AGREEMENT AND PLAN OF MERGER

Exhibit 2.4

AGREEMENT AND PLAN OF MERGER

Dated as of April 30, 2009

among

ComVest NationsHealth Holdings, LLC

NationsHealth Acquisition Corp.

and

NationsHealth, Inc.

TABLE OF CONTENTS

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TABLE OF CONTENTS
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TABLE OF CONTENTS
(continued)

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EXHIBITS

     iv     

AGREEMENT AND PLAN OF MERGER

     This Agreement and Plan of Merger, dated as of April 30, 2009 (this “ Agreement ”), is by and among ComVest NationsHealth Holdings, LLC, a Delaware limited liability company (“ Parent ”), NationsHealth Acquisition Corp., a Delaware corporation and a wholly owned Subsidiary of Parent (“ Merger Sub ”), and NationsHealth, Inc., a Delaware corporation (the “ Company ”). Certain defined terms used in this Agreement are defined in Annex A .

RECITALS

      WHEREAS , the Board of Directors of the Company, acting upon the recommendation of a special committee formed by the Board of Directors of the Company for the purpose of evaluating and negotiating strategic alternatives and/or transactions for the Company, including, but not limited to, this Agreement and the Transactions contemplated herein, any Superior Proposal, any Takeover Proposal, any Company Acquisition Agreement, and/or any other similar transactions, (a) has approved and declared advisable this Agreement and determined that this Agreement is in the best interests of its stockholders (other than holders of the Rollover Shares and/or shares of Preferred Stock as to which no determination has been made), (b) has approved and declared advisable the merger of Merger Sub with and into the Company (the “ Merger ”), on the terms and subject to the conditions provided for in this Agreement, and determined that the Merger is in the best interests of its stockholders (other than holders of the Rollover Shares and/or shares of Preferred Stock as to which no determination has been made), (c) has reviewed the terms of the Merger and determined that such terms are fair and (d) has recommended adoption by its stockholders of this Agreement and the Merger;

      WHEREAS , the respective Boards of Directors (or similar governing body) and the stockholders of Parent and Merger Sub have approved this Agreement and the Merger on the terms and subject to the conditions provided for in this Agreement and declared it advisable and in the best interests for Parent, Merger Sub and their respective stockholders to enter into this Agreement;

      WHEREAS , concurrently with the execution of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, the Senior Managers, Parent and Merger Sub have entered into that certain Voting Agreement (the “ Voting Agreement ”), pursuant to which the Senior Managers have agreed to vote their respective Shares in favor of the adoption of this Agreement and the consummation of the Merger in accordance with the terms of the Voting Agreement;

      WHEREAS , concurrently with the execution of this Agreement, and as a condition to the willingness of the Company to enter into this Agreement, the Company and Parent have entered into the Bridge Loan Documents to which it is a party pursuant to which Parent has agreed to provide a bridge loan to the Company in the principal amount of $3,000,000 (the “ Bridge Loan ”) in accordance with the terms of the Bridge Loan Documents whereby the Bridge Loan shall (a) be subordinated to the Company’s obligations to the Senior Lender and be senior to the Company’s obligations to MHR, (b) have a monthly cash interest payment based on an interest rate of ten percent (10%) per annum, (c) have a term of six (6) months (the “ Maturity

Date ”), and (d) be used to pay a portion of the Transaction Fees and for the Company’s general business purposes, working capital, growth capital and capital expenditures;

      WHEREAS , concurrently with the execution of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement, the Senior Managers, MHR, and Parent have entered into that certain Exchange and Rollover Agreement (the “ Exchange and Rollover Agreement ”) pursuant to which the Senior Managers and MHR have agreed to contribute their respective Rollover Shares in the Exchange for shares of the Merger Sub Non-Voting Common Stock immediately prior to the Closing in accordance with Section 5.15 and the terms of the Exchange and Rollover Agreement;

      WHEREAS , concurrently with the execution of this Agreement, and as a condition to the willingness of the Company, Parent and Merger Sub to enter into this Agreement, the Company, Parent, the Senior Managers and MHR have entered into the Preferred Stock Investment Documents pursuant to which the signatories thereto have agreed to the purchase and sale of the shares of Preferred Stock, the rights, preferences, privileges and restrictions of the Preferred Stock and the Surviving Corporation Common Stock to be issued to the holders of the Merger Sub Non-Voting Common Stock (to be issued in the Exchange), and the composition and governance of the Company’s Board of Directors after the Closing in accordance with the terms of the Preferred Stock Investment Documents;

      WHEREAS , concurrently with the execution of this Agreement, and as a condition to the willingness of the Company, Parent, and Merger Sub to enter into this Agreement, each of the Senior Lender and MHR granted its consent to this Agreement and the Transactions contemplated hereby (the “ Lender Consents ”);

      WHEREAS , concurrently with the execution of this Agreement, and in connection with Lender Consents, the Senior Lender and MHR (collectively the “ Lenders ”) and the Company have agreed to enter into the Rollover Financing Documents, providing for (i) certain waivers under and modifications to the Lenders’ respective loan documents and in connection therewith MHR has agreed to amend and restate the Notes, and the Company shall issue the MHR Warrants to MHR, and (ii) the agreement of MHR to contribute its Rollover Shares in the Exchange and to enter into certain related agreements with the Company, Parent and the Senior Managers as described herein;

      WHEREAS , concurrently with the execution of this Agreement, and as a condition to the willingness of the Company to enter into this Agreement, Parent, Merger Sub, the Guarantor, and the Company have entered into that certain Limited Guaranty (the “ Guaranty ”) pursuant to which the Guarantor has agreed to guaranty the Investment Amount, including, but not limited to the funding of the Bridge Loan, the Preferred Stock Investment and the Preferred Stock Investment Option (if exercised) in accordance with the terms of the Guaranty; and

      WHEREAS , prior to or concurrently with the execution of this Agreement, and as a condition to the willingness of Parent and Merger Sub to enter into this Agreement each of the Senior Managers and the Company have entered into an Employment Agreement (each an “ Employment Agreement ”) pursuant to which each such Senior Manager has agreed to be

employed by the Company after the Closing in accordance with the terms of such Senior Manager’s Employment Agreement.

      NOW, THEREFORE , in consideration of the foregoing and the representations, warranties, covenants and agreements contained in this Agreement, and intending to be legally bound hereby, Parent, Merger Sub and the Company hereby agree as follows:

ARTICLE I
THE MERGER

     1.1 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 ”), at the Effective Time, Merger Sub shall be merged with and into the Company, and the separate corporate existence of Merger Sub shall thereupon cease, and the Company shall be the surviving corporation in the Merger (with respect to all post-Effective Time periods, the “ Surviving Corporation ”) and shall continue to be governed by the laws of the State of Delaware.

     1.2 Closing .

     The closing of the Merger (the “ Closing ”) shall take place at 10:00 a.m. eastern time on a date (the “ Closing Date ”) that is not later than two (2) Business Days after satisfaction or waiver of the conditions set forth in Article VI , other than those conditions that by their nature are to be satisfied at the Closing, but subject to the satisfaction or waiver of those conditions at such time at the offices of McDermott, Will & Emery, 201 South Biscayne Boulevard, Suite 2200, Miami, Florida 33131, unless another time, date or place is agreed to in writing by the parties hereto.

     1.3 Effective Time .

     Subject to the provisions of this Agreement, upon the Closing, the Company and Merger Sub shall file with the Secretary of State of the State of Delaware a certificate of merger, executed, acknowledged and filed in accordance with the relevant provisions of the DGCL (the “ Certificate of Merger ”). The Merger shall become effective at the time when the Certificate of Merger has been duly filed with the Secretary of State of the State of Delaware, or at such later time as is agreed to by the parties hereto and specified in the Certificate of Merger (the time at which the Merger becomes effective is herein referred to as the “ Effective Time ”).

     1.4 Effects of the Merger .

     The Merger shall have the effects set forth in this Agreement, the Certificate of Merger and the applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all the properties, rights, privileges, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

     1.5 Certificate of Incorporation and Bylaws of the Surviving Corporation .

          (a) Subject to Section 5.8 , the Company’s Amended and Restated Certificate of Incorporation attached hereto as Exhibit 1.5(a) (the “ Amended and Restated Certificate of Incorporation ”), as filed and in effect immediately prior to the Effective Time, shall be the certificate of incorporation of the Surviving Corporation until thereafter amended in accordance with the DGCL and such Amended and Restated Certificate of Incorporation.

          (b) Subject to Section 5.8 , the Company’s Amended and Restated Bylaws attached hereto as Exhibit 1.5(b) (the “ Bylaws ”), as amended and in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation until thereafter amended in accordance with the DGCL and such Bylaws.

     1.6 Directors and Officers of the Surviving Corporation .

          (a) Each of the parties hereto shall take all necessary action to cause the directors of Merger Sub immediately prior to the Effective Time to be the directors of the Surviving Corporation immediately following the Effective Time, until their respective successors are duly elected or appointed and qualified or their earlier death, resignation or removal in accordance with the DGCL, the Amended and Restated Certificate of Incorporation, and the Bylaws.

          (b) The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation until their respective successors are duly appointed and qualified or their earlier death, resignation or removal in accordance with the DGCL, the Amended and Restated Certificate of Incorporation, and the Bylaws.

