AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

Execution Version

AGREEMENT AND PLAN OF MERGER

by and among

COLLEGIATE PACIFIC INC.,

CP MERGER SUB, INC.

and

SPORT SUPPLY GROUP, INC.

Dated as of September 20, 2006

TABLE OF CONTENTS

EXHIBITS

Exhibit A — Form of Option Surrender Agreement

AGREEMENT AND PLAN OF MERGER

     AGREEMENT AND PLAN OF MERGER, dated as of September 20, 2006 (this “ Agreement ”), by and among Collegiate Pacific Inc., a Delaware corporation (“ Parent ”), CP Merger Sub, Inc., a Delaware corporation (“ Merger Sub ”), and Sport Supply Group, Inc., a Delaware corporation (the “ Company ”).

A. The boards of directors of Parent, Merger Sub and the Company deem it advisable and in the best interests of their respective corporations and stockholders that Parent and the Company enter into a business combination pursuant to which Parent would acquire the issued and outstanding shares of the Company that it does not already own.

B. To effect such business combination, upon the terms and subject to the conditions set forth herein, Merger Sub will be merged with and into the Company with the Company continuing as the surviving entity in such merger as a direct wholly owned subsidiary of Parent (the “ Merger ”).

     NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I
CERTAIN DEFINITIONS

     As used in this Agreement, the following terms shall have the respective meanings set forth below:

     “ affiliate ” of a specified person means a person who, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person; provided that, for purposes of this Agreement, the Company and its Subsidiaries shall be deemed not to be affiliates of Parent and its Subsidiaries, and Parent and its Subsidiaries shall be deemed not to be affiliates of the Company and its Subsidiaries.

     “ Agreement ” has the meaning set forth in the introductory paragraph of this Agreement.

     “ AMEX ” means the American Stock Exchange.

     “ Book Entry Shares ” has the meaning set forth in Section 3.3(b)(i).

     “ Business Day ” means any day on which banks are not required or authorized to close in New York, New York or Dallas, Texas.

     “ Certificate ” has the meaning set forth in Section 3.3(b)(i).

     “ Certificate of Merger ” has the meaning set forth in Section 2.2.

     “ Change in the Company Recommendation ” has the meaning set forth in Section 5.5(a).

     “ Closing ” has the meaning set forth in Section 2.4.

     “ Closing Date ” has the meaning set forth in Section 2.4.

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

     “ Company ” has the meaning set forth in the introductory paragraph of this Agreement.

     “ Company Banker ” has the meaning set forth in Section 4.1(h).

     “ Company Benefit Plan ” means any “employee benefit plan” (within the meaning of Section 3(3) of ERISA), and any severance, change in control or employment plan, program or agreement, and vacation, incentive, bonus, stock option, stock purchase and restricted stock plan, program or policy and any other employee benefit plan, agreement, program or other arrangement sponsored or maintained by the Company, in which present or former employees thereof participate or the Company has any present or future or future liability.

     “ Company Common Stock ” means common stock, par value $0.01 per share, of the Company.

     “ Company Confidentiality Agreement ” has the meaning set forth in Section 5.1(b).

     “ Company Disclosure Schedule ” has the meaning set forth in Section 4.1.

     “ Company Financial Statements ” has the meaning set forth in Section 4.1(f)(i).

     “ Company Indemnified Party ” has the meaning set forth in Section 5.8(b).

     “ Company Material Adverse Effect ” has the meaning set forth in Section 4.1(a).

     “ Company Option Plan ” has the meaning set forth in Section 4.1(b)(i).

     “ Company Preferred Stock ” means preferred stock, par value $0.01 per share, of the Company.

     “ Company Recommendation ” has the meaning set forth in Section 5.5(a).

     “ Company Stock Options ” has the meaning set forth in Section 4.1(b)(i).

     “ Company Stockholder Approval ” has the meaning set forth in Section 4.1(c)(i).

     “ Company Stockholders Meeting ” has the meaning set forth in Section 5.5(a).

