AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

Section 1.1    The Offer . (a) Provided that (i) this Agreement shall not have been terminated in accordance with Section 8.1 , (ii) none of the events set forth in Annex I (other than paragraphs (f) and (i)) shall have occurred and be continuing and (iii) the Company shall have complied with its applicable obligations under Section 1.2 , as promptly as practicable after the effectiveness of the Form 10, and in any event, within five (5) business days thereafter, the Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”)) the Offer, subject to (i) there being validly tendered in the Offer (in the aggregate) and not withdrawn prior to the expiration of the Offer that number of Shares which, together with the Shares then beneficially owned by the Purchaser, represents at least a majority of the Shares outstanding on a fully diluted basis and no less than a majority of the voting power of the outstanding shares of capital stock of the Company entitled to vote in the election of directors or (if a greater majority) upon the adoption of this Agreement (collectively, the “ Minimum Condition ”) and (ii) the satisfaction or waiver of the other conditions and requirements set forth in Annex I . Subject to the prior satisfaction or waiver by the Purchaser of the Minimum Condition and the other conditions and requirements set forth in Annex I , the Purchaser shall consummate the Offer in accordance with its terms and accept for exchange, and exchange the Offer Consideration for, all Shares tendered pursuant to the Offer as soon as practicable after the Purchaser is legally permitted to do so under applicable law; provided , however , that the initial expiration date of the Offer shall be the date that is twenty (20) business days following the commencement of the Offer (the “ Initial Expiration Date ”). The obligation of the Purchaser to accept for exchange, and to exchange the Offer Consideration for, any Shares validly tendered on or prior to the expiration of the Offer and not withdrawn shall be subject to the Minimum Condition and the other conditions and requirements set forth in Annex I . The Offer shall be made by means of an offer to exchange (the “ Offer to Exchange ”) that contains the terms set forth in this Agreement, the Minimum Condition and the other conditions and requirements set forth in Annex I . The Purchaser shall not decrease the Offer Consideration, change the form of consideration payable in the Offer or reduce the maximum number of Shares to be purchased in the Offer without the prior written consent of the Company. For the avoidance of doubt: (x) if on the Initial Expiration Date (as it may be extended), all conditions to the Offer shall not have been satisfied or waived, the Purchaser may, from time to time, in its sole discretion, extend the Initial Expiration Date, for such period as the Purchaser may determine, (y) the Purchaser may, in its sole discretion, provide a “subsequent offering period” in accordance with Rule 14d-11 under the Exchange Act and (z) the Purchaser may, in its sole discretion, extend the Offer for any reason on one or more occasions for an aggregate period of not more than ten (10) business days beyond the latest expiration date of the Offer that would otherwise be permitted under clause (x) of this sentence if, on such expiration date, there have not been tendered (and not withdrawn) at least ninety percent (90%) of the outstanding Shares on a fully diluted basis. The Purchaser may (i) increase the Offer Consideration and extend the Offer to the extent required by applicable law in connection with such increase and (ii) extend the Offer to the extent otherwise required by applicable law,   in each case in its sole discretion and without the Company’s consent. The Purchaser shall not terminate the Offer prior to any scheduled expiration date (as the same may be extended or required to be extended) without the written consent of the Company, except in the event that this Agreement is terminated pursuant to Section 8.1 . If the Offer is terminated or withdrawn by the Purchaser, or this Agreement is terminated prior to the exchange of Shares in the Offer, the Purchaser shall promptly return, and shall cause any depository or exchange agent, including the Exchange Agent, acting on behalf of the Purchaser, to return all tendered Shares to the registered holders thereof.

(b)    Notwithstanding anything to the contrary contained in this Article I , no certificates or scrip representing fractional shares of Purchaser Common Stock shall be issued upon the surrender for exchange of the Shares pursuant to the Offer, no dividends or other distributions with respect to the Purchaser Common Stock shall be payable on or with respect to any such fractional share interest and such fractional share interests will not entitle the owner thereof to vote or to any other rights of a shareholder of the Purchaser. In lieu of any such fractional shares, each tendering shareholder who would otherwise be entitled to a fractional share of Purchaser Common Stock (after aggregating all fractional shares of Purchaser Common Stock that otherwise would have been received by such shareholder) shall, upon surrender of his or her Certificate or Certificates, be entitled to receive an amount of cash (without interest) determined by multiplying (i) the closing price of a share of Purchaser Common Stock as reported on the Nasdaq Global Market (the “ Nasdaq ”) on the Acceptance Date by (ii) the fractional share interest to which such shareholder would otherwise be entitled. The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares was not separately bargained for consideration, but merely represents a mechanical rounding off for purposes of simplifying the corporate and accounting complexities that would otherwise be caused by the issuance of fractional shares.

(c)    As soon as practicable on the date the Offer is commenced, the Purchaser shall (i) file with the Securities and Exchange Commission (the “ SEC ”), pursuant to Regulation M-A under the Exchange Act (“ Regulation M-A ”), a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”) and (ii) file with the SEC a registration statement on Form S-4 to register, under the Securities Act, the offer and sale of the Purchaser Common Stock pursuant to the Offer and the Merger (together with all amendments, supplements and exhibits thereto, the “ Registration Statement ”). The Registration Statement shall include a preliminary prospectus (the “ Prospectus ”) containing the information required under Rule 14d-4(b) promulgated under the Exchange Act. The Schedule TO shall include the summary term sheet required under Regulation M-A and, as exhibits, the Offer to Exchange and a form of letter of transmittal and summary advertisement (collectively with the Prospectus, and together with any amendments and supplements thereto and to the Prospectus, the “ Offer Documents ”). The Purchaser shall cause the Offer Documents to be disseminated to the holders of the Shares as and to the extent required by applicable federal securities laws. The Company shall provide the Purchaser with all information concerning the Company and its directors, officers and affiliates as shall be required to be included in the Offer Documents and the Registration Statement. The Company and its counsel shall be given a reasonable opportunity to review the Registration Statement and the Offer Documents before they are filed with the SEC, and the Purchaser shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. In addition, the Purchaser shall provide the Company and its counsel with copies of any written comments, and shall inform them of any oral comments, that the Purchaser or its counsel may receive from time to time from the SEC or its staff with respect to the Registration Statement or the Offer Documents promptly after receipt of such comments, and any written or oral responses thereto. The Company and its counsel shall be given a reasonable opportunity to review any such written responses, and the Purchaser shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel. No amendment or supplement to the Offer Documents shall be made by the Purchaser without providing the Company and its counsel a reasonable opportunity to review any such amendment or supplement, and the Purchaser shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel.

(d)    The Purchaser shall use its reasonable efforts to have the Registration Statement declared effective under the Securities Act as promptly as practicable after the filing thereof with the SEC and to keep the Registration Statement effective as long as is necessary to complete the Offer and the Merger. Notwithstanding any other provision herein to the contrary, no amendment or supplement to the Registration Statement will be made by the Purchaser without the approval of the Company, which will not be unreasonably withheld, conditioned or delayed; provided , that with respect to documents filed by the Purchaser which are incorporated by reference in the Registration Statement, this right of approval shall apply only with respect to information relating to this Agreement, the Transactions or the Company or its business, financial condition or results of operations. The Purchaser shall take any action (other than qualifying to do business in any jurisdiction in which it is now not so qualified) reasonably required to be taken under applicable state securities or Blue Sky laws in connection with the issuance of the Purchaser Common Stock in the Offer and the Merger. The Purchaser will advise the Company, promptly after it receives notice thereof, of the time when the Registration Statement is declared effective, the issuance of any stop order, the suspension of the qualification of the Purchaser Common Stock issuable in connection with the Offer or the Merger for offering or sale in any jurisdiction, or of any request by the SEC for amendment of the Registration Statement. Following the time the Registration Statement is declared effective, the Purchaser shall file the final prospectus included therein under Rule 424(b) promulgated pursuant to the Securities Act.

