AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1



AGREEMENT AND PLAN OF MERGER

BY AND AMONG

INTUIT INC.

ELAN ACQUISITION CORPORATION

AND

ELECTRONIC CLEARING HOUSE, INC.


Dated as of December 14, 2006


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ARTICLE I THE MERGER..................................................1

1.1 The Merger..................................................1

1.2 Effective Time; Closing.....................................2

1.3 Effect of the Merger........................................2

1.4 Articles of Incorporation and Bylaws of
Surviving Corporation.....................................2

1.5 Directors and Officers of Surviving Corporation.............3

1.6 Effect on Capital Stock.....................................3

1.7 Dissenting Shares...........................................5

1.8 Surrender of Certificates...................................5

1.9 No Further Ownership Rights in Shares.......................7

1.10 Lost, Stolen or Destroyed Certificates......................7

1.11 Taking of Necessary Action; Further Action..................7

ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY...................8

2.1 Organization and Qualification; Subsidiaries................8

2.2 Articles of Incorporation and Bylaws........................9

2.3 Capitalization..............................................9

2.4 Authority Relative to this Agreement.......................11

2.5 No Conflict; Required Filings and Consents.................11

2.6 Compliance.................................................12

2.7 SEC Filings; Financial Statements; Internal Controls.......13

2.8 No Undisclosed Liabilities.................................15

2.9 Absence of Certain Changes or Events.......................15

2.10 Absence of Litigation......................................16

2.11 Employee Benefit Plans.....................................16

2.12 Proxy Statement............................................21

2.13 Restrictions on Business Activities........................22

2.14 Title to Property..........................................22

2.15 Taxes......................................................23

2.16 Environmental Matters......................................25

2.17 Third Party Expenses.......................................26

2.18 Intellectual Property......................................27

2.19 Contracts..................................................31

2.20 Customers and Suppliers....................................34


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2.21 Insurance..................................................34

2.22 Opinion of Financial Advisor...............................34

2.23 Board Approval.............................................34

2.24 Vote Required..............................................35

2.25 State Takeover Statutes; Rights Agreement..................35

2.26 Transactions with Affiliates...............................35

2.27 Illegal Payments, Etc......................................35

2.28 Privacy....................................................35

2.29 Compliance With Applicable Standards;
Merchant Agreements......................................36

2.30 Federal Reserve Regulations................................38

ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT
AND MERGER SUB...........................................38

3.1 Corporate Organization.....................................38

3.2 Authority Relative to this Agreement.......................38

3.3 No Conflict; Required Filings and Consents.................39

3.4 Proxy Statement............................................39

3.5 Sufficient Funds...........................................40

3.6 No Business Activities.....................................40

3.7 Ownership of Company Stock.................................40

ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME........................40

4.1 Conduct of Business by Company.............................40

4.2 No Control.................................................44

ARTICLE V ADDITIONAL AGREEMENTS......................................44

5.1 Proxy Statement............................................44

5.2 Meeting of Company Stockholders............................44

5.3 Confidentiality; Access to Information.....................46

5.4 No Solicitation............................................46

5.5 Public Disclosure..........................................49

5.6 Rights Agreement...........................................50

5.7 Reasonable Efforts; Notification...........................50

5.8 Third Party Consents; Other Actions........................51

5.9 Indemnification............................................52

5.10 Regulatory Filings; Reasonable Efforts.....................53


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5.11 Termination of Certain Benefit Plans.......................53

5.12 Employee Benefits..........................................54

5.13 FIRPTA Certificate.........................................54

ARTICLE VI CONDITIONS TO THE MERGER...................................55

6.1 Conditions to Obligations of Each Party
to Effect the Merger.....................................55

6.2 Additional Conditions to Obligations of Company............55

6.3 Additional Conditions to the Obligations
of Parent and Merger Sub.................................56

ARTICLE VII TERMINATION, AMENDMENT AND WAIVER..........................58

7.1 Termination................................................58

7.2 Notice of Termination; Effect of Termination...............61

7.3 Fees and Expenses..........................................61

7.4 Amendment..................................................63

7.5 Extension; Waiver..........................................63

ARTICLE VIII GENERAL PROVISIONS.........................................63

8.1 Non-Survival of Representations and Warranties.............63

8.2 Notices....................................................64

8.3 Interpretation; Knowledge..................................65

8.4 Counterparts...............................................66

8.5 Entire Agreement; Third Party Beneficiaries................66

8.6 Severability...............................................66

8.7 Other Remedies; Specific Performance.......................67

8.8 Governing Law..............................................67

8.9 Rules of Construction......................................67

8.10 Assignment.................................................67

8.11 Waiver of Jury Trial.......................................67

INDEX OF EXHIBITS

EXHIBIT A Form of Company Voting Agreement


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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER is made and entered into as of
December 14, 2006 (the "AGREEMENT"), by and among Intuit inc., a Delaware
corporation ("PARENT"), Elan Acquisition Corporation, a Nevada corporation and A
wholly-owned subsidiary of Parent ("MERGER SUB"), and Electronic Clearing House,
Inc., a Nevada corporation (the "COMPANY").

RECITALS

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

WHEREAS, the Board of Directors of the Company (the "BOARD") has
unanimously (i) determined that the Merger (as defined in SECTION 1.1 hereof) is
advisable and fair to, and in the best interests of, the Company and its
stockholders, and (ii) approved this Agreement, the Merger and the other
transactions contemplated by this Agreement (the "TRANSACTIONS"), and (iii)
resolved, subject to the terms and conditions of this Agreement, to recommend
the approval of this Agreement by the stockholders of the Company.

WHEREAS, concurrently with the execution of this Agreement, as a
condition and material inducement to Parent's willingness to enter into this
Agreement, all executive officers and directors of the Company and all of their
respective affiliates, in their capacity as stockholders of the Company, are
entering into voting agreements in substantially the form attached hereto as
EXHIBIT A (the "COMPANY VOTING AGREEMENTS"), pursuant to which each such
stockholder has agreed, among other things, to vote his, her or its Shares (as
defined in SECTION 1.6(A) hereof) in favor of the Merger.

WHEREAS, concurrently with the execution of this Agreement, as a
condition and material inducement to Parent's willingness to enter into this
Agreement, (i) the individuals listed on SCHEDULE I attached hereto are entering
into non-competition agreements with Parent (the "NON-COMPETITION AGREEMENTS"),
and (ii) the individuals listed on SCHEDULE II attached hereto (the "KEY
EMPLOYEES") are entering into offer letters with Parent.

NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

ARTICLE I
THE MERGER

1.1 THE MERGER. At the Effective Time (as defined in SECTION 1.2
hereof) and subject to and upon the terms and conditions of this Agreement and
the applicable provisions of the Nevada Revised Statutes ("NEVADA LAW"), Merger
Sub shall be merged


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with and into the Company (the "MERGER"), the separate corporate existence of
Merger Sub shall cease and the Company shall continue as the surviving
corporation. The Company, as the surviving corporation after the Merger, is
hereinafter sometimes referred to as the "SURVIVING CORPORATION."

1.2 EFFECTIVE TIME; CLOSING. Upon the terms and subject to the
conditions of this Agreement, the parties hereto shall cause the Merger to be
consummated by filing articles of merger (the "ARTICLES OF MERGER") with the
Secretary of State of the State of Nevada in accordance with the relevant
provisions of Nevada Law (the time of such filing (or such later time as may be
agreed in writing by the Company and Parent and specified in the Articles of
Merger) being the "EFFECTIVE TIME") as soon as practicable on or after the
Closing Date (as herein defined). Unless the context otherwise requires, the
term "AGREEMENT" as used herein refers collectively to this Agreement and Plan
of Merger (as the same may be amended from time to time in accordance with the
terms hereof) and the Articles of Merger. The closing of the Merger (the
"CLOSING") shall take place at the offices of O'Melveny & Myers LLP, Embarcadero
Center West, 275 Battery Street, Suite 2600, San Francisco, California, at a
time and date to be specified by the parties hereto, which shall be no later
than the second business day after the satisfaction or waiver of the conditions
set forth in ARTICLE VI hereof (other than those conditions, which by their
terms, are to be satisfied or waived on the Closing Date), or at such other
time, date and location as the parties hereto agree in writing (the "CLOSING
DATE").

1.3 EFFECT OF THE MERGER. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Nevada Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all of the assets, properties, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all of the debts, liabilities, obligations,
restrictions and duties of the Company and Merger Sub shall become the debts,
liabilities, obligations, restrictions and duties of the Surviving Corporation.