     “ Confidentiality Agreements ” has the meaning set forth in Section 5.1(c).

     “ Contract ” has the meaning set forth in Section 4.1(d)(i).

     “ Delaware Secretary ” means the Secretary of State of the State of Delaware.

     “ DGCL ” means the Delaware General Corporation Law, as amended.

     “ Dissenting Shares ” has the meaning set forth in Section 3.3(f)(ii).

     “ Effective Time ” has the meaning set forth in Section 2.2.

     “ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated thereunder.

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     “ Exchange Agent ” has the meaning set forth in Section 3.3(a).

     “ Exchange Fund ” has the meaning set forth in Section 3.3(a).

     “ Expenses ” has the meaning set forth in Section 7.3(b).

     “ Financing ” has the meaning set forth in Section 4.2(i).

     “ Financing Letter ” has the meaning set forth in Section 4.2(i).

     “ GAAP ” means U.S. generally accepted accounting principles.

     “ Governmental Entity ” means any supranational, national, state, municipal or local government, foreign or domestic, any instrumentality, subdivision, court, administrative agency or commission or other authority thereof, or any quasi-governmental body exercising any regulatory, taxing, importing or other governmental or quasi-governmental authority.

     “ knowledge ” or “ known ” means, with respect to the Company, the actual knowledge of Terrence Babilla and Robert Mitchell.

     “ Letter of Transmittal ” has the meaning set forth in Section 3.3(b)(i).

     “ Litigation Expenses ” means all fees and expenses incurred after the date of this Agreement by the Company in defending any litigation brought by any stockholder of the Company challenging the Transactions, including without limitation reasonable fees and expenses of counsel (including fees and expenses of plaintiff’s counsel if awarded by a court and fees and expenses of counsel for the Company’s directors pursuant to the indemnification and advancement provisions of the Company’s certificate of incorporation and bylaws), accountants, financial advisor, experts and consultants and judgments and amounts paid in settlement, provided that Parent shall have the opportunity to consult with the Company in the negotiation of any settlement and no amounts may be paid in settlement without Parent’s advance approval, which approval will not be unreasonably withheld.

     “ Merger ” has the meaning set forth in the recitals.

     “ Merger Consideration ” has the meaning set forth in Section 3.1(b).

     “ Merger Sub ” has the meaning set forth in the introductory paragraph of this Agreement.

     “ Merger Sub Common Stock ” means the common stock, par value $0.01 per share, of Merger Sub.

     “ Merrill Lynch Consent ” has the meaning set forth in Section 6.2(d).

     “ MLBFS ” has the meaning set forth in Section 4.2(i).

     “ Option Consideration ” means, with respect to each Company Stock Option outstanding immediately prior to the Effective Time, an amount equal to the product of (a) the number of Outstanding Option Shares previously issuable immediately prior to the Effective Time pursuant to such Company Stock Option, multiplied by (b) the excess of (i) the Merger Consideration over (ii) the exercise price per share of Outstanding Option Shares previously issuable pursuant to such Company Stock Option.

     “ Option Surrender Agreement ” has the meaning set forth in Section 3.3(b)(ii).

     “ other party ” means, with respect to Parent or Merger Sub, the Company, and with respect to the Company, Parent and Merger Sub.

     “ Outstanding Option Shares ” means, with respect to each Company Stock Option outstanding immediately prior the Effective Time, the number of shares of Company Common Stock issuable immediately prior to the Effective Time under such Company Stock Option to the extent that (i) such Company Stock Option has become vested and exercisable in accordance with its terms at the time of Closing (including Company Stock Options that vest and become exercisable as a result of the Merger) and (ii) the exercise price for each such share of Company Common Stock is less than the Merger Consideration.

     “ Parent ” has the meaning set forth in the introductory paragraph of this Agreement.

     “ Parent Confidentiality Agreement ” has the meaning set forth in Section 5.1(c).

