AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

EXECUTION VERSION

AGREEMENT AND PLAN OF MERGER

            AGREEMENT AND PLAN OF MERGER, dated as of December 22, 2006 (the " Agreement "), by and among CPAC, Inc., a New York corporation (" Company "), Buckingham CPAC, Inc., a Delaware corporation (" Parent "), and Buckingham CPAC Acquisition Corp., a New York corporation and a wholly-owned subsidiary of Parent (" Acquisition Sub ").

R E C I T A L S:

            WHEREAS, the respective boards of directors of Parent, Acquisition Sub and Company have each approved this Agreement and the merger of Acquisition Sub with and into Company (the " Merger "), upon the terms and subject to the conditions set forth in this Agreement; and

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

            NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this Agreement, and intending to be legally bound by this Agreement, Parent, Acquisition Sub and Company agree as follows:

ARTICLE I.
THE MERGER

            Section 1.01     The Merger . Upon the terms and subject to the conditions of this Agreement, at the Effective Time in accordance with the New York Business Corporation Law (the " BCL "), Acquisition Sub shall be merged with and into Company. Following the Merger, the separate corporate existence of Acquisition Sub shall cease and Company shall continue as the surviving corporation. Company, as the surviving corporation after the Merger, is sometimes referred to as the " Surviving Corporation ."

            Section 1.02     Closing; Effective Time .

            (a)       The closing of the Merger (the " Closing ") will take place at 10:00 a.m. on the earliest Business Day after satisfaction or waiver of conditions set forth in Article V (but no later than the second Business Day after satisfaction or waiver of the conditions set forth in Article V ), at the offices of Chamberlain, D'Amanda, Oppenheimer, & Greenfield, LLP, unless another date, time or place is agreed to in writing between Parent and Company. The date on which the Closing occurs is referred to in this Agreement as the " Closing Date ."

            (b)       Upon the terms and subject to the conditions of this Agreement, on the Closing Date, the parties hereto shall file a Certificate of Merger of Acquisition Sub into Company (the " Certificate of Merger "), in accordance with Section 904 of the BCL, with the New York Department of State, in such form as required by, and executed and attested in accordance with the relevant provisions of, the BCL. The Merger shall become effective upon the filing of the

Certificate of Merger (the time of such filing (or such later time as is specified in such Certificate of Merger as agreed between Parent and Company) being the " Effective Time ").

            Section 1.03     Effect of the Merger . At the Effective Time, and without the necessity of any action by or on behalf of the Constituent Corporations or either of them, the effect of the Merger shall be as provided in the applicable provisions of the BCL. Without limiting the generality of the applicable provisions of the BCL, at the Effective Time all the property, rights, privileges, powers and franchises of the Constituent Corporations shall vest in the Surviving Corporation, and all Liabilities and duties of the Constituent Corporations shall become the Liabilities and duties of the Surviving Corporation.

            Section 1.04     Subsequent Actions . If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of the Constituent Corporations acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either Company or Acquisition Sub, all such deeds, bills of sale, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title and interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

            Section 1.05     Certificate of Incorporation; By-Laws; Directors and Officers .

            (a)       At the Effective Time, the Certificate of Incorporation of the Surviving Corporation shall be amended and restated in its entirety to read in the form of the Certificate of Incorporation of the Acquisition Sub, as in effect immediately prior to the Effective Time, until thereafter amended in accordance with their terms and as provided by applicable Laws and this Agreement, except that, as of the Effective Time, Article I of such Certificate of Incorporation shall be amended to reflect the name of the Surviving Corporation designated by Parent.

            (b)       At the Effective Time, the By-Laws of Acquisition Sub, as in effect immediately prior to the Effective Time, shall be the By-Laws of the Surviving Corporation until thereafter amended as provided by Law, the Certificate of Incorporation of the Surviving Corporation and the By-Laws of the Surviving Corporation provided that the By-Laws of the Surviving Corporation shall be consistent with the provisions of Section 4.09 of this Agreement.

            (c)       The directors and officers of Acquisition Sub immediately prior to the Effective Time shall be the only directors and officers of the Surviving Corporation as of the Effective Time.

            Section 1.06     Conversion of Shares . At the Effective Time, automatically by virtue of the Merger and without any action on the part of the Constituent Corporations or the holder of any of the following securities:

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            (a)       Each share of Common Stock of Company (a " Share ") issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 1.06(b) and any Dissenting Shares) shall be canceled and be converted into the right to receive $8.65 in cash payable to the holder of such Shares, without interest (the " Merger Consideration "), upon surrender of the certificate representing such Share, less any amounts withheld pursuant to Section 1.08(e) . From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect to such Shares, except the right to receive the Merger Consideration for such Shares, without interest, upon the surrender of such certificate in accordance with Section 1.08 .

            (b)       Each Share held in the treasury of Company or owned by any Subsidiary and each Share owned by Parent or any direct or indirect wholly owned subsidiary of Parent immediately prior to the Effective Time shall be canceled and no payment or other consideration shall be made with respect thereto or in exchange therefor.

            (c)       Each share of common stock, $0.01 par value, of Acquisition Sub issued and outstanding immediately prior to the Effective Time shall be converted into and thereafter represent one validly issued, fully paid and nonassessable share of common stock, $0.01 par value per share, of the Surviving Corporation.

            Section 1.07     Dissenting Shares .