ARTICLE II
EFFECT OF THE MERGER; EXCHANGE OF CERTIFICATES; COMPANY STOCK OPTIONS; CAPITALIZATION OF PARENT; BRIDGE LOAN, PREFERRED STOCK INVESTMENT

     2.1 Effect on Capital Stock .

          At the Effective Time, as a result of the Merger and without any action on the part of the Company, Parent, Merger Sub, the holder of any shares of common stock, par value $0.0001 per share, of the Company (“ Company Common Stock ”), or the holder of any shares of capital stock of Merger Sub:

          (a)  Capital Stock of Merger Sub . Each share of Class A Voting Common Stock, par value $0.0001 per share, of Merger Sub (the “ Merger Sub Voting Common Stock ”), and each share of Class B Non-Voting Common Stock, par value $0.0001 per share, of Merger Sub (the “ Merger Sub Non-Voting Common Stock ”), including the Merger Sub Non-Voting Common Stock that was issued in the Exchange for the Rollover Shares pursuant to the Exchange and Rollover Agreement and Section 5.15 , 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 $0.0001 per share, of the Surviving Corporation (the “ Surviving Corporation Common Stock ”). As of the Effective Time, all such shares of

Merger Sub capital stock converted in accordance with this Section 2.1(a) , when so converted, shall be cancelled and no longer be issued and outstanding and shall automatically cease to exist, and each holder of a certificate representing any such shares of Merger Sub capital stock shall cease to have any rights with respect thereto, except the right to receive a share of the Surviving Corporation Common Stock as set forth in this Section 2.1(a) .

          (b)  Conversion of Company Common Stock . Each share of Company Common Stock, including shares of Company Restricted Stock (each a “ Share ” and collectively, the “ Shares ”) (other than shares to be canceled in accordance with Section 2.1(c) , the Dissenting Shares, and the shares of Preferred Stock issued at or immediately prior to the Effective Time in connection with the Preferred Stock Investment and the Preferred Stock Investment Option (if exercised)), issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive from the Surviving Corporation a cash amount equal to $0.12, without interest (the “ Merger Consideration ”) pursuant to the terms and conditions set forth in Section 2.2 . As of the Effective Time, all such Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such Shares (each, a “ Certificate ”) shall cease to have any rights with respect thereto, except the right to receive a cash amount equal to the product of the Merger Consideration and the number of Shares represented by such Certificate, which amount shall be paid in consideration therefor upon surrender of such Certificate in accordance with Section 2.2(b) , without interest.

          (c)  Cancellation of Treasury Stock and Parent-Owned Stock . Any Shares that are owned by the Company as treasury stock, and any Shares owned by Parent or Merger Sub, including the Rollover Shares, immediately prior to the Effective Time, shall be automatically canceled and shall cease to exist and no consideration shall be delivered in exchange therefor.

          (d)  Appraisal Rights . Notwithstanding anything in this Agreement to the contrary, Shares that are issued and outstanding immediately prior to the Effective Time and which are held by a stockholder who did not vote to adopt this Agreement (or consent thereto in writing) and who is entitled to demand and properly demands appraisal of such Shares pursuant to, and who complies in all respects with, the provisions of Section 262 of the DGCL (the “ Dissenting Stockholders ”), shall not be converted into the right to receive the Merger Consideration (the “ Dissenting Shares ”), but instead such holder shall be entitled to payment of the fair value of such Shares in accordance with the provisions of Section 262 of the DGCL (and at the Effective Time, such Dissenting Shares shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and such holder shall cease to have any rights with respect thereto, except the right to receive the fair value of such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL), unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost rights to appraisal under the DGCL. If any Dissenting Stockholder shall have failed to perfect or shall have effectively withdrawn or lost such appraisal rights pursuant to the DGCL, such holder’s Shares shall thereupon be treated as if they had been converted into and become exchangeable for the right to receive, as of the Effective Time, the Merger Consideration for each such Share, in accordance with Section 2.1(b) , without any interest thereon. The Company shall give Parent (i) prompt notice of any written demands for appraisal of any Shares, attempted withdrawals of such demands and any other instruments served pursuant to the DGCL and received by the Company

relating to stockholders’ rights of appraisal, and (ii) the opportunity to participate in 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, which consent shall not be unreasonably withheld or delayed, voluntarily make any payment with respect to, or settle, or offer or agree to settle, any such demand for payment or waive any failure by a stockholder to timely comply with the requirements of the DGCL to perfect or demand appraisal rights. Any portion of the Merger Consideration made available to the Paying Agent pursuant to Section 2.2 to pay for Shares for which appraisal rights have been perfected shall be returned to Parent upon demand.

     2.2 Exchange of Certificates .

          (a)  Paying Agent . Prior to the Effective Time, a bank or trust company mutually agreed to by Parent and the Company, shall be engaged to act as agent for the holders of Shares and Options in connection with the Merger (the “ Paying Agent ”) to receive, for the benefit of such holders, the aggregate amount equal to the sum of (i) the aggregate Merger Consideration and (ii) the aggregate amount of Option Consideration payable upon the exercise of the Options (collectively, items (i) and (ii) shall be referred to as the “ Aggregate Merger Consideration ”). At the Closing, Parent shall deposit, or cause to be deposited, on behalf of Parent and the Company, immediately available funds equal to the Aggregate Merger Consideration with the Paying Agent for the benefit of the holders of Shares (other than shares to be canceled in accordance with Section 2.1(c) , the Dissenting Shares, and the shares of Preferred Stock issued at or immediately prior to the Effective Time in connection with the Preferred Stock Investment and the Preferred Stock Investment Option (if exercised)). In the event the Aggregate Merger Consideration deposited with the Paying Agent shall be insufficient to make the payments contemplated by Section 2.1(b) and Section 2.3 , Parent and/or the Guarantor shall promptly deposit, or cause to be deposited, additional funds with the Paying Agent in an amount that is equal to the amount of such deficiency required to make such payment. The Paying Agent shall cause the Aggregate Merger Consideration to be (A) held for the benefit of the holders of Company Common Stock and Options, and (B) applied promptly to making the payments pursuant to Section 2.1(b) and Section 2.3 . The Aggregate Merger Consideration shall not be used for any purpose that is not expressly provided for in this Agreement. The Aggregate Merger Consideration deposited with the Paying Agent shall only be invested and reinvested by Parent or the Surviving Corporation after the Effective Time and solely in obligations issued or guaranteed by the United States government (or agencies thereof) maturing in thirty (30) days or less and certificates of deposit or repurchase agreements maturing in thirty (30) days or less of domestic United States banks having capital and surplus of $250,000,000 or more and having a rating of A or better from Moody’s Investors Service, Inc. and A or better from Standard & Poor’s Corporation. The Aggregate Merger Consideration shall not be invested or reinvested in any other manner either directly by the Paying Agent or indirectly by the Paying Agent as instructed by Parent or the Surviving Corporation after the Effective Time or any of their respective Affiliates. Any net profit resulting from, or interest or income produced by, such amounts on deposit with the Paying Agent will be payable to the Surviving Corporation.

          (b)  Payment Procedures . Promptly after the Effective Time and in no event later than two (2) Business Days after the Effective Time, the Surviving Corporation shall use its commercially reasonable efforts to cause the Paying Agent to mail to each Person who was,

immediately prior to the Effective Time, a holder of record of a Certificate or Options (to the extent there is any positive Option Consideration applicable to such Option) (i) a letter of transmittal (which shall specify, in connection with a Certificate, that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates (or affidavits of loss in lieu thereof) to the Paying Agent, and which shall be in such form and shall have such other provisions as Parent may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates or Options in exchange for payment of the Merger Consideration and the Option Consideration, as applicable. Upon surrender of a Certificate (or affidavit of loss in lieu thereof) or Options for cancellation to the Paying Agent (if applicable), together with such letter of transmittal, duly completed and validly executed in accordance with the instructions (and such other customary documents as may reasonably be required by the Paying Agent), the holder of such Certificate or Options shall be entitled to receive in exchange therefor the Merger Consideration, without interest, for each Share formerly represented by such Certificate and Option Consideration for each Option, and the Certificate or Option so surrendered shall forthwith be canceled. If payment of the applicable portion of the Aggregate Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate or Option is registered, it shall be a condition of such payment that (x) the Certificate or Option so surrendered shall be properly endorsed or shall otherwise be in proper form for transfer and (y) the Person requesting such payment shall have paid any transfer and other taxes required by reason of the payment of the applicable portion of the Aggregate Merger Consideration to a Person other than the registered holder of such Certificate or Option surrendered or shall have established to the reasonable satisfaction of the Surviving Corporation that such tax either has been paid or is not applicable, and such Person shall indemnify the Paying Agent, if so requested by the Paying Agent. Until surrendered as contemplated by this Section 2.2 , each Certificate or Option shall be deemed at any time after the Effective Time to represent only the right to receive the applicable portion of the Aggregate Merger Consideration as contemplated by this Article II , without interest.