1.4 ARTICLES OF INCORPORATION AND BYLAWS OF SURVIVING CORPORATION.

(a) ARTICLES OF INCORPORATION. As of the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub
or the Company, the Articles of Incorporation of the Surviving
Corporation shall be amended and restated to read the same as the
Articles of Incorporation of Merger Sub, as in effect immediately prior
to the Effective Time, until thereafter amended in accordance with
Nevada Law and such Articles of Incorporation; PROVIDED, HOWEVER, that
as of the Effective Time the Articles of Incorporation shall provide
that the name of the Surviving Corporation is "Electronic Clearing
House, Inc."

(b) BYLAWS. As of the Effective Time, by virtue of the Merger
and without any action on the part of Merger Sub or the Company, the
Bylaws of the Surviving Corporation shall be amended and restated to
read the same as the Bylaws of Merger Sub, as in effect immediately
prior to the Effective Time, until thereafter amended in accordance
with Nevada Law, the Articles of Incorporation of the Surviving


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Corporation and such Bylaws; PROVIDED, HOWEVER, that all references in
such Bylaws to Merger Sub shall be deemed to refer to "Electronic
Clearing House, Inc."

1.5 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.

(a) DIRECTORS. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub as of immediately
prior to the Effective Time, until their respective successors are duly
elected or appointed and qualified.

(b) OFFICERS. The initial officers of the Surviving
Corporation shall be the officers of Merger Sub as of immediately prior
to the Effective Time, until their respective successors are duly
elected or appointed and qualified.

1.6 EFFECT ON CAPITAL STOCK. Upon the terms and subject to the
conditions of this Agreement, at the Effective Time, by virtue of the Merger and
without any action on the part of Merger Sub, the Company or the holders of any
of the following securities, the following shall occur:

(a) CONVERSION OF SHARES. Each share of Company Common Stock
(as defined in Section 2.3(a) hereof), including the associated right
(the "RIGHTS") to purchase one one-hundredth of a share of Series A
Junior Participating Preferred Stock ("SERIES A PREFERRED STOCK"), or
in certain circumstances Company Common Stock, pursuant to the Amended
and Restated Rights Agreement dated as of January 29, 2003 (the "RIGHTS
AGREEMENT"), by and between the Company and OTR, Inc., as Rights Agent,
(the "SHARES") issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to
SECTION 1.6(B) hereof and any Dissenting Shares (as defined in SECTION
1.7 hereof)), will be canceled and extinguished and automatically
converted into the right to receive, upon surrender of the certificate
representing such Share in the manner provided in SECTION 1.8 hereof
(or in the case of a lost, stolen or destroyed certificate, upon
delivery of an affidavit (and bond, if required) in the manner provided
in SECTION 1.10 hereof), cash, without interest, in an amount equal to
Eighteen Dollars and Seventy Five Cents ($18.75) per Share (the "MERGER
CONSIDERATION").

(b) CANCELLATION OF TREASURY AND PARENT-OWNED SHARES. Each
Share held by the Company or owned by Merger Sub, Parent or any direct
or indirect wholly-owned subsidiary of the Company or of Parent
immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof.

(c) CAPITAL STOCK OF MERGER SUB. Each share of common stock,
par value $0.01 per share, of Merger Sub (the "MERGER SUB COMMON
STOCK") issued and outstanding immediately prior to the Effective Time
shall be converted into one validly issued, fully paid and
nonassessable share of common stock, par value $0.01 per share, of the
Surviving Corporation. Each certificate evidencing ownership of shares
of Merger


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Sub Common Stock outstanding immediately prior to the Effective Time
shall evidence ownership of such shares of capital stock of the
Surviving Corporation.

(d) EQUITY AWARDS. The Company shall, prior to the Effective
Time, take such action, adopt such amendments, and obtain all such
consents, as shall be required: (i) as to any Company Stock Options (as
defined in Section 2.3(a)), shares of Company Restricted Stock (as
defined in Section 2.3(a)) (including those shares issued pursuant to
the acceleration of Long-Term Incentive Restricted Stock Grants (as
defined in Section 2.3(a)) as a result of this Section 1.6(d)),
Long-Term Incentive Restricted Stock Grants and Long-Term Incentive
Phantom Stock Grants (as defined in Section 2.3(a)) that are
outstanding and unvested immediately prior to the Effective Time, to
cause such Company Stock Options, shares of Company Restricted Stock,
Long-Term Incentive Restricted Stock Grants and Long-Term Incentive
Phantom Stock Grants to be fully vested immediately prior to the
Effective Time; (ii) as to any Long-Term Incentive Restricted Stock
Grants that are accelerated as a result of this Section 1.6(d), to
issue shares of Company Restricted Stock in respect thereof upon such
acceleration; (iii) as to any shares of Company Restricted Stock
(including those issued pursuant to the acceleration of Long-Term
Incentive Restricted Stock Grants as a result of this Section 1.6(d)),
to cause such shares to be treated in accordance with Section 1.6(a) at
the Effective Time; and (iv) to cancel, immediately prior to the
Effective Time, all then-outstanding Company Stock Options and
Long-Term Incentive Phantom Stock Grants such that the holder of any
such Company Stock Option or Long-Term Incentive Phantom Stock Grant
shall have no further interest in such Company Stock Option or
Long-Term Incentive Phantom Stock Grants, or right in respect thereof
or with respect thereto, other than the right to receive such cash
consideration as determined pursuant to the next three sentences. With
respect to each Company Stock Option that has a per share exercise
price that is less than the Merger Consideration and is so cancelled,
the holder of such Company Stock Option shall be entitled to receive
for such Company Stock Option (the "OPTION CONSIDERATION") (subject to
any applicable withholding tax) cash equal to the product of (A) the
number of shares of Company Common Stock as to which the portion of the
Company Stock Option that is so cancelled could be exercised,
multiplied by (B) the Merger Consideration less the per share exercise
price of such portion of the Company Stock Option. In the case of a
Company Stock Option having a per share exercise price equal to or
greater than the Merger Consideration, such Company Stock Option shall
be cancelled without the payment of cash or issuance of other
securities in respect thereof. With respect to each Long-Term Incentive
Phantom Stock Grant, the holder of such Long-Term Incentive Phantom
Stock Grant shall be entitled to receive for such Long-Term Incentive
Phantom Stock Grant (the "PHANTOM STOCK CONSIDERATION") (subject to any
applicable withholding tax) cash equal to the product of (A) the number
of shares of phantom stock subject to such Long-Term Incentive Phantom
Stock Grant, multiplied by (B) the Merger Consideration. As soon as
reasonably practicable after the Effective Time, Parent shall deliver
to the Surviving Corporation an amount equal to the sum of the
aggregate Option Consideration and the aggregate Phantom Stock
Consideration payable to holders of Company Stock Options and Long-Term
Incentive Phantom Stock Grants that were converted into the right to
receive Option Consideration and Phantom Stock Consideration pursuant
to this SECTION 1.6(D), and the Surviving Corporation shall promptly
deliver the Option Consideration


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and Phantom Stock Consideration to such holders of Company Stock
Options and Long-Term Incentive Phantom Stock Grants.

1.7 DISSENTING SHARES.

(a) Notwithstanding any provision of this Agreement to the
contrary, any shares of Company Common Stock that are issued and
outstanding immediately prior to the Effective Time and that are held
by a stockholder of the Company who has properly exercised his, her or
its dissenter's rights under Nevada Law (the "DISSENTING SHARES") shall
not be converted into the right to receive the Merger Consideration
pursuant to SECTION 1.6(A), but, instead, such shares shall be
converted into the right to receive such consideration as may be
determined to be due with respect to such Dissenting Shares pursuant to
and subject to the requirements of Nevada Law. If any such holder shall
have failed to perfect, or shall have effectively withdrawn or lost,
his, her or its right to dissent from the Merger under Nevada Law, each
share of such holder's Company Common Stock shall thereupon be deemed
to have been converted, as of the Effective Time, into the right to
receive the Merger Consideration, without any interest thereon, upon
surrender, in the manner provided in SECTION 1.8 hereof, of the
certificate or certificates that formerly evidenced such Shares. The
Company shall give Parent (i) prompt notice of any notice or demands
for appraisal or payment for shares of Company Common Stock received by
the Company, and (ii) the opportunity to direct all negotiations and
proceedings with respect to demands for appraisal under Nevada Law. The
Company shall not, except with the prior written consent of Parent,
make any payment with respect to any demands for appraisal or offer to
settle or settle any such demands.

