AGREEMENT AND PLAN OF MERGER

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

among

COMTECH TELECOMMUNICATIONS CORP.,

COMTECH TA CORP.

and

RADYNE CORPORATION

Dated as of May 10, 2008

TABLE OF CONTENTS

i

TABLE OF CONTENTS

(Continued)

ii

TABLE OF CONTENTS

(Continued)

iii

TABLE OF DEFINED TERMS

The following terms are defined in the section of this Agreement set forth after such term below:

iv

TABLE OF DEFINED TERMS

(Continued)

v

TABLE OF DEFINED TERMS

(Continued)

vi

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this “ Agreement ”) is entered into as of May 10, 2008, by and among COMTECH TELECOMMUNICATIONS CORP., a Delaware corporation (“ Parent ”), COMTECH TA CORP., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Purchaser ”), and RADYNE CORPORATION, a Delaware corporation (the “ Company ”).

WHEREAS, the Boards of Directors of Parent, Purchaser 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, in furtherance of such acquisition, it is proposed that Purchaser shall make a cash tender offer to acquire all the issued and outstanding shares of common stock, par value $0.001 per share, of the Company (“ Shares ”) for $11.50 per Share (such amount, or any greater amount per Share paid pursuant to the Offer, being the “ Per Share Amount ”), net to the seller in cash (the “ Offer ”), upon the terms and subject to the conditions of this Agreement and the Offer;

WHEREAS, the Board of Directors of the Company (the “ Board ”) has unanimously approved the making of the Offer and resolved to recommend that holders of Shares tender their Shares pursuant to the Offer; and

WHEREAS, also in furtherance of such acquisition, the Boards of Directors of Parent, Purchaser and the Company have each approved this Agreement and declared its advisability and approved the merger (the “ Merger ”) of Purchaser with and into the Company in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), following the consummation of the Offer and upon the terms and subject to the conditions set forth herein.

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

ARTICLE I

DEFINITIONS

SECTION 1.01 Definitions. For purposes of this Agreement:

“ affiliate ” of a specified person means a person who directly, or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, such specified person.

“ beneficial owner ”, with respect to any Shares, has the meaning ascribed to such term under Rule 13d-3(a) of the Exchange Act.

“ business day ” means any day on which the principal offices of the SEC in Washington, D.C. are open to accept filings, or, in the case of determining a date when any payment is due, any day

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(other than a Saturday or Sunday) on which banks are not required or authorized to close in the city of Phoenix, Arizona.

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

“ control ” (including the terms “ controlled by ” and “ under common control with ”) means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, as trustee or executor, by contract or credit arrangement or otherwise.

“ Environmental Laws ” means any federal, state, local, or foreign law, regulation, ordinance, code, decree, applicable judgment, common law standard, or other enforceable requirement of Governmental Authorities relating to (i) releases of Hazardous Substances; (ii) the manufacture, handling, transport, use, treatment, storage or disposal of Hazardous Substances; or (iii) pollution or protection of the environment.

“ ERISA Affiliate ” means any trade or business (whether or not incorporated) under common control with the Company or any Subsidiary and which, together with the Company or any Subsidiary, is treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ Fully Diluted Basis ” means after taking into account all outstanding Shares and assuming the exercise, conversion or exchange of all options, warrants, convertible or exchangeable securities and similar rights and the issuance of all Shares that the Company is obligated to issue thereunder.

“ Hazardous Substances ” means (i) those substances regulated under the United States Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Clean Water Act and the Clean Air Act; (ii) petroleum and petroleum products; and (iii) any other substance, chemical, pollutant, contaminant or other material regulated by any Governmental Authority pursuant to any Environmental Law.

“ Intellectual Property ” means all intellectual property rights of any kind or nature, including all United States, non-United States and international (i) patents, patent applications and statutory invention registrations, (ii) trademarks, service marks, domain names, trade dress, logos, slogans, trade names, corporate names and other source identifiers, and registrations and applications for registration thereof, (iii) copyrightable works, copyrights, and registrations and applications for registration thereof, (iv) rights in computer software and related technology, and (v) confidential and proprietary information, including trade secrets, know-how, inventions, proprietary processes, formulae, models, and methodologies.

“ IP Contracts ” has the meaning set forth in Section 4.15(b).

“ knowledge of the Company ” means, with respect to any matter in question, the actual knowledge of the individuals set forth on Section 1.01 of the Disclosure Schedule.

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“ Lien ” means any mortgage, pledge, lien, hypothecation, charge, security interest, easement, covenant, encroachment, right of way or other encumbrance or defect to title, or any option, right of first refusal, right of first offer or other adverse claim.

“ Material Adverse Effect ” means, with respect to the Company, any event, violation, inaccuracy, circumstance or development that, individually or in the aggregate, with other events, violations, inaccuracies, circumstances or developments, has or would reasonably be likely to (i) have a material adverse effect on the business, financial condition or results of operations of the Company and the Subsidiaries, taken as a whole, or (ii) prevent, impair or materially delay the ability of the Company to perform its obligations under this Agreement or consummate the transactions contemplated by this Agreement, except to the extent that such event, violation, inaccuracy, circumstance or development results, alone or in combination, from the following, none of which shall be taken into account in determining whether any such Material Adverse Effect has occurred: (A) general economic, market or political conditions, or acts of war, terrorism or sabotage, natural disasters, acts of God or comparable events, in each case except to the extent that the same disproportionately affect the Company and the Subsidiaries, taken as a whole, as compared to other companies in the industries or industry sectors in which the Company and the Subsidiaries operate; (B) conditions affecting the industries or industry sectors in which the Company and the Subsidiaries operate, except to the extent that the same disproportionately affect the Company and the Subsidiaries, taken as a whole, as compared to other companies in the industries or industry sectors in which the Company and the Subsidiaries operate; (C) changes arising out of the announcement, pendency or consummation of the Offer, the Merger, this Agreement or any of the transactions contemplated hereby, including, without limitation, (1) any actions of competitors, (2) any actions taken by or losses of employees or (3) any delays or cancellations of orders for products or services; (D) changes in the market price or trading volume of the Company’s common stock ( provided , that the underlying causes of such changes shall not be excluded pursuant to this clause (D)); (E) changes in legal requirements or GAAP, except to the extent that the same disproportionately affect the Company and its Subsidiaries, taken as a whole, as compared to other companies affected by the changes in legal requirements or GAAP; (F) any failure of the Company to meet internal projections or analysts’ expectations for any period ending after the date of this Agreement (provided, that the underlying causes of such failure shall not be excluded pursuant to this clause (F)); or (G) changes resulting from any action taken pursuant to or in accordance with this Agreement or at the request of Parent.

“ Permitted Lien ” means any (A) statutory Lien for current Taxes and assessments not yet past due or delinquent, (B) inchoate mechanics’ and materialmen’s Liens for construction in progress, (C) workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the ordinary course of business for sums not yet due and payable, and (D) all matters of record, Liens and other imperfections of title and encumbrances that do not, individually or in the aggregate, have a Material Adverse Effect.

“ person ” means an individual, corporation, partnership, limited partnership, limited liability company, syndicate, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or entity or government, political subdivision, agency or instrumentality of a government.