          (c)  Transfer Books; No Further Ownership Rights in Company Stock . The Merger Consideration paid in respect of Shares upon the surrender for exchange of Certificates (or affidavit of loss in lieu thereof) 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 previously represented by such Certificates (or affidavit of loss in lieu thereof), and at the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers on the stock transfer books of the Surviving Corporation of the Shares that were outstanding immediately prior to the Effective Time. From and after the Effective Time, the holders of Certificates (or affidavit of loss in lieu thereof) that evidenced ownership of Shares outstanding immediately prior to the Effective Time shall cease to have any rights with respect to such Shares, except as otherwise provided for herein or by applicable Law. Subject to the last sentence of Section 2.2(e) , if, at any time after the Effective Time, Certificates (or affidavit of loss in lieu thereof) are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article II .

          (d)  Lost, Stolen or Destroyed Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of loss for a Certificate (in a form reasonably acceptable to the party receiving such affidavit) by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Paying Agent or the Surviving

Corporation, the posting by such Person of a bond, in such reasonable amount as the Surviving Corporation or the Paying Agent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Paying Agent will pay, in exchange for such lost, stolen or destroyed Certificate, the applicable Merger Consideration to be paid in respect of the Shares formerly represented by such Certificate, as contemplated by this Article II .

          (e)  Termination of Fund . At any time following twelve (12) months after the Closing Date, the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds (including any interest received with respect thereto) that had been made available to the Paying Agent and which have not been disbursed to holders of Certificates or Options, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) as general creditors thereof with respect to the payment of any of the Aggregate Merger Consideration that may be payable upon surrender of any Certificates or Options held by such holders, as determined pursuant to this Agreement, without any interest thereon. Any amounts remaining unclaimed by such holders at such time at which such amounts would otherwise escheat to or become property of any Governmental Authority shall become, to the extent permitted by applicable Law, the property of the Surviving Corporation, subject to any and all claims or interest of any Person previously entitled thereto.

          (f)  No Liability . Notwithstanding any provision of this Agreement to the contrary, none of the parties hereto, the Surviving Corporation or the Paying Agent shall be liable to any Person for any portion of the Aggregate Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

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

     2.3 Company Stock Options; Restricted Stock .

          (a) Prior to the Effective Time, the Company shall take all actions necessary to provide that each option outstanding immediately prior to the Effective Time (whether or not then vested or exercisable) that represents the right to acquire shares of Company Common Stock (each, an “ Option ”) shall be cancelled and terminated (without regard to the exercise price of the Options) immediately before the Effective Time and that all Options, whether or not vested, that remain unexercised immediately prior to the Effective Time shall be converted at the Effective Time into the right to receive a cash amount equal to the Option Consideration for each share of Company Common Stock then subject to such Option, whether or not vested, without the need for any further action by the holder of the Option. The Option Consideration shall be paid to holders of Options in accordance with Section 2.2 . Prior to the Effective Time, the Company shall make such amendments to the terms of the Company Stock Plans that are

necessary to give effect to the transactions contemplated by this Section 2.3 . Without limiting the foregoing, the Company shall take all actions necessary to ensure that the Company will not at the Effective Time be bound by any options, stock appreciation rights or other rights or agreements which would entitle any Person, other than Parent and its Subsidiaries, to own any capital stock of the Surviving Corporation or to receive any payment in respect thereof, except as provided in connection with the Transactions contemplated herein and therein. Prior to the Effective Time, the Company shall take all actions necessary to terminate all its Company Stock Plans, such termination to be effective at or before the Effective Time. Notwithstanding anything else herein, Parent and the Surviving Corporation shall be entitled to deduct and withhold from the Option Consideration otherwise payable such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of state, local or foreign tax Laws.

          (b) Each holder of shares of Company Restricted Stock that are outstanding immediately prior to the Effective Time shall become fully vested in any such shares of Company Restricted Stock immediately prior to the Effective Time. Each share of Company Restricted Stock outstanding immediately prior to the Effective Time shall be converted into the right to receive Merger Consideration in accordance with Section 2.1(b) (other than Company Restricted Stock that is included as Rollover Shares and will be contributed in the Exchange for the same number of shares of Merger Sub Non-Voting Common Stock immediately prior to the Closing pursuant to Section 5.15 ).

     2.4 Adjustments .

          Notwithstanding any provision of this Article II to the contrary (but without limiting the covenants in Section 5.2 in any manner whatsoever), if between the date of this Agreement and the Effective Time the outstanding shares of Company Common Stock shall have been changed into a different number or class of shares by reason of the occurrence or record date of any stock dividend, subdivision, reclassification, recapitalization, stock split, conversion, combination, exchange of shares or similar transaction, the Aggregate Merger Consideration shall be appropriately adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, stock split, conversion, combination, exchange of shares or similar transaction.

     2.5 Capitalization of Parent; Bridge Loan; Preferred Stock Investment; Preferred Stock Investment Option

          (a) Parent shall be capitalized with $8,000,000 (the “ Investment Amount ”), of which (i) the amount of the Bridge Loan shall be funded on or before the date hereof and (ii) the Investment Amount, minus the outstanding principal amount of the Bridge Loan, shall be funded, subject to the terms and conditions of this Agreement, on or before the Closing Date (the “ Remaining Investment Amount ”).

          (b) On the date hereof, Parent and the Company shall enter into the Bridge Loan Documents to which it is a party whereby Parent shall provide the Bridge Loan to the Company and the proceeds therefrom shall be used to pay a portion of the Transaction Fees pursuant to Section 5.10 , to fund the Company’s general business purposes, working capital,

growth capital and capital expenditures after the date hereof. In connection with the Bridge Loan, the Company shall issue to Parent the Bridge Loan Warrants, which shall (i) be exercisable within fifteen (15) days of such termination date if this Agreement is terminated pursuant to (A) Section 7.1(c)(i) or Section 7.1(c)(iii) and the Company’s breach triggering such termination shall have been willful or (B) Section 7.1(b)(iii) , Section 7.1(c)(ii) , or Section 7.1(d)(iii) ,and (ii) automatically expire at the Effective Time.

          (c) At the Effective Time, (i) the outstanding principal amount under the Bridge Loan shall be converted into shares of Preferred Stock at a price per share equal to the Merger Consideration and (ii) any remaining accrued and unpaid interest on the Bridge Loan shall be paid in cash by the Company to Parent.

          (d) At the Effective Time and in connection with the Merger, Parent shall invest the Remaining Investment Amount in the Company in exchange for shares of Preferred Stock at a price per share equal to the Merger Consideration pursuant to the terms and conditions set forth in the Preferred Stock Investment Documents (the “ Preferred Stock Investment ”), from which (i) Parent shall deposit the Aggregate Merger Consideration on behalf of Parent and the Company with the Paying Agent in accordance with Section 2.2 in order to purchase all of the Shares (other than shares to be canceled in accordance with Section 2.1(c) , the Dissenting Shares, and the shares of Preferred Stock issued in connection with the Preferred Stock Investment and the Preferred Stock Investment Option (if exercised)), and Options, and (ii) Parent shall pay to the Company a cash amount equal to the Remaining Investment Amount minus the Aggregate Merger Consideration, which proceeds shall be used to pay the remaining Transaction Fees pursuant to Section 5.10 and to fund the Company’s general business purposes, working capital, growth capital and capital expenditures after the Effective Time.

          (e) Pursuant to the Preferred Stock Investment Documents, Parent shall have the right, but not the obligation, during the period commencing on the date hereof and ending on the first anniversary of the Closing Date, to invest up to $2,000,000 in the Surviving Corporation in exchange for shares of Preferred Stock at the same price per share and on the same terms and conditions as the Preferred Stock Investment (the “ Preferred Stock Investment Option ”).

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

     Except as set forth in the disclosure schedule delivered by the Company to Parent simultaneously with the execution of this Agreement; provided , that, any information set forth in one Section of the Company Disclosure Schedule will be deemed to apply to each other Section or subsection of this Agreement and the Company Disclosure Schedule to the extent such disclosure is made in a way as to make its relevance to such other Section or subsection readily apparent (the “ Company Disclosure Schedule ”), or as disclosed in any of the Company SEC Documents filed during the twelve (12) month period prior to the date hereof, other than any sections contained therein specifically relating to risks factors or cautionary or forward looking statements, the Company represents and warrants to Parent and Merger Sub as follows:

     3.1 Organization, Standing and Power .

          (a) Each of the Company and its Subsidiaries is a corporation, partnership, or a limited liability company duly organized, validly existing and in good standing under the Laws of the jurisdiction in which it is incorporated or organized and has all requisite corporate, partnership, or limited liability company power and authority necessary to own, lease, and operate all of its properties and assets and to carry on its business as it is now being conducted. Each of the Company and its Subsidiaries is duly licensed or qualified to do business as a foreign corporation, partnership, or limited liability company and is in good standing in each jurisdiction in which the nature of the business conducted by it or the operation, ownership, leasing, character or location of the properties and assets owned or leased by it makes such licensing or qualification necessary, except where the failure to be so licensed, qualified or in good standing, individually or in the aggregate, has not had and would not reasonably be expected to have a Company Material Adverse Effect.

