AGREEMENT AND PLAN OF MERGER

 

TABLE OF CONTENTS

	Page
ARTICLE I THE MERGER		1
Section 1.1. The Merger		1
Section 1.2. Effective Time		1
Section 1.3. Effect of the Merger		2
Section 1.4. Certificate of Incorporation; Bylaws		2
Section 1.5. Directors and Officers		2
Section 1.6. Conversion of Company Capital Stock; Merger Consideration		2
Section 1.7. Cancellation of Treasury Stock		3
Section 1.8. Working Capital Adjustment		3
Section 1.9. Dissenting Shares		4
Section 1.10. Stock Options		4
Section 1.11. Additional Consideration		5
Section 1.12. Capital Stock of Merger Sub		5
Section 1.13. Surrender and Exchange of Certificates		6
Section 1.14. Further Ownership Rights in Company Common Stock		8
Section 1.15. Closing		8
Section 1.16. Lost, Stolen or Destroyed Certificates		9
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY		9
Section 2.1. Organization and Qualification; Subsidiaries		9
Section 2.2. Certificate of Incorporation and Bylaws		9
Section 2.3. Capitalization		10
Section 2.4. Authority; Enforceability		11
Section 2.5. No Conflict; Required Filings and Consents		12
Section 2.6. Material Contracts		12
Section 2.7. Compliance with Laws; Permits and Licenses		14
Section 2.8. Financial Statements		16
Section 2.9. Absence of Certain Changes or Events		16
Section 2.10. No Undisclosed Liabilities		16
Section 2.11. Absence of Litigation		16
Section 2.12. Employee Benefit Plans		16
Section 2.13. Employment and Labor Matters		18
Section 2.14. Absence of Restrictions on Business Activities		19
Section 2.15. Title to Assets; Leases		19
Section 2.16. Taxes		20
Section 2.17. Intellectual Property		23
Section 2.18. Data Security		24
Section 2.19. Insurance		24
Section 2.20. No Restrictions on the Merger; Takeover Statutes		24
Section 2.21. Brokers		24
Section 2.22. Certain Business Practices		24
Section 2.23. Interested Party Transactions		24
Section 2.24. Company Indebtedness		25
Section 2.25. Disclaimer of Other Representations and Warranties		25
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB		25
Section 3.1. Organization and Qualification		25
Section 3.2. Certificate of Incorporation and Bylaws		25

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Section 3.3. Capitalization		26
Section 3.4. Authority; Enforceability		26
Section 3.5. No Conflict; Required Filings and Consents		26
Section 3.6. Absence of Litigation		27
Section 3.7. SEC Reports; Financial Statements		27
Section 3.8. Proxy Statement		27
Section 3.9. No Undisclosed Liabilities		27
Section 3.10. Brokers		27
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER		28
Section 4.1. Conduct of Business by the Company Pending the Merger		28
Section 4.2. No Solicitation of Other Proposals		30
Section 4.3. Stockholders Consents		31
Section 4.4. Preparation of Proxy Statement		31
Section 4.5. Stockholders Meeting		32
Section 4.6. Access to Information; Confidentiality		32
Section 4.7. Reasonable Efforts; Further Assurances		33
Section 4.8. Notification of Certain Matters; Certain Consents		34
Section 4.9. Public Announcements		35
Section 4.10. Takeover Statutes		35
Section 4.11. Shareholder Approval of Certain Payments		35
Section 4.12. Company Transaction Expenses		35
Section 4.13. Stock Consideration		35
Section 4.14. Funding		35
Section 4.15. Non-Competition		36
Section 4.16. Related Agreements		36
Section 4.17. Stockholders’ Agreement		37
Section 4.18. Employment Agreements		37
Section 4.19. Reporting Issuer		37
Section 4.20. Separate Entity		37
Section 4.21. Director & Officer Indemnification		37
ARTICLE V CONDITIONS OF MERGER		38
Section 5.1. Conditions to Obligation of Each Party to Effect the Merger		38
Section 5.2. Additional Conditions to Obligations of Parent and Merger Sub		39
Section 5.3. Additional Conditions to Obligations of the Company		41
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER		42
Section 6.1. Termination		42
Section 6.2. Effect of Termination		43
Section 6.3. Fees and Expenses		43
Section 6.4. Amendment		43
Section 6.5. Waiver		43
ARTICLE VII ESCROW AND INDEMNIFICATION		43
Section 7.1. No Survival		43
Section 7.2. Escrow Fund		43
Section 7.3. Indemnification		43
Section 7.4. Escrow Fund		45
Section 7.5. Objections to Claims; Resolution of Conflicts		45
Section 7.6. Stockholders’ Agent		46
Section 7.7. Actions of the Stockholders’ Agent		47

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Section 7.8. Notice; Third-Party Claims		47
Section 7.9. Adjustment to Purchase Price		48
ARTICLE VIII GENERAL PROVISIONS		48
Section 8.1. Tax Matters		48
Section 8.2. Notices		50
Section 8.3. Disclosure Schedules		51
Section 8.4. Certain Definitions		51
Section 8.5. Interpretation		54
Section 8.6. Severability		54
Section 8.7. Entire Agreement		55
Section 8.8. Assignment		55
Section 8.9. Parties in Interest		55
Section 8.10. Failure or Indulgence Not Waiver; Remedies Cumulative		55
Section 8.11. Governing Law; Enforcement		55
Section 8.12. Counterparts		55

 

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EXHIBITS

EXHIBIT A	—	Forms of Stockholders’ Agreement
EXHIBIT B	—	Form of Sosnoff Executive Employment Agreement
EXHIBIT C	—	Form of Sheridan Executive Employment Agreement

 

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Index of Defined Terms

Action		8.4
Acquisition Proposal		4.2(a)
Advisors		2.7(f)
Affiliate		8.4
Affiliated Group		2.16(d)
Agreement		Preamble
Approvals		2.1(a)
Beneficial owner		8.4
Business Day		8.4
Certificate of Merger		1.2
Certificates		1.13(c)
CFTC		8.4
Closing		1.15
Closing Date		1.15
Code		1.13(h)
Common Per Share Consideration		1.6(b)
Company		Preamble
Company Capital Stock		1.6(a)
Company Common Stock		1.6(a)
Company Disclosure Schedule		8.4
Company Employees		2.12(a)
Company Material Adverse Effect		8.4
Company Representatives		4.2(a)
Company Shareholder Approval		4.11
Company Statement		1.8(a)
Company Transaction Expenses		8.4
Competitive Business		4.15(a)
Confidentiality Agreement		4.6(b)
Contract		8.4
Control		8.4
Controlled Group		2.12(c)
Court		8.4
DGCL		Recitals
Dissenting Shares		1.9
Dissenting Stockholder		1.9
Effective Time		1.2
Employee Plans		2.12(a)
End Date		6.1(b)
ERISA		2.12(a)
Escrow Agreement		4.16(b)
Escrow Agent		1.13(c)
Escrow Amount		1.13(e)
Escrow Claims Notice		7.4(d)
Escrow Fund		1.13(a)
Estimated Working Capital		1.8(a)
Exchange Act		3.7(a)
Executive Employment Agreements		4.18
Financial Statements`		2.8

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Financing		4.14
Final Working Capital		1.8(a)
Foreign Competition Laws		8.4
GAAP		2.8
Governmental Authority		8.4
HSR Act		2.5(b)
Indebtedness		8.4
Infringes		2.17(d)
Intellectual Property		8.4
Knowledge		8.4
Law		8.4
Lien		8.4
Litigation		8.4
Losses		7.3(a)
Material Contracts		2.6(a)
Merger		Recitals
Merger Consideration		1.6(e)
Merger Sub		Preamble
Merger Sub Common Stock		1.12
NASD		8.4
Neutral Firm		1.8(a)
Option Consideration		1.10(a)
Order		8.4
Outstanding Stock Options		2.3(a)
Parent		Preamble
Parent Acquisition		4.21(a)
Parent Common Stock		1.6(b)
Parent Disclosure Schedule		8.4
Parent Financial Statements		3.7(b)
Parent Indemnified Person		7.3(a)
Parent Indemnified Persons		7.3(a)
Parent Material Adverse Effect		8.4
Parent SEC Documents		3.7(a)
Parent Stockholders Meeting		4.5
Parent Stockholder Approvals		4.5
Paying Agent		8.4
PBGC		2.12(e)
Person		8.4
Potential 280G Benefits		4.11
Preferred Stock		1.6(a)
Proxy Statement		3.8
Real Property		2.15(b)
Regulation		8.4
Related Agreements		8.4
Restricted Period		4.15(a)
Rule 1017 Request		5.1(d)
SEC		2.5(b)
Securities Act		2.3(c)
Series A Consideration		1.6(c)
Series A Preferred		1.6(a)

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Series B Consideration		1.6(d)
Series B Preferred		1.6(a)
Sheridan		4.15(a)
Software		8.4
Sosnoff		4.15(a)
Stock-Based Rights		2.3(c)
Stock Consideration		1.6(f)
Stock Issuance		8.4
Stock Option		1.10(c)
Stock Option Plan		1.10(c)
Stockholder		8.4
Stockholder Consents		Recitals
Stockholders’ Agent		7.6(a)
Stockholders’ Agreement		4.17
Subsidiary		8.4
Surviving Corporation		1.1
Systems		8.4
Tail Indemnitees		4.21(b)
Tax		2.16
Tax Claim		8.1(b)
Tax Returns		2.16
Taxes		2.16
Termination Fee		6.2(b)
thinkorswim		2.7(e)
Transfer Taxes		8.1(f)
Voting Agreement		Recitals
WARN		2.13(b)

 

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of September 18, 2006 (the “ Agreement ”), among INVESTools Inc., a Delaware corporation (“ Parent ”), Atomic Acquisition Corp., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”), and thinkorswim Group, Inc., a Delaware corporation (the “ Company ”).

WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have each determined that it is in the best interests of their respective stockholders for Parent to acquire the Company upon the terms and subject to the conditions set forth herein;

WHEREAS, the Boards of Directors of Merger Sub and the Company have each approved the merger (the “ Merger ”) of Merger Sub with and into the Company, in accordance with Section 251 of the Delaware General Corporation Law (the “ DGCL ”) and subject to the conditions set forth herein, which Merger will result in, among other things, the Company becoming a wholly-owned subsidiary of Parent;

WHEREAS, the Board of Directors of Merger Sub and the Company have unanimously (i) approved and declared the Merger advisable upon the terms and subject to the conditions set forth in this Agreement and (ii) recommended the approval of the Merger and this Agreement by the stockholders of Merger Sub or the Company, as applicable;

WHEREAS, the Board of Directors of Parent has unanimously (i) approved and declared the Merger advisable upon the terms and subject to the conditions set forth in the Agreement and (ii) authorized the issuance of the Stock Consideration (as defined herein);

WHEREAS, as a condition to the willingness of, and an inducement to, Parent and Merger Sub to enter into this Agreement, each holder of Company Capital Stock (as defined herein) that holds shares representing 3% or more of the outstanding shares of any class or series of Company Capital Stock has entered into a Voting Agreement, dated as of the date hereof (the “ Voting Agreement ”), pursuant to which, among other things, (a) holders of Company Capital Stock have executed and delivered, in accordance with the requirements of the DGCL, a written consent effective immediately following execution of this Agreement with respect to shares of Company Capital Stock owned by them or which they have the right to vote, in favor of the approval of this Agreement and the Merger (“ Stockholder Consents ”) and (b) each of the stockholders party thereto has agreed, subject to the terms thereof, to vote all shares of Company Capital Stock owned by each of them in favor of the approval of this Agreement and the Merger;

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

ARTICLE I
THE MERGER

Section 1.1.   The Merger.    At the Effective Time (as defined herein) and subject to and upon the terms and conditions of this Agreement and in accordance with Section 251 of the DGCL, (a) Merger Sub shall be merged with and into the Company, (b) the separate corporate existence of Merger Sub shall cease, and (c) the Company shall, as the surviving corporation in the Merger, continue its existence under Delaware law as a wholly-owned subsidiary of Parent. The Company as the surviving corporation after the Merger is hereinafter sometimes referred to as the “Surviving Corporation”.

Section 1.2.   Effective Time.    As promptly as practicable after the satisfaction or waiver of the conditions set forth in Article V, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of State of the State of Delaware in such form as required by and executed in accordance with the relevant provisions of the DGCL (the date and time of such filing, or such later date and time as may be specified in such filing by mutual agreement of Parent, Merger Sub and the Company, being the “ Effective Time ”).

 

Section 1.3.   Effect of the Merger.    At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the foregoing, from and after the Effective Time, the Surviving Corporation shall have all the properties, rights, privileges, purposes, and powers and debts, duties, and liabilities of the Company.

Section 1.4.   Certificate of Incorporation; Bylaws.    Following the Effective Time, the certificate of incorporation of Merger Sub shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof and applicable Law. Following the Effective time, the bylaws of Merger Sub shall be the bylaws of the Surviving Corporation until thereafter changed or amended in accordance with the provisions thereof and applicable Law. True and correct copies of the certificate of incorporation and by-laws of Merger Sub as of the date of this Agreement are set forth in Section 1.4 of the Parent Disclosure Schedule.

Section 1.5.   Directors and Officers.    The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the certificate of incorporation and the bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws. The officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation.

Section 1.6.   Conversion of Company Capital Stock; Merger Consideration.    At the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto or the holders of the following securities:

(a)        Subject to the provisions of this Article I and Article VII, (i) each share of common stock, par value $0.001, of the Company (the “ Company Common Stock ”) issued and outstanding immediately prior to the Effective Time (other than any shares of Company Common Stock to be canceled pursuant to Section 1.7 and Dissenting Shares (as defined herein)) will be cancelled and converted automatically into the right to receive the Common Per Share Consideration (as defined herein), without interest, (ii) each share of Series A Preferred Stock, par value $0.001 per share (“ Series A Preferred ”), will be cancelled and converted automatically into the right to receive the Series A Consideration (as defined herein), (iii) each share of Series B Preferred Stock, par value $0.001 per share (“ Series B Preferred ”, and together with the Series A Preferred, the “ Preferred Stock ”, and the Preferred Stock, together with the Company Common Stock, the “ Company Capital Stock ”), will be converted automatically into the right to receive the Series B Consideration (as defined herein) and (iv) each Stock Option will be cancelled and converted into the right to receive the applicable Option Consideration (as defined herein). Each holder of a certificate representing any such Company Capital Stock shall cease to have any rights with respect thereto, except the right to receive, subject to this Article I and Article VII, the applicable consideration to be paid upon surrender of such certificate in accordance with Section 1.13 hereof.

(b)        The “ Common Per Share Consideration ” shall equal, per share of Company Common Stock, $130.109276 in cash (subject to any adjustments made pursuant to Section 1.8 hereof) and 14.621796 fully paid and nonassessable shares of common stock, par value $0.01 per share of Parent (“ Parent Common Stock ”), payable to the holder thereof, without interest and less any withholding taxes.

(c)        The “ Series A Consideration ” shall equal, per share of Series A Preferred, $151.960850 in cash (subject to any adjustments made pursuant to Section 1.8 hereof) and 17.077497 fully paid and nonassessable shares of Parent Common Stock, payable to the holder thereof, without interest and less any withholding taxes.

(d)        The “ Series B Consideration ” shall equal, per share of Series B Preferred, $130.109276 in cash (subject to any adjustments made pursuant to Section 1.8 hereof) and 14.621799 fully paid and

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nonassessable shares of Parent Common Stock, payable to the holder thereof, without interest and less any withholding taxes.

(e)        The “ Merger Consideration ” shall equal the aggregate of (i) the Series A Consideration multiplied by the number of shares of Series A Preferred issued and outstanding as of the date hereof, (ii) the Series B Consideration multiplied by the number of shares of Series B Preferred issued and outstanding as of the date hereof, (iii) the Common Per Share Consideration multiplied by the number of shares (excluding the shares to be cancelled pursuant to Section 1.7) of Company Common Stock issued and outstanding as of the date hereof, (iv) the Option Consideration (as defined in Section 1.10) and (v) the Additional Consideration (as defined in Section 1.11).

(f)         The Parent Common Stock constituting a portion of the Merger Consideration is referred to herein as the “ Stock Consideration ”. The Stock Consideration shall be subject to equitable adjustment for any stock split, stock dividend, combination or recapitalization of the Parent Common Stock following the date hereof.

(g)        Notwithstanding the foregoing, but subject to Section 1.8(b) and (c), in no event shall the Merger Consideration exceed $170,000,000 in cash and, subject to Section 1.6(f), 19,104,762 shares of Parent Common Stock), plus (x) the aggregate amount of all cash dividends, distributions and payments paid to the securityholders of the Company pursuant to Section 4.1(c)(ii) after the date hereof but on or prior to the Closing Date, plus (y) the Additional Consideration.

Section 1.7.   Cancellation of Treasury Stock.    Each share of the Company Common Stock owned by the Company or any direct or indirect Subsidiary of the Company, if any, immediately prior to the Effective Time, shall be canceled and extinguished without any conversion thereof and no payment or distribution shall be made with respect thereto.

Section 1.8.   Working Capital Adjustment.

(a)        Set forth in Section 1.8 of the Company Disclosure Schedule is the Company’s good faith estimate of the working capital (“ Estimated Working Capital ”) of the Company and its consolidated subsidiaries as of the date hereof, subject to accounting principles, methodologies, procedures and classifications as set forth in Section 1.8(a) of the Company Disclosure Schedule (“ Company’s Statement ”), and copies of all documentary evidence reasonably necessary or helpful to substantiate such calculation. Parent shall have an opportunity to fully investigate and substantiate the Company’s Statement for a period of 90 days, during which period Parent and its agents shall have reasonable access, during normal business hours and upon reasonable notice, to the books and records, the financial systems and finance personnel and any other relevant information of the Company to the extent reasonably necessary to review the Company’s Statement, and the Company agrees to promptly and fully cooperate in any such process as reasonably requested by Parent. If Parent agrees in writing with the Company’s estimate, such estimate shall be the “ Final Working Capital .” If Parent contests such estimate, the parties shall discuss and negotiate in good faith to resolve any dispute and agree upon the Final Working Capital. If the parties are unable to resolve such dispute by the Closing Date, the matter will be submitted for resolution to a nationally-recognized independent public accounting firm reasonably satisfactory to both Parent and the Company (the “ Neutral Firm ”), and the Closing Date will be delayed but in no event later than the End Date (as defined herein) pending resolution of the dispute. The Neutral Firm shall determine the Final Working Capital as of the date hereof. The determination by the Neutral Firm shall be binding on both parties. The Company agrees to provide the Neutral Firm all reasonable cooperation and access to books and records and personnel of the Company and its Subsidiaries. The fees and disbursements of the Neutral Firm shall be allocated equally between Parent and the Company. The Estimated Working Capital and Final Working Capital shall have the meaning and be calculated in accordance with Section 1.8 of the Company Disclosure Schedule.

