AGREEMENT AND PLAN OF MERGER

ARTICLE VII  

  ADDITIONAL AGREEMENTS

(a)     Each share of common stock, par value $0.01 per share, of MergerCo issued and outstanding immediately prior to the Effective Time shall be converted into one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation following the Merger.

(b)     Each share of Company Common Stock that is owned by the Company, by any wholly owned Subsidiary of the Company or by Parent, MergerCo or any other wholly owned Subsidiary of Parent shall automatically be canceled and retired and shall cease to exist, and no cash or other consideration shall be delivered or deliverable in exchange therefor.

(c)     Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares to be canceled in accordance with Section 2.1(b)) shall be converted into the right to receive $18.60 per share, net to the seller in cash, payable to the holder thereof, without any interest thereon (the “ Merger Consideration ”), upon surrender and exchange of the Certificate representing such share of Company Common Stock in accordance with the provisions of Section 3.1.

(d)     All shares of Company Common Stock, when converted as provided in Section 2.1(c), shall no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each Certificate previously evidencing such shares shall thereafter represent only the right to receive the Merger Consideration. The holders of Certificates previously evidencing shares of Company Common Stock outstanding immediately prior to the Effective Time shall cease to have any rights with respect to the Company Common Stock except as otherwise provided herein or by law and, upon the surrender of Certificates in accordance with the provisions of Section 3.1, shall only represent the right to receive for their shares of Company Common Stock, the Merger Consideration.

(a)     Each option (collectively, the “ Options ”) granted under the 2002 Amended and Restated Stock Option Plan for Directors (the “ Director Plan ”) or the 2002 Amended and Restated Equity Incentive Plan (the “ Equity Plan ,” and together with the Director Plan, the “ Company Stock Option Plans ”), which is outstanding (whether or not then exercisable) as of immediately prior to the Effective Time, shall become fully vested as of the Effective Time or earlier in accordance with the relevant Company Stock Option Plan. At the Effective Time, upon the surrender and cancellation of the option agreement representing such Option, the Company shall pay to the holder thereof cash in an amount equal to the product of (i) the number of shares of Company Common Stock provided for in such Option and (ii) the excess, if any, of the Merger Consideration over the exercise price per share provided for in such Option, which cash payment shall be treated as compensation and shall be net of any applicable federal or state withholding tax. The Company shall cause all Options issued pursuant to the Director Plan to terminate and cease to be outstanding or of any force or effect immediately following the Effective Time subject only to the right of each holder of an Option to receive the cash payment to which such holder is entitled pursuant to this Section 2.2(a). The Company shall use its reasonable best efforts to take all actions, including such actions as set forth in Section 2.2(a) of the Company Disclosure Schedule, necessary to ensure that all Options issued pursuant to the Equity Plan, to the extent not exercised prior to the Effective Time, shall terminate and be cancelled immediately following the Effective Time and thereafter be of no further force or effect.

(b)     Parent and MergerCo acknowledge that all restricted stock awards granted under the Company Stock Option Plans shall immediately vest and the restrictions associated therewith shall automatically be deemed waived as provided by the Company Stock Option Plans but in no event later than the date on which the Company’s stockholders approve this Agreement.

(a)     At the Effective Time, Parent shall deposit, or shall cause to be deposited, with a bank or trust company as shall be mutually acceptable to Parent and the Company (the “ Exchange Agent ”), for the benefit of the

holders of shares of Company Common Stock for exchange through the Exchange Agent, the aggregate Merger Consideration as provided pursuant to Section 2.1(c) (the “ Exchange Fund ”).

(b)     Promptly after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding shares of Company Common Stock (the “ Certificates ”) whose shares were converted into the right to receive the Merger Consideration pursuant to Section 2.1 (i) a form of letter of transmittal reasonably acceptable to the Company which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent and (ii) instructions for use in surrendering the Certificates in exchange for the Merger Consideration.

(c)     Upon surrender of a Certificate for cancellation to the Exchange Agent together with such letter of transmittal, properly completed and duly executed, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration which such holder has the right to receive in respect of the shares of Company Common Stock formerly represented by such Certificate, and the Certificate so surrendered shall forthwith be canceled. No interest will be paid or accrued on any Merger Consideration payable to holders of Certificates.