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“ subsidiary ” or “ subsidiaries ” of the Company, the Surviving Corporation (as defined herein), Parent or any other person means an affiliate controlled by such person, directly or indirectly, through one or more intermediaries.

“ Taxes ” means any and all taxes, fees, levies, duties, tariffs, imposts and other similar charges of any kind imposed by any Governmental Authority, including, without limitation (A) all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, ad valorem, transfer, franchise, profits, license, lease, service, service use, withholding, estimated, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest and any penalties, additions to tax or additional amounts with respect thereto, (B) any liability for payment of amounts described in clause (A) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period, or otherwise through operation of Law, and (C) any liability for the payment of amounts described in clauses (A) or (B) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other person; and

“ Tax Return ” means any report, return, document, declaration or other information or filing (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065)) required to be supplied to any taxing authority or jurisdiction (foreign or domestic) with respect to Taxes.

ARTICLE II

THE OFFER

SECTION 2.01 The Offer .

(a) Provided that this Agreement shall not have been terminated in accordance with Section 9.01 and that none of the events or conditions set forth in Annex A shall have occurred and be existing and shall not have been waived by Parent (the conditions set forth in Annex A , the “ Tender Offer Conditions ”), Purchaser shall commence (within the meaning of Rule 14d-2 under the U.S. Securities Exchange Act of 1934, as amended (together with the rules and regulations thereunder, the “ Exchange Act ”)) the Offer as promptly as practicable and in any event within ten (10) business days after the date hereof. The obligation of Purchaser to accept for payment Shares validly tendered pursuant to the Offer and to pay the Per Share Amount for each such tendered and not subsequently withdrawn Share shall be subject only to the Tender Offer Conditions. Purchaser expressly reserves the right to waive any such condition, to increase the Per Share Amount payable in the Offer, and to make any other changes to the terms and conditions of the Offer; provided , however , that without the prior written consent of the Company (i) the Minimum Condition (as defined in Annex A ) may not be waived and (ii) no change may be made that (A) changes the form of consideration to be paid pursuant to the Offer, (B) decreases the Per Share Amount payable in the Offer, (C) reduces the maximum number of Shares to be purchased in the Offer, (D) imposes conditions to the Offer in addition to those set forth in Annex A hereto, or (E) amends the conditions set forth in Annex A hereto in any manner materially adverse to the holders of Shares.

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(b) Subject to the terms and conditions thereof, the Offer shall remain open until midnight, New York City time, at the end of the twentieth (20th) business day after the date that the Offer is commenced (the “ Expiration Date ”), unless Purchaser shall have extended the period of time for which the Offer is open pursuant to, and in accordance with, this Section 2.01(b) or as may be required by applicable Law, in which event the term “Expiration Date” shall mean the latest time and date as the Offer, as so extended, may expire. Unless this Agreement or the Offer is terminated in accordance with its terms, Purchaser shall extend the Offer from time to time: (i) if the Minimum Condition is not satisfied on or before the Expiration Date; (ii) if any of the conditions of the Offer set forth in clause (ii) of the second paragraph of the Tender Offer Conditions are not satisfied on or before the Expiration Date; (iii) if the condition set forth in clause (d) of Annex A is not satisfied and is the sole condition remaining unsatisfied and the Company is using its reasonable best efforts to satisfy such condition; or (iv) if any applicable Law, rule, regulation, interpretation or position of the Securities and Exchange Commission (the “ SEC ”) or the staff of the SEC (the “ SEC Staff ”) thereof applicable to the Offer requires such extension. Purchaser shall extend the Offer for up to five (5) business days after the satisfaction or waiver of the conditions set forth in clauses (i), (ii) or (iii) in the immediately preceding sentence, or for such period as may be required by any applicable Law, rule, regulation, interpretation or position set forth with respect to the condition in clause (iv) in the immediately preceding sentence; provided , however , that Purchaser shall not be required to extend the Offer beyond the Outside Date. Unless this Agreement or the Offer is terminated in accordance with its terms, Purchaser may in its sole election extend the Offer from time to time if any of the Tender Offer Conditions, other than the conditions set forth in the second sentence of this Section 2.01(b), are not satisfied or waived on or before the Expiration Date. If all of the Tender Offer Conditions are satisfied, but the number of Shares that have been validly tendered and not withdrawn in the Offer, together with any Shares then owned by Parent is less than 90% of the outstanding Shares on a Fully Diluted Basis, Purchaser may, in its sole discretion, and subject to the first sentence of subsection (c), commence a subsequent offering period (as provided in Rule 14d-11 under the Exchange Act) for three to 20 business days to acquire additional outstanding Shares.

(c) Subject to the terms and conditions set forth in this Agreement and to the satisfaction or waiver of the Tender Offer Conditions, Purchaser shall, and Parent shall cause it to, promptly after the Expiration Date, accept for payment and pay for (after giving effect to any required withholding Tax) all Shares that have been validly tendered and not withdrawn pursuant to the Offer. If Purchaser shall commence a subsequent offering period in connection with the Offer, Purchaser shall accept for payment and pay for (after giving effect to any required withholding Tax) all additional Shares validly tendered during such subsequent offering period.

(d) As promptly as reasonably practicable on the date of commencement of the Offer, Purchaser shall file with the SEC a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto, the “ Schedule TO ”) with respect to the Offer. The Schedule TO shall contain or shall incorporate by reference an offer to purchase (the “ Offer to Purchase ”) and forms of the related letter of transmittal and forms of notice of guaranteed delivery and any related summary advertisement (the Schedule TO, the Offer to Purchase and such other documents, together with all supplements and amendments thereto, being referred to herein collectively as the “ Offer Documents ”). Each of Parent, Purchaser and the Company agrees to correct promptly any information provided by it for use in the Offer Documents if and

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to the extent that it shall have become false or misleading in any material respect, and Parent and Purchaser further agree to take all steps necessary to cause the Schedule TO, as so corrected, to be filed with the SEC, and the other Offer Documents, as so corrected, to be disseminated to holders of Shares, in each case as and to the extent required by applicable Law. The Company shall promptly furnish to Parent and Purchaser all information concerning the Company that is required or reasonably requested by Parent or Purchaser in connection with the obligations relating to the Offer Documents contained in this Section 2.01(d). Parent and Purchaser shall give the Company and its counsel a reasonable opportunity to review and comment on the Offer Documents prior to such documents being filed with the SEC or disseminated to holders of Shares. Parent and Purchaser shall provide the Company and its counsel with any comments that Parent, Purchaser or their counsel may receive from the SEC or the SEC Staff with respect to the Offer Documents promptly after the receipt of such comments and shall provide the Company and its counsel with a reasonable opportunity to participate in the response of Parent or Purchaser to such comments.

SECTION 2.02 Company Action .