     “ Parent Disclosure Schedule ” has the meaning set forth in Section 4.2.

     “ Parent SEC Reports ” has the meaning set forth in Section 4.2(d).

     “ person ” means an individual, corporation, limited liability company, partnership, association, trust, unincorporated organization, other entity or group (as defined in the Exchange Act).

     “ Proxy Statement ” has the meaning set forth in Section 5.4.

     “ Public Stockholders ” means all of the holders of issued and outstanding shares of Company Common Stock, excluding Parent.

     “ SEC ” means the U.S. Securities and Exchange Commission.

     “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

     “ Solvent ” shall mean, with respect to any person, that (a) the property of such person, at a fair valuation, exceeds the sum of its debts (including contingent and unliquidated debts); (b) the present fair saleable value of the property of such person exceeds the amount that will be required to pay such person’s probable liability on its existing debts as they become absolute and matured; (c) such person does not have unreasonably small capital with which to conduct its business; and (d) such person does not intend or believe that it will incur debts beyond its ability to pay as they mature. In computing the amount of contingent or unliquidated liabilities at any time, such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become actual or matured liabilities.

     “ Special Committee ” means the Special Committee of the Board of Directors of the Company.

     “ Subsidiary ” means as the case may be, any entity, whether incorporated or unincorporated, of which the securities or other ownership interests having by their terms voting power to elect a majority of the board of directors or other persons performing similar functions is directly or indirectly owned or controlled by such person; provided, that under no circumstances shall the Company and its Subsidiaries be deemed to be Subsidiaries of Parent.

     “ Surviving Entity ” has the meaning set forth in Section 2.1.

     “ Transactions ” has the meaning set forth in Section 4.1(c)(i).

ARTICLE II
THE MERGER

     2.1 The Merger . Upon the terms and subject to the conditions contained in this Agreement, and in accordance with the DGCL, at the Effective Time, Merger Sub shall be merged with and into the Company, the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall continue as the surviving entity (sometimes hereinafter referred to as the “ Surviving Entity ”) and direct wholly owned subsidiary of Parent.

     2.2 Effective Time of the Merger . As soon as practicable on the Closing Date, the Company shall file with the Delaware Secretary a certificate of merger with respect to the Merger (the “ Certificate of Merger ”), which Certificate of Merger shall be in such form as is required by, and executed and acknowledged in accordance with, the DGCL. The Merger shall become effective upon such filing or at such later date and time as Parent and the Company shall agree and shall be specified in the Certificate of Merger (the “ Effective Time ”).

     2.3 Effects of the Merger . The Merger shall have the effects set forth in this Agreement and the applicable provisions of the DGCL.

     2.4 Closing . Upon the terms and subject to the conditions set forth in Article VI, the closing of the transactions contemplated by this Agreement (the “ Closing ”) will take place at the

offices of Vinson & Elkins L.L.P., 2001 Ross Avenue, Suite 3700, Dallas, Texas, 75201 at 10:00 a.m. on the date that is the second full AMEX trading day to occur after the date on which the satisfaction or waiver (subject to applicable law) of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing Date) set forth in Article VI occurs, unless this Agreement has been theretofore terminated pursuant to its terms or unless another place, time or date is agreed to in writing by Parent and the Company (the date of the Closing, the “ Closing Date ”).

     2.5 Certificate of Incorporation of Surviving Entity . At the Effective Time, the certificate of incorporation of the Company shall be amended to read in its entirety as the certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time and as so amended shall be the certificate of incorporation of the Surviving Entity until thereafter amended as provided therein or by applicable law; provided, however, that the name of the Surviving Entity is “Sport Supply Group, Inc.” and the provisions of the certificate of incorporation of the Company relating to the incorporator of the Company shall not be amended.

     2.6 Bylaws of Surviving Entity . From and after the Effective Time, the bylaws of Merger Sub in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Entity until thereafter amended as provided therein or by applicable law.

     2.7 Directors and Officers . From and after the Effective Time, (a) the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Entity and (b) the officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Entity.