(d)     Until surrendered in accordance with this Section 3.1, each such Certificate (other than Certificates representing shares of Company Common Stock held by Parent, MergerCo or any other wholly owned Subsidiary of Parent, in the treasury of the Company or by any wholly owned Subsidiary of the Company) shall represent solely the right to receive the Merger Consideration relating thereto. If the Merger Consideration (or any portion thereof) is to be delivered to any person other than the person in whose name the Certificate formerly representing shares of Company Common Stock surrendered therefor is registered, it shall be a condition to such right to receive such Merger Consideration that the Certificate so surrendered shall be properly endorsed or otherwise be in proper form for transfer and that the person surrendering such shares of Company Common Stock shall pay to the Exchange Agent any transfer or other taxes required by reason of the payment of the Merger Consideration to a person other than the registered holder of the Certificate surrendered, or shall establish to the satisfaction of the Exchange Agent that such tax has been paid or is not applicable.

(e)     Promptly following the date which is 180 days after the Effective Time, the Exchange Agent shall deliver to the Surviving Corporation all cash, Certificates and other documents in its possession relating to the Merger, and the Exchange Agent’s duties shall terminate. Thereafter, each holder of a Certificate formerly representing shares of Company Common Stock may surrender such Certificate to the Surviving Corporation and (subject to applicable abandoned property, escheat and similar laws) receive in consideration therefor the Merger Consideration relating thereto.

(f)     At the Effective Time, the stock transfer books of the Company shall be closed and thereafter, there shall be no further registration of transfers of shares of Company Common Stock on the stock transfer books of the Surviving Corporation of any shares of Company Common Stock which were outstanding immediately prior to the Effective Time.

On or after the Effective Time, any Certificates formerly representing shares of Company Common Stock presented to the Surviving Corporation or the Exchange Agent shall be surrendered and canceled in return for the payment of the Merger Consideration relating thereto, as provided in this Article III.

(g)     None of Parent, the Surviving Corporation or the Exchange Agent or any of their respective Subsidiaries or affiliates shall be liable to any person in respect of any cash from the Exchange Fund delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(h)     If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming such Certificate to be lost, stolen or destroyed and, if reasonably required by Parent, the posting by such person of a bond, in such reasonable amount as Parent may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue the Merger Consideration in exchange for such lost, stolen or destroyed Certificate.

(i)     The Exchange Agent, Parent and the Surviving Corporation shall be entitled to deduct and withhold from the Merger Consideration or other amounts payable pursuant to this Agreement to any holder of shares of Company Common Stock such amounts as the Exchange Agent, Parent or the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of United States federal, state or local tax laws. To the extent that amounts are so withheld by the Exchange Agent, Parent or the Surviving Corporation, such amounts withheld shall be treated for all purposes of this Agreement as having been paid to the holder of the shares of Company Common Stock in respect of which such deduction and withholding was made by the Exchange Agent, Parent or the Surviving Corporation.

(a)     MergerCo was formed solely for the purpose of engaging in the transactions contemplated by this Agreement. All of the issued and outstanding capital stock of MergerCo is validly issued, fully paid and non-assessable and is owned, beneficially and of record, by Parent free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, stockholder agreements, limitations on Parent’s voting rights, charges and other encumbrances of any nature whatsoever.

(b)     As of the date hereof and as of the Effective Time, except for (i) obligations or liabilities incurred in connection with its incorporation or organization and (ii) this Agreement and any other agreements or arrangements contemplated by this Agreement or in furtherance of the transactions contemplated hereby, MergerCo has not incurred, directly or indirectly, through any Subsidiary or affiliate, any obligations or liabilities or engaged in any business activities of any type or kind whatsoever or entered into any agreements or arrangements with any person.

(a)     The Company is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts. Except as set forth in Section 5.1(a) of the Company Disclosure Schedule, the Company is duly qualified or licensed to do business as a foreign corporation and is in good standing under the laws of any other jurisdiction in which the character of the properties owned, leased or operated by it therein or in which the transaction of its business makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not, individually or in the aggregate, have a Company Material Adverse Effect. The Company has all requisite corporate power and authority to own, operate, lease and encumber its properties and carry on its business as now conducted.