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(b)        If the Final Working Capital as of the date hereof, as finally determined pursuant to this Section 1.8, exceeds the sum of (i) $5,000,000, plus (ii) the aggregate amount of all cash dividends, distributions and payments paid to the securityholders of the Company pursuant to Section 4.1(c)(ii) after the date hereof but on or prior to the Closing Date, Parent shall pay to the Paying Agent the aggregate amount of such excess in accordance with Section 1.13 hereof and such excess shall be considered to be part of the Merger Consideration. If the Final Working Capital as of the date hereof, as finally determined pursuant to this Section 1.8, is less than the sum of (i) $5,000,000, plus (ii) the aggregate amount of all cash dividends and distributions paid to the stockholders of the Company pursuant to Section 4.1(c)(ii) after the date hereof but on or prior to the Closing Date, then the Merger Consideration payable by Parent pursuant to Section 1.13 shall be reduced by such deficit.

(c)        In the event that the Merger Consideration is increased or decreased because of adjustments made pursuant to Section 1.8, such increase or decrease shall be allocated ratably among the Series A Consideration, Series B Consideration and Common Per Share Consideration, as applicable, and any reference to the Common Per Share Consideration, the Series A Consideration or the Series B Consideration shall be deemed to mean such defined term as adjusted by this Section 1.8.

Section 1.9.   Dissenting Shares.    Notwithstanding anything in this Agreement to the contrary, if any Stockholder shall demand to be paid the “fair value” of such holder’s shares of Company Common Stock, as provided in Section 262 of the DGCL (such Stockholder a “ Dissenting Stockholder ”), such shares (the “ Dissenting Shares ”) shall not be converted into or exchangeable for the right to receive the Merger Consideration except as provided in this Section 1.9 , and the Company shall give Parent notice thereof and Parent shall have the right to participate in all negotiations and proceedings with respect to any such demands. Neither the Company nor the Surviving Corporation shall, except with the prior written consent of Parent, voluntarily make any payment with respect to, or settle or offer to settle, any such demand for payment. If any Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn or lost the right to dissent, the shares of Company Common Stock held by such Dissenting Stockholder shall thereupon be treated as though such shares had been converted into the Merger Consideration pursuant to Section 1.6 . Parent shall contribute or cause to be contributed to the Surviving Corporation funds sufficient from time to time to make all payments with respect to the Dissenting Shares.

Section 1.10.   Stock Options.

(a)        Each Stock Option (as defined herein) that is outstanding and unexercised immediately prior to the Effective Time, and that is not then vested and exercisable, shall become fully vested and exercisable on an accelerated basis immediately prior to the Effective Time. As of the Effective Time and in accordance with the terms of the Stock Option Plan (as defined herein), each Stock Option that is outstanding and unexercised immediately prior to the Effective Time shall be cancelled in exchange for the right to receive from Parent or the Surviving Corporation consideration (the aggregate of such payments being the “ Option Consideration ”) equal to the difference of (i) the product of (x) the excess (if any) of (A) the Common Per Share Consideration over (B) the exercise price per share of Company Common Stock for such Stock Option times (y) the number of shares of Company Common Stock underlying such Stock Option, minus (ii) applicable withholding taxes, minus (iii) the portion of the Escrow Fund to be deposited in the Escrow Fund on such holder’s behalf pursuant to Section 1.13(c). Each holder of Stock Options cancelled in accordance with this Section 1.10(a) shall, as of the Effective Time, cease to have any rights with respect thereto, other than the right to receive the stock and cash payment pursuant to this Section 1.10(a) attributable to such cancelled Stock Option. The Option Consideration issued to each holder of Stock Options cancelled in accordance with this Section 1.10(a) shall be in the same proportion of cash and Parent Common Stock as issued to a holder of Company Common Stock pursuant to Section 1.6(a).

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(b)        Prior to the Effective Time, the Company shall (i) take all lawful and commercially reasonable actions (including, without limitation, obtaining all necessary consents and waivers from the holders of Stock Options) necessary to give effect to the transactions contemplated by Section 1.10(a) and (ii) take all lawful and commercially reasonable actions necessary such that, on and after the Effective Time, the Stock Option Plan shall be cancelled, the Stock Options shall cease to represent the right to purchase Company Common Stock and no Stock Option holder shall have any right or option to purchase Company Common Stock or any other equity security of the Company, Parent, or the Surviving Corporation (in each case, without the creation of any additional liability of the Company or any of its Subsidiaries).

(c)        A “ Stock Option ” is any option or warrant to purchase Company Common Stock granted under any stock option plan or other equity-related plan of the Company or any of its subsidiaries to employees, directors or consultants, including options issued under the Company’s 2000 Stock Option and Grant Plan adopted June 30, 2000, as amended (the “ Stock Option Plan ”), whether vested or not.

Section 1.11.   Additional Consideration.

(a)        If the Trading Price of the Parent Common Stock is less than $8.75 as of any Freely Transferable Date, Parent shall promptly issue, to each Stockholder (or permitted transferee thereof) holding Parent Common Stock, for each share of Parent Common Stock held by such holder that is then becoming Freely Transferable, an additional fractional share of Parent Common Stock equal to the product of (i) 40.68%, multiplied by (ii) the excess of $8.75 over the Trading Price, divided by (iii) the Trading Price. The aggregate number of shares of Parent Common Stock to be issued to each such holder shall be rounded to the nearest whole number.

(b)        (i)   “Trading Price” shall mean the average closing bid price, weighted by daily trading volume, both numbers as reported by NASDAQ, during the twenty (20) consecutive trading days immediately preceding the Freely Transferable Date. For purposes of this Section 1.11, if the “Trading Price” is less than $8.00 then it shall be deemed to be $8.00.

(ii)       “Freely Transferable”, in respect of any particular share of Parent Common Stock received as Merger Consideration, shall mean that the transfer restrictions set forth in Section 2.1 of the Stockholders’ Agreement are no longer applicable.

(iii)      “Freely Transferable Date” shall mean, (x) in respect of Persons other than Tom Sosnoff and Scott Sheridan, the date that is six months after the Effective Date (or such later date when a Form S-3 shelf registration statement is first effective with respect to shares of Parent Common Stock received by such Persons as Merger Consideration) and (y) in respect of Tom Sosnoff and Scott Sheridan, each of the first and second anniversaries of the Effective Date as to 35% of the number of shares of Parent Common Stock constituting a portion of the Merger Consideration received by them and the third anniversary thereof as to 30% of the number of such shares (or in each case such later date when a Form S-3 shelf registration statement is first effective with respect to such percentage of shares of Parent Common Stock received by such Persons as Merger Consideration).

(c)        On or prior to any Freely Transferable Date, Parent shall deliver a statement to each Stockholder holding Parent Common Stock then becoming Freely Transferable with details of the calculation of the “Trading Price” and the number of additional shares of Parent Common Stock, if any, each Stockholder will be issued as Additional Consideration.

Section 1.12.   Capital Stock of Merger Sub.    Each share of common stock, par value $0.01 per share, of Merger Sub (“Merger Sub Common Stock”) issued and outstanding immediately prior to the Effective Time shall be automatically converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation and shall thereafter constitute all of the issued and

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outstanding capital stock of the Surviving Corporation, all of which will be owned by Parent. Each stock certificate representing any shares of Merger Sub Common Stock shall continue after the Effective Time to represent ownership of such shares of capital stock of the Surviving Corporation.

Section 1.13.    Surrender and Exchange of Certificates.

(a)        Paying Agent .   Prior to the Effective Time, Parent shall designate a bank or trust company, reasonably acceptable to the Company, to act as the Paying Agent in the Merger.

(b)        Parent to Provide Merger Consideration .   When and as needed, Parent shall deposit with the Paying Agent, in trust for the benefit of holders of shares of Company Capital Stock, at or prior to the Effective Time, the Merger Consideration (as adjusted pursuant to Section 1.8), less the amount to be deposited into an escrow fund (the “ Escrow Fund ”) pursuant to Section 1.13(c). Parent agrees to make available to the Paying Agent, from time to time as needed, additional cash sufficient to pay cash in lieu of fractional shares pursuant to Section 1.13(i) and any dividends and other distributions pursuant to Section 1.13(j). At any time following six months after the Effective Time, all cash and certificates deposited with or made available to the Paying Agent pursuant to this Section 1.13(b), which remains undistributed to the holders of the Certificates representing shares of Company Capital Stock, shall be delivered to Parent upon demand, and thereafter such holders of unexchanged shares of Company Capital Stock shall be entitled to look to Parent (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration for payment upon due surrender of their Certificates.

