AGREEMENT AND PLAN OF MERGER

Exhibit 2.1

Execution Version

 

AGREEMENT AND PLAN OF MERGER

Dated as of June 15, 2008

by and among

QGF Acquisition Company Inc.,

QGF Merger Sub Inc.

and

Greenfield Online, Inc.

 

TABLE OF CONTENTS

				Page
ARTICLE I
THE MERGER
Section 1.01		The Merger			1
Section 1.02		Closing			1
Section 1.03		Effective Time			2
Section 1.04		Effects of the Merger			2
Section 1.05		Certificate of Incorporation and Bylaws			2
Section 1.06		Directors and Officers of Sub			2
Section 1.07		Reservation of Right to Revise Transaction			2
Section 1.08		Further Assurances			3
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01		Effect on Capital Stock			3
Section 2.02		Exchange of Certificates			4
Section 2.03		Stock Options			7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01		Representations and Warranties of the Company			8
Section 3.02		Representations and Warranties of Parent and Sub			27
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS; NO SOLICITATION
Section 4.01		Conduct of Business by the Company			31
Section 4.02		No Solicitation			34
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01		Preparation of the Proxy Statement; Stockholders’ Meeting			39
Section 5.02		Access to Information; Confidentiality			40
Section 5.03		Reasonable Best Efforts			40
Section 5.04		Indemnification, Exculpation and Insurance			43
Section 5.05		Fees and Expenses			44
Section 5.06		Public Announcements			46
Section 5.07		Stockholder Litigation			46
Section 5.08		Employee Matters			47
Section 5.09		Financing			48
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01		Conditions to Each Party’s Obligation to Effect the Merger			50
Section 6.02		Conditions to Obligations of Parent and Sub			51
Section 6.03		Conditions to Obligation of the Company			52

				Page
Section 6.04		Frustration of Closing Conditions			52
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01		Termination			52
Section 7.02		Effect of Termination			54
Section 7.03		Amendment			54
Section 7.04		Extension; Waiver			54
Section 7.05		Procedure for Termination or Amendment			55
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01		Nonsurvival of Representations and Warranties			55
Section 8.02		Notices			55
Section 8.03		Definitions			56
Section 8.04		Interpretation			57
Section 8.05		Consents and Approvals			57
Section 8.06		Counterparts			58
Section 8.07		Entire Agreement; No Third-Party Beneficiaries			58
Section 8.08		Governing Law			58
Section 8.09		Assignment			58
Section 8.10		Enforcement; Consent to Jurisdiction			58
Section 8.11		Severability			59
Section 8.12		No Recourse			59
Section 8.13		WAIVER OF JURY TRIAL			59
Annex I		Index of Defined Terms
Annex II		Consolidated EBITDA

     AGREEMENT AND PLAN OF MERGER (this “ Agreement ”), dated as of June 15, 2008, by and among QGF Acquisition Company Inc., a Delaware corporation (“ Parent ”), QGF Merger Sub Inc., a Delaware corporation and a wholly owned Subsidiary of Parent (“ Sub ”), and Greenfield Online, Inc., a Delaware corporation (the “ Company ”).

W I T N E S S E T H :

     WHEREAS, the Board of Directors of each of the Company, Sub and Parent has approved and declared advisable, this Agreement and the merger of Sub with and into the Company with the Company continuing as the surviving corporation in the merger (the “ Merger ”), upon the terms and subject to the conditions set forth in this Agreement, whereby each issued and outstanding share of common stock, par value $0.0001 per share, of the Company (“ Company Common Stock ”), other than any Cancelled Shares, Remaining Shares or Dissenting Shares, will be converted into the right to receive $15.50 in cash, without interest (the “ Merger Consideration ”); and

     WHEREAS, concurrently with the execution of this Agreement, and as a condition and inducement to the Company’s willingness to enter into this Agreement, the Guarantor (as defined herein) is entering into a guarantee (the “ Guarantee ”) in favor of the Company with respect to certain of Parent’s obligations under this Agreement;

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

     NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and subject to the conditions set forth herein, the parties hereto (intending to be legally bound) hereby agree as follows:

ARTICLE I

          Section 1.01 The Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), Sub shall be merged with and into the Company at the Effective Time. Following the Effective Time, the separate corporate existence of Sub shall cease and the Company shall continue as the surviving corporation in the Merger (the “ Surviving Corporation ”) and shall succeed to and assume all the rights and obligations of Sub in accordance with the DGCL.

          Section 1.02 Closing . The closing of the Merger (the “ Closing ”) will take place at 10:00 a.m. on a date to be specified by the parties, which shall be no later than the third Business Day after satisfaction or (to the extent permitted by applicable Law) waiver of the conditions set forth in Article VI (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or (to the extent permitted by applicable Law) waiver of those conditions), at the offices of Simpson Thacher & Bartlett LLP, 425

Lexington Avenue, New York, New York, unless another time, date or place is agreed to in writing by Parent and the Company; provided , however , that if all the conditions set forth in Article VI shall no longer be satisfied or (to the extent permitted by applicable Law) waived on such third Business Day, then the Closing shall take place on the first Business Day on which all such conditions shall again have been satisfied or (to the extent permitted by applicable Law) waived unless another time is agreed to in writing by Parent and the Company. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Date ”.

          Section 1.03 Effective Time . Subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file with the Secretary of State of the State of Delaware a certificate of merger (the “ Certificate of Merger ”) executed and acknowledged by the parties in accordance with the relevant provisions of the DGCL and, as soon as practicable on or after the Closing Date, shall make or cause to be made all other filings or recordings required under the DGCL. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, or at such later time as Parent and the Company shall agree in writing, and shall specify in the Certificate of Merger (the time the Merger becomes effective being the “ Effective Time ”).

          Section 1.04 Effects of the Merger . The Merger shall have the effects set forth in this Agreement and in the DGCL.

          Section 1.05 Certificate of Incorporation and Bylaws . The certificate of incorporation of the Company shall be amended as a result of the Merger so as to read in its entirety as the certificate of incorporation of Sub as in effect immediately prior to the Effective Time, except that the name of the Surviving Corporation shall be Greenfield Online, Inc. and the provision in the certificate of incorporation of Sub naming its incorporator shall be omitted, and, as so amended, shall be the Surviving Corporation’s certificate of incorporation until thereafter changed or amended as provided therein or by applicable Law. The bylaws of the Company, as in effect as of immediately prior to the Effective Time, shall be amended and restated so as to read in their entirety as the bylaws of Sub as in effect immediately prior to the Effective Time (except the references to Sub’s name shall be replaced by references to Greenfield Online, Inc.) and, as so amended and restated, shall be the Surviving Corporation’s bylaws until thereafter changed or amended as provided therein or by applicable Law.

          Section 1.06 Directors and Officers of Sub . The directors of Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be. The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation until the earlier of their resignation or removal or until their respective successors are duly elected and qualified, as the case may be.

          Section 1.07 Reservation of Right to Revise Transaction . If each of Parent and the Company agree in writing, they may change the method of effecting the business combination between the Company and Parent, and each party shall cooperate in such efforts, including to provide for a different form of Merger; provided , however , that no such change shall (a) alter or change the amount and kind of consideration to be received by holders of Company Common Stock, (b) adversely affect the proposed accounting or tax treatment of the Merger to

the Company, Parent or their respective stockholders and (c) materially delay receipt of any approval referred to in this Agreement or the consummation of the Merger.