(b)     Each of the Company Subsidiaries listed in Section 5.4 of the Company Disclosure Schedule (the “ Company Subsidiaries ”) is a corporation, partnership or limited liability company duly incorporated or organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has the requisite corporate power or other power and authority to own its properties and to carry on its business as it is now being conducted, and is duly qualified to do business and is in good standing in each jurisdiction in which the ownership of its property or the conduct of its business requires such qualification, except for jurisdictions in which such failure to be so qualified or to be in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect. The Company has no other Subsidiaries other than the Company Subsidiaries.

(c)     Except as set forth in Section 5.1(c) of the Company Disclosure Schedule, neither the Company nor any of the Company Subsidiaries is in violation of any order of any court, governmental authority or arbitration board or tribunal, or any law, ordinance, governmental rule or regulation to which the Company or any Company Subsidiary or any of their respective properties or assets is subject (including, but not limited to, the Sarbanes-Oxley Act of 2002 (“ SOX ”), other Securities Laws, and the Listing Standards of the Nasdaq Stock Market, Inc.), where such violation, alone or together with all other violations, would have a Company Material Adverse Effect. The Company and the Company Subsidiaries have obtained all licenses, permits and other authorizations and have taken all actions required by applicable law or governmental regulations in connection with their businesses as now conducted, except where the failure to obtain any such license, permit or authorization or to take any such action, alone or together with all other such failures, would not have a Company Material Adverse Effect.

(d)     The Company has previously provided or made available to Parent true and complete copies of the Articles of Organization and By-laws and the other charter documents, bylaws, organizational documents and partnership, limited liability company and joint venture agreements (and in each such case, all amendments thereto) of the Company and each of the Company Subsidiaries as in effect on the date of this Agreement.

(a)     The Company has all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby and perform its obligations hereunder. Subject only to the approval of this Agreement by the holders of the Company Common Stock, the execution, delivery and performance by the Company of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on behalf of the Company. In connection with the foregoing, the Company Board has unanimously adopted and approved this Agreement and approved the transactions contemplated by this Agreement, unanimously recommended that the Company’s stockholders adopt and approve this Agreement, and taken such actions and votes as are necessary on its part to render the provisions of Chapter 110F of the MGL and all other applicable takeover statutes inapplicable to this Agreement, the Voting Agreements and the Merger. In accordance with the applicable provisions of the MGL, the stockholders of the Company are not entitled to appraisal or dissenters rights in connection with transactions contemplated hereby. This Agreement, assuming due and valid authorization, execution and delivery hereof by Parent and MergerCo, constitutes a valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity.

(b)     The Company Board has amended the Common Stock Rights Agreement, dated as of November 19, 2001, between the Company and EquiServe Trust Company, N.A., as Rights Agent thereunder (the “ Company Rights Agreement ”), prior to the execution of this Agreement so as to provide that (i) (A) neither Parent nor MergerCo will become an “Acquiring Person” and (B) no “Stock Acquisition Date” or “Distribution Date” (as such terms are defined in the Company Rights Agreement) will occur, in each case, as a result of the approval, execution and

delivery of this Agreement and the consummation of the transactions contemplated hereby and (ii) the Company Rights Agreement will terminate immediately prior to the Effective Time. The Company Board has taken all other action necessary so that the execution of this Agreement and the consummation of the transactions contemplated hereby does not and will not (x) cause any of the Rights to become exercisable or redeemable or (y) enable or require the Company to separate any Rights from the shares of Company Common Stock to which they are attached.

(a)     The authorized capital stock of the Company consists of 50,000,000 shares of Company Common Stock and no shares of preferred stock of the Company. As of June 2, 2004, (i) 8,346,981 shares of Company Common Stock were issued and outstanding, (ii) 2,980,000 shares of Company Common Stock have been authorized and reserved for issuance pursuant to the Company Stock Option Plans, subject to adjustment on the terms set forth in the Company Stock Option Plans, (iii) 1,325,286 Options were outstanding under the Company Stock Option Plans, and (iv) 2,614,364 shares of Company Common Stock were held in the treasury of the Company. As of the date of this Agreement, the Company had no shares of Company Common Stock reserved for issuance other than as described above. All such issued and outstanding shares of capital stock of the Company are duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights.