1.8 SURRENDER OF CERTIFICATES.

(a) PAYING AGENT. Prior to the Effective Time, Parent shall
select a bank or trust company reasonably acceptable to the Company to
act as agent (the "PAYING AGENT") for the holders of Shares to receive
the funds to which holders of Shares shall become entitled pursuant to
SECTION 1.6(A). As soon as reasonably practicable after the Effective
Time, Parent shall deposit, or cause Merger Sub to deposit, with the
Paying Agent, for the benefit of the holders of Shares, cash in an
amount sufficient to pay the aggregate Merger Consideration. The
deposit made by Parent or Merger Sub, as the case may be, pursuant to
this SECTION 1.8(A) is hereinafter referred to as the "EXCHANGE FUND."
If such funds are insufficient to make the payments contemplated by
SECTION 1.6(A), Parent shall promptly deposit, or cause to be
deposited, additional funds with the Paying Agent in an amount that is
equal to the deficiency in the amount funds required to make such
payment. Parent shall instruct the Paying Agent to cause the Exchange
Fund to be (i) held for the benefit of the holders of the Shares, and
(ii) applied promptly to make the payments provided for in SECTION
1.6(A) in accordance with this SECTION 1.8. The Exchange Fund shall be
invested by the Paying Agent as directed by Parent.

(b) PAYMENT PROCEDURES. As soon as reasonably practicable
after the Effective Time, Parent shall cause the Paying Agent to mail
to each holder of record (as


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of the Effective Time) of a certificate or certificates (the
"CERTIFICATES"), which immediately prior to the Effective Time
represented the outstanding Shares converted into the right to receive
the Merger Consideration, (i) a letter of transmittal in customary form
(which shall specify that delivery shall be effected, and risk of loss
and title to the Certificates shall pass, only upon delivery of the
Certificates (or affidavits of loss in lieu thereof and any required
bond in accordance with SECTION 1.10) to the Paying Agent and shall
contain such other provisions as Parent or the Paying Agent may
reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration
(which instructions shall include provisions for payment of the Merger
Consideration to a person other than the person in whose name the
surrendered Certificate is registered on the transfer books of the
Company, subject to receipt of appropriate documentation and payment of
any applicable taxes). Upon surrender of Certificates for cancellation
(or affidavits of loss in lieu thereof together with any required bond
in accordance with SECTION 1.10) to the Paying Agent or to such other
agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such
Certificates formerly representing the Shares shall be entitled to
receive in exchange therefor the Merger Consideration, and the
Certificates so surrendered shall forthwith be canceled. Until so
surrendered, outstanding Certificates shall be deemed from and after
the Effective Time, for all corporate purposes, to evidence only the
right to receive the Merger Consideration. Promptly following surrender
of any such Certificates, the Paying Agent shall deliver to the record
holders thereof, without interest, the Merger Consideration.

(c) PAYMENTS WITH RESPECT TO UNSURRENDERED SHARES; NO
LIABILITY. At any time following the one (1) year anniversary of the
Effective Time, the Surviving Corporation shall be entitled to require
the Paying Agent to deliver to it any portion of the Exchange Fund that
remains unclaimed by the holders of Shares (including, without
limitation, all interest and other income received by the Paying Agent
in respect of all funds made available to it), and, thereafter, such
holders shall be entitled to look to the Surviving Corporation (subject
to abandoned property, escheat and other similar laws) only as general
creditors thereof with respect to any Merger Consideration that may be
payable upon due surrender of the Certificates held by them.
Notwithstanding the foregoing, neither Parent, the Surviving
Corporation nor the Paying Agent shall be liable to any holder of a
Share for any Merger Consideration delivered in respect of such Share
to a public official pursuant to any abandoned property, escheat or
other similar law.

(d) TRANSFERS OF OWNERSHIP. If the payment of the Merger
Consideration is to be paid to a person other than the person in whose
name the Certificates surrendered in exchange therefor are registered,
it will be a condition of payment that the Certificates so surrendered
be properly endorsed and otherwise in proper form for transfer
(including without limitation, if requested by Parent or the Paying
Agent, a medallion guarantee), and that the persons requesting such
payment will have paid to Parent or any agent designated by it any
transfer or other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the
Certificates surrendered, or established to the reasonable satisfaction
of Parent or any agent designated by it that such tax has been paid or
is not applicable.


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(e) REQUIRED WITHHOLDING. Each of the Paying Agent, Parent and
the Surviving Corporation shall be entitled to deduct and withhold from
any consideration payable or otherwise deliverable pursuant to this
Agreement to any holder or former holder of Shares or Company Stock
Options such amounts as may be required to be deducted or withheld
therefrom under the Code (as defined in SECTION 2.11(A) hereof) or
under any provision of state, local or foreign tax law or under any
other applicable Legal Requirement (as defined in SECTION 2.3(A)
hereof). To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as
having been paid to the person to whom such amounts would otherwise
have been paid (in respect of which Parent, the Paying Agent or the
Surviving Company, as the case may be, made such deductions and
withholdings).

(f) ADJUSTMENTS. If during the period from the date of this
Agreement through the Effective Time, any change in the outstanding
shares of Company Common Stock or the shares of Company Common Stock
issuable upon conversion, exercise or exchange of securities
convertible, exercisable or exchangeable into or for shares of Company
Common Stock, shall occur by reason of any reclassification,
recapitalization, stock split or combination, exchange or readjustment
of shares of Company Common Stock, or any similar transaction, or any
stock dividend thereon with a record date during such period, the
Merger Consideration shall be appropriately adjusted to reflect such
change.

1.9 NO FURTHER OWNERSHIP RIGHTS IN SHARES. Payment of the Merger
Consideration shall be deemed to have been paid in full satisfaction of all
rights pertaining to the Shares, and there shall be no further registration of
transfers on the records of the Surviving Corporation of the Shares which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be canceled and exchanged as provided in this ARTICLE I.

1.10 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event that any
Certificates shall have been lost, stolen or destroyed, the Paying Agent shall
pay in exchange for such lost, stolen or destroyed Certificates, upon the making
of an affidavit of that fact by the holder thereof, the Merger Consideration
payable with respect thereto; PROVIDED, HOWEVER, that Parent may, in its
discretion and as a condition precedent to the payment of such Merger
Consideration, require the owner of such lost, stolen or destroyed Certificates
to deliver a bond in such reasonable and customary amount as it may direct as
indemnity against any claim that may be made against Parent, the Surviving
Corporation or the Paying Agent with respect to the Certificates alleged to have
been lost, stolen or destroyed.

1.11 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub will take all such lawful and reasonably necessary
action.


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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY

The Company hereby represents and warrants to Parent and Merger Sub,
subject only to exceptions disclosed in writing in the disclosure schedule
supplied by the Company to Parent dated as of the date hereof and certified by a
duly authorized officer of the Company (the "COMPANY SCHEDULE"), as follows:

2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.

(a) Each of the Company and its subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation and has the requisite corporate
power and authority to own, lease and operate its assets and properties
and to carry on its business as it is now being conducted and as
proposed by the Company to be conducted. Each of the Company and its
subsidiaries is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates,
approvals and orders ("APPROVALS") 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 and as proposed by the Company to
be conducted. except where any failure to possess such Approvals would
not, individually or in the aggregate, be reasonably likely to have a
Material Adverse Effect.

(b) The Company has no subsidiaries except for the
corporations identified in SECTION 2.1(B) of the Company Schedule.
SECTION 2.1(B) of the Company Schedule also (i) sets forth the form of
ownership and percentage interest of the Company in each of its
subsidiaries, (ii) to the extent that a subsidiary set forth thereon is
not wholly owned by the Company, lists the other persons or entities
who have an interest in such subsidiary and sets forth the percentage
of each such interest, and (iii) identifies each of the directors and
officers of each such subsidiary. Neither the Company nor any of its
subsidiaries has agreed to make nor is obligated to make nor is bound
by any written, oral or other agreement, contract, subcontract, lease,
mortgage, indenture, understanding, arrangement, instrument, note,
bond, option, warranty, purchase order, license, sublicense, insurance
policy, benefit plan, permit, franchise or other instrument, obligation
or commitment or undertaking of any nature (a "CONTRACT"), in effect as
of the date hereof or as may hereafter be in effect under which it may
become obligated to make, any future investment in or capital
contribution to any other entity. Neither the Company nor any of its
subsidiaries directly or indirectly owns any equity or similar interest
in or any interest convertible, exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, limited
liability company, joint venture or other business, association or
entity.

(c) The Company and each of its subsidiaries is duly qualified
to do business as a foreign corporation, and is in good standing, under
the laws of all jurisdictions where the character of the properties
owned, leased or operated by it or the nature of its activities makes
such qualification necessary, except where failures to be so qualified
and in good standing would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect on the Company.


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2.2 ARTICLES OF INCORPORATION AND BYLAWS. The Company has previously
furnished to Parent (i) a complete and correct copy of its Articles of
Incorporation and Bylaws as amended to date (together, the "COMPANY CHARTER
DOCUMENTS") and (ii) the equivalent organizational documents for each subsidiary
of the Company, each as amended to date. The Company is not in violation of any
of the provisions of the Company Charter Documents, and no subsidiary of the
Company is in violation of its equivalent organizational documents.