(a) The Company hereby approves of and consents to the Offer and represents and warrants that the Board, at a meeting duly called and held on May 8, 2008, has, subject to the terms and conditions set forth in this Agreement, unanimously (i) determined that this Agreement and the transactions contemplated hereby, including each of the Offer and the Merger (collectively, the “ Transactions ”), are fair to, and in the best interests of, the holders of Shares, (ii) approved and declared advisable this Agreement and the Transactions (such approval having been made in accordance with the DGCL, including, without limitation, Section 203 thereof), and (iii) resolved to recommend that the holders of Shares accept the Offer and tender their Shares pursuant to the Offer, and that the holders of Shares adopt this Agreement and approve the Transactions to the extent required by applicable Law. The Company further represents that Needham & Company, LLC has delivered to the Board a written opinion that, as of the date of this Agreement, the consideration to be received by the holders of Shares pursuant to each of the Offer and the Merger is fair to the holders of Shares from a financial point of view (the “ Fairness Opinion ”). The Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Board described in this Section 2.02(a).

(b) As promptly as reasonably practicable on the date of commencement of the Offer, the Company shall file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto, the “ Schedule 14D-9 ”) containing, subject to Section 7.05(c), the Fairness Opinion and the recommendation of the Board described in Section 2.02 (a), and shall disseminate the Schedule 14D-9 to the extent required by Rule 14d-9 promulgated under the Exchange Act, and any other applicable Law. The Company will use its reasonable best efforts to cause the Schedule 14D-9 to comply in all material respects with the applicable requirements under Law. Each of the Company, Parent and Purchaser agrees to correct promptly any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect, and the Company further agrees to take all steps necessary to cause the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by applicable Law. The Company shall give Parent and its counsel a reasonable opportunity to review and comment on the Schedule 14D-9 prior to such

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document being filed with the SEC or disseminated to holders of Shares. The Company shall provide Parent and its counsel with any comments that the Company or its counsel may receive from the SEC or the SEC Staff with respect to the Schedule 14D-9 promptly after the receipt of such comments and shall provide Parent and its counsel with a reasonable opportunity to participate in the response of the Company to such comments.

(c) The Company shall promptly furnish Purchaser with mailing labels containing the names and addresses of all record holders of Shares and with security position listings of Shares held in stock depositories, each as of a recent date, together with all other available listings and computer files containing names, addresses and security position listings of record holders and beneficial owners of Shares. The Company shall furnish Parent and Purchaser with such additional information, including, without limitation, updated listings and computer files of stockholders, mailing labels and security position listings, and such other assistance in disseminating the Offer Documents to holders of Shares as Parent or Purchaser may reasonably request. Subject to the requirements of applicable Law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer or the Merger, Parent and Purchaser shall hold in confidence the information contained in such labels, listings and files, shall use such information only in connection with the Transactions, and, if this Agreement shall be terminated in accordance with Article IX, shall deliver to the Company all copies of such information then in their possession.

SECTION 2.03 Top-Up Option.

(a) The Company hereby grants to Parent and Purchaser an irrevocable option (the “ Top-Up Option ”) to purchase up to that number of newly issued Shares (the “ Top-Up Option Shares ”) equal to the number of Shares that, when added to the number of Shares owned by Parent and Purchaser immediately following consummation of the Offer, shall constitute one Share more than 90% of the Shares then outstanding on a Fully Diluted Basis (after giving effect to the issuance of the Top-Up Option Shares) for consideration per Top-Up Option Share equal to the Per Share Amount.

(b) The Top-Up Option shall be exercisable only after the purchase of and payment for Shares pursuant to the Offer by Parent or Purchaser as a result of which Parent and Purchaser own beneficially at least a majority of the outstanding Shares. The Top-Up Option shall not be exercisable if the number of Shares subject thereto exceeds the number of authorized Shares available for issuance.

(c) In the event that Parent or Purchaser wish to exercise the Top-Up Option, Purchaser shall give the Company one day’s prior written notice specifying the number of Shares that are or will be owned by Parent and Purchaser immediately following consummation of the Offer and specifying a place and a time for the closing of the purchase. The Company shall, as soon as practicable following receipt of such notice, deliver written notice to Purchaser specifying the number of Top-Up Option Shares. At the closing of the purchase of the Top-Up Option Shares, the portion of the purchase price owing upon exercise of the Top-Up Option that equals the product of (i) the number of Shares purchased pursuant to the Top-Up Option, multiplied by (ii) the Per Share Amount, shall be paid to the Company, at the election of Parent

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and Purchaser, in cash (by wire transfer or cashier’s check) or by delivery of a promissory note having full recourse to Parent.

(d) Parent and Purchaser acknowledge that the Top-Up Option Shares that Purchaser may acquire pursuant to the Top-Up Option will not be registered under the Securities Act and will be issued in reliance upon an exemption thereunder for transactions not involving a public offering. Parent and Purchaser represent and warrant to the Company that Purchaser is, or will be upon the purchase of the Top-Up Options Shares, an “accredited investor,” as defined in Rule 501 of Regulation D under the Securities Act. Purchaser agrees that the Top-Up Option and the Top-Up Option Shares to be acquired upon exercise of the Top-Up Option are being and will be acquired by Purchaser for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof (within the meaning of the Securities Act).

ARTICLE III

THE MERGER

SECTION 3.01 The Merger . Upon the terms and subject to the conditions set forth in Article VIII, and in accordance with the DGCL, at the Effective Time (as defined in Section 3.02), Purchaser shall be merged with and into the Company.

SECTION 3.02 Effective Time . As promptly as practicable after the satisfaction or, if permissible, waiver of the conditions set forth in Article VIII, the parties hereto shall cause the Merger to be consummated by filing this Agreement or a certificate of merger or certificate of ownership and merger (in either case, the “ Certificate of Merger ”) with the Secretary of State of the State of Delaware, in such form as is required by, and executed in accordance with, the relevant provisions of the DGCL (the date and time of such filing of the Certificate of Merger (or such later time as may be agreed by each of the parties hereto and specified in the Certificate of Merger) being the “ Effective Time ”).

SECTION 3.03 Effect of the Merger . As a result of the Merger, the separate corporate existence of Purchaser shall cease and the Company shall continue as the surviving corporation of the Merger (the “ Surviving Corporation ”). At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the property, rights, privileges, powers and franchises of the Company and Purchaser shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of the Company and Purchaser shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.

SECTION 3.04 Certificate of Incorporation; By-laws .

(a) At the Effective Time, the Certificate of Incorporation of the Company shall be amended so as to read in the form of Exhibit A hereto and, as so amended, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by Law and such Certificate of Incorporation.

(b) At the Effective Time, the By-laws of the Company shall be amended so as to read in the form of Exhibit B hereto and, as so amended, shall be the By-laws of the

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Surviving Corporation until thereafter amended as provided by Law, the Certificate of Incorporation of the Surviving Corporation and such By-laws.

SECTION 3.05 Directors and Officers . The directors of Purchaser immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation, in each case until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal.

SECTION 3.06 Conversion of Securities . At the Effective Time, by virtue of the Merger and without any action on the part of Purchaser, the Company or the holders of any of the following securities:

(a) Each Share issued and outstanding immediately prior to the Effective Time (other than any Shares to be canceled pursuant to Section 3.06(b) and any Dissenting Shares (as hereinafter defined)) shall be canceled and shall be converted automatically into the right to receive an amount equal to the Per Share Amount (the “ Merger Consideration ”) payable, without interest, to the holder of such Share, upon surrender, in the manner provided in Section 3.10, of the Certificate that formerly evidenced such Share;

(b) Each Share held in the treasury of the Company and each Share owned by Purchaser, Parent or any direct or indirect wholly-owned subsidiary of Parent or of the Company immediately prior to the Effective Time shall be canceled without any conversion thereof and no payment or distribution shall be made with respect thereto; and

(c) Each share of common stock, par value $.01 per share, of Purchaser issued and outstanding immediately prior to the Effective Time shall be converted into and exchanged for one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation.

