, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Series B Preferred Per Share Amount (as defined in Section 2.1(b) below);

(iv) Series C Preferred Stock, no par value per share, of Mentorix (the “Mentorix Series C Preferred Stock”) issued and outstanding immediately prior to

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the Effective Time (excluding any Mentorix Series C Preferred Stock held by Parent or Merger Sub or any other Subsidiary of Parent, or by the Mentorix or any Subsidiary of the Mentorix, which shares (the “Series C Preferred Excluded Shares”) will be automatically canceled in the Merger without payment of any consideration therefor, and excluding Dissenting Shares), will automatically, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Series C Preferred Per Share Amount (as defined in Section 2.1(b) below); and

(v) Series D Preferred Stock, no par value per share, of Mentorix (the “Mentorix Series D Preferred Stock”; and, together with the Mentorix Series A Preferred Stock, Mentorix Series B Preferred Stock and Mentorix Series C Preferred Stock, the “Mentorix Preferred Stock”) issued and outstanding immediately prior to the Effective Time (excluding any Mentorix Series D Preferred Stock held by Parent or Merger Sub or any other Subsidiary of Parent, or by the Mentorix or any Subsidiary of the Mentorix, which shares (the “Series D Preferred Excluded Shares”, collectively with the Common Excluded Shares, Series A Preferred Excluded Shares, Series B Preferred Excluded Shares and Series C Preferred Excluded Shares, the “Excluded Shares”) will be automatically canceled in the Merger without payment of any consideration therefor, and excluding Dissenting Shares), will automatically, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Series D Preferred Per Share Amount (as defined in Section 2.1(b) below).

The Mentorix Common Stock and the Mentorix Preferred Stock are sometimes referred to herein as the “Mentorix Capital Stock.” Shares of Mentorix Capital Stock that are actually issued and outstanding immediately prior to the Effective Time, excluding the Excluded Shares, are sometimes referred to herein as the “Outstanding Mentorix Shares.”

(b) For purposes of this Agreement, the terms

(i) “Series A Preferred Per Share Amount” means the product of (A) the Merger Consideration multiplied by 4.1393% divided by (B) the number of shares of Mentorix Series A Preferred Stock;

(ii) “Series B Preferred Per Share Amount” means the product of (A) the Merger Consideration multiplied by 14.1345% divided by (B) the number of shares of Mentorix Series B Preferred Stock;

(iii) “Series C Preferred Per Share Amount” means the product of (A) the Merger Consideration multiplied by 17.6681% divided by (B) the number of shares of Mentorix Series C Preferred Stock;

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(iv) “Series D Preferred Per Share Amount” means the product of (A) the Merger Consideration multiplied by 12.8799% divided by (B) the number of shares of Mentorix Series D Preferred Stock; and

(v) “Common Per Share Amount” means the product of (A) the Merger Consideration multiplied by 51.1782% divided by (B) the number of shares of Mentorix Common Stock.

(c) At Closing, the Merger Consideration shall be paid as follows: (i) $1,750,000 (the “Indemnity Escrow”) shall be deposited into escrow pursuant to Section 2.2(a) and (ii) the balance shall be paid to the Paying Agent pursuant to Section 2.4. The term “Merger Consideration” means the Initial Merger Consideration less Excess Mentorix Expenses (as defined in Section 8.4). “Initial Merger Consideration” means $28,299,525.

(d) At the Effective Time, each share of common stock, $.01 par value, of Merger Sub issued and outstanding immediately prior to the Effective Time will, by virtue of the Merger and without any action on the part of the holder hereof, be converted into one share of common stock, no par value, of the Surviving Corporation.

(e) All shares of Mentorix Capital Stock that are owned by Mentorix, as treasury stock, Parent or Merger Sub immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist and no consideration shall be delivered in exchange therefor.

(f) The Series A Preferred Per Share Amount, the Series B Preferred Per Share Amount, the Series C Preferred Per Share Amount, the Series D Preferred Per Share Amount and the Common Per Share Amount shall be appropriately adjusted to reflect fully the effect of any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Mentorix Common Stock), reorganization, recapitalization or other like change with respect to Mentorix Common Stock occurring after the date hereof and prior to the Effective Time.

2.2 Escrow. At Closing, $1,750,000 of the Merger Consideration shall be held in escrow pursuant to the Escrow Agreement in a form reasonably satisfactory to Parent and Mentorix (the “Escrow Agreement”) until April 15, 2004 as non-exclusive source of security for breaches of representations, warranties and covenants and any indemnification claims by Parent pursuant to Article X. The Indemnity Escrow will be withheld from the holders of the Outstanding Mentorix Shares based on the pro rata portion of the Merger Consideration that is payable to each such holder pursuant to Section 2.1 of this Agreement. The exact amount of the Indemnity Escrow held for the account of each Mentorix shareholder will be determined at the Closing by Mentorix in consultation with Parent. The approval of this Agreement by shareholders of Mentorix will also constitute their approval of the Indemnity Escrow and the terms and provisions of the Escrow Agreement, which are integral terms of the Merger.