2.3 CAPITALIZATION.

(a) The authorized capital stock of the Company consists of
36,000,000 shares of Company common stock, par value $0.01 per share
("COMPANY COMMON STOCK") and 5,000,000 shares of Preferred Stock, par
value of $0.01 per share ("COMPANY PREFERRED STOCK"), of which 500,000
shares have been designated as Series A Junior Participating Preferred
Stock. At the close of business on the date of this Agreement (i)
6,824,814 shares of Company Common Stock were issued and outstanding
(not including 38,269 shares of Company Common Stock held by the
Company as treasury stock), all of which are validly issued, fully paid
and nonassessable, of which 137,602 shares were Company Restricted
Stock (of which (x) 108,088 shares of Company Restricted Stock were
granted under the 2003 Option Plan (as defined below), (y) no shares of
Company Restricted Stock were granted under the 1992 Option Plan (as
defined below), and (z) 29,514 shares of Company Restricted Stock were
granted outside of the Company Option Plans (as defined below)); (ii)
no shares of Company Common Stock were held by subsidiaries of the
Company; (iii) 709,200 shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding options to purchase Company
Common Stock under the Company's 2003 Incentive Stock Option Plan (the
"2003 OPTION Plan"), 95,000 shares of Company Common Stock were
reserved for issuance pursuant to outstanding incentive grants of
future restricted stock awards (the "LONG-TERM INCENTIVE RESTRICTED
STOCK GRANTS") under the 2003 Option Plan, 10,000 shares of phantom
stock were reserved for issuance pursuant to outstanding cash-settled
incentive phantom stock grants (the "LONG-TERM INCENTIVE PHANTOM STOCK
GRANTS") under the 2003 Option Plan, and 227,912 shares of Company
Common Stock were reserved for future issuance pursuant to the 2003
Option Plan; (iv) 239,325 shares of Company Common Stock were reserved
for issuance upon the exercise of outstanding options to purchase
Company Common Stock under the Company's 1992 Officers and Key
Employees Incentive Stock Option Plan (the "1992 OPTION PLAN," and
together with the 2003 Option Plan, the "COMPANY OPTION PLANS"), no
shares of Company Common Stock were reserved for issuance pursuant to
outstanding Long-Term Incentive Restricted Stock Grants under the 1992
Option Plan, no shares of phantom stock were reserved for issuance
pursuant to Long-Term Incentive Phantom Stock Grants under the 1992
Option Plan, and no shares of Company Common Stock were reserved for
future issuance pursuant to the 1992 Option Plan, (v) no shares of
Company Common Stock were reserved for issuance upon the exercise of
outstanding options to purchase Company Common Stock granted outside of
the Company Option Plans, and (vi) no shares of Company Preferred Stock
were issued and outstanding. No Long-Term Incentive Restricted Stock
Grants or Long-Term Incentive Phantom Stock Grants have been granted by
the Company other than under the Company Option Plans. SECTION 2.3(A)
of


9
<PAGE>


the Company Schedule sets forth the following information with respect
to each Company stock option ("COMPANY STOCK OPTIONS"), each share of
Company Common Stock that is restricted, unvested or subject to a
repurchase option or other risk of forfeiture ("COMPANY RESTRICTED
STOCK") and each Long-Term Incentive Restricted Stock Grant and
Long-Term Incentive Phantom Stock Grant (collectively, "INCENTIVE
GRANTS," and collectively with the Company Stock Options and Company
Restricted Stock, "EQUITY AWARDS") outstanding as of the date of this
Agreement: (i) the name and address of the Equity Award Holder; (ii)
the particular Company Option Plan, if any, pursuant to which such
Equity Award was granted; (iii) the number of shares of Company Common
Stock subject to such Equity Award; (iv) for each Equity Award that is
a Company Stock Option, the exercise price of each Company Stock
Option; (v) the date on which such Equity Award was granted; (vi) the
date on which such Equity Award expires; and (vii) for each Equity
Award that is a Company Stock Option, whether such Company Stock Option
is intended to qualify as an incentive stock option within the meaning
of Section 422 of the Code. All Company Stock Options (including those
that have been exercised, terminated, expired, forfeited or otherwise
cancelled) were issued at a strike price at least equal to fair market
value such that the fair market value on the grant date equaled or
exceeded the fair market value on the financial measurement date for
each such Company Stock Option or, with respect to Company Stock
Options that were not issued in such a manner, the Company recorded an
appropriate compensation charge in its financial statements relating to
such grants in the appropriate period and reported such in its
financial statements and Returns during the required period. The
Company has made available to Parent accurate and complete copies of
all forms of agreements pursuant to which outstanding Equity Awards
have been issued. All shares of Company Common Stock subject to
issuance upon exercise of or otherwise issuable under such Equity
Awards, when issued on the terms and conditions specified in the
instrument pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. There are no
commitments or agreements of any character to which the Company is
bound obligating the Company to accelerate the vesting of any Equity
Award as a result of the Transactions. All outstanding shares of
Company Common Stock, all outstanding Company Equity Awards and all
outstanding shares of capital stock of each subsidiary of the Company
have been issued and granted in material compliance with (i) all
applicable Legal Requirements, and (ii) all requirements set forth in
applicable Contracts. For the purposes of this Agreement, "LEGAL
REQUIREMENTS" means any federal, state, local, municipal, foreign or
other law, statute, legislation, constitution, principle of common law,
resolution, ordinance, code, edict, order, judgment, decree, rule,
regulation, ruling or requirement issues, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the
authority of any Governmental Entity (as defined in SECTION 2.5(B)
hereof). There are no declared or accrued but unpaid dividends with
respect to any shares of Company Common Stock.

(b) The Company owns free and clear of all liens, pledges,
hypothecations, charges, mortgages, security interests, encumbrances,
claims, interferences, options, rights of first refusals, preemptive
rights, community property interests or restrictions of any nature
(including any restriction on the voting of any security, any
restriction on the transfer of any security or other asset, any
restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset)


10
<PAGE>


("LIENS"), other than restrictions on transfer imposed by federal and
state securities laws, directly or indirectly through one or more
wholly owned subsidiaries, all issued and outstanding shares of capital
stock, partnership interests or similar ownership interests of any
subsidiary of the Company, and all issued and outstanding securities
convertible into, or exercisable or exchangeable for, such shares of
capital stock, partnership interests or similar ownership interests.
Except as set forth in SECTION 2.3(A) hereof, there are no
subscriptions, options, warrants, shares of capital stock, partnership
interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound obligating the Company or
any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire,
or cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests of
the Company or any of its subsidiaries or obligating the Company or any
of its subsidiaries to grant, extend, accelerate the vesting of or
enter into any such subscription, option, warrant, call, right,
commitment or agreement. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation, or other similar
rights with respect to the Company or any of its subsidiaries. There
are no registration rights in respect of any shares of Company Common
Stock, and except for the Company Voting Agreements, there are no
voting trusts, proxies, rights plans, antitakeover plans or other
agreements or understandings to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound with respect to any class of capital stock of the
Company or with respect to any class of capital stock, partnership
interest or similar ownership interest of any of its subsidiaries.

2.4 AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has all necessary
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate, on the terms and subject to the
conditions hereof (including, without limitation, with respect to the Merger,
the approval of this Agreement by holders of a majority of the outstanding
Shares in accordance with Nevada Law), 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 (x) with respect to the Merger, the
approval of this Agreement by holders of a majority of the outstanding Shares in
accordance with Nevada Law, and (y) the filing of the Articles of Merger as
required by Nevada Law). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, constitute legal and binding obligations of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, reorganization and
similar laws affecting creditors' rights generally and to general equitable
principles.


11
<PAGE>


2.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.

(a) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company
will not, (i) conflict with or violate the Company Charter Documents or
the equivalent organizational documents of any of the Company's
subsidiaries, (ii) subject, (x) with respect to the Merger, to the
approval of this Agreement by holders of a majority of the outstanding
Shares in accordance with Nevada Law and (y) to compliance with the
requirements set forth in SECTION 2.5(B) hereof, conflict with or
violate in any material respect any Legal Requirements applicable to
the Company or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) conflict with or
violate, or result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default)
under, or alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a Lien on any of the
properties or assets of the Company or any of its subsidiaries pursuant
to, any Company Contract to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound or
affected, except to the extent such conflict, violation, breach,
default, impairment or other effect would not in the case of clauses
(ii) or (iii), individually or in the aggregate, be reasonably likely
to (A) be material to the Company and its subsidiaries taken as a
whole, or, following the Effective Time, Parent or the Surviving
Corporation, or (B) have a material adverse effect on the ability of
the Company to perform its obligations under this Agreement or
consummate the Transactions without any material delay.