          (b)  Section 3.1(b) of the Company Disclosure Schedule lists all Subsidiaries of the Company together with the jurisdiction of organization of each such Subsidiary. All the outstanding shares of capital stock of, or other Equity Interests in, each Subsidiary of the Company have been duly authorized and validly issued and are fully paid and nonassessable and, except for the Permitted Liens and as set forth in Section 3.1(b) of the Company Disclosure Schedule, are owned directly or indirectly by the Company free and clear of all liens, pledges, charges, mortgages, encumbrances, adverse rights or claims and security interests of any kind or nature whatsoever (including any restriction on the right to vote or transfer the same, in each case except as provided in connection with the Transactions contemplated herein and therein, and for such transfer restrictions of general applicability as may be provided under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the “ Securities Act ”), and the “blue sky” laws of the various States of the United States) (collectively, “ Liens ”). Except as set forth in Section 3.1(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries owns, directly or indirectly, any capital stock, voting securities or Equity Interests in any Person.

          (c) The Company has made available to Parent correct and complete copies of its organizational and governing documents (the “ Company Charter Documents ”) and correct and complete copies of the organizational and governing documents of each of its Subsidiaries (the “ Subsidiary Documents ”), and all amendments thereto. All such Company Charter Documents and Subsidiary Documents are in full force and effect and neither the Company nor any of its Subsidiaries is in material violation of any of their respective provisions.

     3.2 Capitalization .

          (a) The authorized capital stock of the Company consists of 300,000,000 shares of Company Common Stock and 50,000,000 shares of preferred stock, par value $0.0001 per share (“ Company Preferred Stock ”). At the close of business on February 28, 2009 (the “ Reference Date ”), (i) 28,551,805 shares of Company Common Stock were issued and outstanding (of which 158,120shares were Company Restricted Stock), (ii) 4,000,000 shares of Company Common Stock were reserved for issuance under the Company Stock Plans (of which 1,798,069 shares of Company Common Stock were subject to outstanding Options granted under the Company Stock Plans) and 2,331,585 shares of Company Common Stock were reserved for issuance upon conversion of the Notes and Warrants (other than the Bridge Loan Warrants,

which shall automatically expire at the Effective Time), (iii) no shares of Preferred Stock were issued or outstanding; and (iv) 837,926 shares of Company Common Stock were held in the Company’s treasury. Since the Reference Date, no shares of Company Common Stock, Company Preferred Stock or any other Equity Interests have been issued, except pursuant to the exercise, if any, of Options granted under Company Stock Plans or outstanding Warrants (other than the Bridge Loan Warrants) as of the close of business on the Reference Date, except as provided in connection with the Transactions contemplated herein and therein. Section 3.2(a) of the Company Disclosure Schedule contains a correct and complete list, as of the Reference Date, of Options and Company Restricted Stock, Warrants (other than the Bridge Loan Warrants) and Notes including the holder, date of grant, term, number of shares of Company Common Stock subject to such Option or Warrant (other than the Bridge Loan Warrants) and, where applicable, exercise price and vesting schedule. All outstanding shares of the capital stock of the Company have been duly authorized and validly issued and are fully paid and nonassessable. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, the Bridge Loan Documents, and the Preferred Stock Investment Documents, none of the outstanding shares of the capital stock of the Company are entitled or subject to any preemptive right, right of participation, right of maintenance or any similar right or are subject to any right of first refusal in favor of the Company, and, there is no Contract restricting any Person from purchasing, selling, pledging or otherwise disposing of (or granting any option or similar right with respect to), any shares of the capital stock of the Company, except as provided in connection with the Transactions contemplated herein and therein. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, (A) there are no outstanding options or other rights of any kind which obligate the Company or any of its Subsidiaries to issue or deliver any shares of capital stock, voting securities or other Equity Interests of the Company or any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other Equity Interests of the Company (collectively, “ Company Securities ”); (B) there are no outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any Company Securities; and (C) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of the Company to which the Company or any of its Subsidiaries is a party, in each case except as provided in connection with the Transactions contemplated herein and therein. Except as set forth in Section 3.2(a) of the Company Disclosure Schedule, no bonds, debentures, notes or other indebtedness of the Company having a right to vote (or convertible into or exercisable for securities having the right to vote) on any matters on which the holders of capital stock of the Company may vote are issued and outstanding, except as provided in connection with the Transactions contemplated herein and therein.

          (b) Except as set forth in Section 3.2(b) of the Company Disclosure Schedule, each of the outstanding shares of capital stock, voting securities or other Equity Interests of each Subsidiary of the Company is duly authorized, validly issued, fully paid, nonassessable and free of any preemptive rights, and all such securities are owned by the Company or another wholly-owned Subsidiary of the Company and are owned free and clear of all Liens other than the Permitted Liens. Except as set forth in Section 3.2(b) of the Company Disclosure Schedule, there are no (i) preemptive rights, outstanding options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or other rights of any kind which obligate the Company or any of its Subsidiaries

to issue or deliver any shares of capital stock, voting securities or other Equity Interests of any Subsidiary of the Company or any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other Equity Interest of a Subsidiary of the Company, (ii) outstanding obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any securities or obligations convertible into or exchangeable into or exercisable for any shares of capital stock, voting securities or other Equity Interests of a Subsidiary of the Company; or (iii) other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of any Subsidiary of the Company to which the Company or any of its Subsidiaries is a party. None of the Subsidiaries of the Company owns any Company Common Stock.

          (c) Except as described in Section 3.2(c) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries directly or indirectly owns any Equity Interest, or any Equity Interest convertible into or exchangeable or exercisable for Equity Interests or similar interests in, any Person (other than the Company Subsidiaries).

          (d) Except as set forth in Section 3.2(d) of the Company Disclosure Schedule, the Preferred Stock Investment Documents and any of the documents, instruments and agreements entered into in connection with the Transactions contemplated herein and therein, there are not, as of the date hereof, (i) any registration rights agreements or (ii) any stockholder agreements, voting trusts, or other agreements or understandings to which the Company is a party or by which it is bound relating to the voting of any shares of the capital stock of the Company.

     3.3 Authority; Noncontravention; Voting Requirements .

          (a) The Company has all necessary corporate power and authority to execute and deliver this Agreement and, subject to obtaining the Company Stockholder Approval, to perform its obligations hereunder and to consummate the Merger and any other Transactions contemplated hereby to which it is a party. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Merger and any other Transactions contemplated hereby to which it is a party, have been duly authorized and approved by its Board of Directors acting upon a receipt of a recommendation by the Special Committee, and except for obtaining the Company Stockholder Approval for the adoption of this Agreement and the consummation of the Merger and any other Transactions contemplated hereby to which it is a party and the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate action on the part of the Company is necessary to authorize the execution, delivery and performance by the Company of this Agreement and the consummation by it of the Merger and any other Transactions contemplated by hereby to which it is a party. This Agreement has been duly executed and delivered by the Company and, assuming due authorization, execution and delivery hereof by 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, fraudulent transfer, reorganization, moratorium and other similar laws of general application affecting or relating to the enforcement of creditors’ rights generally and (ii) is subject to general principles

of equity, whether considered in a proceeding at law or in equity (the “ Bankruptcy and Equity Exception ”).

          (b) The Company’s Board of Directors, at a meeting duly called and held and acting upon receipt of a recommendation by the Special Committee, has duly (i) determined that this Agreement and the Merger are advisable and fair to and in the best interests of the Company and its stockholders (other than holders of the Rollover Shares and the Preferred Stock issued in connection with the Preferred Stock Investment and the Preferred Stock Investment Option (if exercised) in each case as to which no determination has been made); (ii) authorized and approved the execution, delivery and performance of this Agreement, the Voting Agreement, each Employment Agreement, the Rollover Financing Documents, the Bridge Loan Documents, and the Preferred Stock Documents, and the related agreements, documents and instruments contemplated thereby, and the consummation of the Merger; and (iii) resolved to recommend that the stockholders of the Company adopt this Agreement and directed that this Agreement be submitted for consideration by the stockholders of the Company at the Company Stockholders Meeting.

          (c) Except as specifically set forth in Section 3.3(c) of the Company Disclosure Schedule and except for any agreements, documents or instruments entered into in connection with the Rollover Financing, the Preferred Stock Investment, the Preferred Stock Investment Option (if exercised), and the Bridge Loan, neither the execution and delivery of this Agreement by the Company nor the consummation by the Company of the Transactions, nor compliance by the Company with any of the terms or provisions hereof, will (i) conflict with or violate any material provision of the Company Charter Documents or any of the Subsidiary Documents or (ii) assuming that the authorizations, consents and approvals referred to in Section 3.4 and the Company Stockholder Approval are obtained and the filings referred to in Section 3.4 are made, (x) conflict with or violate in any material respect any Law, judgment, writ or injunction of any Governmental Authority applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, or (y) violate, conflict with, result in the loss of any benefit under, constitute a default (or an event which, with notice or lapse of time, or both, would constitute a default) under, result in the termination of or a right of termination or cancellation under, accelerate the performance required by, or result in the creation of any Lien, other than the Permitted Liens, upon any of the respective properties or assets of, the Company or any of its Subsidiaries, in each case, in any material respect, under, any of the terms, conditions or provisions of any written loan or credit agreement, debenture, note, bond, mortgage, indenture, deed of trust, license, lease, contract or other agreement, instrument or obligation (each, a “ Contract ”) or Permit, to which the Company or any of its Subsidiaries is a party, or by which they or any of their respective properties or assets may be bound or affected, other than, in each case, any such violation, conflict, default, termination, cancellation, acceleration or Lien that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

          (d) Assuming that the representations and warranties of Parent and Merger Sub in Section 4.11 are true, the affirmative vote (in person or by proxy) of the holders of a majority of the outstanding shares of Company Common Stock at the Company Stockholders Meeting or any adjournment or postponement thereof in favor of the adoption of this Agreement and consummation of the Merger (the “ Company Stockholder Approval ”) is the only vote or

approval of the holders of any class or series of capital stock of the Company or any of its Subsidiaries which is necessary under the DGCL to adopt this Agreement and approve the Transactions.