          Section 1.08 Further Assurances . If at any time after the Effective Time the Surviving Corporation shall consider or be advised that any deeds, bills of sale, assignments or assurances or any other acts or things are necessary, desirable or proper (a) to vest, perfect or confirm, of record or otherwise, in the Surviving Corporation its right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of either  Sub or the Company, or (b) otherwise to carry out the purposes of this Agreement, the Surviving Corporation and its proper officers and directors or their designees shall be authorized to execute and deliver, in the name and on behalf of either of  Sub and the Company, all such deeds, bills of sale, assignments and assurances and to do, in the name and on behalf of either  Sub or the Company, all such other acts and things as may be necessary, desirable or proper to vest, perfect or confirm the Surviving Corporation’s right, title or interest in, to or under any of the rights, privileges, powers, franchises, properties or assets of  Sub or the Company and otherwise to carry out the purposes of this Agreement.

ARTICLE II

EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE

CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

          Section 2.01 Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Sub or the holder of any shares of Company Common Stock or any shares of capital stock of Parent or Sub:

               (a)  Capital Stock of Sub . Each share of common stock, par value $0.01 per share, of Sub issued and outstanding immediately prior to the Effective Time shall be converted into and become one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation and shall with the Remaining Shares (each of which, if any, shall be converted into and become such number of validly issued, fully paid and nonassessable shares of common stock, par value $0.01 per share, of the Surviving Corporation as shall be necessary to maintain relative ownership percentages) constitute the only outstanding shares of capital stock of the Surviving Corporation. From and after the Effective Time, all certificates representing common stock of Sub, if any, shall be deemed for all purposes to represent the number of shares of common stock of the Surviving Corporation into which they were converted in accordance with the immediately preceding sentence.

               (b) Cancellation of Treasury Stock and Stock Owned by Parent or Sub . Each share of Company Common Stock that is owned, directly or indirectly, by Parent or Sub immediately prior to the Effective Time, if any, or that is held in treasury by the Company immediately prior to the Effective Time (collectively, the “ Cancelled Shares ”) shall automatically be canceled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

               (c)  Conversion of Company Common Stock . Subject to Section 2.02(j), each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than (i) any shares of Company Common Stock held by any direct or indirect wholly-owned Subsidiary of the Company (the “ Remaining Shares ”) and (ii) any Cancelled Shares) shall be converted into the right to receive the Merger Consideration. As of the Effective Time, subject to Section 2.02(j), all such shares of Company Common Stock shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of any such shares of Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration. Notwithstanding the foregoing, if between the date of this Agreement and the Effective Time, (i) the outstanding shares of Company Common Stock shall have been changed into a different number of shares or a different class, by reason of the occurrence or record date of any stock dividend, subdivision, reclassification, recapitalization, split, combination, exchange of shares or similar transaction, (ii) the Company declares or pays any cash dividend or (iii) the Company declares or pays any non-cash dividends or distributions, then in any such case the Merger Consideration shall be appropriately adjusted to reflect such action; provided , that nothing in this Section 2.01(c) shall be construed to permit the Company to take any action with respect to its securities that is prohibited by the terms of this Agreement. The right of any holder of a share of Company Common Stock to receive the Merger Consideration, any dividends or other distributions payable pursuant to Section 2.02(c) shall be subject to and reduced by the amount of any withholding that is required under applicable tax Law.

          Section 2.02 Exchange of Certificates .

               (a)  Paying Agent . Prior to the Effective Time, Parent shall appoint a bank or trust company that is reasonably satisfactory to the Company to act as paying agent (the “ Paying Agent ”) for the payment of the Merger Consideration and shall use its reasonable best efforts to enter into a paying agent agreement with the Paying Agent. At the Effective Time, Parent shall deposit, or cause the Surviving Corporation to deposit, with the Paying Agent, for the benefit (from and after the Effective Time) of the holders of shares of Company Common Stock, cash in an amount sufficient to pay the aggregate Merger Consideration required to be paid pursuant to Section 2.01(c). All cash deposited with the Paying Agent pursuant to this Section 2.02(a) shall hereinafter be referred to as the “ Exchange Fund ”.

               (b)  Exchange Procedures . As soon as reasonably practicable after the Effective Time, Parent shall cause the Paying Agent to mail to each holder of record whose shares of Company Common Stock were converted into the right to receive the Merger Consideration, (i) a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the certificates that immediately prior to the Effective Time represented shares of Company Common Stock (the “ Certificates ”) shall pass, only upon proper delivery of the Certificates to the Paying Agent or, in the case of book-entry shares that immediately prior to the Effective Time represented shares of Company Common Stock (“ Book-Entry Shares ”), upon adherence to the procedures set forth in the letter of transmittal, and shall be in customary form and have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates (or effective affidavits of loss in lieu thereof) or Book-Entry Shares in exchange for the Merger Consideration. Each holder of record of one or more Certificates or Book-Entry Shares shall, upon surrender to the Paying

Agent of such Certificates or Book-Entry Shares, together with such letter of transmittal, duly executed, and such other documents as may reasonably be required by the Paying Agent, be entitled to receive in exchange therefor the amount of cash to which such holder is entitled pursuant to Section 2.01(c), and the Certificates or Book-Entry Shares so surrendered shall forthwith be canceled. In the event of a transfer of ownership of Company Common Stock which is not registered in the transfer records of the Company, payment of the Merger Consideration in accordance with this Section 2.02(b) may be made to a person other than the person in whose name the Certificate or Book-Entry Share so surrendered is registered if such Certificate or Book-Entry Share shall be properly endorsed or otherwise be in proper form for transfer (and accompanied by all documents required to evidence and effect such transfer) and the person requesting such payment shall pay any transfer or other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of such Certificate or Book-Entry Share. Until surrendered as contemplated by this Section 2.02(b), each Certificate and each Book-Entry Share (other than Certificates or Book-Entry Shares representing Dissenting Shares, Cancelled Shares and Remaining Shares) shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration. No interest shall be paid or will accrue on any payment to holders of Certificates or Book-Entry Shares pursuant to the provisions of this Article II.

               (c)  Distributions with Respect to Unexchanged Shares . No payment of Merger Consideration shall be paid to any such holder, in each case, until the holder of such Certificate or Book-Entry Share shall have surrendered such Certificate or Book-Entry Share in accordance with this Article II. Following the surrender of any Certificate or Book-Entry Share, there shall be paid to the record holder of the Certificate representing whole shares of Company Common Stock issued in exchange therefor, or to the record holder of the Book-Entry Shares, as applicable, without interest, the Merger Consideration payable in respect therefor in accordance with this Article II.

               (d)  No Further Ownership Rights in Company Common Stock . The Merger Consideration paid upon the surrender of Certificates (or affidavits in lieu thereof) or Book-Entry Shares in accordance with the terms of this Article II shall be deemed to have been paid in full satisfaction of all rights pertaining to the shares of Company Common Stock formerly represented by such Certificates or Book-Entry Shares. At the close of business on the day on which the Effective Time occurs, the share transfer books of the Company shall be closed, and there shall be no further registration of transfers on the share transfer books of the Surviving Corporation of the shares of Company Common Stock that were outstanding immediately prior to the Effective Time. If, after the Effective Time, any Certificate or Book-Entry Share is presented to the Surviving Corporation or Parent for transfer, it shall be canceled against delivery of the Merger Consideration as provided in this Article II.

               (e)  Termination of the Exchange Fund . Any portion of the Exchange Fund which remains undistributed to the holders of the Certificates or Book-Entry Shares for six months after the Effective Time shall be delivered to the Surviving Corporation, upon demand, and any holders of the Certificates or Book-Entry Shares who have not theretofore complied with this Article II shall thereafter look only to the Surviving Corporation for payment of their claim for the Merger Consideration in accordance with this Article II.

               (f)  No Liability . None of Parent, Sub, the Company, the Surviving Corporation or the Paying Agent or any of their respective Affiliates shall be liable to any person in respect of any Merger Consideration properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law. If any Certificate or Book-Entry Share shall not have been surrendered immediately prior to the date on which any Merger Consideration would otherwise escheat to or become the property of any Governmental Entity, any such Merger Consideration shall, to the extent permitted by applicable Law, become the property of the Surviving Corporation, free and clear of all claims or interest of any person previously entitled thereto.