(c)        Exchange Procedures .   Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed or delivered to each holder of record of a certificate or certificates (the “ Certificates ”) that represented as of the Effective Time outstanding shares of Company Capital Stock to be exchanged pursuant to Section 1.6, a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify, including acknowledgement of the provisions of Article VII) and instructions for use in effecting the surrender of the Certificates in exchange for payment of the applicable Merger Consideration therefor. Upon surrender of a Certificate to the Paying Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be reasonably required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor (i) one or more shares of Parent Common Stock (which shall be in uncertificated book-entry form unless a physical certificate is requested) representing, in the aggregate, the whole number of shares that such holder has the right to receive pursuant to Section 1.6 (after taking into account all shares of Company Capital Stock then held by such holder) and (ii) a check for the cash portion of the Merger Consideration represented by such Certificate (less the portion of the Escrow Fund to be deposited in the Escrow Fund on such holder’s behalf pursuant to this Section 1.13(c)). No interest will be paid or will accrue on any cash payable for the cash portion of the Merger Consideration or pursuant to Section 1.13(i) or Section 1.13(j). The Certificate so surrendered shall forthwith be canceled. At the Effective Time, and subject to and in accordance with the provisions of Article VII, Parent shall pay to the escrow agent under the Escrow Agreement (the “ Escrow Agent ”) on behalf of the Stockholders, the Escrow Amount, which shall be held by the Escrow Agent as nominee for the Stockholders. The Escrow Fund shall be beneficially owned by such Stockholders and shall be held in escrow and shall be available to indemnify the Parent Indemnified Persons as provided in Article VII.

(d)        The parties hereby acknowledge and agree that the Escrow Fund shall be treated as an installment obligation for purposes of Section 453 of the Code, and no party shall take any action or filing position inconsistent with such characterization. The parties further agree that, consistent with Proposed Treasury Regulation Section 1.468B-8, for Tax reporting purposes, all interest or other income earned

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from the investment of the Escrow Fund or any portion thereof in any Tax year (including capital gains and losses) shall be reported as allocated to Parent until the distribution of the Escrow Fund (or portions thereof) is determined and thereafter to Parent and the Stockholders in accordance with their respective interests in the Escrow Fund consistent with Proposed Treasury Regulation Section 1.468B-8. The parties hereby agree that Parent shall be entitled to an annual distribution from the Escrow Fund on the last business day of the year (in the manner specifically provided in the Escrow Agreement) in an amount equal to 40% of the interest and other income (including capital gains and losses) earned from all or a portion of the Escrow Fund which is reported by the Escrow Agent as allocated to Parent.

(e)        Escrow Amount .   The “ Escrow Amount ” shall be equal to the sum of (i) $8,000,000 in cash, plus (ii) $400,000, as the estimated amount of court costs and legal fees to be incurred after the Effective Time in connection with the Litigations set forth in Section 7.3(a)(iii) of the Company Disclosure Schedule, plus (iii) when and if available in cash to the Surviving Corporation, the net cash proceeds received in connection with such Litigations, plus (iv) when and if available in cash to the Surviving Corporation, the amount of the federal income Tax refund attributable to the carryback created by the expenses relating to Stock Options granted under the Stock Option Plan (or any predecessor plan).

(f)         Payment to Registered Holders .   If any portion of the Merger Consideration is to be paid to a Person other than the Person in whose name the Certificate surrendered in exchange therefor is registered, it will be a condition to such payment that (i) the Certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and (ii) the Person requesting such exchange will have paid any transfer or other Taxes required by reason of such payment in a name other than the registered holder of the Certificate surrendered or established to the satisfaction of Parent, or any agent designated by Parent, that such Tax has been paid or is not applicable.

(g)        No Liability .   Notwithstanding anything to the contrary in this Agreement, none of the Paying Agent, Parent, Merger Sub or the Surviving Corporation shall be liable to a holder of a Certificate for any amount delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate has not been surrendered prior to five years after the Effective Time (or immediately prior to such earlier date on which the Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any Governmental Authority), any Merger Consideration or other shares, cash, dividends, distributions or other things of value in respect of such Certificate shall, to the extent permitted by applicable law, become the property of the Surviving Corporation, free and clear of all claims or interests of any Person, whether previously entitled thereto or not.

(h)        Withholding of Tax .   The Surviving Corporation or the Paying Agent will be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Company Capital Stock such amounts as the Surviving Corporation or the Paying Agent shall determine in good faith they are required to deduct and withhold with respect to the making of such payment under the U.S. Internal Revenue Code of 1986, as amended from time to time (the “ Code ”), and the regulations promulgated and rulings issued thereunder, or any provision of federal, state, local or foreign Laws relating to Taxes. To the extent that amounts are so withheld by the Surviving Corporation or the Paying Agent, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the holder of the Company Capital Stock in respect of whom such deduction and withholding were made by the Surviving Corporation or the Paying Agent.

(i)         No Fractional Shares of Parent Common Stock.

(i)         No certificates or scrip or shares of Parent Common Stock representing fractional shares of Parent Common Stock or book entry credit of the same shall be issued upon the surrender for exchange of Certificates and such fractional share interests will not entitle the owner thereof to vote or to have any rights of a stockholder of Parent or a holder of shares of Parent Common Stock.

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(ii)       Notwithstanding any other provision of this Agreement, each holder of shares of Company Capital Stock exchanged pursuant to the Merger who would otherwise have been entitled to receive a fraction of a share of Parent Common Stock (after taking into account all Certificates delivered by such holder) shall receive, in lieu thereof, cash (without interest) in an amount equal to the product of (i) such fractional part of a share of Parent Common Stock multiplied by (ii) $9.00. As promptly as practicable after the determination of the amount of cash, if any, to be paid to holders of fractional interests, the Paying Agent shall so notify Parent, and Parent shall cause the Surviving Corporation to deposit such amount with the Paying Agent and shall cause the Paying Agent to forward payments to such holders of fractional interests subject to and in accordance with the terms hereof.

(j)         Distributions with Respect to Unexchanged Shares .   No dividends or other distributions declared or made with respect to shares of Parent Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate (of Company Capital Stock) that such holder would be entitled to receive upon surrender of such Certificate until such holder shall surrender such Certificate in accordance with Section 1.13(c). Subject to the effect of applicable laws, following surrender of any such Certificate, there shall be paid to such holder of shares of Parent Common Stock issuable in exchange therefor, without interest, (a) promptly after the time of such surrender, the amount of dividends or other distributions, with a record and payment date after the Effective Time but prior to such surrender, payable with respect to such shares of Parent Common Stock and (b) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to such surrender and a payment date subsequent to such surrender, payable with respect to such shares of Parent Common Stock.

Section 1.14.   Further Ownership Rights in Company Common Stock.    The applicable Merger Consideration paid upon the surrender for exchange of Certificates in accordance with the terms of this Article I (including amounts paid into the Escrow Fund pursuant to Article VII) shall be deemed to have been paid in full satisfaction of all rights pertaining to such Company Capital Stock (including any rights to receive accumulated but undeclared dividends on such Company Capital Stock, if any). At the Effective Time, the stock transfer books of the Company shall be closed, and thereafter there shall be no further registration of transfers of shares of Company Capital Stock on the records of the Surviving Corporation. From and after the Effective Time, the holders of Certificates representing ownership of shares of Company Capital Stock outstanding shall cease to have any rights with respect to such shares of Company Capital Stock (including any rights to receive accumulated but undeclared dividends on such Company Capital Stock, if any) except as otherwise provided for herein. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article I.

Section 1.15.   Closing.    Unless this Agreement shall have been terminated and the transactions contemplated by this Agreement abandoned pursuant to the provisions of Article VI, and subject to the provisions of Article V, the closing of the Merger (the “ Closing ”) will take place at 10:00 a.m. (Eastern time) on a date (the “ Closing Date ”) to be mutually agreed upon by the parties, which date shall be not later than the third Business Day after all the conditions set forth in Article V shall have been satisfied (or waived in accordance with Section 6.5), unless another time and/or date is agreed by the parties hereto. The Closing shall take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York or such other place as the parties hereto otherwise agree.

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Section 1.16.   Lost, Stolen or Destroyed Certificates.    In the event any Certificates representing Company Capital Stock shall have been lost, stolen or destroyed, the Paying Agent shall pay in exchange for such lost, stolen or destroyed Certificates, upon the making of an acceptable affidavit of that fact by the holder thereof and the delivery of such other documents reasonably requested by the Paying Agent, the applicable Merger Consideration; provided , however, that Parent may, in its discretion and as a condition precedent to the payment 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 Parent or the Paying Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub that as of the date hereof and as of the Closing Date the statements contained in this Article II are true and correct as of the date of this Agreement, except to the extent such representations and warranties are specifically made as of a particular date (in which case such representations and warranties will be true and correct as of such date).

Section 2.1.   Organization and Qualification; Subsidiaries .

(a)        The Company is a corporation duly organized, validly existing and in good standing under Delaware law and has all the requisite corporate power and authority necessary to own, lease and operate its properties and to carry on its business as it is now being conducted. The Company is in possession of all material franchises, grants, authorizations, licenses, permits, easements, consents, waivers, qualifications, certificates, Orders and approvals (collectively, “ Approvals ”) necessary to own, lease and operate its properties and to carry on its business as it is now being conducted. The Company is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except to the extent that the failure to be so qualified or licensed would not have a Company Material Adverse Effect.