SECTION 3.07 Employee Stock Options . Effective as of the Effective Time, the Company shall take all necessary action, including obtaining the consent of the individual option holders, if necessary, to (i) terminate the Company’s 1996 Stock Option Plan, 2000 Long-Term Incentive Plan, and 2007 Stock Incentive Plan, each as amended through the date of this Agreement (the “ Company Stock Option Plans ”), (ii) provide that each outstanding option to purchase shares of Company common stock granted under the Company Stock Option Plans (each, a “ Company Stock Option ”) that is outstanding and unexercised as of immediately prior to the Effective Time, whether or not vested or exercisable, shall become fully vested and exercisable as of the Effective Time, and (iii) cancel as of the Effective Time each Company Stock Option that is outstanding and unexercised at the Effective Time. Each holder of a Company Stock Option that is outstanding and unexercised at the Effective Time and that has an exercise price per Share that is less than the Merger Consideration shall be entitled (subject to the provisions of this Section 3.07) to be paid by the Surviving Corporation immediately after the Effective Time, in exchange for the cancellation of such Company Stock Option, an amount in cash (subject to any applicable withholding taxes) with respect to each Share subject to the Company Stock Option equal to the excess, if any, of the Merger Consideration over the

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applicable per share exercise price of such Company Stock Option (the “ Option Payment ”). Any such payment shall be subject to all applicable federal, state and local tax withholding requirements. The Company shall take all necessary action to approve the disposition of the Company Stock Options in connection with the transactions contemplated by this Agreement to the extent necessary to exempt such dispositions under Rule 16b-3 of the Exchange Act. Prior to the Effective Time, Parent shall cause to be wired to an account designated by the Company an amount sufficient to enable the Company to make the payments required pursuant to this Section 3.07.

SECTION 3.08 Restricted Stock Units . Effective as of the Effective Time, the Company shall take all necessary action, including obtaining the consent of the individual restricted stock unit holders, if necessary, to (i) provide that each outstanding restricted stock unit granted under the Company Stock Option Plans (each, a “ Restricted Stock Unit ”) that is outstanding as of immediately prior to the Effective Time, whether or not vested, shall become fully vested as of the Effective Time, and (ii) cancel as of the Effective Time each Restricted Stock Unit that is outstanding at the Effective Time. Each holder of a Restricted Stock Unit that is outstanding at the Effective Time shall be entitled (subject to the provisions of this Section 3.08) to be paid by the Surviving Corporation immediately after the Effective Time, in exchange for the cancellation of such Restricted Stock Unit, an amount in cash (subject to any applicable withholding taxes) with respect to each Share subject to the Restricted Stock Unit equal to the Merger Consideration (the “ Restricted Stock Unit Payment ”). Any such payment shall be subject to all applicable federal, state and local tax withholding requirements. The Company shall take all necessary action to approve the disposition of the Restricted Stock Units in connection with the transactions contemplated by this Agreement to the extent necessary to exempt such dispositions under Rule 16b-3 of the Exchange Act. Prior to the Effective Time, Parent shall cause to be wired to an account designated by the Company an amount sufficient to enable the Company to make the payments required pursuant to this Section 3.08.

SECTION 3.09 Employee Stock Purchase Plan . The Company shall take all actions necessary to suspend any pending Purchase Period (as such term is defined in the Company’s 1999 Employee Stock Purchase Plan ( as amended through the date of this Agreement, the “ ESPP ”)) as of the date hereof. As of the Effective Time, conditioned upon the consummation of the Merger, the Company shall take all actions necessary to terminate the ESPP. Upon the termination of the ESPP, all amounts in the Stock Purchase Accounts (as such term is defined in the ESPP) as of the Effective Time shall be returned to such participants as soon as reasonably practicable.

SECTION 3.10 Dissenting Shares.

(a) Notwithstanding any provision of this Agreement to the contrary, Shares that are outstanding immediately prior to the Effective Time and that are held by stockholders who shall have neither voted in favor of the Merger nor consented thereto in writing and who shall have demanded properly in writing appraisal for such Shares in accordance with Section 262 of the DGCL (collectively, the “ Dissenting Shares ”) shall not be converted into, or represent the right to receive, the Merger Consideration. Such stockholders shall be entitled to receive payment of the appraised value of such Shares held by them in accordance with the provisions of such Section 262, except that Dissenting Shares held by stockholders who shall have failed to

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perfect or who effectively shall have withdrawn or lost their rights to appraisal of such Shares under such Section 262 shall thereupon be deemed to have been converted into, and to have become exchangeable for, as of the Effective Time, the right to receive the Merger Consideration, without any interest thereon, upon surrender, in the manner provided in Section 3.11, of the Certificate or Certificates that formerly evidenced such Shares.

(b) The Company shall give Parent and Purchaser (i) prompt notice of any demand for appraisal received by the Company, withdrawals of such demands, and any other instruments served pursuant to the DGCL and received by the Company and (ii) the opportunity to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL. 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.

SECTION 3.11 Surrender of Shares; Stock Transfer Books .

(a) Prior to the Effective Time, Purchaser shall designate a bank or trust company reasonably acceptable to the Company to act as agent (the “ Paying Agent ”) for the holders of Shares and Company Stock Options to receive the funds to which holders of Shares and Company Stock Options shall become entitled pursuant to Section 3.06(a) and Section 3.07, respectively. Such funds shall be invested by the Paying Agent as directed by the Surviving Corporation; provided , that such investments shall be in obligations of or guaranteed by the United States of America or of any agency thereof and backed by the full faith and credit of the United States of America, in commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Service, Inc. or Standard & Poor’s Corporation, respectively, or in deposit accounts, certificates of deposit or banker’s acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits purchased from, commercial banks with capital, surplus and undivided profits aggregating in excess of $500 million (based on the most recent financial statements of such bank which are then publicly available at the SEC or otherwise).

(b) Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each person who was, at the Effective Time, a holder of record of Shares entitled to receive the Merger Consideration pursuant to Section 3.06(a) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates evidencing such Shares (the “ Certificates ”) shall pass, only upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting the surrender of the Certificates pursuant to such letter of transmittal. Upon surrender to the Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly evidenced by such Certificate, and such Certificate shall then be canceled. No interest shall accrue or be paid on the Merger Consideration payable upon the surrender of any Certificate for the benefit of the holder of such Certificate. If the payment equal to the Merger Consideration is to be made to a person other than the person in whose name the surrendered certificate formerly evidencing Shares is registered on the stock transfer books of the Company, it shall be a condition of payment that the certificate so surrendered shall be endorsed properly or otherwise be in proper form for transfer and that the person requesting such payment shall have paid all transfer and other taxes required by reason of

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the payment of the Merger Consideration to a person other than the registered holder of the certificate surrendered, or shall have established to the satisfaction of the Surviving Corporation that such taxes either have been paid or are not applicable. If any holder of Shares is unable to surrender such holder’s Certificates because such Certificates have been lost, mutilated or destroyed, such holder may deliver in lieu thereof an affidavit and indemnity bond in form and substance and with surety reasonably satisfactory to the Surviving Corporation. Each of Parent, Purchaser, the Surviving Corporation and the Paying Agent shall be entitled to deduct and withhold from any amounts otherwise payable pursuant to this Agreement in respect of Shares such amount as it is required to deduct and withhold with respect to the making of such payment under the Code or any Law. To the extent that amounts are so withheld, such withheld amounts shall be treated for purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made.