ARTICLE III
CONVERSION OF SECURITIES

     3.1 Effect of Merger on Capital Stock . At the Effective Time, subject and pursuant to the terms of this Agreement, by virtue of the Merger and without any further action on the part of the Company, Merger Sub or the holders of any shares of capital stock of Parent, the Company or Merger Sub:

          (a)  Conversion of Capital Stock of Merger Sub . Each share of capital stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall remain outstanding and shall be converted into and shall represent one share of common stock, par value $0.01 per share, of the Surviving Entity, so that, after the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of the Surviving Entity’s capital stock.

          (b)  Conversion of Company Common Stock . Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares held by Parent or any Subsidiary of the Company, and other than Dissenting Shares), shall, subject to Section 3.1(c), be converted into the right to receive from Parent $8.80 in cash, without interest (the “ Merger Consideration ”). At the Effective Time, all shares of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares held by Parent or any Subsidiary of the Company, and other than Dissenting Shares) shall no longer be outstanding, and shall automatically be cancelled and retired and cease to exist, and

each holder of a certificate representing any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration to be issued in consideration thereof upon the surrender of such certificate in accordance with Section 3.3, without interest.

          (c)  Adjustment for Dilution and Other Matters . If, between the date of this Agreement and the Effective Time, the outstanding shares of Company Common Stock shall have been changed into a different number of shares or a different class by reason of any reclassification, recapitalization, reorganization, split-up, stock dividend (including any dividend or distribution of securities convertible into, or exercisable or exchangeable for, Company Common Stock), stock combination, exchange of shares, readjustment or otherwise, as the case may be, then the Merger Consideration shall be correspondingly adjusted.

          (d)  Shares Held by Parent, the Company or Subsidiaries . Each of the shares of Company Common Stock held by Parent or any Subsidiary of the Company or in the treasury of the Company immediately prior to the Effective Time shall be cancelled and retired and cease to exist as of the Effective Time, no Merger Consideration shall be issued in respect thereof and each holder of a certificate representing any such shares of Company Common Stock will cease to have any rights with respect thereto.

     3.2 Treatment of Options . Prior to the Closing, the Company shall give notice in writing to each holder of a Company Stock Option that (a) all Company Stock Options outstanding immediately prior to the Effective Time shall vest and be exercisable immediately prior to the Effective Time and (b) each Company Stock Option that is not exercised prior to the Effective Time shall be converted into the right to receive the Option Consideration payable to the holder thereof in cash, without interest. From and after the Effective Time, each Company Stock Option shall only represent the right to receive the Option Consideration provided in this Section 3.2. The Company shall take such actions, including amending the Company Option Plan and stock option agreements, as may be required to accomplish the foregoing.

     3.3 Exchange of Certificates and Options .

          (a)  Exchange Agent . Prior to the Closing Date, Parent shall select a bank or trust company reasonably acceptable to the Company to act as exchange agent in the Merger (the “ Exchange Agent ”) on terms consistent with this Agreement. Prior to the Effective Time, Parent shall deposit with the Exchange Agent, for the benefit of the holders of shares of Company Common Stock and Company Stock Options, for payment in accordance with this Article III, through the Exchange Agent, cash in an amount sufficient to permit payment of the aggregate Merger Consideration payable pursuant to Section 3.1(b) and the aggregate Option Consideration pursuant to Section 3.2 (such cash, the “ Exchange Fund ”), for exchange for outstanding shares of Company Common Stock and Company Stock Options in accordance with this Article III. The Exchange Agent shall invest any cash included in the Exchange Fund in one or more bank accounts or in high-quality, short-term investments, as directed by Parent, on a daily basis. Any interest and other income resulting from such investments will be paid to Parent; provided that no such investment, or any loss resulting from any such investment shall affect Parent’s obligation to pay the Merger Consideration and Option Consideration in accordance with Section 3.1(b) and Section 3.2. The Exchange Fund shall not be used for any other purpose.