(b)        Each Subsidiary of the Company is a legal entity, duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization and has all the requisite power and authority necessary to own, lease and operate its properties and to carry on its business as it is now being conducted. Each Subsidiary of the Company is in possession of all material Approvals necessary to own, lease and operate its properties and to carry on its business as it is now being conducted. Each Subsidiary is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary, except to the extent that the failure to be so qualified or licensed would not have a Company Material Adverse Effect.

(c)        Section 2.1(c) of the Company Disclosure Schedule sets forth, as of the date hereof, a true and complete list of all of the Company’s directly and indirectly owned Subsidiaries, together with the jurisdiction of incorporation or organization of each Subsidiary, the jurisdictions in which such Subsidiary is qualified or licensed to do business as a foreign corporation and the percentage of each Subsidiary’s outstanding capital stock or other equity or other interest owned by the Company or another Subsidiary of the Company. Except as set forth in Section 2.1(c) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, directly or indirectly, any equity or similar interest in, any Person.

Section 2.2.   Certificate of Incorporation and Bylaws.   The Company has heretofore furnished to Parent a true and complete copy of each of its and each of its Subsidiaries’ certificate of incorporation and bylaws or equivalent organizational documents, as modified, supplemented, amended or restated to the date hereof. Such certificate of incorporation and bylaws and equivalent organizational documents of the

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Company and each of its Subsidiaries are in full force and effect, and no other organizational documents are applicable to or binding upon the Company or its Subsidiaries. None of such certificate of incorporation or bylaws or equivalent organizational documents restricts or limits the ability of the holders of Company Capital Stock to act by written consent in lieu of a meeting.

Section 2.3.   Capitalization .

(a)        The authorized stock of the Company consists of 1,610,281 shares, consisting of: (i) 1,372,213 shares of Company Common Stock, of which 741,115 are outstanding, and (ii) 238,068 shares of Preferred Stock, of which 59,060 shares have been designated Series A Preferred and are outstanding and 179,008 shares have been designated Series B Preferred and are outstanding. The Board of Directors of the Company has taken all action necessary to rescind any board resolution or action that would be inconsistent with the prior sentence. All of the outstanding shares of Company Capital Stock are duly authorized, validly issued, fully paid and nonassessable, and were not issued in violation of any purchase option, call option, right of first refusal or offer, preemptive right, subscription right or any similar right. As of the date hereof, (i) 317,492 shares of Company Common Stock are subject to Stock Options issued and outstanding on the date hereof, 317,492 shares of Common Stock are duly reserved for future issuance pursuant to Stock Options outstanding (the “ Outstanding Stock Options ”), and no shares of Common Stock or Preferred Stock are held in the treasury of the Company. Except as set forth in Section 2.3(a) of the Company Disclosure Schedule, none of the outstanding shares of Company Capital Stock are subject to, nor were they issued in violation of, any purchase option, call option, right of first refusal or offer, preemptive right, subscription right or any similar right. Except as set forth above, no shares of voting or non-voting capital stock, other equity interests, or other voting securities of the Company are issued, reserved for issuance or outstanding. Except as described in Section 2.3(a) of the Company Disclosure Schedule, all Outstanding Stock Options were granted under the Stock Option Plan. Section 2.3(a) of the Company Disclosure Schedule sets forth a correct and complete list of (i) each holder of Company Capital Stock and the number of shares of Company Capital Stock held by such holder and (ii) each Stock Option and other right to purchase Company Capital Stock, if any, outstanding as of the date hereof, together with the number of shares of Company Capital Stock subject to such option, warrant or right, the extent to which such option, warrant or right is vested and/or exercisable, the date of grant or issuance, the exercise price (and, in the case of Stock Options, whether such option is a non-qualified stock option or an incentive stock option), and the expiration date of each such option, warrant and right, and the total number of such options, warrants and rights. There are no Stock Options for any class of Company Capital Stock other than Company Common Stock. Except as provided in Section 1.10, no Stock Option shall entitle the holder thereof to receive anything after the Merger in respect of such Stock Option. Except as set forth in Section 2.3(a) of the Company Disclosure Schedule, all outstanding shares of Company Capital Stock are, and all shares which may be issued upon the exercise of Stock Option will be, duly authorized, validly issued, fully paid and nonassessable and not subject to any purchase option, call option, right of first refusal or offer, preemptive right, subscription right or similar right. Except for the Company Common Stock and Series A Preferred, there are no bonds, debentures, notes, other Indebtedness or any other securities of the Company with voting rights (or convertible into, or exchangeable for, securities with voting rights) on any matters on which Stockholders of the Company may vote.

(b)        Section 2.3(b) of the Company Disclosure Schedule sets forth the number of authorized and outstanding shares of capital stock, and ownership thereof, of each of the Company’s Subsidiaries. All of the outstanding shares of capital stock of each of the Company’s Subsidiaries have been duly authorized, validly issued, fully paid and nonassessable, are not subject to, and were not issued in violation of, any purchase option, call option, right of first refusal or offer, preemptive right, subscription right or any similar right, and are owned, of record and beneficially, by the Company or one of its direct or indirect Subsidiaries, free and clear of all Liens whatsoever. Except as set forth in Section 2.3(b) of the Company Disclosure Schedule, there are no restrictions of any kind which prevent the payment of dividends by any

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of the Company’s Subsidiaries, and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (including in the form of a loan or capital contribution) to or in any Person.

(c)        Except as described in subsection (a) above or set forth in Section 2.3(a) of the Company Disclosure Schedule, there are no outstanding securities, options, warrants, calls, rights, convertible or exchangeable securities or Contracts or obligations of any kind (contingent or otherwise) to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or of any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right or Contract. Except as set forth in Section 2.3(a) of the Company Disclosure Schedule, there are no outstanding obligations of the Company or any of its Subsidiaries (contingent or otherwise) to repurchase, redeem or otherwise acquire any shares of capital stock (or options or warrants to acquire any such shares) of the Company or its Subsidiaries. Except as set forth in Section 2.3(c) of the Company Disclosure Schedule, there are no stock-appreciation rights, stock-based performance units, “phantom” stock rights or other Contracts or obligations of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance or other attribute of the Company or any of its Subsidiaries or any of their businesses or assets or calculated in accordance therewith (collectively, “ Stock-Based Rights ”) or to cause the Company or any of its Subsidiaries to file a registration statement under the Securities Act of 1933, as amended (the “ Securities Act ”), or which otherwise relate to the registration of any securities of the Company. Except as set forth in Section 2.3(c) of the Company Disclosure Schedule or the Voting Agreement, there are no voting trusts, proxies or other Contracts of any character to which the Company or any of its Subsidiaries or, to the Knowledge (as defined herein) of the Company, any of the Stockholders is a party or by which any of them is bound with respect to the issuance, holding, acquisition, voting or disposition of any shares of capital stock or similar interests of the Company or any of its Subsidiaries.

(d)        Under the current certificate of incorporation of the Company, each share of Preferred Stock is convertible into Company Common Stock as follows:  (a) each share of Series A Preferred is convertible into 1.16794 shares of Company Common Stock; and (b) each share of Series B Preferred is convertible into 1.0 shares of Company Common Stock.

Section 2.4.   Authority; Enforceability .   The Company has all necessary corporate power and authority to execute and deliver this Agreement, each Related Agreement to which it is a party and each instrument required to be executed and delivered by it at the Closing, and to perform its obligations hereunder and thereunder and, subject to the requisite approval and adoption of this Agreement by the stockholders of the Company (evidenced by the consents delivered to Parent on the date hereof), to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Company of this Agreement and each Related Agreement, the performance of its obligations hereunder and thereunder, and the consummation of the transactions contemplated hereby and thereby, have been approved by the Company’s Board of Directors, duly and validly authorized by all requisite corporate action and, except for approval by the stockholders of the Company (evidenced by the consents delivered to Parent on the date hereof), no other actions or proceedings on the part of the Company are necessary to authorize the execution, delivery and performance of this Agreement and each Related Agreement or, upon delivery of the Stockholder Consents, to consummate the transactions so contemplated. With the receipt of the Stockholder Consents, no vote of the holders of any class or series of the capital stock of the Company is necessary to approve this Agreement or to consummate the transactions contemplated hereby. Each of this Agreement and the Related Agreements to which it is a party has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery

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thereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing.

Section 2.5.   No Conflict; Required Filings and Consents .

(a)        The execution and delivery by the Company of this Agreement, the Related Agreements to which it is a party or any instrument required by this Agreement or the Related Agreements to be executed and delivered by the Company or any of its Subsidiaries do not, and the performance of this Agreement, the Related Agreement or any instrument required by this Agreement to be executed and delivered by the Company or any of its Subsidiaries, shall not, (i) conflict with or violate the certificate of incorporation or bylaws or equivalent organizational documents of the Company or any of its Subsidiaries, (ii) conflict with or violate in any material respect any Law or Order in each case applicable to the Company or any of its Subsidiaries or by which its or any of their respective properties, rights or assets is bound or affected, or (iii) result in any material breach or violation of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company’s or any of its Subsidiaries’ rights or alter the rights or obligations of any party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties, rights or assets of the Company or any of its Subsidiaries pursuant to, any Contract to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties, rights or assets is bound or affected, except, with respect to (i), (ii) and (iii) above, as set forth in Section 2.5(a) of the Company Disclosure Schedule.