               (g)  Investment of Exchange Fund . The Paying Agent shall invest the cash included in the Exchange Fund as directed by Parent. Any interest and other income resulting from such investments shall be payable to the Surviving Corporation or Parent, as Parent directs. If for any reason (including losses) the cash in the Exchange Fund shall be insufficient to fully satisfy all of the payment obligations to be made in cash by the Paying Agent hereunder, Parent shall promptly deposit cash into the Exchange Fund in an amount which is equal to the deficiency in the amount of cash required to fully satisfy such cash payment obligations. The Exchange Fund shall not be used for any other purpose except as provided in this Agreement.

               (h)  Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if required by Parent or the Paying Agent, the entering into of an indemnity or the posting of a bond as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent shall deliver in exchange for such lost, stolen or destroyed Certificate the Merger Consideration pursuant to this Article II.

               (i)  Withholding Rights . Parent, the Surviving Corporation or the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Certificates or Book-Entry Shares such amounts as Parent, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), or any provision of state, local or foreign tax Law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Parent, the Surviving Corporation or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Certificates or Book-Entry Shares in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent.

               (j)  Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, any issued and outstanding shares of Company Common Stock held by a Person (a “ Dissenting Stockholder ”) who has not voted in favor of or consented to the adoption of this Agreement and has properly perfected dissenter’s rights in accordance with the provisions of Section 262 of the DGCL (each, a “ Dissenting Share ”), if any, shall not be converted into the right to receive the Merger Consideration, but shall become the right to receive such consideration as may be determined to be due to such Dissenting Stockholder to the extent permitted by, and in accordance with the provisions and pursuant to the procedures of, Section 262 of the DGCL; provided , however , that (i) if any Dissenting Stockholder, under the circumstances permitted by and in accordance with the DGCL, affirmatively withdraws such

holder’s demand for appraisal of such Dissenting Shares, (ii) if any Dissenting Stockholder fails to establish such holder’s entitlement to dissenters’ rights as provided in the DGCL or (iii) if any Dissenting Stockholder takes or fails to take any action the consequence of which is that such holder is not entitled to payment under Section 262 of the DGCL for such holder’s shares, such holder or holders (as the case may be) shall forfeit the right to appraisal of such shares of Company Common Stock and such shares of Company Common Stock shall thereupon be deemed to have been converted, as of the Effective Time, into and represent the right to receive the Merger Consideration (without interest) payable in respect of such shares of Company Common Stock. At the Effective Time, any holder of Dissenting Shares shall cease to have any rights with respect thereto, except the rights set forth in Section 262 of the DGCL and as provided in the previous sentence. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of shares of Company Common Stock, and Parent shall have the right to participate in (and the Company shall provide Parent the opportunity to participate in) all negotiations and proceedings with respect to such demands. The Company shall not settle, make any payments with respect to, or offer to settle, any claim with respect to Dissenting Shares without the prior written consent of Parent.

          Section 2.03 Stock Options .

               (a) Except as otherwise agreed by Parent and the holder thereof, each Company Stock Option that is outstanding immediately prior to the Effective Time (whether or not such Company Stock Option is then exercisable) shall at the Effective Time be cancelled and terminated and converted at the Effective Time into the right to receive a cash payment in an amount equal to the amount, if any, by which the per-share Merger Consideration exceeds the per-share exercise price of such Company Stock Option, multiplied by the number of shares of Company Common Stock then subject to such Company Stock Option which shall not theretofore have been exercised (the “ Option Settlement Amount ” and for all the Company Stock Options, the “ Aggregate Option Settlement Amount ”), without interest, and less all required tax withholdings. The Surviving Corporation shall pay the holders of the Company Stock Options the cash payments described in this Section 2.03(a) on or as soon as reasonably practicable after the date on which the Effective Time occurs, but in any event within five Business Days thereafter.

               (b) Prior to the Effective Time, the Company shall deliver to the holders of Company Stock Options appropriate notices setting forth such holders’ rights. Prior to the Effective Time, the Board of Directors of the Company (or, if appropriate, any committee thereof administering the Company Stock Plans) shall adopt such resolutions as may be required to effectuate the provisions of Sections 2.03(a) and 2.03(d).

               (c) For purposes of this Agreement: (i) “ Company Stock Option ” means any option or right to purchase Company Common Stock under any Company Stock Plan and 611,800 options granted to Albert Angrisani, the Company’s Chief Executive Officer, outside of the Company Stock Plans (the “ CEO Option ”); and (ii) “ Company Stock Plans ” means the Company’s Amended and Restated 1999 Stock Option Plan, the Company’s 2004 Equity Incentive Plan and the Company’s 2004 Employee Stock Purchase Plan (the “ ESPP ”).

               (d) Following the date of this Agreement, participants in the ESPP may not increase their payroll deductions or purchase elections under the ESPP from those in effect on the date of this Agreement. Each participant’s outstanding right to purchase shares of Company Common Stock under the Company’s ESPP shall terminate on the day immediately prior to the day on which the Effective Time occurs, provided that all amounts allocated to each participant’s account under the ESPP as of such date shall thereupon be used to purchase from the Company whole shares of Company Common Stock at the applicable price determined under the terms of the ESPP for the then outstanding offering periods using such date as the final purchase date for each such offering period, and the ESPP shall terminate immediately following such purchases of Company Common Stock. Any amounts remaining in a participant’s account at the time of such termination because the purchase of fractional shares is not permitted will be refunded to the participant.

               (e) Parent, the Surviving Corporation or the Paying Agent shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Company Stock Options such amounts as Parent, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax Law. To the extent that amounts are so withheld and paid over to the appropriate taxing authority by Parent, the Surviving Corporation or the Paying Agent, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Company Stock Options in respect of which such deduction and withholding was made by Parent, the Surviving Corporation or the Paying Agent.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

          Section 3.01 Representations and Warranties of the Company . Except (i) as disclosed in, and reasonably apparent from, the Company SEC Documents filed with or furnished to the SEC by the Company and publicly available prior to the date of this Agreement (“ Filed Company SEC Documents ”) and only as and to the extent disclosed therein (other than any forward-looking disclosures set forth in any risk factor section, any disclosures in any section relating to forward-looking statements and any other disclosures included therein to the extent they are primarily predictive, cautionary or forward-looking in nature) ( provided that, in no event shall any disclosure in any Filed Company SEC Documents qualify or limit the representations and warranties of the Company set forth in Section 3.01(c) or (d) of this Agreement), or (ii) as set forth in the disclosure schedule (with specific reference to the particular Section or subsection of this Agreement to which the information set forth in such disclosure schedule relates, provided that the listing of an item on one Schedule shall be deemed to be a listing on each other Schedule and to apply to any other representation and warranty of the Company in this Agreement to the extent that it is reasonably apparent from a reading of such disclosure item that it would also qualify or apply to such other Schedule, representation or warranty) delivered by the Company to Parent prior to the execution of this Agreement (the “ Company Disclosure Schedule ”), the Company represents and warrants to Parent and Sub as follows:

               (a)  Organization, Standing and Corporate Power . Each of the Company and its Subsidiaries is duly organized, and is validly existing and in good standing under the Laws of the jurisdiction of its incorporation or formation, as the case may be. Each of the Company and its Subsidiaries has all requisite corporate, partnership or similar power and authority and possesses all governmental licenses, permits, authorizations and approvals necessary to enable it to use its corporate or other name and to own, lease or otherwise hold and operate its properties and other assets and to carry on its business as currently conducted, except where the failure to have such power, authority, licenses, permits, authorizations and approvals would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries is duly qualified or licensed to do business and is in good standing in each other jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification, licensing or good standing necessary, other than in such other jurisdictions where the failure to be so qualified, licensed or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect. The Company has made available to Parent, prior to the execution of this Agreement, true, complete and accurate copies of the Company’s certificate of incorporation (the “ Company Certificate ”) and bylaws (the “ Company Bylaws ”), and the comparable organizational documents of each of its Subsidiaries, in each case as amended to, and in effect on, the date of this Agreement.