     3.4 Approvals .

          The execution, delivery and performance of this Agreement by the Company and the consummation by the Company of the Transactions do not and will not require any consent, approval, or other authorization of, or filing with, or notification to any Governmental Authority by the Company, other than: (a) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware; (b) the filing with the Securities and Exchange Commission (the “ SEC ”) of (i) a proxy statement (as amended or supplemented from time to time, the “ Proxy Statement ”) relating to the Company Stockholders Meeting in accordance with and under the Securities Exchange Act of 1934, as amended (with the rules and regulations promulgated thereunder referred to herein as the “ Exchange Act ”), (ii) the related Rule 13E-3 Transaction Statement (the “ Schedule 13E-3 ”), if applicable, and (iii) any other schedules, reports, and documents under and in compliance with the Exchange Act and the Securities Act as may be required in connection with this Agreement and the Transactions; (c) any filings required by, and any approvals required under, the rules and regulations of the OTC Bulletin Board; (d) any filings, waivers or approvals as may be required under any Health Care Laws, all of which are set forth on Section 3.4 of the Company Disclosure Schedule; and (e) any other necessary consents, approvals, franchises, licenses, orders, authorizations, registrations, declarations, filings, notices, applications, certifications, permits, waivers and exemptions, except, in each case, where the failure to obtain such other consents, approvals, authorizations or permits, or to make such filings or notifications, had not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

     3.5 Company SEC Documents; Undisclosed Liabilities .

          (a) Except as set forth on Section 3.5(a) of the Company Disclosure Schedule, Since January 1, 2007, the Company has filed and furnished all reports, schedules, forms, prospectuses, documents, and registration, proxy and other statements required to be filed by it pursuant to the Exchange Act, the Securities Act and the rules and regulations of the SEC (collectively, and in each case, including all exhibits and schedules thereto and documents incorporated by reference therein, the “ Company SEC Documents ”). None of the Company’s Subsidiaries is required to file periodic reports with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. As of their respective effective dates (in the case of Company SEC Documents that are registration statements filed pursuant to the requirements of the Securities Act) and as of their respective SEC filing dates (in the case of all other Company SEC Documents) or if amended as of the latest amendment date, the Company SEC Documents complied in all material respects with the requirements of the Exchange Act, the Securities Act and the Sarbanes-Oxley Act, as the case may be, applicable to such Company SEC Documents, and none of the Company SEC Documents as of such respective dates 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.

          (b) The consolidated financial statements of the Company (and the related notes) included in the Company SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP (except, in the case of unaudited quarterly statements, as permitted by the rules related to Quarterly Reports on Form 10-Q promulgated under the Exchange Act) applied on a consistent basis during the periods presented (except as may be indicated therein or in the notes thereto) and fairly present 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 indicated (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments and to any other adjustments described therein including the notes thereto, none of which has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect).

          (c) Since the enactment of the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act” ), (i) the Company has been and is in compliance in all material respects with (A) the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder and (B) except as set forth in Section 3.5(c)(i)(B) of the Company Disclosure Schedule, the applicable listing and corporate governance rules and regulations of the OTC Bulletin Board, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect (ii) the Company has established and maintains disclosure controls and procedures to satisfy the requirements in all material respects of Rule 13a-15 under the Exchange Act that are designed to ensure that material information relating to the Company and required to be disclosed by the Company, including its Subsidiaries, is made known to the Chief Executive Officer (or the principal executive officer) and the Chief Financial Officer (or the principal financial officer) of the Company by others within those entities, and is in the reports that it files under the Exchange Act and is in accordance with the Exchange Act, the Securities Act and the rules and regulations of the SEC, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, and (iii) the management of the Company has disclosed, based on its most recent evaluation prior to the date hereof, to the Company’s auditors and the audit committee of the Company’s Board of Directors (A) any known significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (B) any known fraud or allegation of fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting, except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. To the Knowledge of the Company, there is no reason to believe that its auditors and its Chief Executive Officer (or the principal executive officer) and the Chief Financial Officer (or the principal financial officer) will not be able to give the certifications and attestations required pursuant to the rules and regulations of the SEC and under the Sarbanes-Oxley Act when due. There are no outstanding loans made by the Company or any of its Subsidiaries to any executive officer (as defined in Rule 3b-7 under the Exchange Act) or director of the Company.

          (d) To the Company’s Knowledge, (i) from September 30, 2006 through the date of this Agreement, none of the Company or any of its Subsidiaries, or any director, officer, employee or independent auditor of the Company or any of its Subsidiaries, has received or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls relating to periods after September 30, 2006, and (ii) since September 30, 2006 through the date of this Agreement, no attorney representing the Company or any of its Subsidiaries has reported evidence of a material violation of securities Laws, breach of fiduciary duty or similar violation, relating to periods after September 30, 2006, by the Company or any of its officers, directors, employees or agents to the Company’s Board of Directors or any committee thereof or to any director or officer of the Company.

          (e) Neither the Company nor any of its Subsidiaries has any material liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise, whether known or unknown) whether or not required, if known, to be reflected or reserved against on a consolidated balance sheet of the Company prepared in accordance with GAAP or the notes thereto, other than those which have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, except liabilities (i) as and to the extent reflected or reserved against on the unaudited balance sheet of the Company and its Subsidiaries as of September 30, 2008 (the “ Balance Sheet Date ”) (including the notes thereto) included in the Company SEC Documents filed by the Company and publicly available prior to the date of this Agreement, (ii) incurred after the Balance Sheet Date in the ordinary course of business, (iii) that, individually or in the aggregate, have not had and would not reasonably be expected to have a Company Material Adverse Effect or (iv) obligations arising under this Agreement or any of the documents, instruments or agreements entered into in connection with the Transactions. Except as set forth in Section 3.5(e) of the Company Disclosure Schedule, neither the Company nor its Subsidiaries has any Indebtedness and is not a guarantor or indemnitor of any Indebtedness of any other Person.

     3.6 Absence of Certain Changes or Events .

          Since the Balance Sheet Date, except as otherwise contemplated or permitted by this Agreement, (a) there have not been any events, changes, conditions, circumstances, occurrences or state of facts that, individually or in the aggregate, have had or would reasonably be expected to have a Company Material Adverse Effect, (b) there has not been any dedication, setting aside as payment of any dividend or other distribution with respect to any of the Company Securities or the capital stock any of the Company’s Subsidiaries, and (c) there has not been any material change in accounting methods, principles or practices employed by the Company. Since the Balance Sheet Date, the Company and its Subsidiaries have carried on and operated their respective businesses in all material respects in the ordinary course of business consistent with past practice.

     3.7 Legal Proceedings .

          Except as set forth in the Company SEC Documents or as set forth in Section 3.7 of the Company Disclosure Schedule, (a) there is no pending or, to the Knowledge of the

Company, threatened, legal, administrative, arbitral or other proceeding, claim, suit or action against, or governmental or regulatory investigation of, the Company or any of its Subsidiaries, nor is there any injunction, order, judgment, ruling or decree imposed (or, to the Knowledge of the Company, threatened to be imposed) upon the Company, any of its Subsidiaries or the assets of the Company or any of its Subsidiaries, by or before any Governmental Authority, in each case, as has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Except as set forth in Section 3.7 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject to any settlement agreement or stipulation, in each case, as has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect and (b) there is no pending legal, administrative, arbitral, or other proceeding, claim, suit or action that challenges, or that, if decided adversely to the Company would have the effect of preventing, delaying, making illegal or otherwise interfering with, the Merger.

     3.8 Compliance With Laws .

          Except as set forth in Section 3.8 of the Company Disclosure Schedule, the Company and its Subsidiaries are (and since January 1, 2006 have been) in compliance with all laws (including common law), statutes, ordinances, codes, rules, regulations, decrees, requirements and orders (collectively, “ Laws ”) applicable to the Company or any of its Subsidiaries, any of their properties or other assets or any of their businesses or operations, except where the failure to be in such compliance has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Since January 1, 2006, neither the Company nor any of its Subsidiaries has received written notice to the effect that a Governmental Authority claimed or alleged that the Company or any of its Subsidiaries was not in compliance in any material respect with all Laws applicable to the Company or any of its Subsidiaries, any of their properties or other assets or any of their businesses or operations, except where such claims or alleged claims have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and each of its Subsidiaries has obtained and is in compliance with all Permits, licenses, certifications, approvals, registrations, consents, authorizations, franchises, variances, exemptions and orders issued or granted by a Governmental Authority necessary to conduct its business as presently conducted, except where the absence of which has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

     3.9 Change of Control Agreements .

          Except as set forth in Section 3.3(c) of the Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the Merger or the other Transactions will (either alone or in conjunction with any other event) (a) result in any payment or benefit to any employee of the Company or any of its Subsidiaries or (b) result in any payment or benefit to any director or officer of the Company or any of its Subsidiaries.