(e)    If, at any time prior to the Effective Time, the Company or the Purchaser discovers any information relating to either party, or any of their respective affiliates, officers or directors, that should be set forth in an amendment or a supplement to any of the Registration Statement, the Offer Documents or the Schedule 14D-9, as the case may be, so that such documents would not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading, the party that discovers that information shall promptly notify the other party and an appropriate amendment or supplement describing such information shall be promptly filed with the SEC and disseminated to holders of the Shares, in each case as and to the extent required by applicable federal securities laws.

(f)    The Company agrees that no Shares held by the Company or any of its Subsidiaries will be tendered to the Purchaser pursuant to the Offer. The Company hereby consents to the inclusion in the Offer Documents of the recommendation of the Company Board of Directors referred to in clause (iii) of Section 3.4

(g)    Notwithstanding anything herein to the contrary, the Purchaser, the Company or the Exchange Agent may withhold the Offer Consideration as it reasonably deems necessary to satisfy its withholding obligations under applicable law, and the withholding of any such Offer Consideration for such purpose shall be treated as the payment thereof to the Person from whom such amount was withheld for purposes of determining whether such Person received amounts to which such Person is entitled hereunder.

Section 1.2    Company Actions . (a) Contemporaneous with the filing of the Schedule TO and the Registration Statement, the Company shall, in a manner that complies with Rule 14d-9 under the Exchange Act, file with the SEC a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) that shall contain the recommendation referred to in clause (iii) of Section 3.4 . The Company shall cause the Schedule 14D-9 to be disseminated to the holders of the Shares as and to the extent required by applicable federal securities laws. The Purchaser shall provide the Company with all information concerning the Purchaser and its directors, officers and affiliates as shall be required to be included in the Schedule 14D-9. The Company, on the one hand, and the Purchaser, on the other hand, agrees to promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by applicable law. The Company further agrees to take all steps necessary to cause the Schedule 14D-9, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of the Shares, in each case as and to the extent required by applicable federal securities laws. The Purchaser and its counsel shall be given a reasonable opportunity to review the Schedule 14D-9 before it is filed with the SEC, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Purchaser and its counsel. In addition, the Company shall provide the Purchaser and its counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the Company’s receipt of such comments, and any written or oral responses thereto. The Purchaser and its counsel shall be given a reasonable opportunity to review any such written responses, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Purchaser and its counsel. No amendment or supplement to the Schedule 14D-9 shall be made by the Company without providing the Purchaser and its counsel a reasonable opportunity to review any such amendment or supplement, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Purchaser and its counsel.

(b)    In connection with the Offer, the Company shall promptly furnish or cause its transfer agent to furnish to the Purchaser mailing labels, security position listings of Shares held in stock depositories and any available listing or computer files containing the names and addresses of the record holders of the Shares as of the most recent practicable date, and shall promptly furnish the Purchaser with such information and assistance (including, but not limited to, lists of record holders and beneficial owners of the Shares, updated promptly from time to time upon the Purchaser’s request, and their addresses, mailing labels and lists of security positions) as the Purchaser or its agent may reasonably request for the purpose of communicating the Offer to the record and beneficial holders of the Shares. Except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Offer, the Merger and the other Transactions, the Purchaser shall hold in confidence the information contained in any such labels, listings and files, shall use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated, shall promptly deliver to the Company all copies of such information.

Section 1.3    Directors . (a) Promptly upon the acceptance of any Shares for exchange pursuant to the Offer which, together with the Shares then beneficially owned by the Purchaser, represent at least a majority of the Shares outstanding on a fully diluted basis and at all times thereafter, the Purchaser shall be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Company Board of Directors as is equal to the product of the total number of directors on the Company Board of Directors (giving effect to the directors elected or designated by the Purchaser pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by the Purchaser and any of its affiliates bears to the total number of Shares then outstanding. The Company shall, upon the Purchaser’s request at any time following the acceptance of any Shares for exchange pursuant to the Offer, take such actions, including but not limited to promptly filling vacancies or newly-created directorships on the Company Board of Directors, promptly increasing the size of the Company Board of Directors (including by amending the Company Bylaws if necessary so as to increase the size of the Company Board of Directors) and/or promptly securing the resignations of such number of its incumbent directors as are necessary or desirable to enable the Purchaser’s designees to be so elected or designated to the Company Board of Directors, and shall use its best efforts to cause the Purchaser’s designees to be so elected or designated at such time. The Company shall, upon the Purchaser’s request following the acceptance of any Shares for exchange pursuant to the Offer, also cause Persons elected or designated by the Purchaser to constitute the same percentage (rounded up to the next whole number) as is on the Company Board of Directors of (i) each committee of the Company Board of Directors, (ii) each board of directors (or similar body) of each Company Subsidiary and (iii) each committee (or similar body) of each such board, in each case only to the extent permitted by applicable law and the Marketplace Rules of the Nasdaq. Upon consummation of the Offer, the Company shall take all action necessary to elect to be treated as a “controlled company” as defined by Nasdaq Marketplace Rule 4350(c) and make all necessary filings and disclosures associated with such status. The Company’s obligations under this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly upon execution of this Agreement take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a) , including mailing to shareholders (together with the Schedule 14D-9) the information required by Section 14(f) and Rule 14f-1 as is necessary to enable the Purchaser’s designees to be elected or designated to the Company Board of Directors. The Purchaser shall provide the Company with information with respect to the Purchaser’s designees and the Purchaser’s officers, directors and affiliates to the extent required by Section 14(f) and Rule 14f-1. The provisions of this Section 1.3(a) are in addition to and shall not limit any rights that the Purchaser or any of its affiliates may have as a holder or beneficial owner of Shares as a matter of applicable law with respect to the election of directors or otherwise.

(b)    In the event that the Purchaser’s designees are elected or designated to the Company Board of Directors pursuant to Section 1.3(a) , then, until the Effective Time, the Company shall cause the Company Board of Directors to maintain two (2) directors who are members of the Company Board of Directors on the date hereof, each of whom shall be an “independent director” as defined by Rule 4200(a)(15) of the Nasdaq Marketplace Rules and eligible to serve on the Company’s audit committee under the Exchange Act and Nasdaq rules and, at least one of whom shall be an “audit committee financial expert” as defined in Item 401(h) of Regulation S-K and the instructions thereto (the “ Continuing Directors ”); provided , however , that if any Continuing Director is unable to serve due to death, disability or resignation, the remaining Continuing Director(s) shall be entitled to elect or designate another Person (or Persons) to fill such vacancy, and such Person (or Persons) shall be deemed to be a Continuing Director for all purposes of this Agreement. If no Continuing Director then remains, the other directors shall designate two (2) Persons to fill such vacancies and such Persons shall be deemed Continuing Directors for all purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary, if the Purchaser’s designees constitute a majority of the Company Board of Directors after the acceptance of any Shares for exchange pursuant to the Offer and prior to the Effective Time, then the affirmative vote of a majority of the Continuing Directors shall (in addition to the approval rights of the Company Board of Directors or the shareholders of the Company as may be required by the Restated Articles of Incorporation of the Company (as amended, the “ Company Articles ”), the bylaws of the Company (as amended, the “ Company Bylaws ”, and together with the Company Articles, the “ Company Governing Documents ”) or applicable law) be required (i) for the Company to amend or terminate this Agreement, (ii) to exercise or waive any of the Company’s rights, benefits or remedies hereunder, if such action would materially and adversely affect the holders of the Shares (other than the Purchaser), (iii) to amend the Company Governing Documents if such action would materially and adversely affect the holders of the Shares (other than the Purchaser) or (iv) to take any other action of the Company Board of Directors under or in connection with this Agreement if such action would materially and adversely affect the holders of the Shares (other than the Purchaser); provided , however , that if there shall be no Continuing Directors as a result of such Persons’ deaths, disabilities or refusal to serve, then such actions may be effected by majority vote of the entire Company Board of Directors.