               (b)  Subsidiaries . Section 3.01(b) of the Company Disclosure Schedule lists, as of the date of this Agreement, each direct and indirect Subsidiary of the Company (including its jurisdiction of incorporation or formation). Except as set forth on Section 3.01(b) of the Company Disclosure Schedule, all of the outstanding capital stock of, or other equity interests in, each Subsidiary of the Company, is directly or indirectly owned by the Company. All the issued and outstanding shares of capital stock of, or other equity interests in, each such Subsidiary of the Company have been duly authorized, validly issued and are fully paid and nonassessable and are owned directly or indirectly by the Company free and clear of all pledges, liens, charges, encumbrances or security interests of any kind or nature whatsoever (collectively, “ Liens ”), other than Liens imposed by or arising under applicable Law or which are not material, and free of any restriction on the right to vote, sell or otherwise dispose of such capital stock or other equity interests. Except for the capital stock of, or voting securities or equity interests in, its Subsidiaries, the Company does not own, directly or indirectly, as of the date of this Agreement, any capital stock of, or other voting securities or equity interests in, any corporation, partnership, joint venture, association or other entity, or any options, warrants, rights or securities convertible, exchangeable or exercisable therefor. There are no bonds, debentures, notes or other indebtedness of the Company’s Subsidiaries having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters upon which Subsidiary equityholders may vote. Except as set forth on Section 3.01(b) of the Company Disclosure Schedule and capital stock held by the Company or a wholly-owned Subsidiary of the Company, there are not issued, reserved for issuance or outstanding (i) any shares of capital stock or other voting securities or equity interests of any Subsidiary, (ii) any securities of any Subsidiary convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or equity interests of such Subsidiary, (iii) any warrants, calls, options or other rights to acquire, and no obligation to issue, any capital stock, voting securities, equity interests or securities convertible into or exchangeable or exercisable for capital stock or voting securities of any Subsidiary and (iv) there are not any outstanding obligations to repurchase, redeem or

otherwise acquire any such securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities. Neither the Company nor any of its Subsidiaries is a party to any voting Contract with respect to the voting of any such securities. There are no outstanding obligations to repurchase, redeem or otherwise acquire any such outstanding securities or to issue, deliver or sell, or cause to be issued, delivered or sold, any such securities.

               (c)  Capital Structure . The authorized capital stock of the Company consists of 100,000,000 shares of Company Common Stock and 5,000,000 shares of preferred stock, par value $0.0001 per share (“ Company Preferred Stock ”).  At the close of business on May 15, 2008 (the “ Capitalization Date ”), (i) 26,321,422 shares of Company Common Stock were issued and outstanding, (ii) options to purchase 193,094 shares of Company Common Stock were outstanding under the Company’s Amended and Restated 1999 Stock Option Plan (the “ Option Plan ”), such options having a weighted average exercise price of $12.26, (iii) options to purchase 2,944,402 shares of Company Common Stock were outstanding under the Company’s 2004 Equity Incentive Plan (the “ Incentive Plan ”), such options having a weighted average exercise price of $11.85 (iv) options to purchase 611,800 shares of Company Common Stock under the CEO Option were outstanding, such options having a weighted average exercise price of $5.31, (v) no shares of Company Preferred Stock were issued or outstanding, (vi) 9,643 shares of Company Common Stock were held by the Company in its treasury and (vii) no shares of Company Common Stock were owned by any Subsidiary of the Company.  At the close of business on the Capitalization Date, 23,054 shares of Company Common Stock were reserved for issuance for future grants under the Option Plan, 362,570 shares of Company Common Stock were reserved for issuance for future grants under the Incentive Plan and 191,127 shares of Company Common Stock were reserved for issuance under the ESPP.  Except as set forth above in this Section 3.01(c), at the close of business on the Capitalization Date, no shares of capital stock or other voting securities or equity interests of the Company were issued, reserved for issuance or outstanding.  There are no outstanding stock appreciation rights, “phantom” stock rights, restricted stock units, performance units, rights to receive shares of Company Common Stock on a deferred basis or other rights (other than Company Stock Options) that are linked to the value of Company Common Stock (collectively, “ Company Stock- Based Awards ”).  All Company Stock Options and awards of restricted stock under the Option Plan and Incentive Plan are evidenced by stock option agreements, restricted stock purchase agreements or other award agreements.  All outstanding shares of capital stock of the Company are, and all shares which may be issued pursuant to the Company Stock Options will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and nonassessable and not subject to preemptive rights.  There are no bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which stockholders of the Company may vote.  Except as set forth above in this Section 3.01(c) and for issuances of shares of Company Common Stock pursuant to the Company Stock Options set forth above in this Section 3.01(c), (A) there are not issued, reserved for issuance or outstanding (1) any shares of capital stock or other voting securities or equity interests of the Company, (2) any securities of the Company convertible into or exchangeable or exercisable for shares of capital stock or other voting securities or equity interests of the Company, (3) any warrants, calls, options or other rights to acquire from the Company or any of its Subsidiaries, and no obligation of the Company or any of its Subsidiaries to issue, any capital stock, voting securities, equity interests or securities convertible into or exchangeable or exercisable for capital stock or voting securities of the Company or (4) any Company

Stock-Based Awards and (B) there are not any outstanding obligations to repurchase, redeem or otherwise acquire any such shares of capital stock, equity interests or other securities or to register, issue, deliver or sell, or cause to be issued, delivered or sold, any such shares of capital stock, equity interests or other securities.  Neither the Company nor any of its Subsidiaries is a party to any voting Contract with respect to the voting of any such securities.  Section 3.01(c) of the Company Disclosure Schedule lists, as of the date of this Agreement, each outstanding Company Stock Option and the exercise price thereof.

               (d)  Authority; Noncontravention . The Company has all requisite corporate power and authority to execute and deliver this Agreement and, subject to receipt of the Stockholder Approval (as defined in Section 3.01(q)), to perform its obligations under this Agreement and to consummate the Merger and the other transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and the performance and consummation by the Company of the Merger and the other transactions contemplated by this Agreement have been duly 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 Merger and the other transactions contemplated by this Agreement, subject, in the case of the performance of this Agreement and the consummation of the Merger, to the obtaining of the Stockholder Approval. This Agreement has been duly executed and delivered by the Company and, assuming the due authorization, execution and delivery by each of the other parties hereto, constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity. The Board of Directors of the Company, at a meeting duly called and held, duly adopted resolutions (i) approving and declaring advisable this Agreement, the Merger and the other transactions contemplated by this Agreement, (ii) declaring and recommending to its stockholders that it is advisable and in the best interests of the Company and the stockholders of the Company that the Company enter into this Agreement and consummate the Merger and the other transactions contemplated by this Agreement on the terms and subject to the conditions set forth in this Agreement, and (iii) recommending that the stockholders of the Company adopt this Agreement, which resolutions, as of the date of this Agreement, have not been subsequently rescinded, modified or withdrawn in any way (the “ Company Board Recommendation ”). The execution, delivery and performance of this Agreement by the Company do not, and the consummation by the Company of the Merger and the other transactions contemplated by this Agreement and compliance by the Company with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, require consent under, or give rise to a right of, or result in, termination, cancellation, modification or acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon any of the properties or other assets of the Company or any of its Subsidiaries under, (A) the Company Certificate or the Company Bylaws or the comparable organizational documents of any of its Subsidiaries, (B) any loan or credit agreement, bond, debenture, note, mortgage, indenture, lease, supply agreement, license agreement, development agreement or other contract, agreement, obligation, commitment or instrument that is intended by the Company or any of its Subsidiaries to be legally binding, (each, including all amendments thereto, a “ Contract ”), to which the Company or any of its Subsidiaries is a party or any of their respective properties or other assets