     3.10 Tax Matters .

          (a) Each of the Company and its Subsidiaries has timely filed, or has caused to be timely filed on its behalf (taking into account any extension of time within which to file), all material Tax Returns required to be filed by it, and all such filed Tax Returns are correct and complete in all material respects. The Company and each of its Subsidiaries has timely paid (or has had paid on its behalf) all material Taxes due and owing (whether or not shown on any return).

          (b) The unpaid Taxes of the Company and its Subsidiaries (i) did not, as of the Balance Sheet Date, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth on the face of the unaudited balance sheet of the Company and its Subsidiaries as of December 31, 2007 (rather than in any notes thereto) and (ii) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company and its Subsidiaries in filing their Tax Returns. Since December 31, 2007, neither the Company nor any of its Subsidiaries has incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in GAAP, outside the ordinary course of business consistent with past custom and practice.

          (c) No deficiency with respect to Taxes has been proposed, asserted or assessed against the Company or any of its Subsidiaries and no officer or director (or employee responsible for Tax matters) of the Company or any of its Subsidiaries, expects any authority to assess any additional Taxes for any period for which Tax Returns have been filed.

          (d) The Company and its Subsidiaries have disclosed on their respective Tax Returns all positions taken therein that could give rise to a substantial understatement of Tax within the meaning of Section 6662 of the Code or any similar provision of applicable Law, and are in possession of supporting documentation as may be required under any such provision.

          (e) The Company and each of its Subsidiaries have withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party, except where the failure to make such withholdings or payments of Taxes has not had and would not reasonably be expected to have a Company Material Adverse Effect.

          (f) Neither the Company nor any of its Subsidiaries has been subject to a written claim by a taxing authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

          (g) Neither the Company nor any of its Subsidiaries has constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code.

          (h) No audit or other administrative or court proceedings are pending or being conducted or, the Knowledge of the Company, have been threatened by or with any Governmental Authority with respect to Taxes of the Company or any of its Subsidiaries and no written notice thereof has been received.

          (i) Except as set forth in Section 3.10(i) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any contract, agreement, plan or other arrangement that, individually or collectively, could give rise to the payment of any amount which would not be deductible by reason of Section 280G of the Code or would be subject to withholding under Section 4999 of the Code.

          (j) The Company has made available to Parent correct and complete copies of (i) all income and franchise Tax Returns of the Company and its Subsidiaries for the preceding three taxable years and (ii) any audit report or statement of deficiency issued within the last three years (or otherwise with respect to any audit or proceeding in progress) relating to income and franchise Taxes of the Company or any of its Subsidiaries.

          (k) As of the Closing, neither the Company nor any of its Subsidiaries will be a party to any tax allocation, tax sharing, tax indemnity or similar agreement with respect to Taxes.

          (l) There are no liens for Taxes (other than Taxes not yet due and payable or Taxes which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established on the Company’s financial statements in accordance with GAAP) upon any of the assets or properties of the Company or any of its Subsidiaries.

          (m) Neither the Company nor any of its Subsidiaries has ever been a member of an “affiliated group” (as defined in Section 1504(a) of the Code) except for any group of which the Company was the common parent corporation.

          (n) Neither the Company nor any of its Subsidiaries will be required to include any item of income in, or exclude any deduction in calculating, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any: (i) change in method of accounting for a taxable period ending on or prior to the Closing Date; (ii) “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign Tax law) executed on or prior to the Closing Date; or (iii) installment sale or open transaction disposition made on or prior to the Closing Date.

          (o) Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of any Taxes or agreed to any extension of time with respect to an assessment or deficiency for Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course).

          (p) Except as set forth in Section 3.10(p) of the Company Disclosure Schedule, all arrangements that would be considered “deferred compensation” for purposes of Section 409A of the Code are in compliance with Section 409A of the Code. No Option was issued with an exercise price that was less than the fair market value of the Company’s Common Stock on the date of grant.

          (q) The Company has not been a “United States real property holding corporation” within the meaning of Section 897 of the Code during the five-year period ending on the Closing Date.

          (r) Except as disclosed in its Tax Returns, neither the Company nor any of its Subsidiaries has received approval to make or agreed to a change in any accounting method or has any written application pending with any taxing authority requesting permission for any such change. To the Knowledge of the Company, there are no written requests for rulings or determinations in respect of any Taxes or Tax Returns pending between the Company or any Subsidiary of the Company and any taxing authority.

     3.11 Employee Benefits and Labor Matters .

          (a)  Section 3.11(a) of the Company Disclosure Schedule sets forth a correct and complete list of (i) all material “employee benefit plans” (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”)), (ii) all material employee pension benefit plans (as defined in Section 3(2) of ERISA), (iii) all employee welfare benefit plans (as defined in Section 3(1) of ERISA), and (iv) all other material employee benefit plans, policies, agreements or arrangements, and payroll practices, bonus or other incentive compensation, stock option, stock purchase, equity or equity-based compensation, deferred compensation, change in control, retention, termination, supplemental retirement, severance, sick leave, vacation, loans, salary continuation, health or life insurance, fringe benefits and educational assistance plan, policies, agreements or arrangements, written or otherwise, as amended, modified or supplemented, for the benefit of, or relating to, any former or current employee, officer, director, independent contractor or consultant (or any of their beneficiaries) of the Company, any of its Subsidiaries, or any entity required to be aggregated with the Company or any of its Subsidiaries pursuant to Code Section 414 (an “ ERISA Affiliate ”) and with respect to which the Company or any of its Subsidiaries has any obligation or liability, contingent or otherwise, but excluding any employment or individual consulting agreements (collectively, the “ Company Plans ”). No Company Plan is subject to Title IV of ERISA, is a “multiemployer plan”, as defined in Section 3(37) of ERISA (a “ Multiemployer Plan ”), is a “voluntary employees’ beneficiary association”, as defined by Code Section 501(c)(9), is an “employee stock ownership plan”, as defined by Code Section 4975(e)(7) or otherwise invests in “employer securities”, as defined in Code Section 409(l), or is or has been subject to Sections 4063 or 4064 of ERISA. No Company, Subsidiary or ERISA Affiliate has either completely or partially withdrawn from a multiemployer plan within the past six years or has incurred any liability under Title IV of ERISA that remains unsatisfied.

          (b) Correct and complete copies of the following documents with respect to each of the Company Plans have been made available to Parent by the Company to the extent applicable: (i) each such written Company Plan, including (without limitation) all material amendments thereto and all related trust documents, administrative service agreements, funding arrangements, group annuity contracts, insurance contracts, policies pertaining to liability insurance covering the fiduciaries for each Company Plan, registration statements (including all attachments), prospectuses, and all amendments thereto; (ii) the three most recent annual reports on Form 5500 series, with accompanying schedules and attachments, filed with respect to each Company Plan required to make such a filing; (iii) the most recent actuarial report, if any; (iv) the most recent IRS determination letters, including with respect to any such Company Plan and related trust which is intended to qualify under Sections 401(a) and 501(a) of the Code, respectively, the most recent favorable determination or opinion letter from the IRS as to its qualified status under the Code; (v) the most recent summary plan descriptions and summaries of

material modifications; (vi) written summaries of all non-written Company Plans; (vii) the latest reports which have been filed with the U.S. Department of Labor with respect to each Company Plan required to make such filing; (viii) financial and other information regarding current and projected liabilities with respect to each Company Plan for which the filings described in (ii), (iv) or (vii) above are not required under ERISA; and (ix) all correspondence between the Internal Revenue Service and/or the Department of Labor and the Company and/or any of the Company’s Subsidiaries.

          (c) The Company Plans have been established, maintained and administered, in all material respects, in accordance with their terms and with all applicable provisions of ERISA, the Code and other Laws, except where the failure to be maintained and administered has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

          (d) The Company Plans intended to qualify under Section 401 of the Code have received a favorable determination or opinion letter from the IRS indicating that they are so qualified. Nothing has occurred with respect to the Company Plans since the issuance of such favorable determination or opinion letter that could reasonably be expected to impair such favorable determination or opinion or otherwise cause the loss or revocation of the qualified status of such plan, or the imposition of any material liability, penalty or tax under ERISA or the Code. Neither the Company, nor any Subsidiary, nor, to the Knowledge of the Company, any other “disqualified person” or “party in interest”, as defined in Code Section 4975 and ERISA Section 3(14), respectively, has engaged in any “prohibited transaction”, as defined in Code Section 4975 or ERISA Section 406 with respect to any Company Plan, in each case, except for any prohibited transaction that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

          (e) (i) (A) No Company Plan is now or at any time has been subject to Part 3, Subtitle B of Title I of ERISA or Title IV of ERISA, and (B) none of the Company Plans promises or provides retiree medical, death, disability or other retiree welfare benefits to any person (other than continuation coverage to the extent required by Law, whether pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985 or otherwise); (ii) to the Company’s Knowledge, no fiduciary of any Company Plan has breached any of the responsibilities or obligations to such Company Plan imposed upon fiduciaries under Title I of ERISA; (iii) the Company and each of its Subsidiaries have performed all material obligations required to be performed by them under, and are not in any material respect in default under or in violation of, any Company Plan, and, to the Company’s Knowledge, there has been no default or violation by any other Person with respect to, any of the Company Plans; and (iv) all contributions to, and payments from, the Company Plans which have been required to be made in accordance with the Company Plans have been timely made (including without limitation any insurance premiums due under an insurance policy related to a Company Plan), in each case, except for any untimely contributions that that has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect

          (f) There are no pending , or to the Knowledge of the Company, threatened actions, investigations, proceedings, claims or lawsuits arising from or relating to the Company

Plans or the assets thereof (other than routine benefit claims), that have had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

          (g) Except as contemplated by Section 2.3(a) and Section 2.3(b) and as set forth in the Company Disclosure Schedule, neither the execution and delivery of this Agreement nor the consummation of the Merger or the other Transactions will (i) increase any benefits otherwise payable under any Company Plan, (ii) result in the acceleration of the time of payment or vesting of any rights with respect to benefits under any such plan, or (iii) require any contributions or payments to fund any obligations under any Company Plan.