            (a)       Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding as of the Effective Time and that are held by any record holder who has not voted to approve the Certificate of Merger or consented thereto in writing and is otherwise entitled to demand, and who has properly exercised, preserved and perfected dissenters' rights in accordance with Section 623 of the BCL (the " Dissenting Shares ") shall not be converted into the right to receive the Merger Consideration but shall instead become the right to receive such consideration as may be determined to be due in respect of such Dissenting Shares pursuant to the BCL; provided, however, that any holder of Dissenting Shares who shall have failed to perfect or shall have withdrawn or lost his dissenters' rights with respect to such Dissenting Shares, in each case under the BCL, shall forfeit his dissenters' rights with respect to such Dissenting Shares, and such Dissenting Shares shall be deemed to have been converted into the right to receive, as of the Effective Time, the Merger Consideration without interest, upon surrender of the certificates representing such Shares in accordance with Section 1.08 . Payments with respect to any Dissenting Shares will be made only as required by the BCL and will be made by the Surviving Corporation from its own separate funds. Notwithstanding anything to the contrary contained in this Section 1.07(a) , if the Merger is rescinded or abandoned, then the right of any shareholder to be paid the fair value of such shareholder's Dissenting Shares shall terminate.

            (b)       Company shall give Parent (i) prompt written notice of any notices of intent to demand payment, any withdrawals of such notices received by Company and any other related instruments served pursuant to the BCL and received by Company, and (ii) the opportunity to participate in all negotiations and proceedings with respect to demands for payment under the BCL. Company shall not, except with the prior written consent of Parent (which consent will not

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be withheld unreasonably), make any payment with respect to any demands for appraisal or negotiate.

            Section 1.08     Surrender of Shares; Stock Transfer Books .

            (a)       Prior to the Effective Time, Parent shall designate Continental Stock Transfer and Trust Co. to act as paying agent in the Merger (the " Paying Agent ") and to receive the funds necessary to make the payments contemplated by Section 1.06(a) . Parent shall, at or prior to the Effective Time, make available or cause to be made available to the Paying Agent cash in amounts necessary for the payment of the Merger Consideration under Section 1.08(b) to which holders of Shares shall be entitled at the Effective Time pursuant to Section 1.06(a) . Such funds shall be invested by the Paying Agent as directed by Parent. Any net profits resulting from, or interest or income produced by, such investments shall be payable as directed by Parent.

            (b)       As soon as reasonably practicable after the Effective Time, but in no event later than five (5) Business Days thereafter, the Surviving Corporation shall cause the Paying Agent to mail to each holder of record of a certificate or certificates that immediately prior to the Effective Time represented Shares (the " Certificates ") (i) 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 proper delivery of the Certificates to the Paying Agent and shall be in a form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Merger Consideration as provided in Section 1.06(a) . Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent, the holder of such Certificate shall be entitled to receive in exchange for such Certificate the Merger Consideration, and the Certificate so surrendered shall immediately be canceled.

            (c)       If payment of the Merger Consideration in respect of canceled Shares is to be made to a Person other than the Person in whose name a surrendered Certificate is registered, it shall be a condition to such 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 such payment in a name other than that of the registered holder of the Certificate surrendered or shall have established to the satisfaction of Parent or the Paying Agent that such tax either has been paid or is not payable. If a mutilated Certificate is surrendered to the Paying Agent or if the holder of a Certificate submits an affidavit to the Paying Agent stating that the Certificate has been lost, destroyed or wrongfully taken, such holder shall, if required by Parent, furnish an indemnity bond sufficient in the reasonable judgment of Parent to protect Parent, the Surviving Corporation and the Paying Agent from any loss that any of them may suffer. Until surrendered as contemplated by this Section 1.08 , each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration as contemplated by this Section 1.08 , without interest thereon.

            (d)       Promptly following the date which is one year after the Effective Time, the Paying Agent shall deliver to Parent all cash, certificates and other documents in its possession relating to the transactions contemplated by this Agreement, and the Paying Agent's duties shall

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terminate. Thereafter, each holder of a Certificate (other than Certificates representing Dissenting Shares and Certificates representing Shares to be canceled pursuant to Section 1.06(b) ) shall look only to the Parent (subject to abandoned property, escheat or other similar Laws), and only as general creditors thereof, with respect to any Merger Consideration that may be payable upon due surrender of the Certificates held by such holder, without any interest thereon. Notwithstanding the foregoing, none of Parent, Acquisition Sub, the Surviving Corporation or the Paying Agent shall be liable to any Person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificates have not been surrendered prior to the third anniversary of the Effective Time (or immediately prior to such earlier date on which any Merger Consideration in respect of such Certificate would otherwise escheat to or become the property of any Governmental Entity), any amounts payable 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 interest of any Person previously entitled thereto.

            (e)       Parent (or any Affiliate thereof) or the Paying Agent shall be entitled to deduct and withhold from the Merger Consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as Parent or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Code, or under any provision of state, local or foreign tax law. To the extent that amounts are so withheld by Parent or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Parent or the Paying Agent.

            (f)       All Merger Consideration paid upon the surrender of Certificates in accordance with the terms of this Article I shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares previously represented by such Certificates. At the Effective Time, the stock transfer books of Company shall be closed and thereafter there shall not be any further registration of transfers of Shares that were outstanding immediately prior to the Effective Time on the records of the Surviving Corporation. If, after the Effective Time, Certificates are presented to the Surviving Corporation for transfer, they shall be canceled and exchanged for the Merger Consideration as provided in Section 1.06(a) and this Section 1.08 .