is subject or (C) subject to the obtaining of the Stockholder Approval and the governmental filings and other matters referred to in the following sentence, any (1) federal, state, local, provincial or foreign statute, law, ordinance, rule or regulation (each, a “ Law ”) applicable to the Company or any of its Subsidiaries or their respective properties or other assets or (2) order, writ, injunction, decree, judgment or stipulation (each, an “ Order ”) applicable to the Company or any of its Subsidiaries or their respective properties or other assets, other than, in the case of clauses (B) and (C), any such conflicts, violations, breaches, defaults, consents, rights of termination, cancellation, modification or acceleration, losses or Liens that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or prevent or materially impede, interfere with, hinder or delay the consummation of the Merger and the other transactions contemplated by this Agreement. No consent, approval, order or authorization of, action by or in respect of, or registration, declaration, notice to or filing with, any federal, state, local or foreign government, any court, administrative, regulatory or other governmental agency, commission or authority or any organized securities exchange (each, a “ Governmental Entity ”) is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation of the Merger or the other transactions contemplated by this Agreement, except for (i) (A) the filing of a premerger notification and report form by the Company under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (the “ HSR Act ”) and the termination of the waiting period required thereunder and (B) any required non-U.S. antitrust or competition law approvals or filings, (ii) the filing with the Securities and Exchange Commission (the “ SEC ”) of (A) a proxy statement relating to the adoption by the stockholders of the Company of this Agreement (as amended or supplemented from time to time, the “ Proxy Statement ”) and (B) such reports under the Securities Exchange Act of 1934, as amended (including the rules and regulations promulgated thereunder, the “ Exchange Act ”), as may be required in connection with this Agreement and the Merger and the other transactions contemplated by this Agreement, (iii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware and appropriate documents with the relevant authorities of other states in which the Company or any of its Subsidiaries is qualified to do business, (iv) any filings with and approvals of the Nasdaq Global Market and (v) such other consents, approvals, orders, authorizations, actions, registrations, declarations, notices and filings the failure of which to be obtained or made, individually or in the aggregate, would not (A) reasonably be expected to have a Material Adverse Effect or (B) prevent or materially impede, interfere with, hinder or delay the consummation of the transactions contemplated by this Agreement.

               (e)  Company SEC Documents .

               (i) The Company has filed with or furnished to the SEC, on a timely basis, all reports, schedules, forms, statements and other documents (including exhibits and other information incorporated therein) required to be filed or furnished by the Company since January 1, 2005 (such documents, together with any documents filed during such period by the Company with the SEC on a voluntary basis on Current Reports on Form 8-K, the “ Company SEC Documents ”). As of their respective filing dates, or, if revised, amended, supplemented or superseded by a later-filed Company SEC Document filed prior to the date of this Agreement, as of the date of filing of the last such revision, amendment, supplement or superseding filing, the Company SEC Documents complied in all material respects with, to the extent in effect at the time of filing, the

requirements of the Securities Act of 1933, as amended (including the rules and regulations promulgated thereunder, the “ Securities Act ”), the Exchange Act and the Sarbanes-Oxley Act of 2002 (including the rules and regulations promulgated thereunder, “ SOX ”) applicable to such Company SEC Documents, and none of the Company SEC Documents contained any untrue statement of a material fact or omitted 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, not misleading. None of the Company SEC Documents (as revised, amended, supplemented or superseded by a later-filed Company SEC Document) contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, which individually or in the aggregate would require an amendment, supplement or corrective filing to such Company SEC Documents. Each of the financial statements (including the related notes) of the Company included in the Company SEC Documents complied at the time it was filed as to form in all material respects with the applicable accounting requirements and the published rules and regulations of the SEC with respect thereto in effect at the time of filing, had been prepared in accordance with generally accepted accounting principles in the United States (“ GAAP ”) (except as otherwise noted therein and, in the case of unaudited statements, as permitted by the rules and regulations of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly presented in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Neither the Company nor any of its Subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) other than (i) liabilities or obligations reflected or reserved against on the balance sheet of the Company and its Subsidiaries as of March 31, 2008 included in the Filed Company SEC Documents (including the notes thereto, the “ Most Recent Balance Sheet ”), (ii) liabilities or obligations incurred after March 31, 2008 in the ordinary course of business, (iii) liabilities or obligations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect or (iv) liabilities set forth in Section 3.01(e)(i) of the Company Disclosure Schedule that were in existence as of the date of the Most Recent Balance Sheet and not required by GAAP to be reflected on or reserved for in the Most Recent Balance Sheet. None of the Subsidiaries of the Company are, or have at any time been, subject to the reporting requirements of Section 13(a) or 15(d) of the Exchange Act.

               (ii) The Company has made available to Parent correct and complete copies of all material correspondence between the SEC, on the one hand, and the Company and any of its Subsidiaries, on the other hand, occurring from January 1, 2005 through the date of this Agreement and, except as set forth in Section 3.01(e)(ii) of the Company Disclosure Schedule, (A) as of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the SEC staff with respect to the Company SEC Documents and (B) to the Knowledge of the Company, as of the date of this Agreement, none of the Company SEC Documents is the subject of ongoing SEC review, outstanding SEC comment or outstanding SEC investigation.

               (iii) Each of the principal executive officer of the Company and the principal financial officer of the Company (or each former principal executive officer of the Company and each former principal financial officer of the Company, as applicable) has made all certifications required by Rule 13a-14 or 15d-14 under the Exchange Act and Sections 302 and 906 of SOX with respect to the Company SEC Documents, and the statements contained in such certifications are true and accurate. For purposes of this Agreement, “principal executive officer” and “principal financial officer” shall have the meanings given to such terms in SOX. 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 SOX.

               (iv) The Company maintains a system of internal controls over financial reporting and the Company has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s auditors and the audit committee of the Board of Directors of the Company (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting, which are reasonably likely to materially adversely affect the Company’s ability to record, process, summarize and report financial data and (B) any fraud or allegation of fraud, whether or not material, known to management that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

               (v) The Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) are reasonably designed to ensure that all material information 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 and forms of the SEC, and that all such material information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of SOX.

               (f)  Information Supplied . None of the information supplied or to be supplied by or on behalf of the Company specifically for inclusion or incorporation by reference in the Proxy Statement will, at the date it is first mailed to the stockholders of the Company and at the time of the Stockholders’ Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading, except that no representation or warranty is made by the Company with respect to statements made based on information supplied by or on behalf of Parent or Sub specifically for inclusion in the Proxy Statement. The Proxy Statement will comply as to form in all material respects with the requirements of the Exchange Act.

               (g)  Absence of Certain Changes or Events . Since December 31, 2007, (i) except for the transactions contemplated by this Agreement, the Company and its Subsidiaries have conducted their respective businesses in the ordinary course in all material respects consistent with past practice and (ii) there have not been any facts, circumstances, events, changes, effects or occurrences that, individually or in the aggregate, have had or would

reasonably be expected to have a Material Adverse Change. Without limiting the foregoing, from December 31, 2007 until the date of this Agreement, there has not been (x) any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any capital stock of the Company or any of its Subsidiaries, other than dividends or distributions by a Subsidiary of the Company to the Company or another Subsidiary wholly-owned by the Company, (y) any purchase, redemption or other acquisition by the Company or any of its Subsidiaries of any shares of capital stock or any other securities of the Company or any of its Subsidiaries or any options, warrants, calls or rights to acquire such shares or other securities, or (z) any split, combination or reclassification of any capital stock of the Company or any of its Subsidiaries or any issuance or the authorization of any issuance of any other securities in respect of, in lieu of or in substitution for shares of their respective capital stock, or (iv) any material change in financial accounting methods, principles or practices by the Company, except insofar as may have been required by a change in GAAP.