(b)        Except for (i) consents, authorizations, approvals or filings pursuant to the applicable provisions of United States federal and state laws relating to the regulation of broker-dealers or investment advisers and the rules and regulations of the Securities and Exchange Commission (“SEC”), the NASD, applicable state securities commissions, and the securities exchanges, boards of trade or other industry self-regulatory organizations of which the Company is a member that are set forth in Section 2.5(b) of the Company Disclosure Schedule, (ii) the filing of notice under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), and the expiration or early termination of the applicable waiting period, (iii) the filing of the Certificate of Merger in accordance with Delaware law and (iv) as described in Section 2.5(a) or 2.5(b) of the Company Disclosure Schedule, the execution and delivery by the Company of this Agreement, the Related Agreements to which it is a party or any instrument required by this Agreement to be executed and delivered by the Company or any of its Subsidiaries at the Closing do not, and the performance thereof, shall not, require the Company or any of its Subsidiaries to, obtain any Approval of any Person or Approval of, observe any waiting period imposed by, or make any filing with or notification to, any Governmental Authority.

Section 2.6.   Material Contracts .

(a)        Section 2.6(a) of the Company Disclosure Schedule sets forth a true and complete list, and if oral, an accurate and complete summary, of all material Contracts to which the Company or any of its Subsidiaries is a party or by which any of them or their properties, rights or assets are bound as of the date hereof (collectively, together with those entered into after the date hereof, “ Material Contracts ”), including, without limitation, the following Contracts:

(i)         employment Contracts or consulting Contracts with any present or former employee or consultant of the Company or any of its Subsidiaries, and all severance, retention, parachute, bonus, change in control or similar Contracts with any current or former Stockholders, directors, officers, employees, consultants or agents of the Company that would result in any obligation (absolute or contingent) of the Company or any of its Subsidiaries to make any payment as a result

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of or following the consummation of the transactions contemplated hereby or the termination of employment (or the relevant relationship), or both;

(ii)       labor or collective bargaining Contracts (if any);

(iii)      Contracts reasonably likely to involve revenues, receipts, expenditures or liabilities in excess of $200,000 per annum;

(iv)       Contracts that contain any uncapped indemnification or similar obligations of the Company or any of its Subsidiaries;

(v)        promissory notes, loans, indentures, evidences of Indebtedness or other instruments and Contracts relating to the borrowing or lending of money, whether as borrower, lender or guarantor and any interest rate swaps, caps, floors or option Contracts or any other interest rate risk management arrangement or foreign exchange Contracts;

(vi)       Contracts containing any limitation on the freedom of the Company or any of its Subsidiaries or affiliates (or which purport to limit the freedom of Parent) to engage in any line of business or compete with any Person or operate at any location in the world;

(vii)     joint venture or partnership agreements or joint development, distribution or similar Contracts pursuant to which any third party is entitled or obligated to develop or distribute any products or provide any services on behalf of the Company or any of its Subsidiaries or pursuant to which the Company or any of its Subsidiaries is entitled or obligated to develop or distribute any products or provide any services on behalf of any third party;

(viii)    Contracts for the acquisition, directly or indirectly (by merger or otherwise) of assets (whether tangible or intangible), including any capital stock of another Person, for consideration in excess of $200,000;

(ix)       Contracts involving the issuance or repurchase of any capital stock of the Company or any of its Subsidiaries (including newly formed Subsidiaries), or relating to the transfer, voting or encumbering of any share of Company Common Stock or equity stock of any of the Company’s Subsidiaries;

(x)        performance or payment guarantees, keep well arrangements and other similar credit support obligations or arrangements;

(xi)       leases or subleases in respect of any Real Property or any material rights, assets or property;

(xii)     Contracts under which the Company or any of its Subsidiaries has granted or received exclusive rights;

(xiii)    Contracts concerning Intellectual Property (including Software) and/or Systems, but excluding off-the-shelf, commercially available, shrinkwrap, clickwrap or similar Contracts for Software with annual license fees of less than $200,000;

(xiv)     Contracts currently in force to license or provide source code to any third party for any product or technology;

(xv)      Contracts that were not entered into in the ordinary course of business; and

(xvi)     Contracts which would be “material contracts” under Rule 601 of Regulation S-K of the SEC or which are material to the Company or its Subsidiaries or the operation of their businesses.

True and complete copies of all Material Contracts have been delivered to Parent by the Company.

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(b)        Other than Material Contracts that have terminated or expired in accordance with their terms, each Material Contract is in full force and effect, is a valid and binding obligation of the Company or such Subsidiary and, to the Knowledge of the Company, of each other party thereto, and is enforceable, in accordance with its terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing), against the Company or such Subsidiary and, to the Knowledge of the Company, against each other party thereto, and such Material Contracts will continue to be valid, binding and enforceable in accordance with their respective terms (subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing) and in full force and effect immediately following the consummation of the transactions contemplated hereby, with no material alteration or acceleration or increase in fees or liabilities. Except as disclosed in Schedule 2.6(b) to the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is or is alleged to be and, to the Knowledge of the Company, no other party is or is alleged to be in material default under, or in material breach or violation of, any Material Contract and, to the Knowledge of the Company, no event has occurred which, with the giving of notice or passage of time or both, would constitute such a material default, breach or violation.

Section 2.7.   Compliance with Laws; Permits and Licenses .   (a)   The Company and each of its Subsidiaries are in compliance with, and are not in default or violation of, (i) the certificate of incorporation and bylaws of the Company or the equivalent organizational documents of such Subsidiary and (ii) the terms of all Contracts to which any of them are a party or by which any of them or any of their respective properties, rights or assets are bound or affected, except in the case of clause (ii) for immaterial noncompliance, defaults or violations.

(b)        The operations of the Company and each of its Subsidiaries are being conducted in compliance with all applicable Laws, except as set forth in Section 2.7(b) of the Company Disclosure Schedule or except for immaterial noncompliance, defaults or violations. Except as set forth in Section 2.7(b) of the Company Disclosure Schedule, since January 1, 2004, none of the Company or any of its Subsidiaries has received any written notification from any Governmental Authority asserting that the Company or any of its Subsidiaries is not in compliance with any Laws such Governmental Authority enforces or that such Governmental Authority intends to revoke or suspend any such Approval, except for immaterial noncompliance, defaults or violations. The Company and its Subsidiaries are in compliance in all material respects with all of their posted or internal privacy policies, which conform with reputable industry practice and cover the protection of personal privacy, personally identifiable information, sensitive personal information and any special categories of personal information regulated thereunder (including that of its website visitors, clients, customers and those persons included in any demographic or other analyses performed for clients), whether any of same is accessed or used by the Company or any of its business partners.

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(c)        The Company and each Subsidiary holds all material Approvals which are necessary for the operation of their respective businesses as presently conducted. Section 2.7(c) of the Company Disclosure Schedule sets forth a complete list of all securities exchanges, boards of trade, clearing organizations, trade associations and similar organizations in which the Company or any Subsidiary holds a membership or has been granted trading privileges and which memberships or trading privileges are material to the Company or any Subsidiary. Except as set forth in Section 2.7(c) of the Company Disclosure Schedule, none of the Company or any of its Subsidiaries is, or is required to be, registered as a broker/dealer, investment adviser, futures commission merchant, commodities trading advisor, commodity pool operator or introducing broker under the Securities Exchange Act, Investment Company Act of 1940, as amended, Commodities Exchange Act or any similar state laws.

(d)        Except as set forth in Section 2.7(d) of the Company Disclosure Schedules, since January 1, 2004, the Company and each Subsidiary has timely filed all registrations, declarations, reports, notices, forms and other filings required to be filed by it with the SEC, NASD, NYSE, any other Governmental Authority or any clearing agency, and all amendments or supplements to any of the foregoing.

(e)        thinkorswim, Inc. (“ thinkorswim ”) is duly registered, licensed or qualified as a broker-dealer in each jurisdiction where the conduct of thinkorswim’s business requires such registration, licensing or qualification, and, except as set forth in Section 2.7(e) of the Company Disclosure Schedule, is in material compliance with all laws requiring any such registration, licensing or qualification and is not subject to any material liability or disability by reason of the failure to be so registered, licensed or qualified.

(f)         thinkorswim Advisors Inc. (“ Advisors ”) is duly registered, licensed or qualified as an investment advisor in each jurisdiction where the conduct of Advisor’s business requires such registration, licensing or qualification, and, except as set forth in Section 2.7(f) of the Company Disclosure Schedule, is in material compliance with all laws requiring any such registration, licensing or qualification and is not subject to any material liability or disability by reason of the failure to be so registered, licensed or qualified.

(g)        The Company has delivered or made available to Parent a copy of the currently effective Form BD as filed by the Company (or applicable Subsidiary) with the SEC. The information contained in such form was complete and accurate in all material respects as of the time of filing thereof.

(h)        Except as set forth in Section 2.7(h) of the Company Disclosure Schedule, all of the Company’s (or any Subsidiaries) employees who are required to be licensed or registered to conduct the business of the Company or any Subsidiary are duly licensed or registered in each state and with each Governmental Authority in which or with which such licensing or registration is so required.