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2.3 Dissenting Shares. Any holder of shares of Mentorix Capital Stock that are outstanding on the record date for the determination of which holders will be entitled to vote for or against the Merger who did not vote such shares in favor of the Merger or sign and deliver a written consent thereto with respect to such shares (the shares of Mentorix Capital Stock then outstanding that are not thus voted or as to which such consents are not signed and delivered are referred to as “Dissenting Shares”) will be entitled to exercise dissenters’ rights pursuant to Chapter 13 of the CGCL with respect to such Dissenting Shares provided that such holder meets all of the requirements of the CGCL with respect to such Dissenting Shares, and will not be entitled to receive any portion of the Merger Consideration, unless otherwise provided by the CGCL or agreed in writing by Parent. Mentorix will, after consultation with Parent, give such notices with respect to dissenters’ rights as may be required by the CGCL as soon as practicable.

2.4 Exchange Procedures.

(a) Prior to the Effective Time, Parent shall designate American Stock Transfer & Trust Company or such other bank or trust company mutually acceptable to Parent and Mentorix (the “Paying Agent”) to act as agent for the payment of the Merger Consideration upon surrender of any certificate or instrument representing shares of Mentorix Capital Stock (a “Certificate”), and, at the Closing, Parent shall deposit, or cause to be deposited, with the Paying Agent cash in the aggregate amount of the Merger Consideration (less the Indemnity Escrow) for the payment of the Merger Consideration to the former shareholders of Mentorix in accordance with Section 2.1 upon surrender of Certificates held by such shareholders. Any and all interest earned on funds made available to the Paying Agent pursuant to this Agreement shall be the property of the Parent and turned over to Parent by the Paying Agent.

(b) As soon as practicable after the Effective Time, the Paying Agent shall mail to each holder of record of a Certificate (i) a counterpart of the Escrow Agreement, (ii) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificate(s) held by such person shall pass, only upon proper delivery of the Certificate(s) to the Paying Agent and shall be in a form and have such other provisions as Parent may reasonably specify), (iii) instructions for use in effecting the surrender of the Certificate(s) in exchange for the Merger Consideration and (iv) such other documentation as may be reasonably required by Parent or the Paying Agent to effect a transfer of such Certificate(s). Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such duly executed counterpart of the Escrow Agreement, duly completed and executed letter of transmittal, and such other documents as may reasonably be required by the Parent or the Paying Agent, the holder of such Certificate, subject to Section 2.2, shall promptly receive in exchange therefor in cash, the amount into which the Outstanding Mentorix Shares formerly represented by such Certificate shall have been converted in accordance with Section 2.1, and the Certificate so surrendered shall forthwith be canceled (it being acknowledged that such surrender may occur at the Closing). In the event of a transfer of ownership of shares that is not registered in the stock transfer books of Mentorix, payment may be made to a person

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other than the person in whose name the Certificate so surrendered is registered if such Certificate shall be properly endorsed or otherwise be in proper form for transfer and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment to a person other than the registered holder of such Certificate or establish to the satisfaction of Parent that such tax has been paid or is not applicable. No interest shall be paid or shall accrue on the cash payable upon surrender of any Certificate. The approval of this Agreement by shareholders of Mentorix will also constitute their approval of the terms and provisions of the letter of transmittal. In the event any Certificate shall have been lost, stolen or destroyed, upon the making and delivery of an affidavit of that fact by the person claiming same to have been lost, stolen or destroyed and receipt of a customary indemnity, in form reasonably acceptable to Parent, against any claim that would be made against Parent with respect to such Certificate, Parent will issue in exchange for such lost, stolen or destroyed Certificate the cash deliverable in respect thereof pursuant to this Agreement.

(c) None of Parent, Merger Sub, Mentorix or the Paying Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any Merger Consideration would otherwise escheat to or became the property of any Governmental Entity (as defined in Section 3.4)), any such Merger Consideration in respect thereof shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

(d) Parent, the Surviving Corporation or the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Mentorix Capital Stock acquired upon exercise of Mentorix Stock Options such amounts as Parent, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “Code”), or any provision of state, local or foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Parent, the Surviving Corporation or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Mentorix Capital Stock in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent.

2.5 No Further Ownership Rights in Mentorix Capital Stock. The Merger and its approval by the shareholders of Mentorix and the execution of this Agreement will be deemed, at the Effective Time, to constitute full satisfaction and termination of all rights and agreements pertaining to Mentorix Capital Stock pursuant to the CGCL, by contract or otherwise. After the Effective Time, there will be no transfers on the stock transfer books of Mentorix of Mentorix Capital Stock or exercises of any options, warrants or other rights to acquire Mentorix Capital Stock. Until surrendered to Parent, each certificate representing Outstanding Mentorix Shares will, after the Effective Time,

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represent only the right to receive a portion of the Merger Consideration as provided for in this Agreement.