(c) At any time following the ninth (9 ^th ) month after the Effective Time, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds which had been made available to the Paying Agent and not disbursed to 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 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) At the close of business on the day of the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares except as otherwise provided herein or by applicable Law.

(e) All amounts payable by the Surviving Company in respect of Option Payments and Restricted Stock Unit Payments shall be paid as provided in Sections 3.07 and 3.08, respectively, above.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except (A) as set forth in the Disclosure Schedule that has been prepared by the Company and delivered by the Company to Parent and Purchaser in connection with the execution and delivery of this Agreement (the “ Disclosure Schedule ”) (which Disclosure Schedule shall be arranged in sections corresponding to the numbered and lettered sections of this Article IV, and any information disclosed in any such section of the Disclosure Schedule shall be deemed to be disclosed only for purposes of the corresponding section of this Article IV, unless it is readily apparent that the disclosure contained in such section of the Disclosure Schedule contains enough information regarding the subject matter of other representations and warranties contained in this Article IV as to clearly qualify or otherwise clearly apply to such

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other representations and warranties) or (B) as disclosed in the SEC Reports (as defined below) filed after January 1, 2007 and prior to the date of this Agreement, other than any disclosure set forth in (x) any document incorporated by reference in any such SEC Report and (y) any “risk factors” section or in any section relating to “forward looking” statements, in each case of such SEC Report, except to the extent that the applicability of such disclosure to a section is readily apparent from such disclosure, the Company hereby represents and warrants to Parent and Purchaser that:

SECTION 4.01 Organization and Qualification; Subsidiaries .

(a) Each of the Company and each subsidiary of the Company (each a “ Subsidiary ”) is an entity duly incorporated, organized, validly existing and in good standing under the Laws of the jurisdiction of its incorporation or organization and has the requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted, except where the failure to be so organized, existing or in good standing or to have such power and authority would not, individually or in the aggregate, have a Material Adverse Effect. The Company and each Subsidiary is duly qualified or licensed as a foreign entity to do business, and is in good standing, in each jurisdiction where the character of the properties and assets owned, leased or operated by it or the nature of its business makes such qualification or licensing necessary, except for such failures to be so qualified, licensed or in good standing that would not, individually or in the aggregate, have a Material Adverse Effect.

(b) A true, correct and complete list of each Subsidiary, together with the jurisdiction of incorporation of each Subsidiary and the percentage of the outstanding capital stock of each Subsidiary owned by the Company and each other Subsidiary, is set forth in Section 4.01(b) of the Disclosure Schedule. Except as disclosed in Section 4.01(b) of the Disclosure Schedule, the Company does not directly or indirectly own any equity or similar interest in, or any interest convertible into or exercisable or exchangeable for any equity or similar interest in, any corporation, partnership, joint venture or other business association or entity.

SECTION 4.02 Certificate of Incorporation and By-laws . The Company has heretofore made available to Parent a true, complete and correct copy of the Certificate of Incorporation and the By-laws or equivalent organizational documents, each as amended to date, of the Company and each Subsidiary. Such Certificates of Incorporation, By-laws or equivalent organizational documents are in full force and effect. Neither the Company nor any Subsidiary is in violation of any of the provisions of its Certificate of Incorporation, By-laws or equivalent organizational documents, except, in the case of any Subsidiary, for violations that would not have a Material Adverse Effect.

SECTION 4.03 Capitalization .

(a) The authorized capital stock of the Company consists of 50,000,000 Shares. As of May 1, 2008, (i) 18,808,528 Shares were issued and outstanding, all of which are duly authorized, validly issued, fully paid and nonassessable, (ii) no Shares are held in the treasury of the Company, and (iii) 3,790,844 Shares are reserved for future issuance pursuant to

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Company Stock Options or stock incentive rights granted pursuant to the Company Stock Option Plans. Except as set forth in this Section 4.03, there are no options, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company or any Subsidiary or obligating the Company or any Subsidiary to issue, deliver or sell any shares of capital stock of, or other equity interests in, the Company or any Subsidiary. All Shares subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instruments pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and nonassessable. There are no material outstanding contractual obligations of the Company or any Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital stock of any Subsidiary or to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary or any other person.

(b) Each outstanding share of capital stock of, or other equity interest in, each Subsidiary is duly authorized, validly issued, fully paid and nonassessable, and each such share, or other equity interest in, is owned by the Company or another Subsidiary free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on the Company’s or any Subsidiary’s voting rights, charges and other encumbrances of any nature whatsoever.

(c) The Company has delivered to Parent a correct and complete list as of the date set forth in Section 4.03(c) of the Disclosure Schedule of each option and restricted stock unit outstanding immediately prior to the Effective Time (whether or not then vested or exercisable) to purchase Shares issued under any Company Stock Option Plan, which list includes the holder, date of grant, exercise price (if applicable), number of Shares subject thereto, the Company Stock Option Plan under which such option or restricted stock unit, as applicable, was granted and, with respect to any option, whether the option is vested and exercisable and with respect to any restricted stock unit, whether the restricted stock unit is vested.

SECTION 4.04 Relative to This Agreement Authority .

(a) The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance 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, with respect to the Merger, the adoption of this Agreement by the holders of a majority of the then-outstanding Shares, if and to the extent required by applicable Law, and the filing and recordation of the Certificate of Merger and other documents as required by the DGCL). This Agreement has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery by Parent and Purchaser, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all laws relating to fraudulent transfers), reorganization, moratorium or similar laws affecting creditors’ rights generally and subject to the

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effect of general principles of equity (regardless of whether considered in a proceeding at law or in equity).

(b) Assuming the accuracy of the representations set forth in Section 5.06, the Company has taken all appropriate actions so that the restrictions on business combinations contained in each “fair price”, “moratorium”, “control share acquisition”, “business combination” or other similar anti-takeover statute or regulation enacted under Delaware law applicable to the Company (the “ Anti-takeover Laws ”), including without limitation Section 203 of the DGCL, will not apply with respect to or as a result of this Agreement and the transactions contemplated hereby, including the Merger, without any further action on the part of the stockholders of the Company or the Board. True, correct and complete copies of all resolutions of the Board reflecting such actions have been previously provided to Parent. Other than Section 203 of the DGCL, no Anti-takeover Law is applicable to, or purports to be applicable to, the Merger or the other transactions contemplated by this Agreement.

(c) The Board, at a meeting duly called and held and at which all directors were present, has (i) unanimously approved and declared advisable this Agreement, including the Merger and the Transactions contemplated hereby, (ii) determined that this Agreement and the Transactions contemplated hereby are fair to, and in the best interests of, the holders of Shares, and (ii) approved the making of the Offer and resolved to recommend that stockholders of the Company adopt this Agreement and that such matter be submitted for consideration at the Stockholders’ Meeting.