(b) The execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company
shall not, require any consent, approval, authorization or permit of,
or filing with or notification to, any federal, state or foreign court,
administrative agency, commission, governmental or regulatory authority
of competent jurisdiction, or any non-governmental self-regulatory
agency, commission or authority having (through authority granted by a
governmental agency or commission) the force of law (each, a
"GOVERNMENTAL ENTITY"), except in each case (i) for applicable
requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), state securities Legal Requirements
("BLUE SKY LAWS") and state takeover laws, applicable requirements, if
any, of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"), applicable pre-merger notification
requirements of foreign Governmental Entities, the rules and
regulations of the Nasdaq Capital Market (the "NASDAQ"), and the filing
and recordation of the Articles of Merger as required by Nevada Law,
and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications,
would not, individually or in the aggregate, be reasonably likely to
(A) be material to the Company and its subsidiaries taken as a whole
or, following the Effective Time, Parent or the Surviving Corporation,
or (B) have a material adverse effect on the ability of the Company to
perform its obligations under this Agreement or consummate the
Transactions without any material delay.


12
<PAGE>

2.6 COMPLIANCE.

(a) Neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation of, any Legal Requirements
applicable to the Company or any of its subsidiaries or by which its or
any of their respective properties is bound or affected, except for any
conflicts, defaults or violations that would not, individually or in
the aggregate, be reasonably likely to be material to the Company and
its subsidiaries taken as a whole.

(b) The Company's and its subsidiaries' material Approvals are
in full force and effect, and the Company and its subsidiaries are in
compliance in all material respects with the terms of each of such
material Company Approval.

(c) The use by any Person of any Company Product (as defined
in Section 2.18(b)) as such Company Product is intended by the Company
to be used will not cause such Person to be in conflict with, or in
default or violation of, any Legal Requirements, PCI Standards (as
defined in SECTION 2.29(A)), CISP Requirements (as defined in SECTION
2.29(A)) or NACHA Rules (as defined in SECTION 2.29(A)).

2.7 SEC FILINGS; FINANCIAL STATEMENTS; INTERNAL CONTROLS.

(a) Each report, schedule, form, registration statement, proxy
statement and other document filed or furnished by the Company with the
Securities and Exchange Commission (the "SEC") since January 1, 2004
(together with all information incorporated by reference therein, the
"COMPANY SEC REPORTS"), which are all the reports, schedules, forms,
statements and documents required to be filed or furnished by the
Company with the SEC since January 1, 2004 (including any Company SEC
Report filed after the date of this Agreement): (i) was and will be
prepared in all material respects in accordance with the requirements
of the Securities Act of 1933, as amended (the "SECURITIES ACT"), the
Exchange Act and the Sarbanes-Oxley Act of 2002, and the rules and
regulations promulgated thereunder (the "SARBANES-OXLEY ACT"), in each
case, applicable to such Company SEC Report as of its respective date,
as the case may be, and (ii) did not and will not at the time it was
filed (and if amended or superseded by a filing prior to the date of
this Agreement then on the date of such filing) contain any untrue
statement of a material fact or omit to state a 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, in
the case of any such Company SEC Report filed under the Exchange Act)
not misleading. None of the Company's subsidiaries is required to file
any reports or other documents with the SEC.

(b) Each set of consolidated financial statements (including,
in each case, any related notes thereto) contained in the Company SEC
Reports (including any Company SEC Report filed after the date of this
Agreement): (i) complied and will comply as to form in all material
respects with the published rules and regulations of the SEC with
respect thereto in effect at the time of such filing; (ii) was and will
be prepared in accordance with United States generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved (except as may be indicated


13
<PAGE>


in the notes thereto or, in the case of unaudited statements, may not
contain footnotes as permitted by Form 10-Q of the Exchange Act) and
each presents fairly, in all material respects, the consolidated
financial position of the Company and its consolidated subsidiaries at
the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal
year-end adjustments which were not or will not be material in amount
or significance.

(c) The Company has previously furnished to Parent a complete
and correct copy of any amendments or modifications, which have not yet
been filed with the SEC but which are required to be filed or
furnished, to agreements, documents or other instruments which
previously had been filed by the Company with the SEC pursuant to the
Securities Act or the Exchange Act.

(d) Except as set forth on the Company Schedule, the Company's
system of internal controls over financial reporting are reasonably
sufficient in all material respects to provide reasonable assurance (i)
that transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP, (ii) that receipts and
expenditures are executed only in accordance with the authorization of
management, and (iii) regarding prevention or timely detection of the
unauthorized acquisition, use or disposition of the Company's assets
that could materially affect the Company's financial statements.

(e) The Company's "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are
effective to provide reasonable assurance that (i) all information
(both financial and non-financial) required to be disclosed by the
Company in the reports that it files or submits under the Exchange Act
is recorded, processed, summarized and reported within the time periods
specified in the rules, regulations and forms of the SEC, and (ii) all
such information is accumulated and communicated to the Company's
management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the principal executive
officer and principal financial officer of the Company required under
the Exchange Act with respect to such reports.

(f) The Company's management has disclosed to the Company's
auditors and the audit committee of the Board (i) any significant
deficiencies in the design or operation of its internal controls over
financial reporting that are reasonably likely to adversely affect the
Company's and its subsidiaries' ability to record, process, summarize
and report financial information and has identified for the Company's
auditors and audit committee of the Board any material weaknesses in
internal control over financial reporting and (ii) any fraud, whether
or not material, that involves management or other employees who have a
significant role in the Company's internal control over financial
reporting. The Company has made available to the Parent (i) a summary
of any such disclosure made by management to the Company's auditors and
audit committee, and (ii) any material communication made by management
or the Company's auditors to the audit committee required or
contemplated by listing standards of Nasdaq, the audit committee's
charter or professional standards of the Public


14
<PAGE>


Company Accounting Oversight Board. No material complaints from any
source regarding accounting, internal accounting controls or auditing
matters, and no material concerns from Company or subsidiary of the
Company employees regarding questionable accounting or auditing
matters, have been received by the Company. The Company has made
available to the Parent a summary of all such material complaints or
concerns relating to other matters through the Company's whistleblower
hot-line or equivalent system for receipt of employee or other person's
concerns regarding possible violations of Legal Requirements by the
Company or any of its subsidiaries or any of their respective
employees. No attorney representing the Company or any of its
subsidiaries, whether or not employed by the Company or any of its
subsidiaries, has reported evidence of a violation of securities laws,
breach of fiduciary duty or similar violation by the Company, any
subsidiary of the Company or any of its officers, directors, employees
or agents to the Company's chief legal officer, audit committee (or
other committee designated for the purpose) of the Board or the Board
pursuant to the rules adopted pursuant to Section 307 of the
Sarbanes-Oxley Act or any Company policy contemplating such reporting,
including in instances not required by those rules.

(g) The Company is in compliance in all material respects with
the applicable provisions of the Sarbanes-Oxley Act and with the
applicable listing and other rules and regulations of the Nasdaq and
has not received any notice from the Nasdaq asserting any
non-compliance with such rules and regulations. Each of the principal
executive officer of the Company and the principal financial officer of
the Company has made all certifications required by Rule 13a-14 or
15d-14 under the Exchange Act and Sections 302 and 906 of the
Sarbanes-Oxley Act with respect to the Company SEC Reports, and the
statements contained in such certifications are accurate in all
material respects. For purposes of this Agreement, "principal executive
officer" and "principal financial officer" shall have the meanings
given to such terms in the Sarbanes-Oxley Act. Neither the Company nor
any of its subsidiaries has outstanding, or has arranged any
outstanding, "extensions of credit" to directors or executive officers
within the meaning of Section 402 of the Sarbanes-Oxley Act.

2.8 NO UNDISCLOSED LIABILITIES. Neither the Company nor any of its
subsidiaries has any liability, indebtedness, obligation, expense, claim,
deficiency, guaranty or endorsement of any type (whether absolute, accrued,
contingent or otherwise) (collectively, "LIABILITIES") which would be material
to the business, results of operations or financial condition of the Company and
its subsidiaries, taken as a whole, except (i) Liabilities reflected in the
Company's balance sheet as of June 30, 2006 (including any related notes
thereto) (the "INTERIM BALANCE SHEET"), (ii) Liabilities incurred since June 30,
2006 (the "INTERIM BALANCE SHEET DATE") and prior to the date hereof in the
ordinary course of business, none of which individually (in the case of this
clause (ii)) is material to the business, results of operations or financial
condition of the Company and its subsidiaries, taken as a whole, or (iii)
Liabilities incurred on or after the date of this Agreement in compliance with
SECTION 4.1 hereof.