            Section 1.09     Stock Plans . Prior to the Effective Time, the Board of Directors of Company shall adopt appropriate resolutions and take all other actions necessary to cause each holder of an issued and outstanding option or similar right to purchase Common Stock, whether or not then vested or exercisable (an " Option ") pursuant to any stock option or similar plans, agreements or arrangements of Company including any related award agreements (collectively, the " Stock Plans "), to enter into an Option Cancellation Agreement, in substantially the form attached to this Agreement as Exhibit A (an " Option Cancellation Agreement "), pursuant to which such holder will agree to cancellation of his or her Options immediately prior to the Effective Time in exchange for an amount equal to (i) the amount by which the Merger Consideration exceeds the applicable exercise price of such Option (as provided in the Option Cancellation Agreement) or (ii) such other amount as may be agreed upon with any holder of an Option that is exercisable at a price less than the Merger Consideration, provided that the aggregate amount payable pursuant to this Section 1.09 shall not exceed the amount set forth in Schedule 1.09 and, in each case, net of such amounts as may be required to be deducted and

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withheld 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 any amounts are so deducted and withheld, those amounts shall be treated as having been paid to the holder of that Option for all purposes under this Agreement. Company shall take all action to ensure that all Stock Plans and any other plan, program or arrangement providing for the issuance or grant of any other interest in respect of the capital stock of Company or any Subsidiary, shall automatically terminate as of the Effective Time, and that any holder of issued and outstanding awards thereunder will have no rights other than the right to receive the payment in cancellation and settlement thereof as provided in the Option Cancellation Agreement. Prior to the Effective Time, the Board of Directors, or the Stock Option Committee thereof, shall adopt a resolution consistent with the interpretive guidance of the SEC to approve the disposition by any officer or director of Company who is a covered person of Company for purposes of Section 16 under the Exchange Act of Shares or Options pursuant to this Agreement and the Merger for purposes of qualifying the disposition as an exempt transaction under Section 16 under the Exchange Act .

ARTICLE II.
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION SUB

            Except as set forth in the corresponding sections or subsections of the disclosure schedules to this Agreement, Acquisition Sub and Parent jointly and severally represent and warrant to Company as set forth below.

            Section 2.01     Organization . Parent is a corporation duly organized, validly existing and in good standing under the Laws of the State of Delaware. Acquisition Sub is a corporation duly organized and validly existing under the Laws of the State of New York. Parent and Acquisition Sub have all requisite corporate power and authority to execute and deliver this Agreement and to carry out each of the transactions contemplated by this Agreement, including the Merger (the " Transactions ").

            Section 2.02     Authority . The execution and delivery of this Agreement and the consummation of the Transactions contemplated hereby have been duly authorized and approved by the respective boards of directors of Parent and Acquisition Sub and Parent's Investment Committee. No other or further corporate act or proceeding on the part of Parent or Acquisition Sub or their respective shareholders is necessary to authorize or approve this Agreement or the consummation of the Transactions contemplated hereby. This Agreement has been duly executed and delivered by Parent and Sub and, assuming due authorization, execution and delivery by Company, constitutes the legal, valid and binding obligation of Parent and Sub, enforceable against each in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other Laws affecting creditors' rights generally, and by general equitable principles.

            Section 2.03     No Violation . Neither the execution and delivery of this Agreement nor the consummation by Parent and Acquisition Sub of the Transactions contemplated hereby, assuming all notices, reports or other filings specifically described in this Section 2.02 have been given or made, will violate any Laws or Orders of any Governmental Entity applicable

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to Parent or Acquisition Sub. Neither Parent nor Acquisition Sub is required to submit any notice, report or other filing with any Governmental Entity in connection with the execution, delivery or performance of this Agreement or the consummation of the Transactions contemplated hereby except for (i) the filing of the Proxy Statement with the SEC and applicable requirements, if any, of the Exchange Act, (ii) if applicable, the pre-merger notification requirements of the HSR Act, (iii) the filing of the Certificate of Merger as required by the BCL, (iv) filings as may be required by any applicable state takeover or "blue sky" Laws and (v) filings the failure of which to be obtained or made would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect. No waiver, consent, approval, authorization, exemption of, or any other action by, any Governmental Entity is required to be obtained or made by Parent or Acquisition Sub in connection with its execution, delivery or performance of this Agreement or the consummation of the Transactions contemplated hereby, except (A) where the failure to obtain such waivers, consents, approvals or authorizations would not, individually or in the aggregate, reasonably be expected to have a Parent Material Adverse Effect or (B) in connection with any submission required above.

            Section 2.04     Brokers . No broker, finder, financial advisor or investment banker is entitled to any brokerage, finder's, financial advisor's or other fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Parent or Acquisition Sub.

            Section 2.05     Proxy Statement . None of the information supplied in writing by or on behalf of Parent or Acquisition Sub for inclusion in the Proxy Statement (the " Parent Information ") will, on the date the Proxy Statement is first mailed to shareholders or at the time of Company Shareholders' Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.

            Section 2.06     Financing . At the Effective Time, Parent will have, and will make available to Acquisition Sub, the funds necessary to consummate the Merger and the other Transactions contemplated by this Agreement, and to pay related fees and expenses. Parent has made available to Company copies of all commitment letters, letters of intent, term sheets and similar documents with respect to pending or proposed commitments of any third parties to lend or otherwise commit funds with respect to the Merger and the Transactions contemplated hereby. Parent is capable of fulfilling, and knows of no conditions affecting it, Buckingham) or their respective affiliates that would make it unable or unlikely to fulfill any condition reflected in any such commitment letters, letters of intent, term sheets and similar documents.

            Section 2.07     No Ownership of Shares . As of the date hereof, neither Parent, Buckingham nor any of their respective Subsidiaries or Affiliates owns any Shares or other securities convertible into Shares.

            Section 2.08     No Litigation . There is no Litigation pending or, to Parent's or Acquisition Sub's Knowledge, threatened against Parent, Acquisition Sub, Buckingham, the directors or officers of Parent, Acquisition Sub, Buckingham or their respective Affiliates (in such capacity) that, individually or in the aggregate, has had or would reasonably be expected to have a Parent Material Adverse Effect.