The Surviving Entity shall pay all the Expenses of the Exchange Agent other than any expenses customarily charged by the Exchange Agent in connection with lost, stolen or destroyed certificates.

          (b)  Exchange Procedures .

               (i) As soon as reasonably practicable after the Effective Time, Parent shall cause the Exchange Agent to deliver to each record holder, as of the Effective Time, of (A) an outstanding certificate or certificates which immediately prior to the Effective Time represented shares of Company Common Stock (the “ Certificates ”) or (B) shares of Company Common Stock represented by book-entry (“ Book Entry Shares ”), a letter of transmittal (“ Letter of Transmittal ”) (which shall be in customary form and shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent or, in the case of Book-Entry Shares, upon adherence to the procedures set forth in the Letter of Transmittal, and which shall have such other provisions as the Surviving Entity may reasonably specify) and instructions for use in effecting the surrender of the Certificates or, in the case of Book Entry Shares, the surrender of such shares, for payment of the Merger Consideration therefor.

               (ii) Within 20 days after the date of this Agreement, the Company shall distribute to each holder of a Company Stock Option (A) an option surrender agreement (“ Option Surrender Agreement ”) in the form attached hereto as Exhibit A ; and (B) instructions for use in effecting the surrender of such Company Stock Option in exchange for the Option Consideration.

               (iii) Upon surrender to the Exchange Agent of a Certificate or Book Entry Shares, together with the Letter of Transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate or Book-Entry Shares shall be entitled to receive in exchange therefore the Merger Consideration for each share formerly represented by such Certificate or Book-Entry Shares and such Certificate or Book-Entry Shares shall then be canceled. No interest shall be paid or accrued for the benefit of holders of the Certificates or Book Entry Shares on the Merger Consideration payable in respect of the Certificates or Book-Entry Shares. If payment of the Merger Consideration is to be made to a person other than the person in whose name the surrendered Certificate is registered, it shall be a condition of payment that the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and that the person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Entity that such taxes either have been paid or are not applicable. Until surrendered as contemplated hereby, each Certificate and each Book Entry Share shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the applicable Merger Consideration as contemplated by this Article III.

               (iv) After the Effective Time, (A) Parent shall cause the Surviving Entity to pay to each holder of a Company Stock Option who has surrendered such holder’s Company Stock Option for cancellation, together with the Option Surrender Agreement, duly

executed, and any other documents reasonably required by the Surviving Entity, Parent or the Exchange Agent, the Option Consideration which such holder has the right to receive pursuant to the provisions of Section 3.2, and the Company Stock Option so surrendered shall be canceled. Until surrendered in accordance with the provisions of this Section 3.3 each Company Stock Option shall be deemed at any time after the Effective Time to represent for all purposes only the right to receive the Option Consideration.

          (c)  No Further Ownership Rights .

               (i) All Merger Consideration paid upon the surrender for exchange of shares of Company Common Stock in accordance with the terms of this Article III shall be deemed to have been paid in full satisfaction of all rights pertaining to such shares of Company Common Stock. From and after the Effective Time, the stock transfer books of the Company shall be closed with respect to the shares of Company Common Stock, and there shall be no further registration of transfers on the stock transfer books of the Company or the Surviving Entity of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares are presented to the Surviving Entity for any reason, they shall be cancelled and exchanged as provided in this Article III.

               (ii) The surrender of a Company Stock Option, together with a duly executed Option Surrender Agreement, in exchange for the Option Consideration shall be deemed a release of any and all rights the holder had or may have had in respect of such Company Stock Option.

          (d)  Tax Withholding . Parent, the Surviving Entity or the Exchange Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of shares of Company Common Stock or Company Stock Options such amounts as Parent, the Surviving Entity or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code or any provision of state, local or foreign tax law. To the extent that amounts are so withheld or paid over to or deposited with the relevant Governmental Entity by Parent, the Surviving Entity or the Exchange Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock or Company Stock Options, as applicable, in respect of which such deduction and withholding was made by Parent, the Surviving Entity or the Exchange Agent.