(i)         Except as disclosed on Form BD filed prior to the date of this Agreement, neither the Company or any of its Subsidiaries nor any of their respective control affiliates (as defined in Form BD) has been the subject of any disciplinary proceedings or orders of any Governmental Authority arising under applicable Laws which would be required to be disclosed on Form BD. Except as set forth in Section 2.7(i) of the Company Disclosure Schedule, no such disciplinary proceeding or order is pending or, to the Knowledge of the Company or any of its Subsidiaries, threatened. Except as disclosed on a Form BD filed prior to the date of this Agreement, neither the Company or any of its Subsidiaries nor any of their respective control affiliates has been permanently enjoined by the order of any Governmental Authority from engaging or continuing any conduct or practice in connection with any activity or in connection with the purchase or sale of any security. Except as disclosed on Form BD filed prior to the date of this Agreement, neither the Company or any of its Subsidiaries nor any of their respective control affiliates is or has been ineligible to serve as a broker-dealer or an associated person of a broker-dealer under Section 15(b) of the Exchange Act (including being subject to any “statutory disqualification” as defined in Section 3(a)(39) of the Exchange Act).

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Section 2.8.   Financial Statements .   Section 2.8 of the Company Disclosure Schedule contains a copy of (i) the audited consolidated financial statements of the Company as of and for the year ending December 31, 2004 including the notes thereto; (ii) the audited consolidated financial statements of the Company as of and for the year ending December 31, 2005 including the notes thereto; and (iii) the unaudited consolidated financial statements of the Company as of and for the quarter and six months ending June 30, 2006 (the “Financial Statements”). The Financial Statements were prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis throughout the periods involved and fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries as at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated.

Section 2.9.   Absence of Certain Changes or Events .

(a)        Except as described in Section 2.9(a) of the Company Disclosure Schedule, during the period from the Balance Sheet Date to the date hereof, the Company and its Subsidiaries have conducted their businesses only in the ordinary and usual course and in a manner consistent with past practice. Since the Balance Sheet Date, there has not been any change, development, circumstance, condition, event, occurrence, damage, destruction or loss that has had or could reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b)        Except as described in Section 2.9(b) of the Company Disclosure Schedule, during the period from the Balance Sheet Date to the date hereof, (i) there has not been any change by the Company in its accounting methods, principles or practices, any revaluation by the Company of any of its assets, including writing down the value of inventory or writing off notes or accounts receivable, and (ii) there has not been any action or event, and neither the Company nor any of its Subsidiaries has agreed in writing or otherwise to take any action, that would have required the consent of Parent pursuant to Section 4.1 had such action or event occurred or been taken after the date hereof and prior to the Effective Time.

Section 2.10.   No Undisclosed Liabilities .   Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether absolute, accrued, fixed, contingent or otherwise), and there is no existing fact, condition or circumstance which could reasonably be expected to result in such liabilities or obligations, except liabilities or obligations (a) disclosed in the consolidated balance sheet of the Company as of the Balance Sheet Date, (b) incurred since the Balance Sheet Date in the ordinary course of business, none of which are material to the Company and its Subsidiaries taken as a whole or (c) as otherwise disclosed in Section 2.10 of the Company Disclosure Schedule.

Section 2.11.   Absence of Litigation.    Except as described in Section 2.11 of the Company Disclosure Schedule, there is no: (a) Litigation pending on behalf of or against or, to the Knowledge of the Company, threatened (including cease and desist letters or requests for a license) on behalf of or against the Company, any of its Subsidiaries, or any of their respective properties, rights or assets, including (but not limited to) Litigation that seeks permanently or temporarily to enjoin the Company or any of its Subsidiaries from acting as a broker dealer in securities, and the Company knows of no valid basis for same; or (b) Litigation pending or, to the Knowledge of the Company, threatened which questions or challenges (i) the validity of this Agreement or any Related Agreement or (ii) any action taken or to be taken by the Company or any of its Subsidiaries pursuant to this Agreement or any Related Agreement or in connection with the transactions contemplated hereby.

Section 2.12.   Employee Benefit Plans.

(a)        Schedule 2.12(a) of the Company Disclosure Schedule contains a true and complete list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, stock incentive, severance,

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retention, employment, change-in-control, parachute, fringe benefit, collective bargaining, bonus, incentive, deferred compensation, retiree welfare, employee loan and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transaction contemplated by this Agreement or otherwise), whether formal or informal, oral or written, legally binding or not, under which (i) any current or former employee, director or consultant of the Company or any of its Subsidiaries (the “ Company Employees ”) has any present or future right to benefits and which are contributed to, entered into, sponsored by or maintained by the Company or any of its Subsidiaries or (ii) the Company or any of its respective Subsidiaries has had or has any present or future liability (actual or contingent). All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “ Employee Plans ”.

(b)        With respect to each Employee Plan, the Company has provided to Parent a current, accurate and complete copy (or, to the extent no such copy exists, an accurate description) thereof and, to the extent applicable: (i) any related trust agreement or other funding instrument; (ii) the most recent determination letter, if applicable; (iii) any summary plan description and other written communications (or a description of any oral communications) by the Company or its Subsidiaries to the Company Employees concerning the extent of the benefits provided under an Employee Plan; (iv) a summary of any proposed amendments or changes anticipated to be made to the Employee Plans at any time within the twelve months immediately following the date hereof, and (v) for the three most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements and (C) actuarial valuation reports.

(c)        (i) Each Employee Plan has been established and administered in accordance with its terms in all material respects, and in compliance in all material respects with the applicable provisions of ERISA, the Code and other applicable laws, rules and regulations; (ii) each Employee Plan which is intended to be qualified within the meaning of Section 401(a) of the Code is so qualified and has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that could reasonably be expected to cause the loss of such qualification; (iii) no event has occurred and no condition exists that would subject the Company or its Subsidiaries, either directly or by reason of their affiliation with any member of their “ Controlled Group ” (defined as any organization which is a member of a controlled group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code), to any tax, fine, lien, penalty or other liability imposed by ERISA, the Code or other applicable laws, rules and regulations; (iv) for each Employee Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form since the date thereof; (v) no nonexempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has occurred with respect to any Employee Plan; (vi) there is no present intention that any Employee Plan be materially amended, suspended or terminated, or otherwise modified to adversely change benefits (or the levels thereof) under any Employee Plan at any time within the twelve months immediately following the date hereof; (vii) except as set forth in Section 2.12(c) of the Company Disclosure Schedule, no Employee Plan is a split-dollar life insurance program or otherwise provides for loans to executive officers (within the meaning of The Sarbanes-Oxley Act of 2002); and (viii) neither the Company nor any of its Subsidiaries has incurred any current or projected liability in respect of post-employment or post-retirement health, medical or life insurance benefits for current, former or retired employees of the Company or any of its Subsidiaries, except as required to avoid an excise tax under Section 4980B of the Code or otherwise except as may be required pursuant to any other similar applicable law.

(d)        No Employee Plan is an “employee pension benefit plan” (within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA, and neither the Company, its Subsidiaries nor any member of their Controlled Group has an obligation to contribute, or incurred (or will reasonably be expected to incur) any liability in respect of a contribution, to any such plan. No Employee Plan is a

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“multiemployer plan” (as defined in Section 4001(a)(3) of ERISA) and neither the Company, its Subsidiaries nor any member of their Controlled Group has at any time sponsored or contributed to, or has or had any liability or obligation in respect of, any multiemployer plan.

(e)        With respect to any Employee Plan, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or threatened, (ii) no facts or circumstances exist that could give rise to any such actions, suits or claims, (iii) no written or oral communication has been received from the Pension Benefit Guaranty Corporation (the “ PBGC ”) in respect of any Employee Plan subject to Title IV of ERISA concerning the funded status of any such plan or any transfer of assets and liabilities from any such plan in connection with the transactions contemplated herein, and (iv) except as set forth in Section 2.12(e) of the Company Disclosure Schedule, no administrative investigation, audit, amnesty proceeding or other administrative proceeding by the Department of Labor, the PBGC, the Internal Revenue Service or other governmental agencies are pending, threatened or in progress (including, without limitation, any routine requests for information from the PBGC).

(f)         Except for the options outstanding under the Company’s Stock Option Plan that will vest and become exercisable as described in Section 1.10(a) of this Agreement and as set forth in Section 2.12(f) of the Company Disclosure Schedule, no Employee Plan exists that, as a result of the execution of this Agreement, shareholder approval of this Agreement, or the transactions contemplated by this Agreement (whether alone or in connection with any other event(s)), could (i) result in severance pay or any increase in severance pay upon any termination of employment, (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Employee Plans, (iii) limit or restrict the right of the Company to merge, amend or terminate any of the Employee Plans or (iv) cause the Company to record additional compensation expense on its income statement with respect to any outstanding stock option or other equity-based award. No Employee Plan exists that, as a result of the execution of this Agreement, shareholder approval of this Agreement, or the transactions contemplated by this Agreement (whether alone or in connection with any other event(s)), could result in “parachute payments” (as defined in Section 280G of the Code), including any payments under any of the Employee Plans which would not be deductible under Section 280G of the Code.

Section 2.13.   Employment and Labor Matters .