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ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF COMPANY

            Except as set forth in the corresponding sections or subsections of the disclosure schedules to this Agreement, Company represents and warrants to Parent and Acquisition Sub as set forth below.

            Section 3.01     Organization . (a) Each of Company and the Subsidiaries (i) is a corporation duly organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation, (ii)(A) has all requisite corporate power and authority and (B) has any necessary governmental authority and approvals to own, operate or lease the properties that it purports to own, operate or lease and to carry on its business as it is now being conducted, and (iii) is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of its properties owned, operated or leased or the nature of its activities makes such qualification or licensing necessary, except, in the case of subsections (ii)(B) and (iii) hereof, for any such failures that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Company has made available to Parent true correct and complete copies of the certificates of incorporation and bylaws (or comparable organizational documents) of Company and each Subsidiary. Neither Company nor any of the Subsidiaries is in default in the performance, observance or fulfillment of any provision of its articles of organization or bylaws (or comparable organizational documents).

            (b)       A true and complete list of all the Subsidiaries, together with the jurisdiction of incorporation or organization of each Subsidiary and the percentage of each Subsidiary's outstanding capital stock owned by Company or another Subsidiary, is set forth in Schedule 3.01(b) . Other than the Subsidiaries and as set forth in Schedule 3.01(b) Company does not own, directly or indirectly, any equity or other ownership interests of any Person. Except as set forth in Schedule 3.01(b) , all of the outstanding capital stock of each Subsidiary is owned directly or indirectly by Company free and clear of all Liens, except Permitted Liens, and is validly issued, fully paid and nonassessable and except as set forth in Schedule 3.01(b) , there are no outstanding subscriptions, options, warrants, puts, calls, rights or agreements of any kind relating to the issuance, sale, transfer or voting of any capital stock or other equity interests of any such Subsidiary.

            (c)       The authorized capital stock of Company consists entirely of 30,000,000 shares of Common Stock, par value $.01 per share. As of the close of business on September 30, 2006, (i) 4,946,774 shares of Common Stock were issued and outstanding, all of which were duly authorized, validly issued, fully paid and nonassessable; (ii) 4,946,774 shares of Common Stock have been reserved for issuance in connection with the Rights Agreement; and (iii) 1,094,300 shares of Common Stock were reserved for issuance pursuant to the Stock Plans, of which 754,300 shares of Common Stock were subject to outstanding Options. There are no bonds, debentures, notes or other Indebtedness having general voting rights (or convertible into securities having such rights) of Company or any Subsidiary issued and outstanding (" Voting Debt "). Except as set forth in Schedule 3.01(c) , and except for Company's obligations under the Rights Agreement, including with respect to the common stock purchase rights issued under the Rights Agreement (the " Rights "), there are no (x) securities convertible into or exchangeable for

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any capital stock or other securities of Company or (y) options, warrants, calls, pre-emptive rights, subscriptions, commitments, "phantom" stock rights, stock appreciation rights, stock-based performance units, Contracts, arrangements or other rights of any kind to which Company or any Subsidiary is a party or by which Company or any Subsidiary is bound obligating Company or any Subsidiary to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of, or other equity or voting interests in, or any security convertible or exercisable for or exchangeable into any capital stock of, or other equity or voting interests in, Company or any Subsidiary or obligating Company or any Subsidiary to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, Contract, arrangement or undertaking, or that give any person the right to receive any economic benefit or right similar to or derived from the economic benefits and rights accruing to holders of the Common Stock. Schedule 3.01(c) sets forth a listing of all outstanding vested and unvested Options as of the date hereof (indicating which Options will vest upon consummation of the Merger) and the exercise prices thereof. Except as set forth on Schedule 3.01(c) , there are no voting trusts or other agreements or understandings to which Company or any Subsidiary is a party with respect to the voting, issuance or transfer of the capital stock of Company or any of the Subsidiaries, and there are no outstanding contractual obligations of Company or any Subsidiary to (A) repurchase, redeem or otherwise acquire any shares of capital stock or other equity or voting interests in, Company or any Subsidiary or (B) vote or dispose of any shares of the capital stock of, or other equity or voting interests in, any of the Subsidiaries, including puts, calls, rights of first refusal or similar rights. Company has made available to Parent a complete and correct copy of the Rights Agreement, as amended to the date of this Agreement.

            Section 3.02     Authority . Company has all necessary corporate power and authority to enter into this Agreement and (subject to, with respect to the Merger, the approval and adoption of this Agreement by Company's shareholders in accordance with the BCL) to carry out its obligations hereunder and to consummate the Transactions. The execution and delivery of this Agreement by Company and the consummation by Company of the Transactions contemplated hereby have been duly authorized and approved by all necessary corporate action on the part of Company (subject to, with respect to the Merger, the approval and adoption of this Agreement by Company's shareholders in accordance with the BCL), and no other corporate action or proceeding is necessary for the execution and delivery of this Agreement, the performance by Company of its obligations hereunder and the consummation by Company of the Transactions (subject to, with respect to the Merger, the approval and adoption of this Agreement by Company's shareholders in accordance with the BCL). This Agreement has been duly executed and delivered by Company and, assuming due authorization, execution and delivery by the Parent and Acquisition Sub, constitutes the legal, valid and binding obligation of Company, enforceable against it in accordance with its terms, except as such may be limited by bankruptcy, insolvency, reorganization or other Laws affecting creditors' rights generally, and by general equitable principles.

            Section 3.03     No Violation .