(b)     The Company has no outstanding bonds, debentures, notes or other obligations the holders of which have the right to vote (or which are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

(c)     Except for the Options (all of which have been issued under the Company Stock Option Plans) and the Company Rights Agreement, there are not any existing options, warrants, calls, subscriptions, convertible securities, or other rights, agreements or commitments which obligate the Company to issue, transfer or sell any shares of capital stock of the Company. Section 5.3(c) of the Company Disclosure Schedule sets forth a full list of the Options, including the name of the person to whom such Options have been granted, the number of shares subject to each Option, the per share exercise price for each Option, and the vesting schedule for each Option. True and complete copies of all instruments (or the forms of such instruments) referred to in this Section 5.3(c) have been furnished or made available to Parent.

(d)     Section 5.3(d) of the Company Disclosure Schedule sets forth a complete list of the restricted stock awards granted under the Company Stock Option Plans. True and complete copies of all instruments (or the forms of such instruments) referred to in this Section 5.3(d) have been furnished or made available to Parent.

(e)     Except as set forth in Section 5.3(e) of the Company Disclosure Schedule, there are no agreements or understandings to which the Company or any Company Subsidiary is a party with respect to the voting of any shares of capital stock of the Company or which restrict the transfer of any such shares, nor does the Company have knowledge of any third party agreements or understandings with respect to the voting of any such shares or which restrict the transfer of any such shares.

(f)     There are no outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock, partnership interests or any other securities of the Company or any Company Subsidiary.

(g)     Neither the Company nor any Company Subsidiary is under any obligation, contingent or otherwise, by reason of any agreement to register the offer and sale or resale of any of their securities under the Securities Act.

(a)     The Company has filed all required forms, reports and registration statements with the SEC since December 31, 2000 (collectively, the “ Company SEC Reports ”), all of which were prepared in all material respects in accordance with the applicable requirements of the Exchange Act, the Securities Act and the rules and regulations promulgated thereunder (the “ Securities Laws ”). As of their respective dates, the Company SEC Reports (i) complied as to form in all material respects with the applicable requirements of the Securities Laws and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each of the consolidated balance sheets of the Company included in or incorporated by reference into the Company SEC Reports (including the related notes and schedules) fairly presents in all material respects the consolidated financial position of the Company and the Company Subsidiaries as of its date and each of the consolidated statements of income, retained earnings and cash flows of the Company included in or incorporated by reference into the Company SEC Reports (including any related notes and schedules) fairly presents in all material respects the results of operations, retained earnings or cash flows, as the case may be, of the Company and the Company Subsidiaries for the periods set forth therein, in each case in accordance with GAAP consistently applied during the periods involved, except as may be noted therein and except, in the case of the unaudited statements, as permitted by Form 10-Q pursuant to Sections 13 or 15(d) of the Exchange Act and normal year-end audit adjustments which would not be material in amount or effect. No Company Subsidiary is required to file any form or report with the SEC or any state securities authority. The certificates of the Chief Executive Officer and Chief Financial Officer of the Company required by Rules 13a-14 and 15d-14 of the Exchange Act or 18 U.S.C. §1350 (Section 906 of SOX) with respect to the Company SEC Reports, as applicable, are true and correct as of the date of this Agreement as they relate to a particular Company SEC Report, as though made as of the date of this Agreement. The Company has established and maintains disclosure controls and procedures, has conducted the procedures in accordance with their terms and has otherwise operated in compliance with the requirements under Rules 13a-15 and 15d-15 of the Exchange Act.

(b)     Except as and to the extent set forth on the consolidated balance sheet of the Company and the Company Subsidiaries as of December 31, 2003, including all notes thereto (the “ Company Balance Sheet ”), and except as set forth in Section 5.7(b) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary has any liabilities or obligations of any nature (whether accrued, absolute, contingent, or otherwise) that would be required to be reflected on a balance sheet, or in the notes thereto, prepared in accordance with GAAP, except (i) the obligation to pay any transfer fee necessary to transfer and assign the Company licenses listed on Section 7.3 of the Company Disclosure Schedule, (ii) the obligations to pay fees and expenses to the Company’s attorneys, accountants and the Company’s financial advisor relating to the transactions contemplated by this Agreement and other expenses incurred in connection with the Company’s exploration of strategic alternatives, (iii) for liabilities or obligations incurred in the ordinary course of business since December 31, 2003, that, individually or in the aggregate, would not have a Company Material Adverse Effect, or (iv) as otherwise reflected in the Company SEC Reports filed prior to the date of this Agreement.