2.6 Stock Options. All Mentorix Options (as defined in Section 3.2) that are outstanding immediately prior to the Effective Time and do not expire pursuant to their terms on or before the Closing are specifically identified on Section 3.2 of the Mentorix Disclosure Schedule (as defined below). Parent will not assume any such outstanding Mentorix Options and, on or prior to the Closing, Mentorix will cause all such outstanding Mentorix Options to either be exercised or canceled (by written agreement with each holder of such outstanding Mentorix Option to be canceled).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF MENTORIX

Except as set forth in the disclosure schedule of Mentorix dated as of the date hereof and delivered herewith to Parent (the “Mentorix Disclosure Schedule”) which identifies the section and subsection to which each disclosure therein relates (provided, however, that Mentorix will be deemed to have adequately disclosed with respect to any section or subsection any matters that are clearly described elsewhere in such document if the applicability of such disclosure to such non-referenced sections or subsections is clearly apparent and Mentorix has not intentionally omitted any required cross-references), and whether or not the Mentorix Disclosure Schedule is referred to in a specific section or subsection, Mentorix represents and warrants to Parent and Merger Sub as follows:

3.1 Organization, Standing and Power; Subsidiaries.

(a) Mentorix is a corporation duly organized, validly existing and in good standing under the laws of the State of California, has all requisite corporate power and authority to own, lease and operate its properties and to carry on its businesses as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which a failure to so qualify would have a material adverse effect on the Business Condition (as hereinafter defined) of Mentorix.

As used in this Agreement, “Business Condition” with respect to any Person (as defined below) means the business, financial condition, results of operations, assets or prospects (as defined below) (without giving effect to the consequences of the transactions contemplated by this Agreement, and other than changes in general economic conditions) of such Person or Persons including its Subsidiaries taken as a whole. In this Agreement, a “Subsidiary” of any Person means a corporation, partnership, limited liability company, joint venture or other entity of which such Person directly or indirectly owns or controls a majority of the equity interests or voting securities or other interests that are sufficient to elect a majority of the Board of Directors or other managers of such corporation,

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partnership, limited liability company, joint venture or other entity, and “prospects” means events, conditions, facts or developments that are known to Mentorix and that have an effect on future operations of the business as presently conducted by Mentorix or Mentorix Learning Technologies Private Limited, a corporation organized under the laws of India and a wholly-owned subsidiary of Mentorix (“Mentorix India”), but will exclude the results of any changes that are made at the specific written direction of Parent, that are specifically contemplated herein, or that directly result from this transaction. References to Mentorix in this Agreement shall be deemed to include Mentorix India and any other Subsidiary of Mentorix and references to actions to be taken or not to be taken by Mentorix India shall be deemed to mean that Mentorix will cause Mentorix India to take or not take such action, unless the context specifically requires otherwise. In this Agreement, “Person” means any natural person, corporation, partnership, limited liability company, joint venture or other entity.

(b) Mentorix India is a corporation duly organized and validly existing under the laws of India and is not presently subject to winding up proceedings under Section 433 of the Indian Companies Act, 1956, as amended, has all requisite corporate power and authority and all material governmental licenses, authorizations, consents and approvals required to own, lease and operate its properties and to carry on its businesses as now being conducted, and is duly qualified and in good standing to do business in each jurisdiction in which a failure to so qualify would have a material adverse effect on the Business Condition of Mentorix or Mentorix India. Other than Mentorix India, Mentorix has no Subsidiaries. Mentorix India has no Subsidiaries.

(c) Mentorix has delivered to Parent complete and correct copies of the articles or certificate of incorporation, bylaws and/or other primary charter and organizational documents (“Charter Documents”) of Mentorix and Mentorix India, in each case, as amended to the date hereof. The minute books and stock records of Mentorix and Mentorix India, complete and correct copies of which have been delivered to Parent, contain correct and complete records of all material proceedings and actions taken at all meetings of, or effected by written consent of, the shareholders of Mentorix and Mentorix India and their respective Board of Directors, and all original issuances and subsequent transfers, repurchases and cancellations of Mentorix’s and Mentorix India’s capital stock. Section 3.1(c) of the Mentorix Disclosure Schedule contains a complete and correct list of the officers and directors of Mentorix and Mentorix India.