2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the Interim Balance
Sheet Date (i) there has not been any Material Adverse Effect on the Company,
(ii) neither the Company nor any of its subsidiaries has taken any of the
actions set forth in SECTIONS


15
<PAGE>


4.1(A) through 4.1(U), and (iii) there has not been any damage, destruction or
other casualty loss with respect to any tangible asset or tangible property
owned, leased or otherwise used by the Company or any of its subsidiaries having
a value prior to such losses exceeding $100,000.

2.10 ABSENCE OF LITIGATION. There are no material claims, actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
(each, an "ACTION") against the Company or any of its subsidiaries, or any of
their respective properties or assets or any of the executive officers or
directors of the Company or any of its subsidiaries, before any Governmental
Entity or arbitrator, nor is there any reasonable basis therefor. No
investigation or review by any Governmental Entity is pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries, or any of their respective properties or assets or any of the
executive officers or directors of the Company or any of its subsidiaries, nor
has any Governmental Entity indicated to the Company an intention to conduct the
same. To the knowledge of the Company, since June 30, 2003, no Governmental
Entity has at any time challenged in writing or questioned in writing the legal
right of the Company to conduct its operations as presently or previously
conducted. The Company has provided to Parent true, correct and complete copies
of all complaints, pleadings, motions and other filings and written
correspondence (including settlement communications) regarding any Actions,
investigations or challenges referred to in SECTION 2.10 of the Company
Schedule.

2.11 EMPLOYEE BENEFIT PLANS.(a) DEFINITIONS. With the exception of the
definition of "AFFILIATE" set forth in SECTION 2.11(A)(I) below (which
definition shall apply only to this SECTION 2.11), for purposes of this
Agreement, the following terms shall have the meanings set forth below:

(i) "AFFILIATE" shall mean any other person or entity
under common control with the Company within the meaning of
Section 414(b), (c), (m) or (o) of the Code and the
regulations issued thereunder;

(ii) "COBRA" shall mean the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended;

(iii) "CODE" shall mean the Internal Revenue Code of
1986, as amended;

(iv) "COMPANY EMPLOYEE PLAN" shall mean any plan,
program, policy, practice, contract, agreement or other
arrangement providing for employment, compensation, severance,
termination pay, deferred compensation, bonus, performance
awards, stock or stock-related awards, fringe benefits,
disability benefits, supplemental employment benefits,
vacation benefits, retirement benefits, profit-sharing,
post-retirement benefits, or other employee benefits or
remuneration of any kind, whether written or unwritten or
otherwise, funded or unfunded, including without limitation,
each "employee benefit plan," within the meaning of Section
3(3) of ERISA which is or has been maintained, contributed to,
or required to be contributed to, by the Company or any
Affiliate


16
<PAGE>


for the benefit of any Employee, or with respect to which the
Company has or may have any liability or obligation;

(v) "DOL" shall mean the Department of Labor;

(vi) "EMPLOYEE" shall mean any current or former or
retired employee, consultant or director of the Company or any
Affiliate;

(vii) "EMPLOYMENT AGREEMENT" shall mean each
management, employment, severance, termination, consulting,
relocation, repatriation, expatriation, visas, work permit or
other agreement, contract or understanding between the Company
or any Affiliate and any Employee;

(viii) "ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended;

(ix) "FMLA" shall mean the Family Medical Leave Act
of 1993, as amended;

(x) "INTERNATIONAL EMPLOYEE PLAN" shall mean each
Company Employee Plan and each Employment Agreement that has
been adopted, maintained or entered into by the Company or any
Affiliate, whether informally or formally, or with respect to
which the Company or any Affiliate will or may have any
liability, outside the jurisdiction of the United States or
for the benefit of any Employee or Employees who perform
services outside the United States;

(xi) "IRS" shall mean the Internal Revenue Service;

(xii) "MULTIEMPLOYER PLAN" shall mean any employee
benefit plan which is a "multiemployer plan," as defined in
Section 3(37) of ERISA;

(xiii) "PENSION PLAN" shall mean each employee
benefit plan which is an "employee pension benefit plan,"
within the meaning of Section 3(2) of ERISA.

(b) SCHEDULE. SECTION 2.11(B) of the Company Schedule contains
an accurate and complete list of each material Company Employee Plan
and each Employment Agreement. The Company does not have any plan or
commitment to establish any new Company Employee Plan or Employment
Agreement, to modify any Company Employee Plan or Employment Agreement
(except to the extent required by applicable Legal Requirements or to
conform any such Company Employee Plan or Employment Agreement to the
requirements of any applicable Legal Requirements, in each case as
previously disclosed to Parent in writing, or as required by this
Agreement), or to adopt or enter into any Company Employee Plan or
Employment Agreement.

(c) DOCUMENTS. The Company has provided to Parent correct and
complete copies of: (i) all documents embodying each Company Employee
Plan and each Employment Agreement including (without limitation) all
amendments thereto


17
<PAGE>


and all related trust documents, administrative service agreements,
group annuity contracts, group insurance contracts, and policies
pertaining to fiduciary liability insurance covering the fiduciaries
for each Plan, a written description of each material Company Employee
Plan that is not set forth in a written document; (ii) the three (3)
most recent annual actuarial valuations, if any, prepared for each
Company Employee Plan; (iii) the three (3) most recent annual reports
(Form Series 5500 and all schedules and financial statements attached
thereto, or otherwise), if any, required under ERISA, the Code or other
applicable Legal Requirement in connection with each Company Employee
Plan; (iv) the most recent summary plan description together with the
summary(ies) of material modifications thereto, if any, required under
ERISA with respect to each Company Employee Plan; (v) all IRS
determination, opinion, notification and advisory letters, and all
material applications and correspondence to or from the IRS or the DOL
with respect to any such application or letter; (vi) all material
communications to any Employee or Employees relating to any Company
Employee Plan and any proposed Company Employee Plans, in each case,
relating to any amendments, terminations, establishments, increases or
decreases in benefits, acceleration of payments or vesting schedules or
other events which would reasonably be expected to result in any
material liability to the Company; (vii) all correspondence to or from
any governmental agency relating to any Company Employee Plan; (viii)
all COBRA forms and related notices (or such forms and notices as
required under comparable Legal Requirements); (ix) the three (3) most
recent plan years discrimination tests for each Company Employee Plan;
and (x) all registration statements, annual reports (Form 11-K and all
attachments thereto) and prospectuses prepared in connection with each
Company Employee Plan.

(d) EMPLOYEE PLAN COMPLIANCE. Each Company Employee Plan has
been established and maintained in all material respects in accordance
with its terms and in compliance with all applicable Legal
Requirements, including ERISA and the Code. Each Company Employee Plan
intended to qualify under Section 401(a) or Section 401(k) of the Code
and each trust intended to qualify under Section 501(a) of the Code has
either (i) received a favorable determination, opinion, notification or
advisory letter from the IRS with respect to each such Company Employee
Plan as to its qualified status, and each such trust as to its exempt
status, under the Code, including all amendments to the Code effected
by the Tax legislation commonly known as "GUST", and, to the Company's
knowledge, no fact or event has occurred since the date of such
determination, opinion, notification or advisory letter to adversely
affect the qualified status of any such Company Employee Plan or the
exempt status of each such trust, or (ii) has remaining a period of
time under applicable Treasury regulations or IRS pronouncements in
which to apply for such a letter and make any amendments necessary to
obtain a favorable determination as to the qualified status of each
such Company Employee Plan. No material "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407
of ERISA, and not otherwise exempt under Section 4975 of the Code or
Section 408 of ERISA (or any administrative class exemption issued
thereunder), has occurred with respect to any Company Employee Plan.
There are no actions, suits or claims pending, or, to the knowledge of
the Company, threatened or reasonably anticipated (other than routine
claims for benefits) against or with respect to any Company Employee
Plan or any Employment Agreement or against the assets of any Company
Employee Plan. Each Company Employee Plan can be


18
<PAGE>


amended, terminated or otherwise discontinued after the Effective Time,
without material liability to Parent, Company or any of its Affiliates
(other than ordinary administration expenses). There are no audits,
inquiries or proceedings pending or, to the knowledge of the Company or
any Affiliates, threatened by the IRS or DOL with respect to any
Company Employee Plan. The Company is not subject to any material
penalty or tax with respect to any Company Employee Plan under Title I
of ERISA or Sections 4975 through 4980 of the Code. All contributions,
reserves or premium payments required to be made or accrued as of the
date hereof to the Company Employee Plans have been timely made or
accrued. Each "nonqualified deferred compensation plan" (as defined in
Section 409A(d)(1) of the Code) has been operated since January 1, 2005
in good faith compliance with Section 409A of the Code and IRS Notice
2005-1 and the Internal Revenue Service's proposed regulations under
Section 409A of the Code and no such plan has been materially modified
since October 3, 2004. No nonqualified deferred compensation plan has
been "materially modified" (within the meaning of IRS Notice 2005-1) at
any time after October 3, 2004.