(d) The Board has duly and validly approved and taken all corporate action required to be taken by the Board to grant the Top-Up Option and to issue the Top-Up Option Shares upon the exercise thereof. True, correct and complete copies of all resolutions of the Board reflecting such actions have been previously provided to Parent. Assuming that the authorizations, consents and approvals referred to in Section 4.05(b) and the filings referred to in Section 4.05(b) are timely made, none of the grant of the Top-Up Option by the Company, the exercise thereof by Parent and Purchaser or the issuance and sale of the Top-Up Option Shares to Parent and Purchaser in respect of such exercise, in each case, subject to and in accordance with Section 2.03, will conflict with, or result in a violation or breach of, any provision of applicable Laws or any judgment, injunction, order or decree of any Governmental Authority, or require any action, consent, approval, authorization or permit of, action by, or filing with or notification to, any Governmental Authority.

(e) A compensation committee or a committee of the Board that performs functions similar to a compensation committee has duly and validly approved and taken all corporate action required to be taken by the Board to (i) defer the annual non-management director option grants, (ii) to grant the bonuses to non-management directors at the December 2007 Board meeting in accordance with Rule 14d-10 of the Exchange Act and (iii) except as set forth in Section 4.04(e) of the Disclosure Schedule, to cause management’s employment or change in control agreements to comply with Section 409A of the Code. True, correct and complete copies of all resolutions of the committee reflecting such actions have been previously provided to Parent.

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(f) The affirmative vote (in person or represented by proxy) at the Stockholders’ Meeting, or at any adjournment or postponement thereof, of a majority of the votes entitled to be cast by the holders of outstanding Shares in favor of the adoption of this Agreement, is (unless the Merger is consummated in accordance with Section 253 of the DGCL as contemplated by Section 7.01(b)) the only vote or approval of the holders of any class or series of capital stock of the Company or any Subsidiary necessary to adopt this Agreement.

SECTION 4.05 No Conflict; Required Filings and Consents .

(a) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement and the consummation of the Transactions by the Company will not, (i) conflict with, violate or result in any breach of the Certificate of Incorporation or By-laws or any equivalent organizational documents of the Company or any Subsidiary, (ii) assuming that all consents, approvals and other authorizations described in Section 4.05(b) and the approval of the holders of the Shares described in Section 4.04(f) have been obtained and that all filings and other actions described in Section 4.05(b) have been made or taken, conflict with or violate or result in any breach of any federal or state statute, law, regulation, judgment or decree (a “ Law ”) applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in any breach of or constitute a default (or an event which, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien or other encumbrance on any property or asset of the Company or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which the Company or any Subsidiary is a party or by which the Company or a Subsidiary or any property or asset of the Company or any Subsidiary is bound or affected, except, with respect to clauses (ii) and (iii), for any such conflicts, violations, breaches, defaults or other occurrences which would not, individually or in the aggregate, have a Material Adverse Effect.

(b) The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company and consummation of the Transactions will not, require any consent, approval, waiver authorization or permit of, or filing with or notification to, any United States federal, state or foreign government, regulatory authority, or any court, tribunal or judicial body (a “ Governmental Authority ”), except for (i) applicable requirements, if any, of the Exchange Act, the NASDAQ rules, state securities or “blue sky” laws (“ Blue Sky Laws ”) and state takeover laws, (ii) the pre-merger notification requirements of the HSR Act, and filings under foreign competition laws, (iii) the filing and recordation of the Certificate of Merger and other documents as required by the DGCL, and (iv) where the failure to obtain such consents, approvals, waivers authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have a Material Adverse Effect.

SECTION 4.06 Permits; Compliance . Each of the Company and the Subsidiaries is in possession of all material licenses, permits certificates, and approvals of any Governmental Authority necessary for each of the Company or the Subsidiaries to own, lease and operate its properties and assets or to carry on its business as it is now being conducted (the “ Permits ”). As of the date of this Agreement, no suspension or cancellation of any of the Permits is pending or, to the knowledge of the Company, threatened. Neither the Company nor any Subsidiary is in

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conflict with, or in default, breach or violation of, (a) any Law applicable to the Company or any Subsidiary or by which any property or asset of the Company or any Subsidiary is bound or affected or (b) any contract, Permit or other instrument or obligation to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary or any property or asset of the Company or any Subsidiary is bound, except for any such conflicts, defaults, breaches or violations that would not, individually or in the aggregate, have a Material Adverse Effect.

SECTION 4.07 SEC Filings; Financial Statements .

(a) The Company has timely filed all forms, reports and documents required to be filed by it with the SEC since December 31, 2005 (the “ SEC Reports ”). No Subsidiary is required to file any report, proxy statement, registration statement, form, schedule or other document with the SEC. The SEC Reports (i) were prepared in accordance with either the requirements of the Securities Act of 1933, as amended (together with the rules and regulations thereunder, the “ Securities Act ”), or the Exchange Act, as the case may be, and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, 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 made therein, in the light of the circumstances under which they were made, not misleading.

(b) The Company has devised and maintains a system of internal accounting controls (within the meaning of Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally accepted accounting principles (“ GAAP ”). The Company (i) has designed disclosure controls and procedures (within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that information material to the Company and the Subsidiaries, taken as a whole, relating to it and any Subsidiary is made known to the management of the Company by others within the Company or any Subsidiary as appropriate to allow timely decisions regarding required disclosure and to make the certifications required by the Exchange Act with respect to the SEC Reports and (ii) has disclosed, based upon the Company’s most recent evaluation, to its auditors and the audit committee of the Board (1) any significant deficiencies in the design or operation of internal controls which could adversely affect in any material respect the Company’s ability to record, process, summarize and report financial data and have disclosed to its auditors any material weaknesses in internal controls and (2) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls. The Company has provided to Parent copies of any such disclosure set forth in clause (1) or clause (2) of the preceding sentence.

(c) Neither the Company nor any Subsidiary nor the chief executive officer or the chief financial officer of the Company or any Subsidiary is aware of, and neither the Board nor the board of directors of any Subsidiary nor, to the knowledge of the Company, the Company’s auditors or the auditors of any Subsidiary has been advised of (i) any fact, circumstance or change that is reasonably likely to result in a “significant deficiency” or a “material weakness” (each as defined in Public Company Accounting Oversight Board Auditing Standard 2) in the Company’s internal controls over its consolidated financial reporting or (ii)

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any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over its consolidated financial reporting.

(d) The Company and each of its officers and directors are in compliance with, and has complied with, in each case in all material respects, the provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated under such act and the Exchange Act (collectively, “ Sarbanes Oxley ”) and the rules and regulations of the NASDAQ that are applicable to the Company. The Company’s auditors and Chief Executive Officer and Chief Financial Officer have given all certifications, attestations and reports required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley.

SECTION 4.08 Financial Statements; No Undisclosed Liabilities .