(d) Mentorix has never owned, nor does it currently own, directly or indirectly, any capital stock or other equity securities of any corporation or have direct or indirect equity or ownership interest in any partnership, limited liability company, joint venture or other entity. All of the outstanding shares of capital stock of Mentorix India are owned beneficially and of record by Mentorix (other than 20 nominee shares held by Maurice Haeems and Jay Sitaram) in each case free and clear of any security interests, liens, charges, restrictions, claims, encumbrances or assessments of any nature whatsoever other than statutory liens for Taxes (as defined below) not yet due and payable (and for which adequate accruals or reserves are accruals have been established on the Audited Balance Sheet) and immaterial (individually and in the aggregate) liens,

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charges, restrictions, claims, encumbrances or assessments that arise in the ordinary course of business (“Liens”); and there are no outstanding subscriptions, warrants, options, convertible securities, or other rights (contingent or other) pursuant to which any of the Subsidiaries is or may become obligated to issue any shares of its capital stock to any Person other than Mentorix.

3.2 Capital Structure.

(a) The authorized capital stock of Mentorix consists of: 37,000,000 shares of Mentorix Common Stock, of which 18,412,727 shares are issued and outstanding as of the date of this Agreement and no shares are issued and held as treasury shares by Mentorix; 1,725,000 shares of Mentorix Series A Preferred Stock, of which 1,725,000 shares are issued and outstanding as of the date of this Agreement and no shares are issued and held as treasury shares by Mentorix; 3,671,745 shares of Mentorix Series B Preferred Stock, of which 3,671,744 shares are issued and outstanding as of the date of this Agreement and no shares are issued and held as treasury shares by Mentorix; 4,434,589 shares of Mentorix Series C Preferred Stock, of which 4,264,028 shares are issued and outstanding as of the date of this Agreement and no shares are issued and held as treasury shares by Mentorix and 1,830,858 shares of Mentorix Series D Preferred Stock, of which 1,760,440 shares are issued and outstanding as of the date of this Agreement and no shares are issued and held as treasury shares by Mentorix. Section 3.2(a) of the Mentorix Disclosure Schedule sets forth all holders of shares of Mentorix Common Stock and/or Mentorix Preferred Stock and the number of shares owned by each such holder. Section 3.2(a) of the Mentorix Disclosure Schedule also sets forth any options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements or rights of any character (each, an “Mentorix Option”) to which Mentorix is a party or by which Mentorix may be bound obligating Mentorix to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Mentorix, or obligating Mentorix to grant, extend, or enter into any such option, warrant, call, conversion right, conversion payment, commitment, agreement, contract, understanding, restriction, arrangement or right.

(b) All outstanding shares of Mentorix Common Stock and Mentorix Preferred Stock are, and any shares of Mentorix Capital Stock issued upon exercise of any outstanding Mentorix Options will be, validly issued, fully paid, nonassessable and not subject to any preemptive rights (other than those which have been duly waived), or to any agreement to which Mentorix is a party or by which Mentorix may be bound. Mentorix does not have outstanding any bonds, debentures, notes or other indebtedness the holders of which (i) have the right to vote (or are convertible or exercisable into securities having the right to vote) with holders of shares of Mentorix Common Stock on any matter (“Mentorix Voting Debt”) or (ii) are or will become entitled to receive any payment as a result of the execution of this Agreement or the completion of the transactions contemplated hereby.

(c) The authorized capital stock of Mentorix India consists of: 100,000 shares of Common Stock, INR 10 par value per share (“Mentorix India Common Stock”),

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of which 99,910 shares are issued and outstanding as of the date of this Agreement and no shares are issued and held as treasury shares by Mentorix India. Section 3.2(c) of the Mentorix Disclosure Schedule sets forth all holders of Mentorix India Common Stock and the number of shares owned. There are no options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, arrangements or rights of any character to which Mentorix India is a party or by which Mentorix India may be bound obligating Mentorix India to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the capital stock of Mentorix India, or obligating Mentorix India to grant, extend, or enter into any such option, warrant, call, conversion right, conversion payment, commitment, agreement, contract, understanding, restriction, arrangement or right.

(d) All outstanding shares of Mentorix India Common Stock are validly issued, fully paid, nonassessable and not subject to any preemptive rights (other than those which have been duly waived), or to any agreement to which Mentorix India is a party or by which Mentorix India may be bound. Mentorix India does not have outstanding any bonds, debentures, notes or other indebtedness the holders of which (i) have the right to vote (or are convertible or exercisable into securities having the right to vote) with holders of shares of Mentorix India Common Stock on any matter (“Mentorix India Voting Debt”) or (ii) are or will become entitled to receive any payment as a result of the execution of this Agreement or the completion of the transactions contemplated hereby.