            (a)       The execution and delivery of this Agreement by Company do not, and the performance of this Agreement and the Transactions by Company will not, (i) assuming all notices, reports or other filings described in clauses (i) through (v) of Section 3.03(b) have been given or made, conflict with or violate any Law, Permit or Order of any Governmental Entity

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applicable to Company or any Subsidiary or by which any of its property is bound or affected, (ii) violate or conflict with either the Certificate of Incorporation or By-Laws of Company or comparable organizational documents of any Subsidiary or, (iii) except as set forth in Schedule 3.03(a) , result in any violation or breach of or constitute a default (or an event which with notice or lapse of time or both would become a default), or impair Company's rights or alter the rights or obligations of any third party under, or result in any increased, additional or guaranteed rights or entitlements of any Person under, or create any obligation to make a payment to any other Person under, or give to others any rights of termination, amendment or cancellation of, or accelerate the performance required by, or result in the creation of a Lien or encumbrance on any of the property or assets of Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture, agreement, Contract, instrument, Permit, license, franchise or other obligation to which Company or any Subsidiary is a party or by which it or its property is bound or affected, except, with respect to clauses (i) and (iii) of this Section 3.03(a) , for conflicts, violations, breaches or defaults which would not, individually or in the aggregate, have a Material Adverse Effect.

            (b)       Except for (i) the filing of the Proxy Statement with the SEC and applicable requirements, if any, of the Exchange Act, (ii) if applicable, the pre-merger notification requirements of the HSR Act, (iii) the filing of the Certificate of Merger as required by the BCL, (iv) filings as may be required by any applicable state takeover or "blue sky" Laws and (v) filings, the failure of which to be obtained or made, would not individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, Company is not required to submit any notice, report or other filing with any Governmental Entity in connection with the execution, delivery or performance of this Agreement or the consummation of the Transactions. No waiver, consent, approval, authorization, exemption of, or any other action by, any Governmental Entity is required to be obtained or made by Company in connection with its execution, delivery or performance of this Agreement or the consummation of the Transactions, except (A) where the failure to obtain such waivers, consents, approvals or authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (B) in connection with any submission required above.

            Section 3.04     SEC Filings; Financial Statements; Sarbanes-Oxley Act .

            (a)       Company has made available to Parent a true, correct and complete copy of Company's Annual Report on Form 10-K for the year ended March 31, 2006 (the " Company Form 10-K "), quarterly reports on Form 10-Q for the quarters ended June 30, 2006 and September 30, 2006, current reports on Form 8-K filed at any time between March 31, 2006 and the date of this Agreement, and the definitive proxy statement for the annual meeting of stockholders of Company held on August 15, 2006, in each case including all amendments thereof and all as filed by Company with the SEC (collectively, the " Company SEC Documents "). As of their respective dates, the Company SEC Documents complied in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and none of the Company's SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

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            (b)       The financial statements of Company included in the Company's SEC Documents (collectively, the " Company Financials ") comply in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except as may be indicated in the notes thereto or, in the case of the unaudited statements, as permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited statements, to normal, recurring audit adjustments that are not material), in all material respects, the consolidated financial position of Company and its Subsidiaries as at the dates thereof and the consolidated results of their operations and cash flows for the periods then ended.

            (c)       Each required form, report and document containing financial statements that has been filed with or submitted to the SEC by Company was accompanied by the certifications required to be filed or submitted by Company's principal executive officer and principal financial officer pursuant to the Sarbanes-Oxley Act and, at the time of filing or submission of each such certification, such certification was true and accurate and complied with the Sarbanes-Oxley Act.

            (d)       There are no outstanding loans made by Company or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of Company. The Company has not since the enactment of the Sarbanes-Oxley Act taken any action prohibited by Section 402 of the Sarbanes-Oxley Act.

            Section 3.05     Financial Controls . The management of Company has (a) established and maintains disclosure controls and procedures (as defined in Rule 13a-15 under the Exchange Act and to the extent applicable to Company as of the date of this Agreement) to ensure that material information relating to Company, including its consolidated Subsidiaries, is made known to the management of Company (including its principal executive officer and principal financial officer) by others within those entities, particularly during periods in which the periodic reports required under the Exchange Act are being prepared, (b) established and maintains a system of internal control over financial reporting (as defined in Rule 13a-15 under the Exchange Act and to the extent applicable to Company as of the date of this Agreement) sufficient to provide reasonable assurance regarding the reliability of Company's financial reporting and the preparation of Company financial statements for external purposes in accordance with GAAP and (c) has disclosed, based on its most recent evaluation of internal controls over financial reporting, to Company's auditors and the audit committee of Company's Board of Directors (i) all significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect Company's ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Company's internal controls over financial reporting. Company has disclosed to Parent prior to the date hereof all disclosures described in clause (c) of the immediately preceding sentence.

            Section 3.06     Tax Matters .

            (a)       Except as set forth on Schedule 3.06 , All Tax Returns required to be filed with respect to Company and its Subsidiaries for all Taxable Periods ending prior to the date hereof have been duly and timely (within any applicable extension periods) filed with the appropriate

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Governmental Entities in all jurisdictions in which such Tax Returns are required to be filed, all such Tax Returns are true, correct and complete, and all Taxes (whether or not shown to be due and payable on such Returns) required to be paid have been paid. Company and its Subsidiaries have set up reserves for the payment of all material Taxes not yet due and payable, and any penalties or fines related to all Tax Returns, that adequately cover all Taxable Periods ending prior to the date hereof, except that Company has not established a reserve for taxes which may become due if in the future funds are repatriated from foreign subsidiaries.