          (e)  Termination of Exchange Fund . Any portion of the Exchange Fund that remains undistributed to the former holders of shares of Company Common Stock or Company Stock Options on the 180th day after the Effective Time shall be delivered to Parent, upon demand, and any former holders of shares of Company Common Stock or Company Stock Options that have not received the Merger Consideration or Option Consideration, respectively, to which they are entitled under this Article III shall thereafter look only to Parent for payment of their claim for such amounts.

          (f)  Dissenting Shares .

               (i) With the Proxy Statement, the Company shall mail, via United States mail, postage prepaid, to each record holder of Company Common Stock (other than Parent) at the address for each record holder as it appears in the Company’s books and records, written notice of such holder’s appraisal rights pursuant to Section 262 of the DGCL. The Company shall give Parent prompt written notice of any demands for appraisal pursuant to Section 262 of the DGCL received by the Company, withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company in connection therewith. No later than ten days following the date on which the Effective Time occurs, the Surviving Entity shall provide written notice of the consummation of the Merger to all dissenting holders of Company Common Stock who have filed a written objection to the Merger with the Company in accordance with Section 262 of the DGCL and who have not voted in favor of this Agreement and the Merger.

               (ii) Notwithstanding any provision of this Agreement to the contrary, any issued and outstanding shares of Company Common Stock that are held immediately prior to the Effective Time by holders who have not voted in favor of this Agreement and the Merger and who have properly demanded and perfected the right, if any, for appraisal of such shares of Company Common Stock in accordance with the provisions of Section 262 of the DGCL and have not withdrawn or lost such right to appraisal (the “ Dissenting Shares ”) shall not be converted into or represent a right to receive the Merger Consideration or any other amount, but the holders of such Dissenting Shares shall only be entitled, in lieu thereof, to receive payment of the fair value of such shares in accordance with the provisions of Section 262 of the DGCL. If a holder of shares of Company Common Stock who demands appraisal of such shares under the DGCL shall thereafter effectively withdraw or lose (through failure to perfect or otherwise) the right to appraisal with respect to such shares of Company Common Stock then each such share of Company Common Stock shall be deemed to have been converted, at the Effective Time, into and represent only the right to receive the Merger Consideration in accordance with this Article III, without any interest thereon, upon delivery of a duly completed and validly executed letter of transmittal, and such other documents as may be required pursuant to the instructions thereto, and the surrender of the Certificate or Certificates representing such shares of Company Common Stock to the Exchange Agent.

          (g)  No Liability . None of the Exchange Agent, Parent, Merger Sub or the Surviving Entity shall be liable to any holder of shares of Company Common Stock or a Company Stock Option for any amount of Merger Consideration or Option Consideration, as applicable, delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. Any amounts remaining unclaimed by holders of any such shares at such date as is immediately prior to the time at which such amounts would otherwise escheat to or become property of any Governmental Entity shall, to the extent permitted by applicable law, become the property of Parent, free and clear of any claims or interest of any such holders or their successors, assigns or personal representatives previously entitled thereto.

          (h)  Lost, Stolen or Destroyed Certificates . If any Certificate shall have been lost, stolen or destroyed, the holder of such lost, stolen or destroyed Certificate shall execute an affidavit of that fact upon request. The holder of any such lost, stolen or destroyed Certificate

shall also deliver a reasonable indemnity and, if required by the Surviving Entity, post a bond or make payment of a reasonable amount as indemnity against any claim that may be made against the Surviving Entity or the Exchange Agent with respect to the Certificate alleged to have been lost, stolen or destroyed. The affidavit and any indemnity that may be required hereunder shall be delivered to the Exchange Agent, who shall be responsible for making payment for such lost, stolen or destroyed Certificate.