3.3 Authority. The execution, delivery and performance of this Agreement and all other agreements contemplated hereby by each of Mentorix and Mentorix India have been duly authorized by all necessary action of the Board of Directors of Mentorix and Mentorix India, as applicable, and if the Closing shall occur, shall have been duly authorized by all necessary action of the shareholders of Mentorix. Certified copies of the resolutions adopted by the Board of Directors of Mentorix and its shareholders and the Board of Directors of Mentorix India approving this Agreement, all other agreements contemplated hereby and the Merger have been or will be provided to Parent prior to the Closing. Each of Mentorix and Mentorix India has duly and validly executed and delivered this Agreement and has, or prior to Closing, will have duly and validly executed and delivered all other agreements contemplated hereby, and each of this Agreement and such other agreements constitutes a valid, binding and enforceable obligation of Mentorix and Mentorix India, as applicable, in accordance with its terms.

3.4 Compliance with Laws and Other Instruments; Non-Contravention. Mentorix holds, and at all times has held, all licenses, permits and authorizations from all Governmental Entities (as defined below) necessary for the lawful conduct of its business pursuant to all applicable statutes, laws, ordinances, rules and regulations of all such Governmental Entities having jurisdiction over it or any part of its operations, excepting, however, when such failure to hold would not have a material adverse effect on Mentorix’s Business Condition. There are no material violations or claimed violations known by Mentorix of any such license, permit or authorization or any such statute, law, ordinance, rule or regulation. Assuming the receipt of all Consents (as defined below),

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neither the execution, delivery or performance of this Agreement and all other agreements contemplated hereby by Mentorix and Mentorix India, nor the consummation of the Merger or any other transaction described herein, does or will, after the giving of notice, or the lapse of time, or otherwise, conflict with, result in a breach of, or constitute a default under, the Charter Documents of Mentorix or any federal, foreign, state or local court or administrative order or process, statute, law, ordinance, rule or regulation including, without limitation, the Foreign Investment Promotion Board of India, or any Material Contract (as defined below); result in the creation of any Lien upon, or otherwise adversely affect, any of the rights, properties or assets of Mentorix; terminate, amend or modify, or give any party the right to terminate, amend, modify, abandon or refuse to perform or comply with, any Material Contract; or accelerate, postpone or modify, or give any party the right to accelerate, postpone or modify, the time within which, or the terms and conditions under which, any liabilities, duties or obligations are to be satisfied or performed, or any rights or benefits are to be received, under any Material Contract. Section 3.4 of the Mentorix Disclosure Schedule sets forth each agreement, contract or other instrument binding upon Mentorix requiring a notice or consent (by its terms or as a result of any conflict or other contravention required to be disclosed in the Mentorix Disclosure Schedule pursuant to the preceding provisions of this Section 3.4) along with a description of such notice or consent required as a result of the execution, delivery or performance of this Agreement and all other agreements contemplated hereby by Mentorix, Mentorix India and the Shareholders or the consummation of the Merger or any other transaction described herein (each such notice or consent, a “Consent”). Except as set forth in Section 3.4 of the Mentorix Disclosure Schedule, no consent, approval, order, or authorization of or registration, declaration, or filing with or exemption (also a “Consent”) by, any court, administrative agency or commission or other governmental authority or instrumentality, whether domestic or foreign (each a “Governmental Entity”) is required by or with respect to Mentorix or Mentorix India in connection with the execution, delivery or performance of this Agreement and all other agreements contemplated hereby by Mentorix, Mentorix India and the Shareholders or the consummation of the Merger or any other transaction described herein, except for the filing by Mentorix and Merger Sub of the appropriate Merger Documents with the Secretary of State of California and Secretary of State of Delaware.

3.5 Technology and Intellectual Property Rights.

(a) For the purposes of this Agreement, “Mentorix Intellectual Property” means all tangible or intangible proprietary information and materials, including without limitation:

(i) (A) all inventions (whether patentable or unpatentable and whether or not reduced to practice), all improvements thereon, and all patents, patent applications and patent disclosures, together with all reissuances, continuations, continuations-in-part, divisions, revisions, extensions and re-examinations thereof, (B) all trademarks, service marks, trade dress, logos, trade names, domain names, and corporate names, together with all translations, adaptations,

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derivations and combinations thereof and including all goodwill associated therewith, and all applications, registrations and renewals in connection therewith, (C) all copyrights and all applications, registrations and renewals in connection therewith, (D) all mask works and all applications, registrations and renewals in connection therewith, (E) all trade secrets and confidential business information (including ideas, research and development, know-how, formulas, compositions, manufacturing and production process and techniques, methods, schematics, technology, technical data, designs, drawings, flowcharts, block diagrams, specifications, customer and supplier lists, pricing and cost information and business and marketing plans and proposals), and (F) all software and firmware (including data, databases and related documentation) other than “off the shelf” third party software and firmware;

(ii) all documents, records and files relating to design, end user documentation, manufacturing, quality control, sales, marketing or customer support for, and tangible embodiments of, all intellectual property described herein; and