               (h)  Intellectual Property . Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect on the Company:

               (i) Section 3.01(h)(i) of the Company Disclosure Schedule sets forth, as of the date of this Agreement, a complete and accurate list of all patents and applications therefor, registered trademarks and applications therefor, domain name registrations and copyright registrations (if any) that, in each case, are owned by or licensed to the Company or any of its Subsidiaries and are material to the conduct of the business of the Company and its Subsidiaries, taken as a whole, as currently conducted. Such intellectual property rights required to be listed in Section 3.01(h)(i) of the Company Disclosure Schedule, together with any trade name rights, trade secret or know-how rights, service mark rights, trademark rights, patent rights, copyrights, intellectual property rights in computer programs or software or any other type of intellectual property rights, in each case, that are owned, used or licensed by the Company or any of its Subsidiaries, are collectively referred to herein as “ Intellectual Property Rights ”.

               (ii) All Intellectual Property Rights are either (A) owned by the Company or a Subsidiary of the Company free and clear of all Liens or (B) licensed to the Company or a Subsidiary of the Company free and clear of all Liens. There are no material claims pending or, to the Knowledge of the Company, threatened with regard to the ownership or licensing by the Company or any of its Subsidiaries of any Intellectual Property Rights or challenging the validity or enforceability of such rights. To the Knowledge of the Company, each of the Company and its Subsidiaries owns, is validly licensed or otherwise has the right to use all Intellectual Property Rights necessary for the conduct of the business of the Company and its Subsidiaries as currently conducted.

               (iii) To the Knowledge of the Company, the execution and delivery of this Agreement by the Company do not, and the consummation by the Company of the Merger and the other transactions contemplated by this Agreement and compliance by the Company with the provisions of this Agreement will not, conflict with, or result in any violation or breach of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of, or result in, termination, modification, cancellation or

acceleration of any obligation or to the loss of a benefit under, or result in the creation of any Lien in or upon, or the impairment of any Intellectual Property Right.

               (iv) There are no pending or, to the Knowledge of the Company, threatened claims that the Company or any of its Subsidiaries has infringed, misappropriated, misused or otherwise violated or is infringing, misappropriating, misusing or violating any intellectual property rights of any Person. To the Knowledge of the Company, the operation of the business of the Company and its Subsidiaries as currently conducted does not infringe, misappropriate, misuse, or otherwise violate the intellectual property rights of any Person. To the Knowledge of the Company, no Person is infringing any Intellectual Property Rights owned by the Company or any of its Subsidiaries.

               (v) The Company and its Subsidiaries have used commercially reasonable efforts to maintain and protect (A) their material trade secrets and confidential information and (B) the security and integrity of their material software, systems, websites and networks.

               (vi) To the Knowledge of the Company, the Company and its Subsidiaries are in compliance with the Company’s own policies with respect to privacy and personally identifiable information, and no claims have been asserted or threatened in writing against the Company or any of its Subsidiaries by any Person alleging a violation of any of the foregoing.

               (vii) (A) The software and computerized services of the Company and its Subsidiaries are fully operational, perform in conformance with their intended purpose and accompanying documentation and are free of material bugs, defects, errors, viruses or other corruptants, (B) the Company and its Subsidiaries have in place adequate disaster recovery and backup procedures to avoid material disruption to customers’ services in case of an unexpected power failure or similar event, and (C) no software contained in any product of the Company or its Subsidiaries and distributed, or otherwise generally made available to third parties, by any of them contains or is derived from any software that is subject to an “open source,” copyleft or similar license.

               (i)  Litigation . There is no suit, action, arbitration, claim or proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries or affecting any of their respective properties, rights or assets that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect nor is there any demand, letter or Order of any Governmental Entity or arbitrator outstanding against, or, to the Knowledge of the Company, investigation by any Governmental Entity involving, the Company or any of its Subsidiaries or any of their respective properties or assets that would, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Memorandum of Understanding described in Section 3.01(i) of the Company Disclosure Schedule (the “ MOU ”) is in full force and effect and, from and after its date of execution, the Stipulation of Settlement (as defined in the MOU) will be in full force and effect and consistent in all material respects with the MOU. The Settlement Agreement and Release dated May 23, 2008 between the Company and Executive Risk Specialty Insurance Company (“ ERSIC ”) is in

full force and effect and neither the Company nor ERSIC is in breach of its obligations thereunder.

               (j)  Material Contracts . (A) The Company has made available to Parent, as of the date of this Agreement, true, correct and complete copies of (including all amendments or modifications to), all Contracts to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective properties or assets is bound (other than Benefit Plans) that:

               (i) are or would be required to be filed by the Company as a “material contract” pursuant to Item 601(b)(10) of Regulation S-K under the Securities Act or disclosed by the Company on a Current Report on Form 8-K;

               (ii) with respect to a joint venture, partnership, limited liability or other similar agreement or arrangement, relate to the formation, creation, operation, management or control of any partnership or joint venture that is material to the business of the Company and the Subsidiaries, taken as a whole;

               (iii) relate to indebtedness for borrowed money (including the issuance of any debt security), any capital lease obligations, any guarantee of such indebtedness or debt securities of any other Person, or any “keep well” or other agreement to maintain any financial statement condition of another Person;

               (iv) were entered into after December 31, 2007 or not yet consummated, and involve the acquisition from another person or disposition to another Person, directly or indirectly (by merger or otherwise), of capital assets or capital stock or other equity interests of another Person for aggregate consideration under such Contract (or series of related Contracts) in excess of $150,000;

               (v) relate to an acquisition, divestiture, merger or similar transaction that contains representations, covenants, indemnities or other obligations (including indemnification, “earn-out” or other contingent obligations), that are still in effect and, individually or in the aggregate, could reasonably be expected to result in payments in excess of $50,000;

               (vi) other than an acquisition subject to clause (v) above, obligate the Company to make any capital commitment or capital expenditure (including pursuant to any joint venture), other than acquisitions of inventory and employee compensation expenses that are capitalized, in excess of $250,000;

               (vii) relate to any guarantee or assumption of other obligations of any third party (other than Subsidiaries) or reimbursement of any maker of a letter of credit, except for agreements entered into in the ordinary course of business consistent with past practice which agreements relate to obligations which do not exceed $50,000 in the aggregate for all such agreements;

               (viii) are license, cross-license, royalty, development or other Intellectual Property agreements that involve total fees of more than $150,000 or are otherwise material to the business of the Company and its Subsidiaries;

               (ix) relate to the provision of services by the Company or any of its Subsidiaries and under which the Company or any of its Subsidiaries generated revenues of $100,000 or more in the twelve months ended December 31, 2007;

               (x) prohibits the payment of dividends or distributions in respect of the capital stock of the Company or any of its Subsidiaries, prohibits the pledging of the capital stock of the Company or any Subsidiary of the Company or prohibits the issuance of guarantees by any Subsidiary of the Company; or

               (xi) relate to an Affiliate Transaction.

               Each contract of the type described in clauses (i) through (xi) above is referred to herein as a “ Material Contract ”

               (i) Each Material Contract to which the Company or any of its Subsidiaries is a party or by which the Company, any of its Subsidiaries or any of their respective properties or assets is bound (each, a “ Company Material Contract ”) is valid and binding on the Company and any of its Subsidiaries to the extent such Subsidiary is a party thereto, as applicable, and to the Knowledge of the Company, each other party thereto, and is in full force and effect and enforceable in accordance with its terms, except to the extent that enforceability may be limited by the effect of (X) any applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally, and (Y) general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity, and except where the failure to be valid, binding, enforceable and in full force and effect, would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (ii) the Company and each of its Subsidiaries, and, to the Knowledge of the Company, any other party thereto, has performed all obligations required to be performed by it under each Company Material Contract, except where such noncompliance, would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and (iii) neither the Company nor any of its Subsidiaries has received written notice of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a default on the part of the Company or any of its Subsidiaries under any such Material Contract, except where such default would not, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

               (B) Section 3.01(j)(B) of the Company Disclosure Schedule contains a complete and accurate list of (I) each Contract restricting or purporting to restrict any of the Company’s Affiliates’ (other than the Company’s Subsidiaries) ability to compete in any line of business, geographic area or customer segment and (II) each Contract restricting the Company’s or any of its Subsidiaries’ ability to compete in any line of business, geographic area or customer segment that is material to the Company and its Subsidiaries taken as a whole.