            (b)       Company and each Subsidiary has duly withheld and paid all Taxes that it is required to withhold and pay in connection with amounts paid or owing to any employee, independent contractor, creditor, shareholder or other third party.

            (c)       Except as set forth on Schedule 3.06(c) , none of the Tax Returns of Company and its Subsidiaries filed with respect to Tax years beginning on or after March 31, 2005 or, to the Knowledge of Company, any prior Tax year, has been or is currently being examined by the IRS or relevant state, local or foreign taxing Authorities or Governmental Entities. Except as set forth on Schedule 3.06(c) , there are no examinations or other administrative or court proceedings relating to Taxes or Tax Returns in progress or pending with respect to which Company or any of its Subsidiaries has received written notice.

            (d)       Except as set forth on Schedule 3.06(d) , no payment made or to be made to any current or former employee or director of Company or any of its Subsidiaries as a result of the Transactions contemplated by this Agreement (either alone or in conjunction with any other events such as a termination of employment) and no trustee under any rabbi trust "or similar arrangement in connection with any Employee Benefit Plan will constitute an excess parachute payment" within the meaning of Section 280G of the Code or will be nondeductible under Section 162(m) of the Code.

            (e)       There are no Liens for Taxes, other than for current Taxes not yet due and payable, on the assets of Company or any of its Subsidiaries.

            (f)       During the five year period ending on the date hereof, neither Company nor any of its Subsidiaries was a distributing corporation or a controlled corporation in a transaction intended to be governed by Section 355 of the Code.

            Section 3.07     Absence of Certain Changes . Except as expressly provided in this Agreement or as set forth in Schedule 3.07 or in the Available Company SEC Documents, since September 30, 2006: (a) the business of Company and the Subsidiaries has been conducted in the ordinary course consistent with past practice; (b) there has not been any event, condition, change or development, or worsening of any existing event, condition, change or development that, individually or in combination with any other event, condition, change, development or worsening thereof, has had or could reasonably be expected to have a Material Adverse Effect; (c) there has not been any damage, destruction or loss (whether or not covered by insurance) with respect to any of the assets of Company or any of its Subsidiaries, except for damage, destruction or loss as would not, individually or in the aggregate, have a Material Adverse Effect; (d) neither Company nor any of its Subsidiaries has engaged in any material transaction or entered into any material agreement or commitments outside the ordinary course of business or, except as and to

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the extent disclosed in the Available Company SEC Documents, revalued any material assets of Company or any Subsidiary resulting in an impairment charge; (e) there has not been any change in any material method of accounting, except insofar as may have been required by a change in GAAP; (f) there has not been any material strike or material work slowdown instituted by or involving the employees of Company or any of its Subsidiaries; (g) there have not been any issuances of capital stock or other ownership interests or securities convertible into or exchangeable for shares of capital stock or other ownership interest of Company or any of its Subsidiaries thereof, or any changes in the certificate of incorporation or bylaws (or equivalent creation or organizational document) of Company or any of its Subsidiaries; (h) there have not been any dividends or distributions of the capital stock of Company or any non-wholly-owned Subsidiary thereof, or any redemption, return of capital or similar transactions with respect to the capital stock of Company or any non-wholly-owned Subsidiary thereof; or (i) there have not been any Contracts, agreements, commitments or understandings entered into by Company or any Subsidiary thereof to do any of the foregoing.

            Section 3.08     No Litigation . There is no Litigation pending or, to Company's Knowledge, threatened against Company, any Subsidiary, the directors or officers of Company or any Subsidiary (in such capacity) that, individually or in the aggregate, has had or would reasonably be expected to have a Material Adverse Effect. There is no Litigation pending or, to the Knowledge of Company, threatened against Company or the Subsidiaries, including, without limitation, any Litigation which seeks to prevent consummation of the Transactions or which seeks damages in connection with the Transactions, and no temporary restraining order, preliminary or permanent injunction or other Order or decree which prevents the consummation of the Transactions has been issued and remains in effect.

            Section 3.09     Environmental Matters

            (a)       Except as set forth in the Environmental Reports, Company and each Subsidiary are in material compliance with all applicable Environmental Laws, and any present or former noncompliance with applicable Environmental Laws would not, individually or in the aggregate, have a Material Adverse Effect.

            (b)       Except as set forth in the Environmental Reports, Company and each Subsidiary have all Environmental Permits necessary for the conduct of its business and the operation of its facilities except where the failure to have any such Environmental Permit would not individually or in the aggregate have a Material Adverse Effect.

            (c)       Except as set forth in the Environmental Reports, Company and each Subsidiary are and have been in compliance with all Environmental Permits, and any noncompliance with such Environmental Permits would not, individually or in the aggregate, result in a Material Adverse Effect.

            (d)       Neither Company nor any Subsidiary has received written communications from any Governmental Entity or other Person alleging that Company or any Subsidiary has in any material way violated or is in material violation of any Environmental Law or Environmental Permit.

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            (e)       Except as set forth on Schedule 3.09(e) or in the Environmental Reports, there are no Environmental Claims pending or, to the Knowledge of Company, threatened (i) against Company or any Subsidiary or (ii) against any Person whose liability for any such Environmental Claim Company or any Subsidiary has retained or assumed, either contractually or by operation of law.

            (f)       Except as set forth on Schedule 3.09(f) or in the Environmental Reports, there have been no Releases of any Hazardous Substances at any Owned Real Property or Leased Real Property or any property used by Company or any Subsidiary that could reasonably be expected to result in any Environmental Claim against Company or any Subsidiary.

            (g)       Complete and accurate copies of all environmental site assessment reports, investigation, remediation or compliance studies, audits, assessments or similar documents which are in the possession, custody or control of Company or any of its Subsidiaries have been made available to Parent.