(iii) all licenses, agreements and other rights in any third party product or any third party intellectual property described in (i) and (ii) above other than any “off the shelf” third party software or related intellectual property;

that is owned or held by or on behalf of Mentorix or that is being, and/or has been, used, or is currently under development for use, in the business of Mentorix as it has been, is currently or is currently planned to be conducted; provided, however, that “Mentorix Intellectual Property” does not include any intellectual property developed by Mentorix and assigned to one or more of Mentorix’s customers in the course of performing services for its customers. Section 3.5(a) of the Mentorix Disclosure Schedule lists: (i) all patents, trademarks, service marks, copyrights and mask works, and any applications and renewals for any of the foregoing owned by or on behalf of Mentorix; (ii) all hardware products and tools, software and firmware products and tools and services that are currently sold, published, offered, or under development by Mentorix; and (iii) all licenses (in and out), sublicenses and other agreements (other than licenses to third party “off the shelf” software) to which Mentorix is a party and pursuant to which Mentorix or any other Person is authorized to use any of Mentorix Intellectual Property or exercise any rights with respect thereto. The disclosures described in clause (iii) of the preceding sentence include the identities of the parties to the relevant agreements, a brief description of the nature and subject matter thereof, the term thereof and a brief description of the payment terms (or a summary of any formula or procedure for determining such payment terms).

(b) Each item of Mentorix Intellectual Property is either: (i) owned solely by Mentorix free and clear of any Liens; or (ii) rightfully used and authorized for use by Mentorix and its respective successors pursuant to a valid and enforceable written license. All of Mentorix Intellectual Property that is used by Mentorix pursuant to a license or other grant of a right by a third party to use its proprietary information is

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separately identified as such in Section 3.5(b) of the Mentorix Disclosure Schedule. Mentorix has all rights in Mentorix Intellectual Property necessary to carry out Mentorix’s former, current and currently planned future activities, including without limitation (except as noted in Section 3.5(b) of the Mentorix Disclosure Schedule) such rights, if any, as may be necessary to conduct Mentorix’s business as it is currently conducted, to make, use, exclude others from using, reproduce, modify, adapt, create derivative works based on, translate, distribute (directly and indirectly), transmit, display and perform publicly, license, rent, lease, assign and sell Mentorix Intellectual Property in all geographic locations and fields of use, and to sublicense any or all such rights to third parties, including the right to grant further sublicenses.

(c) Mentorix is not in violation of any license, sublicense or other agreement to which Mentorix is a party or otherwise bound relating to any of Mentorix Intellectual Property or any other third party software or firmware. Except as noted in Section 3.5(c) of the Mentorix Disclosure Schedule, Mentorix is not obligated to provide any consideration (whether financial or otherwise) to any third party, nor is any third party otherwise entitled to any consideration, with respect to any exercise of rights by Mentorix or Parent, as successor to Mentorix, in Mentorix Intellectual Property.

(d) The use of Mentorix Intellectual Property by Mentorix as currently used and as currently proposed to be used does not infringe any other Person’s copyright, trade secret rights, right of privacy, right in personal data, moral right or other intellectual property right. The use by Mentorix of the Mentorix Intellectual Property as currently used and, to the knowledge of Mentorix, as currently proposed to be used, does not infringe any other Person’s, patent, trademark, service mark, trade name, firm name, logo, trade dress or mask work. No claims (i) challenging the validity, enforceability, effectiveness or ownership by Mentorix of any of Mentorix Intellectual Property or (ii) to the effect that the use, reproduction, modification, manufacture, distribution, licensing, sublicensing, sale, or any other exercise of rights in any Mentorix Intellectual Property by Mentorix, infringes or will infringe on any intellectual property or other proprietary or personal right of any Person have been asserted against Mentorix and, to the knowledge of Mentorix, no such claims are threatened by any Person nor does there exist any valid basis for such a claim. To the knowledge of Mentorix, there are no legal or governmental proceedings, including interference, re-examination, reissue, opposition, nullity, or cancellation proceedings pending that relate to any of Mentorix Intellectual Property and Mentorix is not aware of any information indicating that such proceedings are threatened or contemplated by any governmental entity or any other Person. Mentorix has no granted or issued patents and mask works, no registered trademarks and service marks, and no registered copyrights. To the knowledge of Mentorix, there is no unauthorized use, infringement, or misappropriation of any of Mentorix Intellectual Property by any third party, employee or former employee.

(e) Section 3.5(e) of the Mentorix Disclosure Schedule separately lists all parties (other than employees) who have created any portion of, or otherwise have any rights in or to (including moral rights), Mentorix Intellectual Property. Mentorix has secured from all parties (including employees) who have created any portion of, or

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otherwise have any rights in or to, Mentorix Intellectual Property owned by Mentorix valid and enforceable written assignments of any such work, invention, improvement or other rights to Mentorix and has provided true and complete copies of such assignments to Parent.

(f) The Merger and other transactions contemplated under this Agreement will not alter, impair or otherwise adversely affect any rights of Mentorix in any Mentorix Intellectual Property in any material respect.