               (k)  Compliance with Laws; Environmental Matters .

               (i) Each of the Company and its Subsidiaries is in compliance with all Laws and Orders (collectively, “ Legal Provisions ”) applicable to it, its properties or other assets or its business or operations, except for violations or possible violations that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each of the Company and its Subsidiaries has in effect all approvals, authorizations, certificates, filings, franchises, licenses, notices and permits of or with all Governmental Entities (collectively, “ Permits ”) necessary for it to own, lease or operate its properties and other assets and to carry on its business and operations as currently conducted, except for such authorizations, certificates, filings, franchises, licenses, notices, permits and approvals the failure of which to hold would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Since January 1, 2005, there has occurred no material default under, or material violation of, any such Permit and the consummation of the Merger would not cause the revocation or cancellation of any such Permit, except for such Permits the failure of which to hold would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

               (ii) Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, (i) during the period of ownership or operation by the Company or any of its Subsidiaries of any of its currently or formerly owned, leased or operated properties or facilities, there have been no Releases or threatened Releases of Hazardous Materials in, on, under or affecting any properties or facilities which would subject the Company or any of its Subsidiaries to any liability under any Environmental Law or require any expenditure by the Company or any of its Subsidiaries for remediation to meet applicable standards thereunder; (ii) prior to and after, as applicable, the period of ownership or operation by the Company or any of its Subsidiaries of any of its currently or formerly owned, leased or operated properties or facilities, to the Knowledge of the Company, there were no Releases or threatened Releases of Hazardous Materials in, on, under or affecting any properties or facilities which would subject the Company or any of its Subsidiaries to any liability under any Environmental Law or require any expenditure by the Company or any of its Subsidiaries for remediation to meet applicable standards thereunder; (iii) each of the Company and its Subsidiaries is in compliance with all, and has not violated any, Environmental Laws; (iv) neither the Company nor any of its Subsidiaries is subject to any indemnity obligation with any person relating to obligations or liabilities under Environmental Laws; (v) neither the Company nor its Subsidiaries is subject to, there is not now and there has not been any pending or, to the Knowledge of the Company, threatened investigation, suit, claim, action, cause of action, notice or proceeding alleging liability under, relating to or arising under Environmental Laws. The term “ Environmental Laws ” means all applicable foreign, federal, state, provincial and local Laws (including the common law), Orders, notices, Permits issued, promulgated or entered into by any Governmental Entity, relating in any way to the environment, preservation or reclamation of natural resources or the presence, management, Release of, or exposure to, Hazardous Materials, or to human health. The term “ Hazardous Materials ” means (A) petroleum and petroleum products and by-products, asbestos and asbestos-containing materials, urea formaldehyde foam insulation, medical or infectious wastes, polychlorinated biphenyls, radon gas, radioactive substances, chlorofluorocarbons and all other ozone-depleting

substances and (B) any other chemical, material, substance, waste, pollutant or contaminant that is prohibited, limited, regulated by or pursuant to or for which standards of liability are imposed under any Environmental Law. The term “ Release ” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing or migrating into or through the environment or any natural or man-made structure.

               (l)  Labor Relations . There are no collective bargaining or other labor union Contracts to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound. As of the date of this Agreement, none of the employees of the Company or any of its Subsidiaries are represented by any union with respect to their employment by the Company or such Subsidiary. From January 1, 2005 to the date of this Agreement, neither the Company nor any of its Subsidiaries has experienced any material labor disputes, union organization attempts or work stoppages, slowdowns or lockouts due to labor disagreements. To the Knowledge of the Company, there are no organizational efforts with respect to the formation of a collective bargaining unit presently being made or threatened involving employees of the Company or any of its Subsidiaries.

               (m)  ERISA Compliance .

               (i) Section 3.01(m)(i) of the Company Disclosure Schedule sets forth a complete and correct list of all employee benefit plans, as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), and all employment benefit, compensation, stock option, stock purchase, restricted stock, deferred compensation, retiree medical or life insurance, split dollar insurance, supplemental retirement, severance, change of control, fringe benefit, bonus, incentive, employee loan or other material employee benefit, arrangements, plans, policies or programs, in each case, which are provided, maintained, contributed to or sponsored by the Company or any of its Subsidiaries on behalf of current or former directors, officers, employees or consultants (the “ Employees ”) or for which the Company or any of its Subsidiaries has any liability, contingent or otherwise (collectively, the “ Benefit Plans ”).

               (ii) To the extent applicable, the Company has furnished Parent with true, complete and accurate copies of (A) the plan document or other governing contract for each Benefit Plan, as amended, and a summary of any unwritten Benefit Plans, (B) the most recently distributed summary plan description and summary of material modifications, (C) each trust or other funding agreement with respect to each Benefit Plan, (D) the three most recent annual reports (Form 5500), including schedules and attachments, filed with the U.S. Department of Labor – EBSA with respect to each Benefit Plan, (E) the most recently received Internal Revenue Service (“IRS”) determination or opinion letter with respect to each Benefit Plan intended to qualify under Section 4.01(a) of the Code, and (F) the most recently prepared actuarial report and financial statements for each Benefit Plan.

               (iii) The Benefit Plans have been operated and administered in accordance with their terms and the applicable requirements of ERISA, the Code and any other applicable governing Law, in each case, in all material respects. All contributions

and all payments and premiums required to have been made to or under any Benefit Plan have been timely and properly made (or otherwise properly accrued if not yet due).

               (iv) No Benefit Plan is subject to Title IV of ERISA, or is a multiemployer plan within the meaning of Section 3(37) of ERISA, and neither the Company, its Subsidiaries nor any member of their “Controlled Group” (defined as any organization which is a member of a controlled group of organizations within the meaning of Sections 414(b), (c), (m) or (o) of the Code) has at any time in the last six years sponsored or contributed to, or has any liability or obligation in respect of any multiemployer plan. None of the Company or any of its Subsidiaries or any trade or business (whether or not incorporated) which is or has ever been treated as a single employer with the Company or any of its Subsidiaries under Section 414(b), (c), (m) or (o) of the Code (“ ERISA Affiliates ”), has incurred any liability under Title IV of ERISA or Section 412 of the Code, except for such liability that has been paid in full.

               (v) For each Benefit Plan that is a defined benefit pension plan within the meaning of Statement of Financial Accounting Standard No. 87 (“ SFAS 87” ), the “projected benefit obligation” of each such plan does not exceed the market value of its “plan assets” as of December 31, 2007, as such terms are defined in SFAS 87, by more than $50,000.

               (vi) There are no pending or, to the Knowledge of the Company, threatened suits, audits, administrative investigations or proceedings, examinations, actions, litigation or claims (excluding claims for benefits incurred in the ordinary course) and no facts or circumstances exist that could give rise to any such suits, audits, administrative investigations or proceedings, examinations, actions, litigation or claims with respect to any of the Benefit Plans which, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

               (vii) Each of the Benefit Plans which is intended to be “qualified” within the meaning of Section 401 of the Code has received a favorable determination letter from the IRS and no event has occurred and no condition exists which would result in the revocation of any such determination letter or otherwise result in the loss of its qualified status. Any voluntary employee benefit association which provides benefits to Employees of the Company or any of its Subsidiaries, or their beneficiaries, is and has been qualified under Section 501(c)(9) of the Code.