     3.4 Further Assurances . If, at any time after the Effective Time, any such further action is necessary or desirable to carry out the purposes of this Agreement, or to vest, perfect or confirm of record or otherwise establish in the Surviving Entity full right, title and interest in, to or under any of the assets, property, rights, privileges, powers and franchises of the Company or Merger Sub, the officers and directors of the Surviving Entity are fully authorized in the name and on behalf of each of the Company and Merger Sub or otherwise to take all such lawful and reasonably necessary or desirable action.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

     4.1 Representations and Warranties of the Company . The Company represents and warrants to Parent and Merger Sub as follows (such representations and warranties being deemed to be made as of the date hereof and as of the Closing) (in each case as qualified by matters reflected on the disclosure schedule dated as of the date of this Agreement and delivered by the Company to Parent on or prior to the date of this Agreement (the “ Company Disclosure Schedule ”) (each reference to such disclosure schedule qualifies the referenced representation and warranty to the extent specified therein and such other representations and warranties contained herein (regardless of whether or not such representation or warranty contains a reference to such disclosure schedule) to the extent a matter in such disclosure schedule is disclosed in such a way as to make its relevance to the information called for by such other representation or warranty readily apparent on its face)):

          (a)  Organization and Qualification . Each of the Company and its Subsidiaries is a corporation or other entity duly incorporated or organized, validly existing and, to the extent such concept is legally recognized, in good standing under the laws of the jurisdiction of its incorporation or organization, and has the requisite corporate or other power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. Each of the Company and its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders necessary to own, lease and operate the properties it purports to own, operate or lease and to carry on its business as it is now being conducted, except where the failure to have such franchises, grants, authorizations, licenses, permits, easements, consents, certificates, approvals and orders would not reasonably be expected to, individually or in the aggregate, have a Company Material Adverse Effect. Each of the Company and its Subsidiaries is, as applicable, duly qualified or licensed as a foreign corporation to do business, and is in good standing, to the extent such concept is legally recognized, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so duly qualified or licensed and in good standing that would not reasonably be expected to, either individually or in the aggregate, have a

Company Material Adverse Effect. The Company has heretofore delivered to Parent complete and correct copies of the certificate of incorporation and bylaws, or equivalent organizational documents, of the Company and each of its Subsidiaries. “ Company Material Adverse Effect ” shall mean any result, change, event or effect that individually or in the aggregate with all such other results, changes, events or effects, (i) is materially adverse to the business, condition (financial or otherwise), assets, liabilities or results of operations of the Company and its Subsidiaries, taken as a whole, or (ii) would materially impair the ability of the Company to timely perform its obligations under this Agreement or prevent the consummation of the Transactions, in the case of each of clause (i) and (ii) excluding (A) changes in economic or regulatory conditions in the industries in which the Company carries on business as of the date hereof, and changes in general economic, regulatory or political conditions, including, without limitation, acts of war or terrorism (except for any changes referred to in this subclause which, individually or in the aggregate, disproportionately affect the business, condition (financial or otherwise), assets, liabilities or results of operations of the Company and its Subsidiaries, taken as a whole, in any material respect as compared to other industry participants), and (B) changes resulting from the announcement of the Transactions and any other public announcement of Parent during the term of this Agreement to the extent not covered in any other public announcement of the Company during the term of this Agreement or based upon information provided to Parent by the Company.

          (b)  Capitalization .