Section 1.4    Offer Exchange Fund; Distributions on Shares of Purchaser Common Stock . (a) The Purchaser shall designate a bank or trust company to act as agent for the holders of the Shares in connection with the Offer and the Merger (the “ Exchange Agent ”) and to receive the consideration to which the holders of the Shares shall become entitled pursuant to Section 1.1 and Section 2.1. Prior to the Acceptance Date, the Purchaser shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the holders of the Shares, for exchange in accordance with the terms of the Offer set forth in this Article I, (i) certificates representing the shares of Purchaser Common Stock issuable to such holders in the Offer and (ii) any cash in lieu of fractional shares of Purchaser Common Stock to be paid pursuant to Section 1.1(b) (such cash and certificates for shares of Purchaser Common Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as, the “ Offer Exchange Fund ”). The Exchange Agent shall, pursuant to irrevocable instructions, make cash payments and deliver the shares of Purchaser Common Stock contemplated to be issued pursuant to Section 1.1 out of the Offer Exchange Fund. Any cash and shares of Purchaser Common Stock remaining in the Offer Exchange Fund seven (7) business days following the Acceptance Date shall be returned to the Purchaser, which shall thereafter be responsible to make payments to the holders of the Shares that have validly tendered their Shares pursuant to the Offer.

(b)    For purposes of determining entitlement to dividends or other distributions declared on shares of Purchaser Common Stock, holders of the Shares who have validly tendered and not withdrawn such shares pursuant to the Offer shall be deemed to be record holders of the shares of Purchaser Common Stock as of the Acceptance Date, notwithstanding the fact that certificates representing such shares have not yet been issued or delivered to tendering shareholders (or, if applicable, appropriate book-entries have not yet been made).

Section 1.5    The Merger . (a) Subject to the terms and conditions of this Agreement, and in accordance with the CGCL and the DGCL, at the Effective Time, the Company and the Purchaser shall consummate the Merger pursuant to which (i) the Company shall be merged with and into the Purchaser and the separate corporate existence of the Company shall thereupon cease, (ii) the Purchaser shall be the surviving corporation in the Merger and shall continue to be governed by the applicable laws of the State of Delaware and (iii) the separate corporate existence of the Purchaser with all its property, rights, privileges, powers and franchises shall continue unaffected by the Merger. The corporation surviving the Merger is sometimes hereinafter referred to as the “ Surviving Corporation .” The Merger shall have the effects set forth in Section 1107 of the CGCL and Section 259 of the DGCL.

(b)    The Purchaser and the Surviving Corporation shall take all necessary action such that (i) the certificate of incorporation of the Purchaser as in effect immediately prior to the Effective Time shall be the certificate of incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law and (ii) the bylaws of the Purchaser as in effect immediately prior to the Effective Time shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law.

Section 1.6    Effective Time . The Purchaser and the Company shall cause appropriate articles of merger or other appropriate documents (the “ Articles of Merger ”) to be executed and filed on the Closing Date (or on such other date as the Purchaser and the Company may agree) with (i) the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and (ii) the Secretary of State of the State of California in accordance with the relevant provisions of the CGCL and shall make all other filings or recordings required under the CGCL or the DGCL. The Merger shall become effective at the time such Articles of Merger have been duly filed with the Secretary of State of the State of Delaware or such date and time as is agreed upon by the parties and specified in the Articles of Merger, such date and time hereinafter referred to as the “ Effective Time .”

Section 1.7    Closing . The closing of the Merger (the “ Closing ”) will take place at 9:00 a.m., New York City time, on a date to be specified by the parties, such date to be no later than the second (2 ^nd ) business day after satisfaction or waiver of all of the conditions set forth in Article VII (the “ Closing Date ”), at the offices of Latham & Watkins LLP, 555 Eleventh Street NW, Suite 1000, Washington, DC unless another date or place is agreed to in writing by the parties hereto.

Section 1.8    Directors and Officers of the Surviving Corporation . The directors of the Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, be the directors of the Surviving Corporation, and the officers of the Purchaser immediately prior to the Effective Time, from and after the Effective Time, shall be the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s articles of incorporation and bylaws.

Section 1.9    Subsequent Actions . If at any time after the Effective Time the Surviving Corporation shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale, instruments of conveyance, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving Corporation its right, title or interest in, to or under any of the rights, properties or assets of the Company acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of the Company, all such deeds, bills of sale, instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

Section 1.10    Stockholder Approval . (a) As promptly as practicable following the Acceptance Date, (i) the Purchaser shall vote, or cause to be voted, all of the Shares then owned by it or any of its Subsidiaries and affiliates (including, without limitation, all Shares acquired pursuant to the Offer), or shall approve an action by written consent, in favor of the approval of the Merger and the adoption of this Agreement and (ii) if required by applicable law in order to consummate the Merger, the Company, acting through the Company Board of Directors, shall, in accordance with applicable law and the Company Governing Documents, in conjunction with the Purchaser, prepare and file with the SEC an information statement pursuant to Regulation 14C under the Exchange Act (the “ Information Statement ”) relating to the Merger and this Agreement and obtain and furnish the information required by the SEC to be included therein and respond promptly to any comments made by the SEC with respect to such preliminary Information Statement and cause a definitive Information Statement to be mailed to its shareholders at the earliest practicable date. The Purchaser shall provide the Company with all information concerning the Purchaser and its directors, officers and affiliates as shall be required to be included in the Information Statement. The Company, on the one hand, and the Purchaser, on the other hand, agrees to promptly correct any information provided by it for use in the Information Statement if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by applicable law. The Company further agrees to take all steps necessary to cause the Information Statement, as so corrected (if applicable), to be filed with the SEC and disseminated to holders of the Shares, in each case as and to the extent required by applicable federal securities laws. The Purchaser and its counsel shall be given a reasonable opportunity to review the Information Statement before it is filed with the SEC, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Purchaser and its counsel. In addition, the Company shall provide the Purchaser and its counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Information Statement promptly after the Company’s receipt of such comments, and any written or oral responses thereto. The Purchaser and its counsel shall be given a reasonable opportunity to review any such written responses, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Purchaser and its counsel. No amendment or supplement to the Information Statement shall be made by the Company without providing the Purchaser and its counsel a reasonable opportunity to review any such amendment or supplement, and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Purchaser and its counsel.

(b)    Notwithstanding the foregoing, in the event that the Purchaser shall acquire at least ninety percent (90%) of the outstanding Shares on a fully diluted basis pursuant to the Offer or otherwise in accordance with the provisions hereof, the parties hereto agree, at the request of the Purchaser and subject to Article VII , to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after such acquisition, without a meeting of the shareholders of the Company, in accordance with Section 253 of the DGCL and Section 1110 of the CGCL.

Section 2.1    Conversion of Capital Stock . As of the Effective Time, by virtue of the Merger and without any action on the part of the holders of any securities of the Company or the Purchaser:

(a)    Purchaser Common Stock . Each issued and outstanding share of Purchaser Common Stock shall remain outstanding and be one fully paid and nonassessable share of common stock, par value $0.001 per share, of the Surviving Corporation.

(b)    Cancellation of Treasury Stock and Purchaser-Owned Stock . All Shares that are owned by the Company as treasury stock and any Shares owned by the Purchaser or any wholly-owned Subsidiary of the Purchaser shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

(c)    Conversion of Shares . Each issued and outstanding Share (other than the Shares to be cancelled in accordance with Section 2.1(b) and other than any Dissenting Shares) shall be converted into the right to receive the Offer Consideration (together with any cash in lieu of fractional shares of Purchaser Common Stock to be paid pursuant to Section 2.2(d) ) (collectively, the “ Merger Consideration ”). From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of a certificate representing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration therefor upon the surrender of such certificate in accordance with Section 2.2 , without interest thereon.

Section 2.2    Exchange of Certificates. (a)   Merger Exchange Fund . Prior to the Effective Time, the Purchaser shall deposit, or shall cause to be deposited, with the Exchange Agent, for the benefit of the holders of the Shares, the aggregate Merger Consideration, including (i) certificates representing the shares of Purchaser Common Stock issuable to such holders in the Merger pursuant to Section 2.1 and (ii) any cash in lieu of fractional shares of Purchaser Common Stock to be paid pursuant to Section 2.2(d) (such cash and certificates for shares of Purchaser Common Stock, together with any dividends or distributions with respect thereto, being hereinafter referred to as, the “ Merger Exchange Fund ”). The Exchange Agent shall, pursuant to irrevocable instructions, make cash payments and deliver the shares of Purchaser Common Stock contemplated to be issued pursuant to Section 2.1 out of the Merger Exchange Fund.