(a)        Section 2.13(a)(i) of the Company Disclosure Schedule identifies (i) all directors and officers of the Company and each of its Subsidiaries and (ii) all employees and consultants employed or engaged by the Company and, for each individual identified in clauses (i) or (ii), sets forth each such individual’s rate of pay or annual compensation (including salary, bonus and commissions), total number of vacation, sick or personal days accrued, job title and date of hire and the number and type of shares of Company Capital Stock and Stock Options (or other options, warrants or similar rights to acquire shares of Company Common Stock) beneficially owned or held by such individual. Except as set forth on Section 2.13(a)(ii) of the Company Disclosure Schedule, there are no outstanding offers of employment or consultancy, nor are any such offers presently being negotiated. None of the Company’s or any Subsidiary’s employment policies or practices is currently being audited or investigated by any Governmental Authority or Court. Except as set forth in Section 2.13(a)(iii) of the Company Disclosure Schedule, there is no pending or, to the Knowledge of the Company, threatened Litigation, unfair labor practice charge, or other charge or inquiry against the Company or any Subsidiary brought by or on behalf of any employee, prospective employee, former employee, retiree, labor organization or other representative of the Company’s or Subsidiary’s employee, or other individual or any Governmental Authority with respect to employment practices brought by or before any Court or Governmental Authority.

(b)        Except as set forth in Section 2.13(b) of the Company Disclosure Schedule, (i) there are no material controversies pending or threatened, between the Company or any of its Subsidiaries and any of

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their respective employees or consultants; (ii) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or other labor union Contract applicable to Persons employed by the Company or its Subsidiaries nor are any such Contracts or agreements presently being negotiated; (iii) no representation question exists or has been raised respecting Persons employed by the Company or its Subsidiaries within the past five years, nor to the Knowledge of the Company or any Subsidiary are there any campaigns being conducted to solicit cards from Persons employed by the Company or its Subsidiaries to authorize representation by any labor union; (iv) during the past five years there have been no strikes, slowdowns, work stoppages, disputes, lockouts, or threats thereof, by or with respect to any employees of the Company or any of its Subsidiaries and (v) there are no employment-related grievances pending or, to the Knowledge of the Company or any Subsidiary, threatened. Neither the Company nor any Subsidiary is a party to, or otherwise bound by, any consent decree with, or citation or other Order by, any Governmental Authority relating to employees or employment practices. Except as set forth in Section 2.13(b) of the Company Disclosure Schedule, the Company and each of its Subsidiaries are in compliance in all material respects with all applicable Laws, Contracts, and policies relating to employment, employment practices, wages, hours, and terms and conditions of employment, including the obligations of the Worker Adjustment and Retraining Notification Act of 1988, as amended, or any similar state or local law (“ WARN ”), and all other notification and bargaining obligations arising under any collective bargaining agreement, by Law or otherwise. Neither the Company nor any Subsidiary of the Company has effectuated a “plant closing” or “mass layoff” as those terms are defined in WARN, affecting in whole or in part any site of employment, facility, operating unit or Persons employed by the Company or its Subsidiaries, without complying with all provisions of WARN or implemented any early retirement, separation or window program within the past five years, nor has the Company or any Subsidiary planned or announced any such action or program for the future. Except as set forth in Section 2.13(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is liable for any severance pay or other payments to any employee or former employee arising from the termination of employment. Each individual who is treated by the Company or its Subsidiaries as an independent contractor is properly so treated under applicable Law in all material respects.

Section 2.14.   Absence of Restrictions on Business Activities .   Except as set forth in Section 2.14 of the Company Disclosure Schedule, there is no Contract or Order binding upon the Company or any of its Subsidiaries or any of their properties, rights or assets which has had or could reasonably be expected to have the effect of prohibiting or materially impairing any business practice of Parent, the Company or any of their respective Subsidiaries or the conduct of business by Parent, the Company or any of their respective Subsidiaries as currently conducted, following the consummation of the Merger. Except as set forth in Section 2.14 of the Company Disclosure Schedule, the consummation of the Merger will not result in the granting by Parent or any of its Affiliates of any rights or licenses to any Intellectual Property to a third party (including any covenant not to sue). Except as set forth in Section 2.14 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject to any non-competition, non-solicitation, standstill or similar restriction on their respective businesses. Except as set forth in Section 2.14 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has granted any exclusive rights of any kind.

Section 2.15.   Title to Assets; Leases .

(a)        Except as described in Section 2.15(a) of the Company Disclosure Schedule, the Company and each of its Subsidiaries has good and marketable title to all of their material real or personal properties (whether owned or leased), rights and assets, free and clear of all Liens, except for Liens for current taxes and assessments not yet due and payable and except for Liens or other claims not exceeding $25,000 individually or $100,000 in the aggregate.

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(b)        The Company and its Subsidiaries do not own any real property or interest therein. Section 2.15(b) of the Company Disclosure Schedule contains a list of all leases of real property to which the Company or any Subsidiary is a party or by which any of them holds a leasehold interest (collectively, “ Real Property ”). Except as set forth in Section 2.15(b) of the Company Disclosure Schedule, (i) each Real Property lease to which the Company or any of its Subsidiaries is a party is in full force and effect in accordance with its terms, (ii) all rents and additional rents due to date from the Company or a Subsidiary on each such lease have been paid, (iii) neither the Company nor any Subsidiary has received written notice that it is in material default thereunder, and (iv) there exists no material default by the Company or any Subsidiary under such lease. There are no leases, subleases, licenses, concessions or any other Contracts to which the Company or a Subsidiary is a party granting to any Person other than the Company or a Subsidiary any right to possession, use occupancy or enjoyment of any of the Real Property or any portion thereof. None of the Company or any of its Subsidiaries is obligated under or bound by any option, right or first refusal, purchase Contract, or other Contract to sell or otherwise dispose of any Real Property or any other interest in any Real Property.

Section 2.16.   Taxes .   For purposes of this Agreement, “ Tax ” or “ Taxes ” shall mean any tax, levy or similar fee or imposition of any kind whatsoever, whether imposed on the Company, the Subsidiaries or their assets by any Governmental Authority, pursuant to Treasury Regulation Section 1.1502-6 or any analogous provision of foreign, state, or local Law, as a transferee, successor, or custodian, or by contract or otherwise, including, but not limited to, those on or measured by or referred to as federal, state, local or foreign income, property, value added, withholding, payroll, social security, unemployment, retirement dues, gross receipts, license, severance, occupation, capital gains, premium, environmental (including Taxes under Section 59A of the Code), customs, duties, profits, disability, registration, alternative or add-on minimum, estimated, employment, unemployment, insurance, excise, production, sales, use, goods and services, occupancy, franchise, real property, personal property, unclaimed property, business and occupation, mercantile, windfall profits, capital stock, stamp, transfer, workmen’s compensation or other taxes, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties; and “ Tax Returns ” shall mean returns, reports, notices, forms, declarations, claims for refunds, estimates, elections and/or other information statements, including any schedule or attachment thereto, with respect to Taxes required to be filed with the Internal Revenue Service or any other governmental or taxing authority or agency, domestic, state, local or foreign, including consolidated, combined and unitary tax returns. Except as set forth in Section 2.16 of the Company Disclosure Schedule:

(a)        All material Tax Returns required to be filed by or on behalf of the Company, each of its Subsidiaries, and each affiliated, combined, consolidated or unitary group of which the Company or any of its Subsidiaries is or was at any time a member have been timely filed (taking into account all extensions of due dates) in accordance with applicable Law, and all such Tax Returns were and are true, complete and correct in all material respects.

(b)        All Taxes payable by or with respect to the Company and each of its Subsidiaries (whether or not shown on any Tax Return or otherwise is known by the Company to be payable) have been timely paid or otherwise reserved for in accordance with GAAP. All assessments for Taxes due and owing by or with respect to the Company and each of its Subsidiaries with respect to completed and settled examinations or concluded litigation have been paid. There are no Tax Liens on any assets of the Company or any of its Subsidiaries other than for current Taxes not yet due and payable.

(c)        The unpaid Taxes of the Company and its Subsidiaries (A) did not, as of the date of the most recent Financial Statements, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the balance sheet included in the most recent Financial Statements (rather than in any notes thereto), and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in filing its Tax Returns. Since the

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date of the most recent Financial Statements, the Company and its Subsidiaries have not generated any taxable income from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom and practice.

(d)        No audit or Action has commenced and no written notice has been received by the Company, any of its Subsidiaries or any Company Representatives that such audit or Action is pending or threatened with respect to the Company or any of its Subsidiaries or any group of corporations of which any of the Company and its Subsidiaries is or has been a member in respect of any Taxes (an “ Affiliated Group ”). The Company has no Knowledge of any Tax deficiency or claim for additional Taxes asserted or threatened to be asserted in writing against the Company or any of its Subsidiaries or any Affiliated Group by any taxing authority.

(e)        Neither the Company nor any of its Subsidiaries has requested or been granted any waiver of any federal, state, local or foreign statute of limitations with respect to, or any extension of a period for the assessment of, any Tax which has not since expired.

(f)         Neither the Company nor any of its Subsidiaries is or has ever been (nor does the Company have any liability for unpaid Taxes because it once was) a member of an affiliated, consolidated, combined or unitary group (other than a group the common parent of which is the Company). Neither the Company nor any of its Subsidiaries owes any amount currently or will, after the date hereof, have any liability for or under any Tax allocation, Tax indemnity or Tax sharing agreement or is liable for the Taxes of any other Person under Treasury Regulations §1.1502-6 (or any similar provision of state, local or foreign law), as transferee or successor, by Contract, or otherwise for any taxable period for which the statute of limitations on assessment remains open.

(g)        Except as set forth in Section 2.16(g) of the Company Disclosure Schedule, the Company and its Subsidiaries have not made any pa