(a) The audited consolidated financial statements of the Company (including any related notes thereto) included in the SEC Reports complied, as of their respective dates, with applicable accounting requirements, were prepared in accordance with GAAP as in effect on the dates of such financial statements, applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and fairly present in all material respects the consolidated financial position of the Company and the Subsidiaries at the respective dates thereof and the consolidated statements of operations and cash flows for the periods indicated therein. The unaudited consolidated financial statements of the Company (including any related notes thereto) for all interim periods included in the SEC Reports complied, as of their respective dates, with applicable accounting requirements, have been prepared in accordance with GAAP as in effect on the dates of such financial statements, applied on a consistent basis throughout the periods involved (except as may be indicated in the notes thereto), and fairly present in all material respects the consolidated financial position of the Company and the Subsidiaries at of the respective dates thereof and the consolidated statements of operations and cash flows for the periods indicated therein (subject to normal period-end adjustments).

(b) Except (i) as set forth, reflected or reserved against in the consolidated balance sheet (including the notes thereto) of the Company included in the Company’s Form 10-K for the 2007 calendar year, as amended, (the “ Company 2007 Form 10-K ”) or (ii) for liabilities and obligations incurred since December 31, 2007 in the ordinary course of business consistent with past practice, neither the Company nor any Subsidiary has any liabilities or obligations of any nature (whether known or unknown, accrued, absolute, contingent or otherwise and whether due or to become due) except for such liabilities and obligations which would not, individually or in the aggregate, reasonably be expected to be material to the Company and the Subsidiaries, taken as a whole.

SECTION 4.09 Absence of Certain Changes or Events . Since December 31, 2007, except as contemplated by this Agreement, (a) the Company and the Subsidiaries have conducted their respective businesses in the ordinary course consistent with past practice, (b) since such date there has not been any change, event, fact, occurrence, effect or development (including the incurrence of liabilities of any nature) which, (i) individually or in the aggregate, has had or would have a Material Adverse Effect or (ii) would, individually or in the aggregate, reasonably be expected to prevent or materially delay the performance of this Agreement by the Company

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or the consummation of the Transactions, and (c) none of the Company or any Subsidiary has taken any action that, if taken after the date of this Agreement, would require the consent of Parent under Section 6.01.

SECTION 4.10 Absence of Litigation . Section 4.10 of the Disclosure Schedule, sets forth any litigation, action or proceeding (an “ Action ”) pending or, to the knowledge of the Company, threatened against the Company or any Subsidiary, any employee benefit plan, any present or former officer or director of the Company or any Subsidiary in their respective capacities as such, or any property or asset of the Company or any Subsidiary, before any Governmental Authority. Neither the Company nor any Subsidiary nor any property or asset of the Company or any Subsidiary is subject to any continuing order of, or consent decree, settlement agreement or similar written agreement with, any Governmental Authority, or any order, judgment, injunction or decree of any Governmental Authority. No investigation or inquiry by any Governmental Authority with respect to the Company or any Subsidiary is pending or, to the knowledge of the Company, threatened, in each case with respect to any alleged or claimed violation of Law applicable to the Company or any Subsidiary, or by which any property or asset of the Company or any Subsidiary is bound or affected.

SECTION 4.11 Employee Benefit Plans .

(a) Section 4.11(a)(i) of the Disclosure Schedule lists (i) all employee benefit plans (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)) and all bonus, stock option, stock purchase, restricted stock, incentive, deferred compensation, retiree medical or life insurance, supplemental retirement, severance or other benefit plans, programs or arrangements, and all employment, termination, severance or other contracts or agreements to which the Company or any Subsidiary is a party, with respect to which the Company or any Subsidiary has any obligation or which are maintained, contributed to or sponsored by the Company or any Subsidiary for the benefit of any current or former employee, officer or director of the Company or any Subsidiary, (ii) each employee benefit plan for which the Company or any Subsidiary could incur liability under Section 4069 of ERISA in the event such plan has been or were to be terminated, (iii) any plan in respect of which the Company or any Subsidiary could incur liability under Section 4212(c) of ERISA, and (iv) any contracts, arrangements or understandings between the Company or any Subsidiary and any current or former employee of the Company or any Subsidiary, including, without limitation, any contracts, arrangements or understandings relating to a sale of or similar transaction involving the Company or any Subsidiary (collectively, the “ Plans ”). Except as set forth on Section 4.11(a)(ii) of the Disclosure Schedule, the Company has provided or made available to Parent a true and complete copy (or if such Plan is not contained in a written document, a description thereof) of (A) such Plans, including all amendments thereto, and (B) the most recent summary plan description for each Plan, if any, (C) the two most recent annual reports (Form 5500) filed with the Internal Revenue Service (the “ IRS ”), if any, (D) the most recently received IRS determination letter, if any, relating to a Plan, and (E) the most recently prepared actuarial report or financial statement, if any, relating to a Plan. All items listed on Section 4.11(a)(ii) of the Disclosure Schedule will be provided or made available to Parent as soon as reasonably practicable following the date hereof.

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(b) Each Plan has been operated in all material respects in accordance with its terms and the requirements of all applicable Laws, including, without limitation, ERISA and the Code. No Action is pending or, to the knowledge of the Company, threatened with respect to any Plan (other than claims for benefits in the ordinary course) that would be expended to result in a material liability.

(c) Each Plan that is intended to be qualified under Section 401(a) of the Code or Section 401(k) of the Code has received a favorable determination letter from the IRS and each trust established in connection with any Plan which is intended to be exempt from federal income taxation under Section 501(a) of the Code has received a determination letter from the IRS that it is so exempt, and no fact or event has occurred since the date of such determination letter or letters from the IRS to adversely affect the qualified status of any such Plan or the exempt status of any such trust.

(d) Except as set forth in Section 4.11(d) of the Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby (either alone or in conjunction with any other event) will (i) result in any payment (including, without limitation, severance, unemployment compensation, “excess parachute payment” (within the meaning of Section 280G of the Code), forgiveness of indebtedness or otherwise) becoming due to any director or any employee of the Company or any Subsidiary from the Company or any Subsidiary under any Plan or otherwise, (ii) increase any benefits otherwise payable under any Plan, (iii) result in any acceleration of the time of payment or vesting of any such benefits, except as specifically contemplated herein, or (iv) require the funding of any such benefits.

(e) The Company has no plan or commitment, whether legally binding or otherwise, to create any additional Plan or to modify or change any existing Plan, except as may be required by applicable Law, including Section 409A of the Code.

(f) No Plan is subject to Title IV of ERISA. Neither the Company nor any ERISA Affiliate made, or was required to make, contributions to any plan subject to Title IV of ERISA during the five (5) year period ending on the last day of the most recent plan year ended prior to the Effective Time. No liability under Title IV or Section 302 of ERISA has been incurred by the Company or an ERISA Affiliate that has not been satisfied in full, and no condition exists that presents a risk of such liability. No Plan is a “multiemployer plan” (as such term is defined in section 3(37) of ERISA).

(g) No employee, director or consultant of the Company or any Subsidiary is or will become entitled to post-employment benefits by reason of service to the Company or the Subsidiaries, other than coverage mandated by applicable Law or contracts or plans as set forth in Section 4.11(g) of the Disclosure Schedule.

(h) None of the Plans restrict the ability of the Company or the Subsidiaries to amend or terminate such Plan, except as set forth therein or as required by Law.