(e) PENSION PLAN. Neither the Company nor any Affiliate has
ever maintained, established, sponsored, participated in, or
contributed to, any Pension Plan which is subject to Title IV of ERISA
or Section 412 of the Code.

(f) COLLECTIVELY BARGAINED, MULTIEMPLOYER AND MULTIPLE
EMPLOYER PLANS. At no time has the Company or any Affiliate contributed
to, participated in, or been obligated to contribute to any
Multiemployer Plan. Neither the Company, nor any Affiliate has at any
time ever maintained, established, sponsored, participated in, or
contributed to any plan described in Section 413 of the Code or to any
plan that was also at that time sponsored, participated in, or
contributed to by any employer other than the Company or an Affiliate.

(g) NO SEVERANCE OR POST-EMPLOYMENT OBLIGATIONS. Except as set
forth on SECTION 2.11(G) of the Company Schedule, no Company Employee
Plan provides for the payment of severance or other benefits upon
termination of employment. No Company Employee Plan provides, or
reflects or represents any liability to provide retiree health or other
welfare benefits to any person for any reason, except as may be
required by COBRA or other applicable statute, and the Company has no
expected liability or obligation as a result of representations,
promises or contracts (whether in oral or written form) to or with any
Employee (either individually or to Employees as a group) or any other
person that such Employee(s) or other person would be provided with
retiree health or other welfare benefits, except to the extent required
by statute.

(h) HEALTH CARE COMPLIANCE. Neither the Company nor any
Affiliate has, prior to the Effective Time and in any material respect,
violated any of the health care continuation requirements of COBRA, the
requirements of FMLA, the requirements of the Health Insurance
Portability and Accountability Act of 1996, the requirements of the
Women's Health and Cancer Rights Act of 1998, the requirements of the
Newborns' and Mothers' Health Protection Act of 1996, or any amendment
to each such act, or any similar provisions of state law applicable to
its Employees.


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<PAGE>


(i) EFFECT OF TRANSACTION.

(i) The execution of this Agreement and the
consummation of the Transactions will not (either alone or
upon the occurrence of any additional or subsequent events)
constitute an event under any Company Employee Plan,
Employment Agreement, trust or loan that will or may result in
any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund
benefits with respect to any Employee.

(ii) No payment or benefit which will or may be made
by the Company or its Affiliates with respect to any Employee
or any other "disqualified individual" (as defined in Code
Section 280G and the regulations thereunder) will,
individually or in combination with any other such payment, be
characterized as a "parachute payment," within the meaning of
Section 280G(b)(2) of the Code.

(j) EMPLOYMENT MATTERS. The Company: (i) is in compliance in
all material respects with all applicable foreign, federal, state and
local Legal Requirements respecting employment, employment practices,
terms and conditions of employment and wages and hours, in each case,
with respect to Employees; (ii) has withheld and reported all amounts
required by Legal Requirements or by agreement to be withheld and
reported with respect to wages, salaries and other payments to
Employees; (iii) is not liable for any arrears of wages or any taxes or
any penalty for failure to comply with any of the foregoing; and (iv)
is not liable for any payment to any trust or other fund governed by or
maintained by or on behalf of any governmental authority, with respect
to unemployment compensation benefits, social security or other
benefits or obligations for Employees (other than routine payments to
be made in the normal course of business and consistent with past
practice). Except as set forth on SECTION 2.11(J) of the Company
Schedule, there are no pending, threatened or reasonably anticipated
claims or actions against the Company under any worker's compensation
policy or long-term disability policy.

(k) EMPLOYEE INFORMATION. The Company has made available to
Parent a true, correct and complete list setting forth the names,
positions and rates of compensation of all current officers, directors,
employees and consultants of the Company, as of the date hereof,
showing each such person's name, positions, and annual remuneration,
bonuses and fringe benefits for the current fiscal year and the most
recently completed fiscal year. To the knowledge of the Company, no
executive or key employee of the Company has any plans to terminate his
or her employment with the Company. All independent contractors have
been properly classified as independent contractors for the purposes of
federal and applicable state tax laws, laws applicable to employee
benefits and other applicable law except to the extent such failure
could not reasonably be expected to result in a Material Adverse
Effect. SECTION 2.11(K) of the Company Schedule sets forth a list of
all former consultants of the Company.

(l) LABOR. No work stoppage, labor strike or slowdown against
the Company is pending, threatened or reasonably anticipated. The
Company does not


20
<PAGE>


know of any activities or proceedings of any labor union to organize
any Employees. There are no actions, suits, claims, labor disputes or
grievances pending, or, to the knowledge of the Company, threatened or
reasonably anticipated relating to any labor, safety or discrimination
matters involving any Employee, including, without limitation, charges
of unfair labor practices or discrimination complaints, which, if
adversely determined, would, individually or in the aggregate, result
in any material liability to the Company. Neither the Company nor any
of its subsidiaries has engaged in any unfair labor practices within
the meaning of the National Labor Relations Act. The Company is not
presently, nor has it been in the past, a party to, or bound by, any
collective bargaining agreement or union contract with respect to
Employees and no collective bargaining agreement is being negotiated by
the Company.

(m) INTERNATIONAL EMPLOYEE PLAN. Neither the Company nor any
of its Affiliates has ever established, maintained or administered an
International Employee Plan.

(n) WARN ACT. The Company has complied with the Workers
Adjustment and Retraining Notification Act of 1988, as amended ("WARN
ACT") and all similar state Legal Requirements including applicable
provisions of the California Labor Code. All Liabilities relating to
the employment, termination or employee benefits of any former
Employees previously terminated by the Company or an Affiliate
including, without limitation, all termination pay, severance pay or
other amounts in connection with the WARN Act and all similar state
Legal Requirements including applicable provisions of the California
Labor Code, shall be the responsibility of the Company.

(o) SECTION 409A. Each Company Employee Plan that is a
deferred compensation arrangement has been identified as either being
exempt from Section 409A of the Code or as subject to Section 409A of
the Code (and identified as either an account balance plan or a
non-account balance plan, and equity plan or a severance plan). Any
Equity Award grants by the Company to its employees, directors and
other service providers were made over Company Common Stock, have an
exercise price that is at least equal to the fair market value of the
Company Common Stock on the date that Equity Awards were granted, and
the determination of the fair market value of such Equity Awards
satisfied the valuation requirements of Section 409A of the Code.

2.12 PROXY STATEMENT. Subject to the limitation set forth in the last
sentence of this SECTION 2.12, (a) neither the proxy statement to be sent to the
stockholders of the Company in connection with the Stockholders' Meeting (as
hereinafter defined), nor any amendment or supplement thereto (such proxy
statement, as amended or supplemented, being referred to herein as the "PROXY
STATEMENT"), shall, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company or at the
time of the Stockholders' Meeting (as defined in SECTION 5.2 hereof), and (b) no
other documents that may be filed with the SEC in connection with the
transactions contemplated by this Agreement shall, at the respective times filed
with the SEC, in each case contain any untrue statement of material fact, or
omit to state any material fact required to be stated therein or necessary in
order to make the statement therein, in light of the circumstances under which
it was made, not false or misleading. The Proxy


21
<PAGE>


Statement shall comply in all material respects as to form with the requirements
of the Exchange Act and the rules and regulations thereunder. Notwithstanding
the foregoing, no representation is made by the Company in this SECTION 2.12
with respect to statements made based on information supplied by Parent or
Merger Sub in writing specifically for inclusion in the Proxy Statement.

2.13 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no Contract
(noncompete or otherwise), or to the Company's knowledge, judgment, injunction,
order or decree, binding upon the Company or its subsidiaries or to which the
Company or any of its subsidiaries is a party which has the effect of
prohibiting or limiting any business practice of the Company or any of its
subsidiaries, any acquisition of property by the Company or any of its
subsidiaries, the solicitation or hiring of any person or the conduct of
business by the Company or any of its subsidiaries as currently conducted.
Without limiting the foregoing, neither the Company nor any of its subsidiaries
has entered into any Contract under which it is restricted from selling,
licensing or otherwise distributing any of its technology or products to or
providing or seeking to provide services to, customers or potential customers or
any class of customers, in any geographic area, during any period of time or in
any segment of the market.