(g) Mentorix has taken commercially reasonable measures to protect the proprietary nature of Mentorix Intellectual Property and to maintain in confidence all trade secrets and confidential information owned or used by Mentorix.

(h) Mentorix Intellectual Property does not include any Publicly Available Software and Mentorix has not used Publicly Available Software in whole or in part in the development of any part of Mentorix Intellectual Property in a manner that may subject Mentorix Intellectual Property in whole or in part, to all or part of the license obligations of any Publicly Available Software. “Publicly Available Software” means each of (i) any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software (e.g. Linux), or similar licensing and distribution models; and (ii) any software that requires as a condition of use, modification, and/or distribution of such software that such software or other software incorporated into, derived from, or distributed with such software (a) be disclosed or distributed in source code form; (b) be licensed for the purpose of making derivative works; or (c) be redistributable at no or minimal charge. Publicly Available Software includes, without limitation, software licensed or distributed under any of the following licenses or distribution models similar to any of the following: (a) GNU General Public License (GPL) or Lesser/Library GPL (LGPL), (b) the Artistic License (e.g. PERL), (c) the Mozilla Public License, (d) the Netscape Public License, (e) the Sun Community Source License (SCSL), the Sun Industry Source License (SISL), and the Apache Server License.

3.6 Financial Statements; Business Information.

(a) Mentorix has delivered to Parent audited consolidated balance sheets as of August 31, 2003 (the “Audited Balance Sheet”) and December 31, 2002, and audited consolidated statements of income and cash flows for the eight-month period ended August 31, 2003 and for the twelve-month period ended December 31, 2002 (all of such balance sheets and statements of income and cash flows are collectively referred to as the “Financial Statements”). The Financial Statements: (i) are in accordance with the books and records of Mentorix; (ii) present fairly, in all material respects, the financial position of Mentorix as of the date indicated and the results of its operations and cash flows for such periods; and (iii) have been prepared in accordance with US GAAP consistently applied.

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(b) All of the accounts, notes and other receivables which are reflected in the Audited Balance Sheet were acquired in the ordinary course of business; and, except to the extent fully reserved against in the Audited Balance Sheet, all of the accounts, notes and other receivables which are reflected therein have been collected in full, or are good and collectible, in the ordinary course of business; and all of the accounts, notes and other receivables which have been acquired by Mentorix since the date of the Audited Balance Sheet were acquired in the ordinary course of business and have been collected in full, or are good and collectible, subject to an appropriate reserve determined in a manner consistent with past practices of Mentorix, in the ordinary course of business. Mentorix has not been informed or received notice of any set-off or dispute of such accounts or other receivables. No accounts, notes or other receivables are contingent upon the performance by Mentorix of any obligation or contract. No Person has any Lien on any of such receivables and no agreement for deduction or discount has been made with respect thereto.

(c) The business information previously prepared by Mentorix and delivered to Parent was prepared in good faith, based on assumptions Mentorix deems reasonable, was prepared for planning purposes, although no assurances are given that Mentorix will achieve the results projected therein.

(d) Each of Mentorix and Mentorix India maintains accurate books and records reflecting its assets and liabilities and maintains proper and adequate internal accounting controls that provide assurance that (i) transactions are executed with management’s authorization; (ii) transactions are recorded as necessary to permit preparation of the consolidated financial statements of Mentorix and to maintain accountability for Mentorix’s consolidated assets; (iii) access to Mentorix’s consolidated assets is permitted only in accordance with management’s authorization; (iv) the reporting of Mentorix’s consolidated assets is compared with existing assets at regular intervals; and (v) accounts, notes and other receivables are recorded accurately and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

(e) Except as disclosed in the Audited Balance Sheet or set forth in Section 3.6(e) of the Mentorix Disclosure Schedule, there are no liabilities of Mentorix of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, whether due or to become due, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than liabilities incurred in the ordinary course of business consistent with past practice since the date of the Audited Balance Sheet, which in the aggregate are not material to Mentorix.

3.7 Taxes.

(a) For purposes of this Agreement, the term “Tax” and “ Taxes” means all federal, state, local and foreign net income, alternative or add-on minimum, estimated, gross income, gross receipts, sales, use, ad valorem, value added, transfer, franchise, capital profits, lease, service, license, withholding, payroll, employment, excise,

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severance, stamp, occupation, premium, property, environmental or windfall profit taxes, customs duties and other taxes, governmental fees and other like assessments and charges of any kind whatsoever (including Tax liabilities incurred or borne as a transferee or successor, or by contract or otherwise), together with all interest, penalties, additions to tax and additional amounts with respect thereto. “Tax Returns” means all returns, declarations, reports, claims for refund, information statements and other documents relating to Taxes, including all schedules and attachments thereto, and including all amendments thereof. “Tax Authority” means any governmental authority responsible for the imposition or collection of any Tax. “Treasury Regulations” means the regulations, including proposed regulations and temporary regulations, promulgated by the United States Department of the Treasury under the Code, as amended.