               (i) As of the date hereof, the authorized capital stock of the Company consists of 20,000,000 shares of Company Common Stock and 100,000 shares of Company Preferred Stock. As of September 15, 2006, (A) 9,414,864 shares of Company Common Stock were issued, of which 8,963,991 shares were outstanding and 450,873 shares were held in the treasury of the Company, (B) no shares of Company Preferred Stock were issued and outstanding and (C) 2,000,0000 shares of Company Common Stock were reserved for issuance upon exercise of options to purchase shares of Company Common Stock granted under the Amended and Restated Stock Option Plan of the Company (the “ Company Option Plan ”). Except as set forth in this Section 4.1(b) or as disclosed in Section 4.1(b) of the Company Disclosure Schedule there are no options, warrants or other rights to acquire (including through the conversion or exchange of securities) capital stock from the Company other than the options, representing in the aggregate the right to purchase 488,867 shares of Company Common Stock under the Company Option Plan (the “ Company Stock Options ”). Since September 15, 2006, the Company has not issued any shares of its capital stock, or any securities convertible into or exercisable for any shares of its capital stock, other than shares of Company Common Stock pursuant to the exercise of Company Stock Options granted prior to such date. Section 4.1(b)(i) of the Company Disclosure Schedule sets forth a list, as of the date of this Agreement, of all outstanding Company Stock Options granted under the Company Option Plan, and, for each such option: (1) the number of shares of Company Common Stock subject thereto; (2) the date of grant; (3) the expiration date; (4) the exercise price thereof; (5) the number of options that have vested; and (6) the applicable vesting and acceleration provisions. All outstanding shares of Company Common Stock are, and all such shares that may be issued prior to the Effective Time will be when issued, duly authorized, validly issued and fully paid and nonassessable. There are no preemptive or other similar rights available to the existing holders of Company Common Stock.

               (ii) Section 4.1(b)(ii) of the Company Disclosure Schedule sets forth a list of each Subsidiary of the Company. All of the outstanding shares of capital stock or other ownership interests in each of the Company’s Subsidiaries have been validly issued, and are fully paid, nonassessable and, except as disclosed in Section 4.1(b)(ii) of the Company Disclosure Schedule, are owned by the Company or another Subsidiary of the Company free and clear of all liens, security interests or other encumbrances of any kind or nature whatsoever, and are not subject to preemptive rights. Except as disclosed in Section 4.1(b)(ii) of the Company Disclosure Schedule and except for short-term investments of liquid securities, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible or exchangeable or exercisable for any equity or similar interest in, any person and all of such investments are owned free and clear of all liens, security interests or other encumbrances of any kind or nature whatsoever.

               (iii) Except as described in Sections 4.1(b)(i) and (ii) hereof: (A) no shares of capital stock or other equity securities of the Company are authorized, issued or outstanding, or reserved for issuance, and there are no options, warrants or other rights (including registration rights), agreements, arrangements or commitments of any character to which the Company or any of its Subsidiaries is a party relating to the issued or unissued capital stock or other equity interests of the Company or any of its Subsidiaries, requiring the Company or any of its Subsidiaries to grant, issue or sell any shares of the capital stock or other equity interests of the Company or any of its Subsidiaries by sale, lease, license or otherwise; (B) neither the Company nor its Subsidiaries have any obligations, contingent or otherwise, to repurchase, redeem or otherwise acquire any shares of the capital stock or other equity interests of the Company or its Subsidiaries; (C) neither the Company nor any of its Subsidiaries, directly or indirectly, has agreed to purchase or otherwise acquire, the capital stock or other equity interests of, or any interest convertible into or exchangeable or exercisable for such capital stock or such equity interests, of any person; and (D) there are no voting trusts, proxies or other agreements or understandings to or by which the Company or any of its Subsidiaries is a party or is bound with respect to the transfer or voting of any shares of capital stock or other equity interests of the Company or any of its Subsidiaries.

               (iv) No bonds, debentures, notes or other indebtedness of the Company having the right to vote (whether currently or upon the occurrence of an event) on any matters on which stockholders of the Company or any of its Subsidiaries may vote are issued or outstanding or subject to issuance.

          (c)  Authority Relative to this Agreement; Board Approval .

               (i) The Company has all necessary corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder and, subject to obtaining the Company Stockholder Approval, to consummate the transactions contemplated by this Agreement (the “ Transactions ”). The execution and delivery of this Agreement by the Company and the consummation by the Company of the Transactions have been duly and validly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the Transactions (other than obtaining the Company Stockholder Approval). This Agreement has been duly and validly executed and delivered by the Company and, subject to

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