            Section 3.10     Compliance with Laws and Orders .

            (a)       Company and each Subsidiary are in compliance with all applicable Laws and Orders, except for such instances of noncompliance that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Neither Company nor any Subsidiary has received any notice of any violation or alleged violation of any Laws or Orders. All reports, filings and returns required to be filed by or on behalf of Company or any Subsidiary with any Governmental Entity have been filed, except where the failure to so file would not reasonably be expected to have a Material Adverse Effect.

            (b)       Except as set forth on Schedule 3.10(b) , Company and each Subsidiary has all necessary Permits and/or all necessary exemptions from Permits required for the current conduct of its business and the operation of its facilities, except for instances where the failure to have such Permits and/or exemptions would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Company and each Subsidiary (including its respective business and assets) is in compliance with all Permits except for such instances of noncompliance that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Neither Company nor any Subsidiary has received notice of any violation or alleged violation of any Permit.

            Section 3.11     Properties .

            (a)       Except as set forth on Schedule 3.11(a) , each of Company and its Subsidiaries has good, valid and marketable title to, or in the case of Leased Real Property, valid leasehold interests in, the Owned Real Property and the Leased Real Property free and clear of all Liens, except for Permitted Liens.

            (b)        Schedule 3.11(b) contains a true and complete list of all real property owned by Company or any Subsidiary (collectively, the " Owned Real Property ") and for each parcel of Owned Real Property, contains a correct street address of such Owned Real Property. Copies of title reports or policies obtained by Company with respect to each of the Owned Real Property

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have previously been made available to Parent to the extent that such reports and policies are in Company's possession and control, as applicable.

            (c)        Schedule 3.11(c) contains a true and complete list of all of the leases, subleases, and other agreements under which Company or any of its Subsidiaries uses or occupies or has the right to use or occupy any real property (the " Real Property Leases " and the real property leased thereunder, the " Leased Real Property "), including the correct street address of each such real property. Company has made available to Parent copies of all Real Property Leases (including all written modifications, amendments, supplements, waivers and side letters thereto in Company's possession or control).

            (d)       Each Real Property Lease is a valid and binding obligation of Company or a Subsidiary and is in full force and effect. There is no default under any Real Property Lease either by Company or the Subsidiaries party thereto or, to Company's Knowledge, by any other party thereto, and no event has occurred that, with the lapse of time or the giving of notice or both, would constitute a default by Company or any Subsidiary thereunder, except for such defaults as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. All rent and other sums and charges payable by Company or any of its Subsidiaries, as applicable, as tenant thereunder, are paid or reserved for and no termination event or condition (other than expiration of such Real Property Lease by its terms on its scheduled termination date, rather than an accelerated termination date) exists under any Real Property Lease.

            (e)       There does not exist any pending or, to Company's Knowledge, threatened condemnation or eminent domain proceedings that affect any Owned Real Property or Real Property Lease, and neither Company nor any Subsidiary has received any written notice of the intention of any Governmental Entity or other Person to take or use any Owned Real Property or Real Property Lease. Except as set forth on Schedule 3.11(e) , Company has not received any written notice of any material violations of building codes and/or zoning ordinances or other governmental or regulatory laws affecting the Real Property. Company has obtained all material permits necessary for the present operation and use of each parcel of Owned Real Property and Leased Real Property.

            (f)       Except as set forth on Schedule 3.11(f) , none of the Owned Real Property or the Leased Real Property is subject to any lease, sublease, license or other agreement granting to any other Person any right to the use, occupancy or enjoyment of such real property or any part thereof.

            Section 3.12     Insurance . Schedule 3.12 sets forth a true and complete list of all insurance policies carried by or covering Company and the Subsidiaries with respect to their businesses, assets and properties, together with, in respect of each such policy, the name of the insurer, the policy number, the type of policy, and the amount of coverage and the deductible. True and complete copies of each such policy have previously been made available to Parent. All such policies are in full force and effect, all premiums due and payable thereon have been paid, and no notice of cancellation has been received by Company or any Subsidiary with respect to any such policy. Each of Company and the Subsidiaries has complied with the provisions of each such policy under which it is an insured party, except for instances of noncompliance that

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individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect.

            Section 3.13     Material Contracts .

            (a)       All material Contracts to which Company or any Subsidiary is a party or any of their respective properties or assets is subject that are required to be filed as an exhibit to any Available Company SEC Document have been filed as an exhibit to such Available Company SEC Document (such filed Contracts, the " Filed Contracts "). Schedule 3.13(a) lists all Contracts, other than the Filed Contracts, to which Company or any of its Subsidiaries is a party and which fall within any of the following categories (together with the Filed Contracts, the " Material Contracts "): (i) material Contracts not entered into in the ordinary course of business; (ii) joint venture, partnership and like agreements involving a sharing of profits, losses, costs or liabilities; (iii) Real Property Leases; (iv) Contracts relating to any outstanding commitment for capital expenditures in excess of $100,000 or which provided for payments to or from Company or any Subsidiary in excess of $100,000 in the aggregate over the life of such Contract; (v) indentures, mortgages, promissory notes, loan agreements, guarantees, letter of credit or other agreements, instruments or Indebtedness of Company or any of its Subsidiaries or commitments for the borrowing or the lending by Company or any of its Subsidiaries of amounts in excess of $50,000 or providing for the creation of any Lien upon any of the assets of Company or any of its Subsidiaries; (vi) any non-competition agreement or any other agreement or obligation that purports to limit in any respect the manner in which, or the localities in which, the business of Company or the Subsidiaries may be conducted; (vii) any Contract that by its express terms would prohibit or materially delay the consummation of the Merger or any of the Transactions contemplated by this Agreement; (viii) any collective bargaining agreement; (ix) any material Contracts pertaining to Intellectual Property (excluding Contracts for commercially available off-the-shelf software); and (x) any agreement for the sale of significant assets out of the ordinary course of business.