(i) To the extent applicable, all amounts paid by the Company or any Subsidiary to any of their respective “covered employees” (as such term is defined in Section

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162(m) of the Code) have been deducted by the Company or the Subsidiaries, as applicable, in accordance with the provisions of Section 162(m) of the Code.

(j) Each Plan that is a “nonqualified deferred compensation plan” (as defined in Section 409A(d)(1) of the Code) has been operated and administered in good faith compliance with Section 409A of the Code and the regulations and other authoritative guidance thereunder.

(k) Each Plan that is maintained pursuant the Laws of a country other than the United States is in material compliance with all such applicable Laws, including relevant Laws with respect to Taxes and the requirements of any trust deed under which such Plan is established.

SECTION 4.12 Labor Matters . (a) There are no material controversies pending or, to the knowledge of the Company, threatened between the Company or any Subsidiary and any of their respective employees; (b) neither the Company nor any Subsidiary is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or any Subsidiary, nor, to the knowledge of the Company, are there any activities or proceedings of any labor union to organize any such employees; and (c) there is no strike, slowdown, work stoppage or lockout by or with respect to any employees of the Company or any Subsidiary.

SECTION 4.13 Offer Documents; Schedule 14D-9; Proxy Statement . Neither the Schedule 14D-9 nor any information supplied by the Company for inclusion in the Offer Documents shall, at the times the Schedule 14D-9, the Offer Documents or any amendments or supplements thereto are filed with the SEC or are first published, sent or given to stockholders of the Company, as the case may be, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. Neither the proxy statement to be sent to the stockholders of the Company in connection with the Stockholders’ Meeting (as defined in Section 7.01) nor the information statement to be sent to such stockholders, as appropriate (such proxy statement or information statement, as amended or supplemented, being referred to herein as the “ Proxy Statement ”), shall, at the date the Proxy Statement is first mailed to stockholders of the Company or at the time of the Stockholders’ Meeting, contain any statement which, at the time and in light of the circumstances under which it was made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Stockholders’ Meeting which shall have become false or misleading. Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent, Purchaser or any of Parent’s or Purchaser’s representatives for inclusion in the foregoing documents. The Schedule 14D-9, the Offer Documents and the Proxy Statement shall comply in all material respects as to form with the requirements of the Exchange Act.

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SECTION 4.14 Property and Leases .

(a) The Company and the Subsidiaries have good and valid title to all their personal properties and assets reflected on the Company’s audited balance sheet (including in any related notes thereto) and included in the Company Form 10-K for the year ended December 31, 2007 or acquired after December 31, 2007 (other than assets disposed of since December 31, 2007 in the ordinary course of business consistent with past practice), (the “ Personal Property ”) to conduct their respective businesses as currently conducted or as contemplated to be conducted. The Personal Property comprises all of the personal property and assets necessary to carry on the Company’s and each Subsidiary’s respective business, as currently conducted and consistent with past practice. All Personal Property is in good condition and in a state of good maintenance and repair (ordinary wear and tear excepted) and are suitable for the use to which they are presently put.

(b) Neither the Company nor any Subsidiary (i) owns or has any ownership interest in any real property or (ii) is obligated under, or a party to, any contract to purchase any real property, including, without limitation, any Leased Property (as defined below).

(c) Section 4.14(c) of the Disclosure Schedule sets forth a true, correct and complete list of (i) all real property leased, subleased, licensed or otherwise used or occupied by the Company or any Subsidiary’s (the “ Leased Property ”), which list includes the name of the entity leasing such property, the legal address and the use thereof, and (ii) each lease, sublease, license or other agreement granting to any person or group of persons, other than Company and its affiliates, a right to the use, occupancy or enjoyment of any Leased Property or any portion thereof (the “ Company Subleases ”). The Company or a Subsidiary has a good and valid leasehold or other interest in the Leased Property, free and clear of any Liens other than Permitted Liens. The Leased Property is neither subject to any governmental decree or order to be sold nor is being condemned, expropriated or otherwise taken by any public authority, with or without payment of adequate compensation therefor, nor, to the knowledge of the Company, has any such condemnation, expropriation or taking been proposed in writing to the Company or any Subsidiary. The Company has made available to Parent correct and complete copies of all leases, subleases, licenses and other agreements (including all amendments, modifications, supplements, and extensions thereof) granting rights of use, occupancy or enjoyment to the Company and/or any Subsidiary with respect to the Leased Property (the “ Company Leases ” and together with the Company Subleases, the “ Leases ”) and copies of all Company Subleases (including all amendments, modifications, supplements, and extensions thereof).

(d) Each Lease is a valid and binding obligation of the Company (or, if a Subsidiary is a party, such Subsidiary) and is in full force and effect. Neither the Company nor any Subsidiary (i) is in default under any Lease nor does any condition exist that, with the passage of time or the giving of notice, would cause such a default under such Lease, or (ii) has received written notice of any cancellation or termination of any Lease. Except as covered by adequate insurance, there is no material physical damage caused by any casualty to any Leased Property. The Leased Property comprises all of the real property necessary to carry on the Company’s and each Subsidiary’s respective business as currently conducted and consistent with past practice. The Leased Property and the buildings, fixtures and improvements located thereon

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are in good operating condition and repair (subject to normal wear and tear), and suitable for the use to which they are presently put.

SECTION 4.15 Intellectual Property .

(a) Section 4.15(a) of the Disclosure Schedule sets forth a true, correct, and complete list of all U.S. and foreign applications and registrations for any patents, trademarks, service marks, copyrights, and domain names owned by the Company or any Subsidiary. The Company or a Subsidiary is the sole and exclusive beneficial and record owner of all of the Intellectual Property items set forth in Section 4.15(a) of the Disclosure Schedule, all such Intellectual Property is subsisting, no claim has been made by any third party in writing to the Company or a Subsidiary challenging the validity or enforceability of such Intellectual Property and, to the knowledge of the Company, there is no valid basis for such a claim.

(b) Section 4.15(b) of the Disclosure Schedule sets forth a true, correct, and complete list of all contracts in effect to which the Company or any Subsidiary is a party or to which the Company or any Subsidiary is bound as of the date of this Agreement (i) granting or obtaining any right to use any material Intellectual Property (other than contracts granting rights to use commercially available computer software having an acquisition price of less than $250,000 in the aggregate for any contract or group of related contracts), (ii) permitting any person (other than the Company’s or a Subsidiary’s counsel on behalf and in the name of such Company or Subsidiary) to register any material Intellectual Property owned or purported to be owned by the Company or any Subsidiary, or settlement, coexistence, non-assertion or covenant not to sue agreements in each case restricting the Company’s or a Subsidiary’s rights to use or register material Intellectual Property, or (iii) requiring Parent to license or make available its or its affiliates’ owned material Intellectual Property to any other person as a result of the transactions contemplated by this Agreement, including the Merger (collectively, the “ IP Contracts ”), provided , that the term IP Contracts and the requirements of (i) above shall not include (a) purchaser orders or sales contracts issued by or entered into by the Company in the ordinary course of business, or (b) non-exclusive license agreements entered into by the Company in the ordinary course of business, if and to the extent that the contracts in the foregoing clauses (a) and (b) either are not material or otherwise are disclosed in Section 4.19(a) of the Disclosure Schedule.

(c) Except as would not, individually or