(b)    Exchange Procedures . Promptly after the Effective Time, the Purchaser shall instruct 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 (the “ Certificates ”) and whose Shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of transmittal (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 shall be in such form and have such other provisions as the Purchaser may reasonably specify) and (ii) instructions for use in effecting the surrender of the Certificates in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Exchange Agent or to such other agent or agents as may be appointed by the Purchaser, together with such letter of transmittal, properly completed and duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor (x) a check representing (I) cash in lieu of any fractional shares of Purchaser Common Stock to which such holder is entitled pursuant to Section 2.2(d) and (II) any dividends or other distributions to which such holder is entitled pursuant to Section 2.2(c) , and (y) a certificate representing that number of whole shares of Purchaser Common Stock which such holder has the right to receive in respect of each Share formerly represented by such Certificate (after taking into account all Shares then held by such holder), and the Certificate so surrendered shall forthwith be cancelled. No interest will be paid or accrued on any cash in lieu of fractional shares or on any unpaid dividends and distributions payable to holders of Certificates. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition precedent of payment that (x) the Certificate so surrendered shall be properly endorsed or shall be otherwise 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 Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such Tax either has been paid or is not required to be paid. Until surrendered as contemplated by this Section 2.2 , each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Merger Consideration as contemplated by this Section 2.2 , without interest thereon.

(c)    Distributions with Respect to Unexchanged Shares of Purchaser Common Stock . No dividends or other distributions declared or made after the Effective Time with respect to the Purchaser Common Stock with a record date after the Effective Time shall be paid to the holder of any unsurrendered Certificate with respect to the shares of Purchaser Common Stock represented thereby, and no cash payment in lieu of any fractional shares shall be paid to any such holder pursuant to Section 2.2(d) , unless and until the holder of such Certificate shall surrender such Certificate. Subject to the effect of escheat, Tax or other applicable laws, following surrender of any such Certificate, there shall be paid to the holder of the certificates representing whole shares of Purchaser Common Stock issued in exchange therefor, without interest, (i) the amount of any cash payable with respect to a fractional share of Purchaser Common Stock to which such holder is entitled pursuant to Section 2.2(d) and the amount of dividends or other distributions with a record date after the Effective Time and theretofore paid with respect to such whole shares of Purchaser Common Stock and (ii) at the appropriate payment date, the amount of dividends or other distributions, with a record date after the Effective Time but prior to surrender and a payment date occurring after surrender, payable with respect to such whole shares of Purchaser Common Stock.

(d)    No Fractional Shares . No certificates or scrip representing fractional shares of Purchaser Common Stock shall be issued upon the surrender for exchange of Certificates pursuant to the Merger, and such fractional share interests will not entitle the owner thereof to vote or to any rights of a shareholder of the Purchaser. In lieu of any such fractional shares, each shareholder who would otherwise be entitled to a fractional share of Purchaser Common Stock (after aggregating all fractional shares of Purchaser Common Stock that otherwise would have been received by such shareholder) shall, upon surrender of his or her Certificate or Certificates, be entitled to receive an amount of cash (without interest) determined by multiplying (i) the closing price of a share of Purchaser Common Stock as reported on the Nasdaq on the date of the Effective Time by (ii) the fractional share interest to which such shareholder would otherwise be entitled. The parties acknowledge that payment of the cash consideration in lieu of issuing fractional shares was not separately bargained for consideration, but merely represents a mechanical rounding off for purposes of simplifying the corporate and accounting complexities that would otherwise be caused by the issuance of fractional shares.

(e)    Transfer Books; No Further Ownership Rights in Shares . 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 any Shares on the records of the Company. From and after the Effective Time, the holders of Certificates outstanding immediately prior to the Effective Time shall cease to have any rights with respect to the Shares formerly represented thereby, except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II .

(f)    Termination of Merger Exchange Fund; No Liability . At any time following six (6) months after the Effective Time, the Surviving Corporation shall be entitled to require the Exchange Agent to deliver to it any consideration (including any interest received with respect thereto) made available to the Exchange Agent and not disbursed (or for which disbursement is pending subject only to the Exchange Agent’s routine administrative procedures) to holders of Certificates, and thereafter such holders shall be entitled to look only to the Surviving Corporation (subject to abandoned property, escheat or other similar laws) only as general creditors thereof with respect to the Merger Consideration payable upon due surrender of their Certificates, without any interest thereon. Notwithstanding the foregoing, neither the Surviving Corporation nor the Exchange Agent shall be liable to any holder of a Certificate for Merger Consideration delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

(g)    Withholding Rights . The Purchaser, the Surviving Corporation and the Exchange Agent, as the case may be, shall be entitled to deduct and withhold from the relevant Merger Consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts that the Purchaser, the Surviving Corporation or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code, the rules and regulations promulgated thereunder or any provision of applicable state, local or foreign law. To the extent that amounts are so withheld by the Purchaser, the Surviving Corporation or the Exchange Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Shares in respect of which such deduction and withholding was made by the Purchaser, the Surviving Corporation or the Exchange Agent.

(h)    Lost, Stolen or Destroyed Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed and, if required by the Purchaser or the Surviving Corporation, the posting by such Person of a bond if the fair market value of the Shares formerly represented by such Certificate exceeds $3,000, in such reasonable amount as the Purchaser or the Surviving Corporation may direct, as indemnity against any claim that may be made against it with respect to such Certificate, the Exchange Agent will issue in exchange for such lost, stolen or destroyed Certificate (i) a check representing (x) cash in lieu of any fractional shares of Purchaser Common Stock to which such holder is entitled pursuant to Section 2.2(d) and (y) any dividends or other distributions to which such holder is entitled pursuant to Section 2.2(c) , and (ii) a certificate representing that number of whole shares of Purchaser Common Stock which such holder has the right to receive in respect of each Share formerly represented by such Certificate (after taking into account all Shares then held by such holder).

Section 2.3     Dissenting Shares . (a) Notwithstanding anything in this Agreement to the contrary, any Shares outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and properly demands appraisal of such Shares (“ Dissenting Shares ”) pursuant to, and who complies in all respects with, Chapter 13 of the CGCL (the “ Dissenters Provisions ”) shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the Dissenters Provisions; provided , however , that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to dissent under the Dissenters Provisions, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for, the right to receive the Merger Consideration.

(b)    The Company shall serve prompt notice to the Purchaser of any demands received by the Company for dissenter’s rights of any Shares, and the Purchaser shall have the right to participate in all negotiations and proceedings with respect to such demands. Prior to the Effective Time, the Company shall not, without the prior written consent of the Purchaser, make any payment with respect to, or settle or compromise or offer to settle or compromise, any such demand, or agree to do any of the foregoing. Any portion of the Merger Consideration made available to the Exchange Agent pursuant to Section 2.2(a) to pay for Shares for which dissenter’s rights have been perfected shall be returned to the Purchaser upon demand.

Section 2.4    Top-Up Option . (a) The Company hereby grants to the Purchaser an irrevocable option (the “Top-Up Option”) to purchase that number of Shares (the “Top-Up Option Shares”) equal to the lowest number of Shares that, when added to the number of Shares owned by the Purchaser at the time of such exercise, shall constitute one (1) Share more than ninety percent (90%) of the Shares then outstanding, on a fully diluted basis, at a price per Top-Up Option Share equal to the Offer Consideration, payable (at the Purchaser’s option) in shares of Purchaser Common Stock or cash in an amount equal to the value of the Offer Consideration; provided, however, that the Top-Up Option shall not be exercisable, unless immediately after such exercise the Purchaser would own more than ninety percent (90%) of the Shares then outstanding, on a fully diluted basis; provided, further, that the Top-Up Option shall not be exercisable to the extent doing so would cause the merger not to qualify as a reorganization within the meaning of Section 368(a) of the Code.