(a)     Section 5.11(a) of the Company Disclosure Schedule lists all real property (1) owned by the Company or any of the Company Subsidiaries or (2) leased or subleased to or by the Company or any of the Company Subsidiaries as tenant or sub-tenant, as the case may be. The Company has delivered, or made available, to Parent complete and accurate copies of the leases and subleases (each as amended to date) of the properties listed in Section 5.11(a) of the Company Disclosure Schedule. With respect to each lease and sublease of the properties listed in Section 5.11(a) of the Company Disclosure Schedule except as would not, individually or in the aggregate, have a Company Material Adverse Effect:

(i)     the lease or sublease is a legal, valid, binding, and enforceable obligation of the Company or Company Subsidiary, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity;

(ii)     neither the Company nor any Company Subsidiary, or to the knowledge of the Company any other party, is in breach or violation of, or default under, any such lease or sublease, and, to the knowledge of the Company, no event has occurred, is pending or is threatened, which, after the giving of notice or the lapse of time or both, would constitute a breach or default by the Company or a Company Subsidiary, or to the knowledge of the Company, any other party under such lease or sublease; and

(iii)     neither the Company nor any Company Subsidiary has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in the leasehold or subleasehold.

(b)     Except as set forth in Section 5.11(b) of the Company Disclosure Schedule, the Company and each Company Subsidiary owns fee simple title to or has a valid leasehold interest in each of the real properties at which the Company or any Company Subsidiary conducts operations (the “ Company Properties ”), free and clear of all Encumbrances, and the Company Properties are not subject to any easements, rights of way, covenants, conditions, restrictions or other written agreements, laws affecting building use or occupancy, or reservations of an interest in title (collectively, “ Property Restrictions ”), except for (i) the matters set forth in Section 5.11(b) of the Company Disclosure Schedule, (ii) Property Restrictions imposed or promulgated by law or any Governmental Entity or authority with respect to real property, including zoning regulations, that do not materially and adversely affect the current use of the property, (iii) real estate taxes, Encumbrances, and Property Restrictions disclosed on existing title policies or reports or surveys that have been provided to Parent prior to the date of the Agreement, (iv) mechanics’, carriers’, suppliers’, workmen’s or

repairmen’s liens and other Property Restrictions, if any, which, individually or in the aggregate, are not material in amount, do not materially detract from the value of, or materially interfere with, the present use of any of the Company Properties subject thereto or affected thereby, and do not otherwise materially impair business operations conducted by the Company and the Company Subsidiaries and which have arisen or been incurred only in the ordinary course of business or are set forth in the Company’s financial statements included in the Company SEC Reports filed prior to the date of this Agreement, and (v) with respect to leaseholds any Encumbrances on the landlord’s fee interest. Except as set forth in Section 5.11(b) of the Company Disclosure Schedule or as would not, individually or in the aggregate, have a Company Material Adverse Effect, no written notice of any violation of any law affecting any portion of any of the Company Properties has been received by the Company or any Company Subsidiary from any Governmental Entity.

(c)     To the knowledge of the Company and except as set forth in Section 5.11(c) of the Company Disclosure Schedule, the Company and the Company Subsidiaries own good title, free and clear of all Encumbrances, to all personal property and other non-real estate assets used in connection with the business of the Company as presently conducted, except for (i) Encumbrances reflected in the Company Balance Sheet, (ii) Encumbrances or imperfections of title which are not, individually or in the aggregate, material in character, amount or extent and which do not materially detract from the value or materially interfere with the present use of the assets subject thereto or affected thereby, and (iii) Encumbrances for current Taxes not yet due and payable. All of the machinery, equipment and other tangible personal property and assets owned or used by the Company and the Company Subsidiaries are, to the Company’s knowledge