               (viii) None of the execution and delivery of this Agreement, stockholder approval of this Agreement, nor the consummation of the transactions contemplated hereby (whether alone or in combination with another event) will (A) result in any payment becoming due to any Employee of the Company or any of its Subsidiaries, (B) increase any benefits under any Benefit Plan, or (C) result in the acceleration of the time of payment, vesting or other rights with respect to any such benefits or otherwise result in any accelerated funding (through a grantor trust or otherwise) in respect of any Benefit Plan.

               (ix) The Company and its Subsidiaries do not maintain or have an obligation to contribute to, or provide coverage under, any retiree life or retiree health plans, except (A) as may be required under part 6 of Title I of ERISA and at the sole expense of the participant or the participant’s beneficiary, or (B) pursuant to a medical expense reimbursement account described in Section 125 of the Code.

               (x) With respect to any Benefit Plan that is maintained outside the jurisdiction of the United States, or covers any Employee residing or working outside the United States: (i) all such plans have been established, maintained and administered in compliance with their terms and all applicable statutes, laws, ordinances, rules, orders, decrees judgments, writs, and regulations of any controlling governmental authority or instrumentality, (ii) all such plans that are required by applicable Law or general accounting principles applicable to the relevant jurisdiction to be funded are fully funded on the required basis, and with respect to all other such plans, reserves sufficient to provide for all obligations accrued through the Effective Date thereunder have been established on the accounting statements of the applicable Company or Subsidiary entity; (iii) no material liability or obligation of the Company or its Subsidiaries exists with respect to such plans; and (iv) for each such plan that is a defined benefit pension plan, the “projected benefit obligation” of the plan does not materially exceed the market value of its “plan assets,” as such terms are defined in SFAS 87, as determined in accordance with GAAP and based upon reasonable actuarial assumptions which would be acceptable for financial reporting purposes under SFAS 87.

               (xi) Each outstanding Company Stock Option granted under any Company Stock Plan was properly authorized and granted with an exercise price of no less than fair market value on the date of grant.

               (xii) Each Benefit Plan that is subject to Code Section 409A has been administered in good faith compliance with the applicable requirements of Code Section 409A and all applicable IRS and Treasury Department guidance thereunder. None of the transactions contemplated by this Agreement will constitute or result in deferral of compensation subject to Code Section 409A.

               (xiii) There are no undisclosed tax, securities law or other liabilities relating to Company Stock Options or other Company Stock-Based Awards in any applicable jurisdiction (whether relating to the grant, vesting or anticipated settlement thereof), and to the Knowledge of the Company, no action has been taken by the Company that would limit the deductibility (for tax purposes) of all such Company Stock Options and other Company Stock-Based Awards.

               (n)  Golden Parachute Payments . No Employee of the Company or any of its Subsidiaries is entitled to receive any additional payment from the Company or any of its Subsidiaries or the Surviving Corporation by reason of the excise tax required by Section 4999(a) of the Code being imposed on such person by reason of the transactions contemplated by this Agreement. No payments or benefits reasonably expected to be provided in connection with the transactions contemplated under this Agreement under any of the Benefit

Plans will fail to be deductible under Section 280G of the Code or will be subject to the excise tax required by Section 4999 of the Code.

               (o)  Taxes . Except as would not reasonably be expected to have a Material Adverse Effect:

               (i) All tax returns required by applicable Law to have been filed with any taxing authority by, or on behalf of, the Company or any of its Subsidiaries have been filed in a timely manner (taking into account any valid extension) in accordance with all applicable Laws, and all such tax returns are true, correct and complete.

               (ii) The Company and each of its Subsidiaries has timely paid (or has had paid on its behalf) all taxes due and owing (whether or not shown on any tax return), and the Company’s most recent financial statements included in the Filed Company SEC Documents reflect an adequate accrual under GAAP for all taxes payable by Company and its Subsidiaries for all taxable periods and portions thereof ending on the date of such financial statements.

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

               (iv) The Company and its Subsidiaries have complied with all applicable Laws relating to the payment and withholding of taxes.

               (v) No written notification has been received by the Company or any of its Subsidiaries that any federal, state, local or foreign audit, examination or similar proceeding is pending, proposed or asserted with regard to any taxes or tax returns of the Company or its Subsidiaries.

               (vi) There is no Contract extending, or having the effect of extending, the period of assessment or collection of any federal, state and foreign taxes with respect to the Company or any of its Subsidiaries nor has any request been made for any such extension.

               (vii) No written notice of a claim of pending investigation has been received by the Company or its Subsidiaries from any state, local or other jurisdiction with which the Company or any of its Subsidiaries currently does not file tax returns, alleging that the Company or any of its Subsidiaries has a duty to file tax returns and pay taxes or is otherwise subject to the taxing authority of such jurisdiction.

               (viii) Neither the Company nor any of its Subsidiaries joins or has joined, for any taxable period ending after December 31, 2000, in the filing of any affiliated, aggregate, consolidated, combined or unitary federal, state, local and foreign tax return other than consolidated tax returns for the consolidated group of which the Company is or was the common parent.

               (ix) Neither the Company nor any of its Subsidiaries is a party to or bound by any tax sharing agreement or tax indemnity agreement or any other agreement

or arrangement relating to the apportionment, sharing, assignment, or allocation of any tax or tax asset by contract, agreement or otherwise (including any advance pricing agreement or closing agreement (including pursuant to Section 7121 of the Code or any similar provision of state, local or foreign law) with any taxing authority), other than any such customary agreements with customers, vendors or lessors entered into in the ordinary course of business.

               (x) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (or any similar provision of state, local or foreign law) since May 1, 2006.

               (xi) Neither the Company nor any of its Subsidiaries has engaged in any transaction that could give rise to (A) a registration obligation with respect to any Person under Section 6111 of the Code or the regulations thereunder, (B) a list maintenance obligation with respect to any Person under Section 6112 of the Code or the regulations thereunder, or (C) a disclosure obligation as a “reportable transaction” under Section 6011 of the Code and the regulations thereunder.

               (xii) All assessments for taxes due with respect to completed and settled examinations or any concluded tax litigation have been fully paid.

               (xiii) No deficiencies for any taxes have been proposed or assessed in writing against the Company or any of its Subsidiaries.

               (xiv) Except to the extent reflected on the Most Recent Balance Sheet, neither the Company nor any of its U.S. Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of an installment sale or open transaction arising in a taxable period (or portion thereof) ending on or before the Closing Date or a prepaid amount received, or paid, prior to the Closing Date.

               (xv) Neither the Company nor any of its Subsidiaries (a) has agreed or is required to make any adjustments pursuant to Section 481(a) of the Code or any similar provision of state, local or foreign law by reason of a change in accounting method initiated by it or any other relevant party, (b) has any Knowledge that the IRS has proposed any such adjustment or change in accounting method or (c) has any application pending with any Governmental Entity requesting permission for any changes in accounting methods that relate to the business or assets of the Company or any of its Subsidiaries.

               (xvi) The Company is not a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.

               (xvii) As used in this Agreement: (A) “ tax ” means any federal, state, local or foreign income, gross receipts, property, sales, use license, excise, franchise employment, payroll, withholding, alternative or add on minimum, ad valorem, transfer

or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever (including withholding on amounts paid to or by any person), together with any related interest, penalty, addition to tax or additional amount; (B) “ taxing authority ” means any federal, state, local or foreign government, any subdivision, agency, commission or authority thereof, or any quasi-governmental body exercising tax regulatory authority; and (C) “ tax return ” means any report, return, document, declaration or other information or filing required to be filed with respect to taxes (whether or not a payment is required to be made with respect to such filing), including information returns, any documents with respect to or accompanying payments of estimated taxes