(b) Mentorix and Mentorix India have timely filed all Tax Returns required to be filed (determined without regard to extensions) on or before the date hereof. Mentorix and Mentorix India have paid all Taxes owed (whether or not shown, or required to be shown, on Tax Returns) on or before the date hereof. Each of Mentorix and Mentorix India has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder, or other third party. All Tax Returns filed by Mentorix and Mentorix India were complete and correct in all respects. Neither Mentorix nor Mentorix India has participated, within the meaning of Treasury Regulation Section 1.6011-4(c), in (i) any “reportable transaction” within the meaning of Section 6011 of the Code and the Treasury Regulations thereunder, (ii) any “confidential corporate tax shelter” within the meaning of Section 6111 of the Code and the Treasury Regulations thereunder, or (iii) any “potentially abusive tax shelter” within the meaning of Section 6112 of the Code and the Treasury Regulations thereunder. Mentorix and Mentorix India have disclosed on their Tax Returns all positions taken therein that could give rise to a substantial understatement of Tax within the meaning of Section 6662 of the Code (or any similar provision of state, local or foreign Tax law). There are no liens for Taxes upon any of Mentorix’s or Mentorix India’s assets, other than Liens for ad valorem Taxes not yet due and payable.

(c) None of the Tax Returns filed by Mentorix or Mentorix India or Taxes payable by Mentorix or Mentorix India have been the subject of an audit, action, suit, proceeding, claim, examination, deficiency or assessment by any governmental authority, and no such audit, action, suit, proceeding, claim, examination, deficiency or assessment is currently pending or expected by Mentorix or any director or officer (or employee responsible for Tax matters) of Mentorix or Mentorix India.

(d) Neither Mentorix nor Mentorix India is currently the beneficiary of any extension of time within which to file any Tax Return, and neither Mentorix nor Mentorix India has waived any statute of limitation with respect to any Tax or agreed to any extension of time with respect to a Tax assessment or deficiency. All material elections with respect to Taxes affecting Mentorix or Mentorix India, as of the date hereof, are fully and properly set forth in the Financial Statements or in Section 3.7(d) of the Mentorix Disclosure Schedule.

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(e) Neither Mentorix nor Mentorix India is a party to any agreement, contract, arrangement or plan that has resulted or would result, separately or in the aggregate, in the payment of (i) any “excess parachute payments” within the meaning of Section 280G of the Code (without regard to the exceptions set forth in Sections 280G(b)(4) and 280G(b)(5) of the Code) or (ii) any amount for which a deduction would be disallowed or deferred under Section 162 or Section 404 of the Code. None of the shares of outstanding capital stock of Mentorix or Mentorix India is subject to a “substantial risk of forfeiture” within the meaning of Section 83 of the Code. No portion of the Merger Consideration is subject to the Tax withholding provisions of Section 3406 of the Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of law.

(f) Neither Mentorix nor Mentorix India is a party to or member of any joint venture, partnership, limited liability company or other arrangement or contract which could be treated as a partnership for federal income tax purposes. Neither Mentorix nor Mentorix India has ever filed a consent pursuant to Section 341(f) of the Code, relating to collapsible corporations, and Section 341(f)(2) does not apply to any of Mentorix’s or Mentorix India’s assets. Neither Mentorix nor Mentorix India is, or has been, a U.S. real property holding company (as defined in Section 897(c)(2) of the Code) during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Neither Mentorix nor Mentorix India owns an interest in real property in any jurisdiction in which a Tax is imposed, or the value of the interest reassessed, on the transfer of an interest in real property and which treats the transfer of an interest in an entity that owns an interest in real property as a transfer of the interest in real property. Neither Mentorix nor Mentorix India has ever been either a “controlled corporation “ or a “distributing corporation” (within the meaning of Section 355(a)(1)(A) of the Code) with respect to a transaction that was described in, or intended to qualify as a tax-free transaction pursuant to Section 355 of the Code. Neither Mentorix nor Mentorix India has net operating losses or other tax attributes presently subject to limitation under Sections 382, 383 or 384 of the Code, or the federal consolidated return regulations (other than limitations imposed as a result of the transactions contemplated by this Agreement). Neither Mentorix nor Mentorix India has made or agreed to make any adjustment under Section 481(a) of the Code (or any corresponding provision of state, local or foreign Tax law) by reason of a change in accounting method or otherwise, and will not be required to make such an adjustment as a result of the transactions contemplated by this Agreement. Neither Mentorix nor Mentorix India has participated in an international boycott as defined in Section 999 of the Code. Neither Mentorix nor Mentorix India has ever (i) made an election under Section 1362 of the Code to be treated a