(b)    The Purchaser may exercise the Top-Up Option, in whole but not in part, at any one time after the occurrence of a Top-Up Exercise Event and prior to the Effective Time. For purposes of this Agreement, a “ Top-Up Exercise Event ” shall occur if the Purchaser shall have accepted at least a majority of the Shares then outstanding, on a fully diluted basis, for exchange pursuant to the Offer (including, without limitation, any subsequent offering that the Purchaser may elect to extend pursuant to the terms and conditions of this Agreement) but constituting, together with the number of Shares owned by the Purchaser at the time of such acceptance, less than ninety percent (90%) of the Shares then outstanding, on a fully diluted basis.

(c)    In the event the Purchaser wishes to exercise the Top-Up Option, the Purchaser shall send to the Company a written notice (a “ Top-Up Exercise Notice ,” and the date of which notice is referred to herein as the “ Top-Up Notice Date ”) specifying the denominations of the certificate or certificates evidencing the Top-Up Option Shares which the Purchaser wishes to receive, and the place, time and date for the closing of the purchase and sale of the Top-Up Option Shares pursuant to the Top-Up Option (the “ Top-Up Closing ”). The Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a written notice to the Purchaser confirming the number of Top-Up Option Shares and the aggregate purchase price therefore (the “ Top-Up Notice Receipt ”). At the Top-Up Closing, the Purchaser shall pay the Company the aggregate price required to be paid for the Top-Up Option Shares, by, at the Purchaser’s option, (i) delivery of shares of Purchaser Common Stock or (ii) wire transfer of same day funds to a bank account designated by the Company, and the Company shall cause to be issued to the Purchaser a certificate or certificates representing the Top-Up Option Shares. Upon delivery by the Purchaser to the Company of the Top-Up Exercise Notice, and the payment of the consideration described in the immediately preceding sentence, the Purchaser shall be deemed to be the holder of record of the Top-Up Option Shares issuable upon that exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing those Top-Up Option Shares shall not then be actually delivered to the Purchaser or the Company shall have failed or refused to designate the bank account described in the immediately preceding sentence.

(d)    Subject to the terms and conditions hereof, and for so long as this Agreement has not been terminated pursuant to Section 8.1 , the Company agrees that it shall at all times maintain, free from preemptive rights, sufficient authorized but unissued Shares issuable pursuant to this Agreement so that the Top-Up Option may be exercised without additional authorization of Shares, after giving effect to all other options, warrants, convertible securities and other rights to purchase Shares.

Section 2.5    Treatment of Company Options, SARs and Restricted Stock . (a) At or prior to the Closing, the administrator of the Company Stock Plans shall have resolved under the Company Stock Plans (including under Section 7.2(b) of the Company’s 1996 Stock Incentive Plan, Section 6.1.2 of the Company’s 2000 Nonqualified Stock Option Plan and Section 6.1.2 of the Company’s 2005 Equity Incentive Plan) to determine that each unexercised option to purchase Shares (“ Company Options ”) and stock appreciation right (“ SAR ”), whether settled in cash or Shares, granted pursuant to such Company Stock Plans shall terminate immediately prior to the Effective Time (collectively, the “ Canceled Stock Rights ”) without the payment of consideration to the holders thereof, and the Company will take all necessary and appropriate action to effect the termination of all Canceled Stock Rights (including, but not limited to, the giving of any notice required under any agreement relating to the Canceled Stock Rights), in each case without any Liability to the Company or the Surviving Corporation.

(b)    Upon the consummation of the Offer each Share subject to restrictions and forfeiture (“ Restricted Stock ”) granted pursuant to the Company Stock Plans will, by its terms and with no action of the Company, be fully vested. The vesting of Restricted Stock shall be net of all applicable withholding Taxes.

Section 2.6    Affiliates . Notwithstanding anything to the contrary herein, no shares of Purchaser Common Stock shall be delivered to a Person who may be deemed an “affiliate” of the Company in accordance with Section 6.9 hereof for purposes of Rule 145 under the Securities Act until such Person has executed and delivered to the Purchaser an executed copy of the affiliate letter contemplated in Section 6.9 hereof.

Section 3.1    Organization . (a) The Company and each of the Company Subsidiaries is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California and has the requisite corporate power and authority to own, operate and lease the Acquired Assets and to conduct the ADS Business as it is now being conducted. The Company and each of the Company Subsidiaries is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions which recognize such concept) in each jurisdiction in which the nature of the ADS Business or the ownership, leasing or operation of the Acquired Assets makes such qualification or licensing necessary, except for those jurisdictions where the failure to be so qualified or licensed or to be in good standing has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect. Section 3.1(a) of the Company Disclosure Schedule sets forth a true, complete and correct list of all foreign jurisdictions in which the Company and each Company Subsidiary is so qualified or licensed and in good standing. The Company has delivered to or made available to the Purchaser prior to the execution of this Agreement true, complete and correct copies of any amendments to the Company Governing Documents not filed as of the date hereof with the SEC. The Company is in compliance with the terms of the Company Governing Documents.

(b)    Subsidiaries . Other than International Video Conversions, Inc., a California corporation, the Company does not directly or indirectly beneficially own or hold any Equity Interests in any other Person. All outstanding shares of capital stock of, or other Equity Interests in, each Company Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable and are owned directly or indirectly by the Company, free and clear of any Liens.

Section 3.2    Capitalization . (a) The authorized capital stock of the Company consists of (i) 50,000,000 Shares, (ii) 5,000,000 shares of preferred stock, no par value per share (the “ Company Preferred Stock ”), and (iii) 400,000 shares of Series A junior participating preferred stock, no par value per share (the “ Junior Preferred Stock ”). As of March 31, 2007, (i) 9,984,746 Shares were issued and outstanding, (ii) no shares of Company Preferred Stock were issued and outstanding, (iii) no shares of Junior Preferred Stock were issued and outstanding, (iv) no Shares were issued and held in the treasury of the Company or otherwise owned by the Company and (v) a total of 3,667,570 Shares were reserved for issuance pursuant to the Company Stock Plans of which 2,182,420   Shares were subject to outstanding Company Options and SARs (collectively, the “ Company Stock Rights ”). All of the outstanding Shares are, and all Shares which may be issued pursuant to the exercise of outstanding Company Stock Rights will be, when issued in accordance with the terms thereof, duly authorized, validly issued, fully paid and non-assessable. Except for issuances of Shares pursuant to the Company Stock Rights described in the first sentence of Section 3.2(b) , since March 31, 2007, the Company has not issued any Shares or designated or issued any shares of Company Preferred Stock or Junior Preferred Stock. There are no bonds, debentures, notes or other indebtedness having general voting rights (or convertible into securities having such rights) (“ Voting Debt” ) of the Company or any Company Subsidiary issued and outstanding. Except for the Company Stock Rights described in the first sentence of Section 3.2(b) , there are no (x) options, warrants, calls, pre-emptive rights, subscriptions or other rights, agreements, arrangements or commitments of any kind, including any shareholder rights plan, relating to, or the value of which is determined in reference to, the issued or unissued capital stock of the Company or any Company Subsidiary, obligating the Company or any Company Subsidiary to issue, transfer or sell or cause to be issued, transferred or sold any shares of capital stock or Voting Debt of, or other equity interest in, the Company or any Company Subsidiary or securities convertible into or exchangeable for such shares or equity interests, or obligating the Company or any Company Subsidiary to grant, extend or enter into any such option, warrant, call, subscription or other right, agreement, arrangement or commitment (collectively, “ Equity Interests ”) or (y) outstanding contractual obligations of the Company or any Company Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital stock of, or other Equity Interests in, the Company or any Company Subsidiary or any affiliate of the Company or to provide funds to make any investment (in the form of a loan, capital contribution or otherwise) in the Company, any Company Subsidiary or other Person. No Company Subsidiary owns any Shares. 

(b)    As of March 31, 2007, the Company had outstanding Company Options to purchase 2,182,420 Shares, no   SARs and no shares of Restricted Stock granted under the Company Stock Plans. All of such Company Stock Rights and Restricted Stock have been granted to employees or directors of the Company and the Company Subsidiaries in the ordinary course of business consistent with past practice pursuant to the Company Stock Plans. Since March 31, 2007, the Company has not granted any Company Stock Rights or shares of Restricted Stock. Section 3.2(b) of the Company Disclosure Schedule sets forth a listing of all outstanding Company Stock Rights and shares of Restricted Stock as of March 31, 2007 and (i) the date of their grant and the portion of which that is vested as of March 31, 2007 and if applicable, the exercise price therefor, (ii) the date upon which each Company Stock Right would normally be expected to expire absent termination of employment or other acceleration and (iii) whether or not such Company Option is intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.