          (h) Except as set forth in Section 3.11(h) of the Company Disclosure Schedule:

               (i) Since the Balance Sheet Date, neither the Company nor any of its Subsidiaries has agreed to any increase in benefits under any Company Plan (or the creation of new benefits thereunder) or a change in employee coverage which would materially increase the expense of maintaining any Company Plan;

               (ii) The Company and each of its Subsidiaries have complied in all material respects with (A) the notice and continuation coverage requirements of Section 4980B of the Code and the regulations thereunder with respect to each Company Plan that is a group health plan within the meaning of Section 5000(b)(1) of the Code, and (B) the applicable provisions of the Health Insurance Portability and Accountability Act of 1996 (“ HIPAA ”) and the regulations issued thereunder;

               (iii) There are no pending audits or investigations by any Governmental Authority involving any Company Plan, and no termination proceedings involving any Company Plan, nor, to the Company’s Knowledge are there any facts which could reasonably give rise to any material liability in the event of any such audit, investigation, claim, suit or proceeding;

               (iv) To the extent that any Company Plan constitutes a “non-qualified deferred compensation plan” within the meaning of Section 409A of the Code, such Company Plan complies as to form and has been operated in good faith compliance with Section 409A of the Code; and

               (v) No payment which is or may be made by, from or with respect to any Company Plan, to any employee, former employee, director or agent of the Company, any of its Subsidiaries, or any ERISA Affiliate, either alone or in conjunction with any other payment, event or occurrence that constitutes a payment that (A) will or could properly be characterized as an “excess parachute payment” under Section 280G of the Code (or any corresponding provision of state, local or foreign Tax Law) and (B) will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provision of state, local or foreign Tax Law).

          (i) None of the employees of the Company or its Subsidiaries is represented in his or her capacity as an employee of the Company or any of its Subsidiaries by any labor organization. Neither the Company nor any of its Subsidiaries has recognized any labor organization, nor has any labor organization been elected as the collective bargaining agent of any employees of the Company or any of its Subsidiaries, nor has the Company or any of its

Subsidiaries entered into any collective bargaining agreement or union contract recognizing any labor organization as the bargaining agent of any employees. To the Knowledge of the Company, there is no union organization activity involving any of the employees of the Company or any of its Subsidiaries pending or threatened. There is no picketing pending or, to the Knowledge of the Company, threatened, and there are no strikes, slowdowns, work stoppages, other job actions, lockouts or other material labor disputes involving any of the employees of the Company or any of its Subsidiaries pending or, to the Knowledge of the Company, threatened. There are no complaints, charges or claims against the Company or any of its Subsidiaries pending or, to the Knowledge of the Company, threatened before any Governmental Authority or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by the Company or any of its Subsidiaries, of any individual, that have had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

          (j) The Company and its Subsidiaries are in compliance in all material respects with all Laws relating to employees and the employment of labor, including, but not limited to, all such Laws relating to wages, hours, the Worker Adjustment and Retraining Notification Act and any similar state or local “mass layoff” or “plant closing” laws (“ WARN ”), collective bargaining, discrimination, disability rights or benefits, equal opportunity, civil rights, affirmative action, safety and health, workers’ compensation, employee benefits, severance payments, labor relations, employee leave issues, occupational safety and health requirements, and the collection and payment of withholding and/or social security taxes and any similar tax. There has been no “mass layoff” or “plant closing” (as defined by WARN) with respect to the Company or any of its Subsidiaries since December 31, 2005.

     3.12 Environmental Matters .

     Except as set forth on Section 3.12 of the Company Disclosure Schedule or as would not have, either individually or in the aggregate, a Company Material Adverse Effect:

          (a) to the Company’s Knowledge, the Company and its Subsidiaries are in compliance with all applicable Environmental Laws, which compliance includes obtaining, maintaining and revision of Environmental Permits;

          (b) neither the Company nor any of its Subsidiaries has received any written notice of alleged, actual or potential responsibility for, or any written inquiry or written notice of an investigation regarding, any Release or threatened Release of Hazardous Materials at the Leased Real Property or alleged violation of, or non-compliance with, any Environmental Law by the Company nor does the Company have Knowledge of any information which would reasonably be expected to form the basis of any such notice or claim, except in each case for such notices or inquiries as would not reasonably be expected to require Remedial Action by or result in liability of the Company or any of its Subsidiaries under applicable Environmental Laws;

          (c) no written notice, demand, citation, summons, complaint or order has been received or consent decree or settlement has been entered into by, or is pending against, the Company or any of its Subsidiaries that remains outstanding or unresolved, or, to the Knowledge

of the Company, is threatened by any Person against the Company or any of its Subsidiaries with respect to any alleged violation of, or liability under, any applicable Environmental Laws;

          (d) no penalty has been assessed against the Company or any of its Subsidiaries that remains outstanding or unresolved, with respect to any alleged violation of, or liability under, any applicable Environmental Laws;

          (e) to the Company’s Knowledge, none of the Leased Real Property contains any Hazardous Materials as a result of any activity of the Company or any of its Subsidiaries in amounts exceeding the levels permitted by applicable Environmental Laws;

          (f) the Company does not have Knowledge of any potential liabilities that may be imposed on the Company or any of its Subsidiaries as a result of the Company or any of its Subsidiaries having transported or having arranged for the transportation of Hazardous Materials to an off-site location that remain outstanding and unresolved; and

          (g) neither the Company nor any of its Subsidiaries has generated, stored, used, emitted, discharged or disposed of any Hazardous Materials except in compliance with applicable Environmental Laws.

     3.13 Contracts .

          (a) Except for the documents, instruments and agreements to be entered into by the Company pursuant to this Agreement and in connection with the Transactions, set forth in Section 3.13(a) of the Company Disclosure Schedule is a list of (i) each Contract that would be required to be filed as an exhibit to an Annual Report on Form 10-K under the Exchange Act if such report was filed by the Company with the SEC on the date hereof, and (ii) each of the following to which the Company or any of its Subsidiaries is a party: (A) any Contract that purports to limit, curtail or restrict the ability of the Company or any of its existing or future Subsidiaries or Affiliates to compete in any geographic area or line of business or restrict the Persons to whom the Company or any of its existing or future Subsidiaries or Affiliates may sell products or deliver services, (B) any partnership agreement, joint venture agreement, licensing agreement or other Contract with respect to marketing alliance or involving a sharing of profits, losses, costs or liabilities of any Person by the Company or any of its Subsidiaries, (C) any Contract for the acquisition, sale or lease of material properties or assets (including, by merger, consolidation, business combination, purchase or sale of stock or assets or otherwise) entered into since January 1, 2007 in excess of $250,000, (D) any Contract with any (x) Governmental Authority or (y) director or executive officer of the Company or any of its Subsidiaries or any Affiliate of the Company, (E) any loan or credit agreement, mortgage, indenture, note or other Contract or instrument evidencing indebtedness for borrowed money by the Company or any of its Subsidiaries or any Contract or instrument pursuant to which indebtedness for borrowed money may be incurred or is guaranteed by the Company or any of its Subsidiaries, and including any Contract regarding any bonding facility or financial assurance program, (F) any financial derivatives master agreement or confirmation, or futures account opening agreement and/or brokerage statement, evidencing financial hedging or similar trading activities, (G) any voting agreement or registration rights agreement, (H) any mortgage, pledge, security agreement, deed of trust or other Contract granting a Lien on any material property or assets of the Company

or any of its Subsidiaries, except as provided in connection with the Transactions contemplated herein and therein, (I) any customer, client or supply Contract that involves gross revenue in fiscal year 2008 in excess of $100,000 or is expected to involve gross revenue in fiscal year 2009 in excess of $100,000, (J) any Contract (other than customer, client or supply Contracts) that involves gross revenue (whether or not measured in cash) in fiscal year 2007 or 2008 of greater than $250,000 or is expected to involve gross revenue in fiscal year 2009 in excess of $250,000, (K) any collective bargaining agreement, (L) any “standstill” or similar agreement, (M) to the extent material to the business or financial condition of the Company and its Subsidiaries, taken as a whole, any (1) indemnification Contract (other than pursuant to Section 3.13(Q) ), (2) merchandising, sales representative or distribution Contract or (3) Contract granting a right of first refusal or first negotiation, (N) any Contract for the treatment, storage, disposal and/or transportation of low-level radioactive waste and low-level mixed waste materials and related field services, (O) any other Contract which is material to the operation, or which is outside the ordinary course, of the Company’s and its Subsidiaries’ businesses, (P) any Contract (1) relating to the employment of any employee or retention of any consultant or independent contractor that requires payments of base salary or amounts in excess of $100,000 on an annual basis to any Person, (2) the terms of which obligate or may in the future obligate the Company or any of its Subsidiaries to make any severance, termination or similar payment to any current employee following termination of employment or resulting solely from the consummation of the Transactions contemplated by this Agreement, or (3) pursuant to which the Company or any of its Subsidiaries is obligated to make any bonus payment (other than accrued on the Company’s financial statements or payments constituting sales commissions or sales-related bonuses) in excess of $100,000 to any current or former employee or director, (Q) any Contract which provides for indemnification of any officer, director, or employee, (R) any lease or rental Contract, (S) any product design or development Contract, (T) any consulting Contract, (U) any license or royalty Contract or any other Contract relating to any Intellectual Property Rights, and (V) any commitment or agreement to enter into any of the foregoing (the Contracts and other documents required to be listed on Section 3.13(a) of the Company Disclosure Schedule, together with any and all other Contracts of such type entered into in accordance with Section 5.2 , each a “ Material Contract ”). The Company has heretofore made available to Parent true, correct and complete copies of each Material Contract in existence as of the date hereof, together with any and all amendments and supplements thereto and “side letters” and similar documentation relating thereto.