            (b)       All the Material Contracts are valid and in full force and effect, except to the extent they have previously expired or terminated in accordance with their terms and except for any invalidity or failure to be in full force and effect that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. None of Company or any Subsidiary is in violation of or default (with or without notice or lapse of time or both) under, or has waived or failed to enforce any rights or benefits under, any Material Contract, except for violations, defaults, waivers or failures to enforce rights or benefits that individually or in the aggregate would not reasonable be expected to have a Material Adverse Effect. To the Knowledge of Company, no other party to any Material Contract is in breach thereof or default thereunder, except for breaches or defaults that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. Company has made available to Parent true and complete copies of each Material Contract, including all material amendments thereto.

            Section 3.14     Labor Matters . Except as set forth on Schedule 3.14 , (i) there is no unfair labor practice charge or complaint pending or, to Company's Knowledge, threatened, against Company or any Subsidiary; (ii) there is no labor dispute, slowdown, strike, work stoppage or other collective labor action actually pending or, to Company's Knowledge, threatened, against

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or affecting Company or any Subsidiary; (iii) except as set forth on Schedule 3.14 , neither Company nor Subsidiary is a party to or otherwise bound by any collective bargaining agreement or any other agreement with any labor organization applicable to employees or to Persons providing services to either Company or any Subsidiary; (iv) there has been no mass layoff, plant closure, employment loss or other event covered by the Worker Adjustment and Retraining Notification Act or any applicable state or local law concerning mass layoffs and/or plant closures within the last year; and (v) there are no administrative charges or court complaints or Litigation against Company or any Subsidiary concerning alleged employment discrimination or other employment-related matters pending or threatened before the U.S. Equal Employment Opportunity Commission.

            Section 3.15     Employee Benefit Plans .

            (a)       To the extent Company or any Subsidiary is or has been a party to, maintains or has maintained, contributes or has contributed to, or has or had an obligation to contribute to, or has or has had any Liability with respect to any (i) executive compensation or employment agreement with any current or former director, officer or employee, (ii) severance program or policy, (iii) plan or arrangement relating to its current or former directors, officers or employees which contains change in control provisions, or (iv) employee pension or welfare plans as defined in ERISA, collective bargaining agreement, consulting agreement, or bonus, pension, profit sharing, retirement, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, vacation, supplemental unemployment, disability, death benefit, hospitalization, medical, workers' compensation or other similar plan, fund, agreement, arrangement or understanding for the benefit of any employee or former employee of Company or any other entity (whether or not incorporated) which is or was, together with Company, treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (an " ERISA Affiliate "), such agreement, program, policy, plan, arrangement, fund or understanding shall be deemed an " Employee Benefit Plan ." Schedule 3.15(a) lists all current Employee Benefit Plans to which Company or any Subsidiary is a party or that has outstanding awards on the Closing Date and other qualified or multi-employer plans to which Company or any Subsidiary has been a party at any time during the five year period ending on the Closing Date. To Company's Knowledge, neither Company nor any Subsidiary has any Liability to or under any Employee Benefit Plan (other than those described in the preceding sentence) to which Company, any Subsidiary or any ERISA Affiliate has been a party at any time before the five year period preceding the Closing Date.

            (b)       True, complete and correct copies of each Employee Benefit Plan, or a written summary of any Employee Benefit Plan not in writing have been delivered, or made available, to Parent.

            (c)       Except as disclosed on Schedule 3.15(c) or as expressly provided in this Agreement, neither Company nor any Subsidiary, or any of their officers or directors, has taken any action directly or indirectly during the three year period ending on the closing date which obligates Company or any Subsidiary to institute, modify or change any Employee Benefit Plan, any actuarial or other assumption used to calculate funding obligations with respect to any of the Employee Benefit Plans, the manner in which contributions to any of the Employee Benefit Plans are made, or the basis on which such contributions are determined. Except as disclosed on

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Schedule 3.15(c), with respect to the Employee Benefit Plans, and the employee plans of any entity while an ERISA Affiliate, no event has occurred and, to Company's Knowledge, there exists no condition or set of circumstances, in connection with which Company or any Subsidiary could be subject to any Liability (except for routine payment of benefits and funding) under ERISA, the Code, or any other applicable Law except for events, conditions and circumstances that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect.

            (d)       Each Employee Benefit Plan has been administered in accordance with its terms, and all Employee Benefit Plans have been operated, and are in compliance with the applicable provisions of ERISA, the Code and all other applicable Laws, Orders, and governmental rules and regulations except for instances of noncompliance that, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. To Company's Knowledge, all required reports and description of the Employee Benefit Plans (including but not limited to Form 5500 or 5500C Annual Reports, Form 1024 Application for Recognition of Exemption Under Section 501(a), Summary Annual Reports and Summary Plan Descriptions, as applicable) have been timely filed and distributed.

            (e)       There is not pending or, to the Knowledge of Company, threatened any Litigation, claim, investigation or audit relating to any Employee Benefit Plan or the assets thereof that individually or in the aggregate would reasonably be expected to be material, and to the Knowledge of Company there is no basis therefor.

            (f)       Except as set forth in Schedule 3.15(f) , no current or former director, officer, or employee of Company or any Subsidiary will be entitled to any payment (including severance, unemployment compensation, golden parachute, or otherwise), additional benefits or any acceleration of the time of payment or vesting of any benefits under any Employee Benefit Plan as a result of the Transac