(c)    There are no voting trusts or other agreements or understandings to which the Company or any Company Subsidiary is a party with respect to the voting of any Shares or any capital stock of, or other Equity Interest in, the Company, any of the Company Subsidiaries or other Person. Neither the Company nor any Company Subsidiary has granted any preemptive rights, anti-dilutive rights or rights of first refusal or similar rights.

Section 3.3    Authorization; Validity of Agreement; Company Action .

(a)    The Company has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the Transactions. The execution, delivery and performance by the Company of this Agreement, and the consummation by it of the Transactions, have been duly and validly authorized by the Company Board of Directors and no other corporate action on the part of the Company is necessary to authorize the execution and delivery by the Company of this Agreement and the consummation by it of the Transactions, subject, in the case of the Merger, to the approval of this Agreement by the holder(s) of a majority of all of the Shares entitled to be cast, if required by applicable law. This Agreement has been duly executed and delivered by the Company and, assuming due and valid authorization, execution and delivery hereof by the Purchaser, is a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except that (i) such enforcement may be subject to applicable bankruptcy, insolvency or other similar laws, now or hereafter in effect, affecting creditors’ rights generally and (ii) the remedy of specific performance and injunctive and other forms of equitable relief may be subject to equitable defenses and to the discretion of the court before which any proceeding therefor may be brought.

(b)    The Company Rights Agreement has been amended so that, until the valid termination of this Agreement in accordance with Article VIII hereto: (i) the Purchaser and each Purchaser Subsidiary are each exempt from the definition of “Acquiring Person” contained in the Company Rights Agreement, and no “Shares Acquisition Date” or “Distribution Date” or “Triggering Event” (as such terms are defined in the Company Rights Agreement) will occur as a result of the execution of this Agreement or the consummation of the Offer, the Merger and the other Transactions and (ii) the Company Rights Agreement will terminate and the Company Rights will expire immediately prior to the Effective Time. The Company Rights Agreement, as so amended, has not been further amended or modified. The Company has previously provided a true, complete and correct copy of the Company Rights Agreement and all amendments thereto through the date hereof to the Purchaser.

Section 3.4    Board Approvals . The Company Board of Directors, at a meeting duly called and held, has unanimously (i) determined that this Agreement, the Offer, the Merger and other Transactions are advisable, fair to, and in the best interests of the Company and its shareholders; (ii) duly and validly approved and taken all corporate action required to be taken by the Company Board of Directors to authorize the consummation of the Transactions and (iii) recommended that the shareholders of the Company accept the Offer, tender their Shares to the Purchaser pursuant to the Offer and approve and adopt this Agreement and the Merger, if required by applicable law. No further corporate action is required by the Company Board of Directors, pursuant to the CGCL or otherwise, in order for the Company to approve this Agreement or the Transactions, including the Merger, subject to the approval of this Agreement by the holder(s) of a majority of all of the Shares entitled to be cast, if required by applicable law, as contemplated by Section 1.10 , which is the only shareholder vote that is required for approval of this Agreement and the consummation of the Merger by the Company. The Company has been advised by its directors and officers that they intend to tender all Shares beneficially owned by them into the Offer.

Section 3.5    Consents and Approvals; No Violations . Except as set forth in Section 3.5 of the Company Disclosure Schedule, none of the execution, delivery or performance of this Agreement by the Company, the acceptance for exchange or acquisition of the Shares pursuant to the Offer, the consummation by the Company of the Transactions or compliance by the Company with any of the provisions of this Agreement will (i) conflict with or result in any breach of any provision of the Company Governing Documents or the organizational documents of any Company Subsidiary, (ii) require any filing by the Company or any Company Subsidiary with, or the permit, authorization, consent or approval of, any court, arbitral tribunal, administrative agency or commission or other governmental or other regulatory authority or agency, foreign, federal, state, local or supernational (a “ Governmental Entity ”) or any other Person (except for (A) compliance with any applicable requirements of the Securities Act, the Exchange Act or any state securities or Blue Sky laws, (B) any filings as may be required under the DGCL or the CGCL in connection with the Merger, (C) filings, permits, authorizations, consents and approvals as may be required under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), or (D) the filing with the SEC and the Nasdaq of (1) the Schedule 14D-9, (2) an Information Statement, if required by applicable law, (3) the information required by Rule 14f-1 under the Exchange Act, (4) the Form 10 and (5) such reports under Section 13(a) of the Exchange Act as may be required in connection with this Agreement and the Offer and the Merger), (iii) result in a modification, violation or breach of, constitute (with or without notice or lapse of time or both) a default (or give rise to any right, including, but not limited to, any right of termination, vesting, amendment, cancellation or acceleration) under, or require any consent or approval under, any of the terms, conditions or provisions of any note, bond, mortgage, lien, indenture, lease, license, contract, understanding or agreement, whether oral or written, or other instrument or obligation to which the Company or any Company Subsidiary is a party (or by which any of them or any of their respective properties or assets is bound) (the “ Company Agreements ”), (iv) result in the creation or imposition of any Lien (other than Permitted Liens) on any of the Acquired Assets held by the Company or any of the Company Subsidiaries, or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to the Company, any Company Subsidiary or any of their respective properties or assets; except in the case of clauses (ii), (iii), (iv) or (v) where (w) any failure to obtain such permits, authorizations, consents or approvals, (x) any failure to make such filings, (y) any creation or imposition of such Lien, or (z) any such modifications, violations, rights, breaches or defaults have not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect or have a material adverse effect on the ability of the Company to consummate the Offer, the Merger or any of the other Transactions.

Section 3.6    Company SEC Documents and Company Financial Statements . (a) The Company and each Company Subsidiary has filed or furnished (as applicable) with the SEC all forms, reports, schedules, statements and other documents required by it to be filed or furnished (as applicable) since and including December 31, 2003 under the Exchange Act or the Securities Act of 1933, as amended (the “ Securities Act ”) (together with all certifications required pursuant to the Sarbanes-Oxley Act of 2002 (the “ Sarbanes-Oxley Act ”)) (such documents and any other documents filed by the Company and each Company Subsidiary with the SEC, as have been amended since the time of their filing, collectively, the “ Company SEC Documents ”). As of their respective dates the Company SEC Documents (a) did not (or with respect to Company SEC Documents filed after the date hereof, will not) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading and (b) complied in all material respects with the applicable requirements of the Exchange Act or the Securities Act, as the case may be, the Sarbanes-Oxley Act and the applicable rules and regulations of the SEC thereunder. None of the Company Subsidiaries is currently required to file any forms, reports or other documents with the SEC. All of the audited consolidated financial statements and unaudited consolidated interim financial statements of the Company and its consolidated Subsidiaries included in the Company SEC Documents, as amended or supplemented prior to the date hereof (collectively, the “ Company Financial Statements ”), (i) have been or will be, as the case may be, prepared from, are in accordance with, and accurately reflect the books and records of the Company and its consolidated Subsidiaries in all material respects, (ii) have been or will be, as the case may be, prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and (iii) fairly present in accordance with GAAP the consolidated financial position and the consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as of the times and for the periods referred to therein.

(b)    Without limiting the generality of Section 3.6(a) , (i) Singer Lewak Greenbaum & Goldstein LLP has not resigned or been dismissed as independent public accountant of the Company as a result of or in connection with any disagreement with the Company on a matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, (ii) no executive officer of the Company has failed in any respect to make, without qualification, the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act with respect to any form, report or schedule filed by the Company with the SEC since the enactment of the Sarbanes-Oxley Act and (iii) no enforcement action has been initiated or, to the knowledge of the Company, threatened against the Company by the SEC relating to disclosures contained in any Company SEC Document.