          (b) Each of the Material Contracts is valid, binding and in full force and effect and is enforceable in accordance with its terms by the Company and its Subsidiaries party thereto, subject to the Bankruptcy and Equity Exception, except for those which have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Except as set forth in Section 3.13(b) of the Company Disclosure Schedule, no approval, consent or waiver of any Person is needed in order that any Material Contract continue in full force and effect in all material respects following the consummation of the Transactions. Except as set forth in Section 3.13(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is in default under any Material Contract, nor does any condition exist that, with notice or lapse of time or both, would constitute a default thereunder by the Company and its Subsidiaries party thereto, except for such defaults, individually or in the aggregate, that do not have and would not reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, no other party to any

Material Contract is in default thereunder, nor does any condition exist that with notice or lapse of time or both would constitute a default by any such other party thereunder, except for such defaults as, individually or in the aggregate, do not have and would not reasonably be expected to have a Company Material Adverse Effect. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has received any notice of termination or cancellation under any Material Contract.

     3.14 Title to Properties .

          (a) Neither the Company nor any of its Subsidiaries owns or has ever owned any real property.

          (b)  Section 3.14(b) of the Company Disclosure Schedule contains a true and complete list of all real property leased, subleased, licensed or otherwise occupied (whether as tenant, subtenant or pursuant to other occupancy arrangements) by the Company or any of its Subsidiaries (collectively, including the improvements thereon, the “ Leased Real Property ”), and for each Leased Real Property, identifies the street address of such Leased Real Property. True and complete copies of all agreements under which the Company or any Subsidiary thereof is the landlord, sublandlord, tenant, subtenant, or occupant that have not been terminated or expired as of the date hereof have been made available to Parent. Neither the Company nor any of its Subsidiaries has assigned its interest under any Leased Real Property or sublet any of such premises covered thereby.

     3.15 Intellectual Property .

          (a) All of the Company Intellectual Property and Company Technology that is registered or for which an application to register has been filed and remains pending are set forth on Section 3.15(a) of the Company Disclosure Schedule. Except as set forth in Section 3.15(a) of the Company Disclosure Schedule, the Company or one of its Subsidiaries is the sole and exclusive owner of, or has valid and continuing rights to use and license (pursuant to a written license listed in Section 3.15(a) of the Company Disclosure Schedule, except for commercial-off-the-shelf Software) all right, title and interest in the Company Intellectual Property and Company Technology set forth on Section 3.15(a) of the Company Disclosure Schedule, free and clear of all Liens other than Permitted Liens, except where the failure to have such rights, individually or in the aggregate, does not have and would not reasonably be expected to have a Company Material Adverse Effect. The Company Intellectual Property and Company Technology set forth on Section 3.15(a) of the Company Disclosure Schedule includes all Intellectual Property Rights and Technology used by the Company and its Subsidiaries and necessary to operate the businesses of the Company and its Subsidiaries as presently conducted in the ordinary course of business consistent with past practice. All of the Company’s and its Subsidiaries’ rights in the Company Intellectual Property and Company Technology are valid and enforceable subject to the Bankruptcy and Equity Exception, except for those which have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. The Company and its Subsidiaries have filed or caused to be filed all affidavits, renewals, statements of use, maintenance filings and declarations, and have paid or caused to be paid all fees and charges necessary to maintain in good standing the Company Intellectual Property and Company Technology identified in Section 3.15(a) of the

Company Disclosure Schedule, except where the failure to have made such filings or payments, individually or in the aggregate, does not have and would not reasonably be expected to have a Company Material Adverse Effect. The Company and its Subsidiaries take and have taken all commercially reasonable actions to maintain and preserve their Company Intellectual Property and their Company Technology, except where the failure to do so does not have and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

          (b) To the Knowledge of the Company, (i) no other Person has any rights to any of the Company Intellectual Property or Company Technology owned or used by the Company or any of its Subsidiaries except pursuant to contracts or licenses specified on Section 3.15(b) of the Company Disclosure Schedule, (ii) no other Person is interfering with, infringing upon, misappropriating or otherwise violating any Company Intellectual Property, Company Technology, or any such Intellectual Property Rights that the Company or any of its Subsidiaries own or use, (iii) there are no legal proceedings pending or, to the Knowledge of the Company, threatened challenging the ownership, enforceability, validity or use of any Company Intellectual Property or Company Technology owned by the Company or any of its Subsidiaries, (iv) no Company Intellectual Property or Company Technology is subject to any outstanding order or claim, and (v) none of the Company or any of its Subsidiaries or any of its licensees has infringed, misappropriated or otherwise violated, or is infringing, misappropriating or otherwise violating, any third party Intellectual Property Rights or any other third party proprietary right, nor has any such claim been made against any of them, nor, to the Knowledge of the Company, is there any basis for such a claim, except, in each case, those infringements, violations, claims or misappropriations which have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

     3.16 Insurance .

      Section 3.16 of the Company Disclosure Schedule sets forth a correct and complete list of all insurance policies (including information on the premiums payable in connection therewith and the scope and amount of the coverage provided thereunder) currently maintained by the Company or any of its Subsidiaries (the “ Policies ”). To the Knowledge of the Company, all of the Policies are in full force and effect, all premiums due and payable thereon have been paid (or financed) and the Company and its Subsidiaries have complied with the provisions of the Policies. Neither the Company nor any of its Subsidiaries is in material breach or default, and neither the Company nor any of its Subsidiaries have taken any action or failed to take any action which, with notice or the lapse of time, would constitute such a breach or default, or permit termination or modification, of any of the Policies, except where such breach or default has not had or would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. No notice of cancellation or termination has been received by the Company with respect to any of the Policies. To the Knowledge of the Company, neither the Company nor any of its Subsidiaries has received any written notice from or on behalf of any insurance carrier issuing such Policies that there will be a non-renewal of such Policies or a material decrease in coverage or a material increase in deductible or self insurance retention. To the Knowledge of the Company, Section 3.16 of the Company Disclosure Schedule sets forth each of the Policies as to which (i) the coverage limit has been reached or (ii) the aggregate

amount of the incurred losses as of the date hereof equals at least seventy-five percent (75%) of the coverage limit therein.

     3.17 Customers and Suppliers .

      Section 3.17 of the Company Disclosure Schedule sets forth a list of all of the Company’s customers that generate at least ten percent (10%) of the Company’s revenues and the ten largest suppliers of the Company and its Subsidiaries, as measured by the dollar amount of purchases therefrom or thereby, during the fiscal year ended December 31, 2008, showing the approximate total sales by the Company and its Subsidiaries to each such customer and the approximate total payments by the Company and its Subsidiaries to each such supplier, during such period as well as any minimum purchase requirements of the Company for the 2009 fiscal year or thereafter. Except as set forth on Section 3.17 of the Company Disclosure Schedule, since the Balance Sheet Date, (i) no customer or supplier listed in Section 3.17 of the Company Disclosure Schedule has terminated its relationship with the Company or its Subsidiaries and (ii) to the Company’s Knowledge, neither the Company nor its Subsidiaries has received written notice from any customer or supplier listed in Section 3.17 of the Company Disclosure Schedule that it intends to terminate or materially reduce or change the pricing or other terms of its business with the Company or its Subsidiaries.

     3.18 Opinion of Financial Advisor .

          The Board of Directors of the Company (including the Special Committee) has received the opinion of Ladenburg Thalmann & Co. Inc. (the “ Fairness Opinion ”), dated April 27, 2009, to the effect that, as of the date of such Fairness Opinion, and subject to the various assumptions, limitations, and qualifications set forth therein, the Merger Consideration to be received by the holders of Company Common Stock (other than Parent, Merger Sub, the Senior Managers and MHR who, in connection with the Transactions, shall contribute their respective Rollover Shares in the Exchange for shares of Merger Sub Non-Voting Common Stock immediately prior to the Closing pursuant to Section 5.15 ) is fair from a financial point of view to the holders (other than t