2.14 TITLE TO PROPERTY.

(a) Neither the Company nor any of its subsidiaries owns any
real property. SECTION 2.14(A)(I) of the Company Schedule sets forth a
list of all real property currently leased by the Company or any of its
subsidiaries. SECTION 2.14(A)(II) of the Company Schedule sets forth a
list of all real property previously owned by the Company or any of its
subsidiaries. All such current leases are in full force and effect, are
valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing default or event
of default (or event which with notice or lapse of time, or both, would
constitute a default) of the Company or any of its subsidiaries, or to
the knowledge of the Company, any other party thereto. The Company has
made available to Parent true, complete and correct copies of each
lease set forth on SECTION 2.14(A)(I) of the Company Schedule, and all
amendments and modifications thereto. Each of the properties listed on
SECTION 2.14(A)(II) of the Company Schedule were property transferred
to third parties, are no longer owned by the Company and there are no
outstanding, ongoing or residual obligations by the Company with
respect to such properties.

(b) The Company and each of its subsidiaries has good and
valid title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of its properties and assets, real,
personal and mixed, used or held for use in its business, free and
clear of all Liens, except for Permitted Liens (as defined below). As
used in this Agreement, "PERMITTED LIENS" means: (i) Liens for Taxes
(as herein defined) not yet due and payable or which are being
contested in good faith by appropriate proceedings and for which
adequate reserves have been established; (ii) Liens securing
indebtedness or other liabilities reflected in the Interim Balance
Sheet; (iii) such non-monetary Liens or other imperfections of title,
if any, that, individually or in the aggregate, would not be reasonably
likely to (A) materially interfere with the present use or operation of
any


22
<PAGE>


material property or asset of the Company or any of its subsidiaries or
(B) materially detract from the value of such material property or
asset; (iv) Liens imposed or promulgated by Laws with respect to real
property and improvements, including zoning regulations; (v) Liens
disclosed on existing title reports or existing surveys (in either case
copies of which title reports and surveys have been delivered or made
available to Parent); and (vi) mechanics', carriers', workmen's ,
repairmen's and similar Liens incurred in the ordinary course of
business.

(c) All the plants, structures and equipment of the Company
and its subsidiaries, are in satisfactory condition and repair for
their current and intended use by the Company, reasonable wear and tear
excepted, except where the failure to be in satisfactory condition and
repair would not reasonably be likely to have a Material Adverse
Effect.

2.15 TAXES.

(a) DEFINITION OF TAXES. For the purposes of this Agreement,
"TAX" or "TAXES" means (i) any and all federal, state, local and
foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by
gross receipts, income, profits, sales, use and occupation, and value
added, ad valorem, transfer, franchise, withholding, payroll,
recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts;
(ii) any liability for the payment of any amounts of the type described
in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group for any period; and (iii) any
liability for the payment of any amounts of the type described in
clause (i) or (ii) as a result of any express or implied obligation to
indemnify any other person or as a result of any obligations under any
agreements or arrangements with any other person with respect to such
amounts and including any liability for taxes of a predecessor entity.

(b) TAX RETURNS AND AUDITS.

(i) The Company and each of its subsidiaries have
timely filed all Returns (defined below). Such Returns are
true, correct and complete in all material respects. The
Company and each of its subsidiaries have paid or withheld and
paid to the appropriate Tax authority all material amounts of
Taxes due, whether or not shown to be due on such Returns. As
used in this Agreement, "RETURNS" means federal, state, local
and foreign returns, forms, estimates, information statements
and reports relating to Taxes required to be filed by the
Company and each of its subsidiaries with any Tax authority.

(ii) The Company and each of its subsidiaries have
withheld and paid to the appropriate Tax authority all Taxes
required to be withheld and paid in connection with amounts
paid and owing to any employee, independent contractor,
creditor, stockholder or other third party (whether domestic
or foreign).


23
<PAGE>


(iii) Neither the Company nor any of its subsidiaries
has been delinquent in the payment of any material Tax nor is
there any material Tax deficiency outstanding, proposed or
assessed against the Company or any of its subsidiaries, nor
has the Company or any of its subsidiaries executed any
unexpired waiver of any statute of limitations on or extension
of any the period for the assessment or collection of any Tax.

(iv) No audit or other examination of any Return of
the Company or any of its subsidiaries by any Tax authority is
presently in progress, nor has the Company or any of its
subsidiaries been notified of any request for such an audit or
other examination. The Company has delivered or made available
to Parent true and complete copies of income tax Returns of
the Company and its subsidiaries for the years ended September
30, 2001, 2002, 2003, 2004 and 2005, and true and complete
copies of all examination reports and statements of
deficiencies assessed against or agreed to by any of the
Company and its subsidiaries or any predecessor, with respect
to income Taxes. No material claim in writing has ever been
made by a Tax authority in a jurisdiction where the Company or
any of its subsidiaries do not file Returns that any of the
Company or its subsidiaries is or may be subject to a Tax
liability in that jurisdiction.

(v) No adjustment relating to any Returns filed or
required to be filed by the Company or any of its subsidiaries
has been proposed in writing, formally or informally, by any
Tax authority to the Company or any of its subsidiaries or any
representative thereof.

(vi) Neither the Company nor any of its subsidiaries
has any liability for any unpaid material Taxes (whether or
not shown to be due on any Return) which has not been accrued
for or reserved on the Company's Interim Balance Sheet in
accordance with GAAP, whether asserted or unasserted,
contingent or otherwise, other than any liability for unpaid
Taxes that may have accrued since the Interim Balance Sheet
Date in connection with the operation of the business of the
Company and its subsidiaries in the ordinary course. There are
no Liens with respect to material Taxes on any of the assets
of the Company or any of its subsidiaries, other than
customary Liens for Taxes not yet due and payable.

(vii) Except as set forth on SECTION 2.15(B)(VII) of
the Company Schedule, there is no Contract, plan or
arrangement to which the Company or any of its subsidiaries is
a party as of the date of this Agreement, including the
provisions of this Agreement, covering any employee or former
employee of the Company or any of its subsidiaries that,
individually or collectively, would reasonably be expected to
give rise to the payment of any amount that would not be
deductible pursuant to Sections 280G or 162(m) of the Code.
There is no Contract, plan or arrangement to which the Company
or any of its subsidiaries is a party or by which it is bound
to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.


24
<PAGE>


(viii) Neither the Company nor any of its
subsidiaries is party to or has any obligation under any
tax-sharing, tax indemnity or tax allocation agreement or
arrangement. Neither the Company nor any of its subsidiaries
has ever been a member of a group filing a consolidated,
unitary, combined or similar Return (other than Returns which
include only the Company and any of its subsidiaries) under
any federal, state, local or foreign Legal Requirements.
Neither the Company nor any of its subsidiaries has any
liability for Taxes of any person other than the Company and
its subsidiaries (i) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign
Legal Requirements), (ii) as a transferee or successor, (iii)
by contract, or (iv) otherwise. Neither the Company nor any of
its subsidiaries is party to any joint venture, partnership or
other arrangement that could be treated as a partnership for
federal and applicable state, local or foreign Tax purposes.

(ix) None of the Company's or its subsidiaries'
assets are tax exempt use property within the meaning of
Section 168(h) of the Code. Neither the Company nor any of its
subsidiaries has agreed, or is or was required, to make any
adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise (or by reason of any
similar provision of state, local or foreign Legal
Requirements).

(x) Neither the Company nor any of its subsidiaries
has constituted either a "distributing corporation" or a
"controlled corporation" in a distribution of stock intended
to qualify for tax-free treatment under Section 355 of the
Code (x) in the two years prior to the date of this Agreement
or (y) in a distribution which could otherwise constitute part
of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the
Transactions.

(xi) Neither the Company nor any of its subsidiaries
has been a party to a "reportable transaction," as such term
is defined in Treasury Regulations Section 1.6011-4(b)(1) or
to a transaction that is or is substantially similar to a
"listed transaction," as such term is defined in Treasury
Regulations Section 1.6011-4(b)(2), or any other transaction
requiring disclosure under analogous provisions of state,
local or foreign Tax Legal Requirement.

(xii) Neither the Company nor any of its subsidiaries
has, or has had, any permanent establishment in any foreign
country, as defined in any applicable Tax convention.

2.16 ENVIRONMENTAL MATTERS.

(a) For purposes of this Agreement, the following terms shall
have the meanings set forth below:

(i) "ENVIRONMENTAL LAW" shall mean any applicable
federal, state, local and foreign laws, regulations,
ordinances, and common law relating to


25
<PAGE>


pollution or protection of human health (to the extent
relating to exposure to Materials of Environmental Concern) or
protection of the environment (including, without limitation,
ambient air, surface water, ground water, land surface or
subsurface strata, and natural resources), including, without
limitation, laws and regulations relating to emissions,
discharges, releases or threatened releas