(c)    The Company represents and warrants that, by reason of the Company’s status as a “non-accelerated filer,” the Company is not yet required to comply with the provisions of Section 404 of the Sarbanes-Oxley Act and the rules of the SEC thereunder regarding internal control over financial reporting, and, assuming such representation and warranty is true and accurate, the Purchaser acknowledges that the Company shall not be construed as representing or warranting in this Agreement that it is in compliance with Section 404 of the Sarbanes-Oxley Act or the SEC rules thereunder.

Section 3.7    Internal Controls; Sarbanes-Oxley Act . The Company and the Company Subsidiaries have designed and maintained a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting. The Company (i) has designed and maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and (ii) has disclosed to the Company’s auditors and the audit committee of the Company Board of Directors (and made summaries of such disclosures available to the Purchaser) (A) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that 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 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. The Company is in compliance in all material respects with all effective provisions of the Sarbanes-Oxley Act.

Section 3.8    Absence of Certain Changes . (a) Except as contemplated by this Agreement and except as set forth in Section 3.8 of the Company Disclosure Schedule or in the Company SEC Documents filed prior to the date hereof, since December 31, 2006 (the “ Balance Sheet Date ”), the Company and each Company Subsidiary has conducted the ADS Business in the ordinary course of business consistent with past practice.

Section 3.9    No Undisclosed Liabilities . Except (a) as disclosed in the Company SEC Documents filed prior to the date hereof or the Company Financial Statements included therein, (b) for Retained Liabilities incurred since the Balance Sheet Date that would not or would not reasonably be expected to, individually or in the aggregate, be in excess of $25,000, (c) for Retained Liabilities incurred under this Agreement or in connection with the Transactions and (d) for Retained Liabilities incurred under any Company Agreement other than Retained Liabilities due to breaches thereunder, neither the Company nor any Company Subsidiary has incurred any Retained Liabilities required by GAAP to be recognized or disclosed on a consolidated balance sheet of the Company or any Company Subsidiary or in the notes thereto. The Company’s accruals for loss contingencies relating to the ADS Business, the Acquired Assets or the Retained Liabilities reflected in its balance sheet included in its most recent report on Form 10-K filed prior to the date hereof are the only accruals which would be required under Statement of Financial Accounting Standards No. 5 with regard to such loss contingencies of the Company existing on the date hereof or hereafter, except for such losses which, in the aggregate, do not exceed $25,000.

Section 3.10    Litigation . Except as set forth on Section 3.10 of the Company Disclosure Schedule, there is no claim, action, suit, arbitration, investigation, alternative dispute resolution action or any other judicial or administrative proceeding, in law or equity, pending against (or, to the Company’s knowledge, threatened against or naming as a party thereto), the Company or any Company Subsidiary (or any of their respective rights or properties) or any executive officer or director of the Company or any Company Subsidiary (in their capacity as such). None of the Company or any Company Subsidiary is subject to any outstanding order, writ, injunction, decree or arbitration ruling, judgment, award or other finding where the amount at issue exceeds $25,000 or which would reasonably be expected to prohibit or materially delay the consummation of the Offer, the Merger or any of the other Transactions.

Section 3.11    Employee Benefit Plans; ERISA . (a) With respect to the ADS Employees, Section 3.11(a) of the Company Disclosure Schedule sets forth a true, correct and complete list of all employee benefit plans, programs, agreements or arrangements, including pension, retirement, profit sharing, deferred compensation, stock option, change in control, retention, equity or equity-based compensation, stock purchase, employee stock ownership, severance pay, vacation, bonus or other incentive plans, all medical, vision, dental or other health plans, all life insurance plans, and all other employee benefit plans or fringe benefit plans, including “employee benefit plans” as that term is defined in Section 3(3) of ERISA, in each case, whether oral or written, funded or unfunded, or insured or self-insured, maintained by the Company or any Company Subsidiary, or to which the Company or any Company Subsidiary contributed or is obligated to contribute thereunder, or with respect to which the Company or any Company Subsidiary has or may have any Liability, in each case, for or to any current or former ADS Employees (collectively, the “ Company Benefit Plans ”).

(b)    All Company Benefit Plans that are intended to be subject to Code Section 401(a) and any trust agreement that is intended to be tax exempt under Code Section 501(a) have been determined by the Internal Revenue Service to be qualified under Code Section 401(a) and exempt from taxation under Code Section 501(a), and, to the knowledge of the Company, nothing has occurred that would adversely affect the qualification of any such plan. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect:  (i) each Company Benefit Plan and any related trust subject to ERISA complies with and has been administered in substantial compliance with, (A) the provisions of ERISA, (B) all provisions of the Code, (C) all other applicable laws and (D) its terms and the terms of any collective bargaining or collective labor agreements; (ii) neither the Company nor any Company Subsidiary has received any written notice from any Governmental Entity questioning or challenging such compliance; (iii) there are no unresolved claims or disputes under the terms of, or in connection with, the Company Benefit Plans other than claims for benefits which are payable in the ordinary course; (iv) there has not been any “prohibited transaction” (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Company Benefit Plan; (v) no litigation has been commenced with respect to any Company Benefit Plan and, to the knowledge of the Company, no such litigation is threatened (other than routine claims for benefits in the normal course); (vi) there are no governmental audits or investigations pending or, to the knowledge of the Company, threatened in connection with any Company Benefit Plan; and (vii) to the knowledge of the Company, there are not any facts that could give rise to any liability in the event of any governmental audit or investigation.

(c)    Except as set forth in Section 3.11(c) of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate of the Company (as defined below) (i) sponsors or contributes to a Company Benefit Plan that is a “defined benefit plan” (as defined in ERISA Section 3(35)); (ii) has an “obligation to contribute” (as defined in ERISA Section 4212) to a Company Benefit Plan that is a “multiemployer plan” (as defined in ERISA Sections 4001(a)(3) and 3(37)(A)); (iii) has any Liability under Title IV of ERISA with respect to a Company Benefit Plan, either directly or through any ERISA Affiliate; and (iv) sponsors, maintains or contributes to any plan, program or arrangement that provides for post-retirement or other post-employment welfare benefits (other than health care continuation coverage as required by applicable law). 

(d)    With respect of each of the Company Benefit Plans which is subject to Title IV of ERISA, the present value of accrued benefits under such plan, based upon the actuarial assumptions used for funding purposes in the most recent actuarial report prepared by such plan’s actuary with respect to such plan, did not, as of its latest valuation date, exceed the then current value of the assets of such plan allocable to such accrued benefits. No Company Benefit Plan nor any trust established under a Company Benefit Plan has incurred any “accumulated funding deficiency” (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of the last day of the most recent fiscal year of each of the Company Benefit Plans ended prior to the date of this Agreement.

(e)    Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, all reports, returns and similar documents with respect to all Company Benefit Plans required to be filed by the Company or any Company Subsidiary with any Governmental Entity or distributed to any Company Benefit Plan participant have been duly and timely filed or distributed.

(f)    Section 3.11(f) of the Company Disclosure Schedule discloses whether each Company Benefit Plan that is an employee welfare benefit plan is (i) unfunded or self-insured, (ii) funded through a “welfare benefit fund”, as such term is defined in Code Section 419(e) or other funding mechanism or (iii) insured. Except as has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, each such employee welfare benefit plan may be amended or terminated (including with respect to benefits provided to retirees and other former employees) without liability (other than benefits then payable under such plan without regard to such amendment or termination) to the Company or any Company Subsidiary at any time. The Company and each Company Subsidiary complies in all material respects with the applicable requirements of Section 4980B(f) of the Code or any similar state statute with respect to each Company Benefit Plan that is a group health plan within the meaning of Section 5000(b)(1) of the Code or such state statute. Neither the Company nor any Company Subsidiary has any material obligations for retiree health or life insurance benefits under any Company Benefit Plan (other than for continuation coverage under Section 4980B(f) of the Code).

(g)    Except as may be required by applicable law, or as contemplated under this Agreement, neither the Company nor any Company Subsidiary has any plan or commitment to create any additional Company Benefit Plans, or to amend or modify any existing Company Benefit Plan in such a manner as to materially increase the cost of such Company Benefit Plan to the Company or any Company Subsidiary.

(h)    Section 3.11(h) of the Company Disclosure Schedule discloses: (i) each material payment (including any bonus, severance, unemployment compensation, deferred compensation, forgiveness of indebtedness or golden parachute payment) becoming due to any current or former ADS Employee under any Company Benefit Plan; (ii) any increase in any material respect any benefit otherwise payable under any Company Benefit Plan; (iii) any acceleration in any material respect of the time of payment or vesting of any such benefits under any Company Benefit Plan; or (iv) any material obligation to fund any trust or other arrangement with respect to compensation or benefits under a Company Benefit Plan in each case caused or triggered by the execution and delivery of this Agreement or the consummation of the Offer, the Merger or the other Transactions. No payment or benefit which has been, will or may be made by the Company or any Company Subsidiary with respect to any current or former ADS Employee located in the United States in connection with the execution and delivery of this Agreement or the consummation of the Transactions would be characterized as an “excess parachute payment” with the meaning of Section 280G(b)(1) of the Code or fail to be deductible under Section 162(m) of the Code.

(i)    True, correct and complete copies have been delivered or made available to the Purchaser by the Company of all Company Benefit Plans (including all amendments and attachments thereto); written summaries of any Company Benefit Plan not in writing, all related trust documents; all insurance contracts or other funding arrangements to the degree applicable; the two (2) most recent annual information filings (Form 5500) and annual financial reports for those Company Benefit Plans (where required); the most recent determination letter from the Internal Revenue Service (where required); and the most recent summary plan descriptions for the Company Benefit Plans and in respect of defined Company Benefit Plans, the most recent actuarial valuation and any subsequent valuation or funding advice (including draft valuations).

(j)    None of the Company or any Company Subsidiary has entered into any contract, agreement, arrangement or understanding with any officer or director of the Company or any Company Subsidiary in connection with or in contemplation of the Transactions.

(k)    None of the Company nor any Company Subsidiary has any non-U.S. employees.

Section 3.12    Taxes .  (a) The Company and each Company Subsidiary has timely filed with the appropriate Governmental Entity all income Tax Returns and other material Tax Returns required to be filed by them, and all such Tax Returns are complete and correct in all material respects. All Taxes due and payable by the Company and each Company Subsidiary have been paid, and the Company and each Company Subsidiary have provided adequate reserves in accordance with GAAP in their financial statements for any Taxes that have not been paid. The Company has delivered or made available and will continue to make available to the Purchaser complete and accurate copies of all material Tax Returns relating to any Tax periods of the Company or any Company Subsidiary for which the statute of limitations has not expired.

(b)    There are currently no deficiencies for Taxes that have been claimed, proposed or assessed by any Governmental Entity against the Company or any Company Subsidiary for which adequate reserves have not been provided in the Company Financial Statements. There are no pending, or, to the Company’s knowledge, any threatened audits or other administrative proceedings or court proceedings with regard to any Taxes or Tax Returns of the Company or any Company Subsidiary. There are no matters under discussion with any Governmental Entity with respect to Taxes.

(c)    The Company and each Company Subsidiary has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

(d)    To the knowledge of the Company, no payment of any consideration with respect to the Offer or the Merger is subject to withholding under Section 1441 or 1445 of the Code.

(e)    None of the Company or any Company Subsidiary has engaged in a transaction similar to any “reportable transaction” or “listed transaction” within the meaning of current, former or temporary Treasury Regulation Section 1.6011-4 for which there is no amount reflected in the financial statements of the Company or relevant Company Subsidiary.

(f)    Neither the Company nor, to its knowledge, any of its affiliates has taken or agreed to take any action that would prevent the Offer and the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code. The Company is not aware of any agreement, plan or other circumstance that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

Section 3.13    Contracts . Except as filed as exhibits to the Company SEC Documents filed prior to the date hereof, or as disclosed in Section 3.13 of the Company Disclosure Schedule, there is no Company Agreement relating to the ADS Business, the Acquired Assets or the Retained Liabilities (a) any of the benefits to any party of which will be increased, or the vesting of the benefits to any party of which will be accelerated, by the occurrence of any of the Transactions or the value of any of the benefits to any party of which will be calculated on the basis of any of the Transactions (except as disclosed pursuant to Section 3.11 ) or (b) which, as of the date hereof, (i) is a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC), (ii) involves aggregate expenditures in excess of $50,000 per annum, (iii) involves aggregate expenditures in excess of $50,000 and was not entered into in the ordinary course of business, (iv) contains “take or pay” provisions applicable to the Company or any Company Subsidiary, (v) contains any non-compete or exclusivity provisions with respect to any line of business or geographic area with respect to the Company, any Company Subsidiary or any of the Company’s current or future affiliates, or which restricts the conduct of any line of business by the Company, any of the Company’s current or future affiliates, any Company Subsidiary or any geographic area in which the Company, any Company Subsidiary or any of the Company’s current or future affiliates may conduct business, in each case in any respect, (vi) would reasonably be expected to prohibit or materially delay the consummation of the Offer, the Merger or any of the other Transactions or (vii) is necessary for the conduct of the ADS Business as currently conducted but constitutes an Excluded Asset. Each contract of the type described in this Section 3.13 , whether or not set forth in Section 3.13 of the Company Disclosure Schedule, is referred to herein as a “ Company Material Contract ”. Each Company Agreement relating to the ADS Business, the Acquired Assets or the Retained Liabilities is valid and binding on the Company and each Company Subsidiary party thereto and, to the Company’s knowledge, each other party thereto, as applicable, and in full force and effect, and the Company and each Company Subsidiary has performed all obligations required to be performed by it under each such Company Agreement and, to the Company’s knowledge, each other party to each such Company Agreement has performed all obligations required to be performed by it under such Company Agreement, except as would not, or would not be reasonably expected to, individually or in the aggregate, (1) prohibit or materially delay the consummation of the Offer, the Merger or any of the other Transactions, (2) otherwise prevent or materially delay performance by the Company of any of its material obligations under this Agreement or (3) result in a Company Material Adverse Effect. None of the Company or any Company Subsidiary knows of, or has received notice of, any violation or default under (or any condition which with the passage of time or the giving of notice would cause such a violation of or default under) any Company Agreement relating to the ADS Business, the Acquired Assets or the Retained Liabilities except for violations or defaults that would not, or would not be reasonably expected to, individually or in the aggregate, (1) prohibit or materially delay consummation of the Offer, the Merger or any of the other Transactions, (2) otherwise prevent or materially delay performance by the Company of any of its material obligations under this Agreement or (3) result in a Company Material Adverse Effect.

Section 3.14    Title to Properties; Encumbrances. Except as disclosed in Section 3.14 of the Company Disclosure Schedule, the Company and each of the Company Subsidiaries has good, valid and marketable title to, or, in the case of leased properties and assets, valid leasehold interests in, all of the Acquired Assets except where the failure to have such good, valid and marketable title has not had and would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect; in each case subject to no Liens, except for (a) Liens reflected in the consolidated balance sheet of the Company and its consolidated Subsidiaries as of the Balance Sheet Date, (b) Liens consisting of zoning or planning restrictions, easements, permits and other restrictions or limitations on the use of real property or irregularities in title thereto, which do not materially impair the value of such properties or the use of such properties by the Company or any of the Company Subsidiaries in the operation of its respective business, (c) Liens for current Taxes, assessments or governmental charges or levies on property not yet due and payable and Liens for Taxes that are being contested in good faith by appropriate proceedings and for which an adequate reserve has been provided on the appropriate financial statements, (d) purchase money Liens incurred in the ordinary course of business, and (e) materialmen’s, mechanics’, carriers’, workmens’, warehousemens’, repairmens’ and other like Liens arising in the ordinary course of business, or deposits to retain the release of such Liens (the foregoing Liens (a)-(e), “ Permitted Liens ”). The Company and each of the Company Subsidiaries is in compliance with the terms of all material leases of Acquired Assets to which it is a party. All such material leases are in full force and effect, and the Company and each of the Company Subsidiaries enjoys peaceful and undisturbed possession under all su