AGREEMENT AND PLAN OF MERGER DATED AS OF JANUARY 20, 2007 BY AND AMONG ANALEX CORPORATION, QINETIQ NORTH AMERICA OPERATIONS, LLC, AND APOLLO MERGER SUB INC

Exhibit 2.1

AGREEMENT AND PLAN OF MERGER

DATED AS OF JANUARY 20, 2007

BY AND AMONG

ANALEX CORPORATION,

QINETIQ NORTH AMERICA OPERATIONS, LLC,

AND

APOLLO MERGER SUB INC.

TABLE OF CONTENTS

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AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of January 20, 2007 (this "Agreement") is by and among QinetiQ North America Operations, LLC, a Delaware corporation (" Parent "), Apollo Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of Parent (" Merger Sub "), and Analex Corporation, a Delaware corporation (the " Company ").

RECITALS

A. The board of directors of the Company (the "Company Board") and the boards of directors of Parent and Merger Sub have determined that it is in the best interests of their respective companies and stockholders to enter into the business combination transaction described herein, and have approved the Merger (as defined below) upon the terms and subject to the conditions set forth in this Agreement;

B. In furtherance of such acquisition, Parent, Merger Sub and the Company have proposed that, upon the terms and subject to the conditions set forth in this Agreement, Merger Sub shall commence an offer (as amended or supplemented in accordance with this Agreement, the " Offer ") to purchase for cash all of the shares of common stock, par value $0.02 per share (the " Common Stock "), of the Company outstanding as of the expiration of the Offer (the " Shares "), at a price per Share of $3.70 (subject to any applicable withholding), net to the seller in cash (such price, or such higher price per Share as may be paid in the Offer, the " Offer Price ");

C. The Transaction Committee (as defined below), the Company Board and the boards of directors of Parent and Merger Sub have approved and declared the advisability of this Agreement, the Offer and the merger of Merger Sub with and into the Company following the consummation of the Offer (the " Merger "), upon the terms and subject to the conditions set forth in this Agreement, whereby each Share outstanding immediately prior to the Effective Time (as defined in Section 2.2), other than Shares owned directly or indirectly by Parent or Merger Sub and Dissenting Shares, will be converted into the right to receive the Offer Price;

D. The Company Board has resolved to recommend that the holders of Shares tender their Shares pursuant to the Offer and has approved, adopted and declared advisable this Agreement and the Merger;

E. Concurrently with the execution and delivery of this Agreement and as a condition and inducement to Parent’s and Merger Sub’s willingness to enter into this Agreement, the holders of the Series A Preferred Stock, Series B Preferred Stock, Company Convertible Notes, warrants (to purchase Common Stock) issued in connection with the issuance of Series A Preferred Stock, and warrants (to purchase Common Stock) issued in connection with the issuance of Series B Preferred Stock (collectively, the " Convertible Instruments ") have entered into a Conversion, Tender and Voting Agreement (the " Tender and Voting Agreement ") with the Company, Parent and Merger Sub, pursuant to which each such holder has, upon the terms and conditions set forth in the Tender and Voting Agreement, agreed to, among other things, (i) consent to the Merger and the other transactions contemplated by this Agreement, (ii) convert or exercise, as applicable, effective as of the Expiration Date, all Convertible Instruments held by such holder (except as set forth herein, any Company Warrants held by such holder shall be purchased by Merger Sub without the exercise or conversion of such Company Warrants), (iii) tender their Shares (including the Shares acquired upon conversion or exercise of the applicable Convertible Instruments) in response to the Offer, and (iv) vote their Shares in favor of the Merger and against any competing transaction;

F. It is intended that Parent will be treated as the acquiring entity for accounting purposes; and

G. Certain definitions of capitalized terms used in this Agreement but not otherwise defined herein are set forth in Exhibit A hereto.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements contained herein, the parties hereto, intending to be legally bound, agree as follows:

ARTICLE 1

THE OFFER

1.1 The Offer .

(a) Subject to the provisions of this Agreement, and so long as none of the events or circumstances set forth in subsections (a) through (d) of Annex A hereto shall have occurred and be continuing, Parent shall cause Merger Sub as promptly as practicable (and in any event on or before the 10th calendar day after the date hereof) to commence (within the meaning of Rule 14d-2 promulgated under the Exchange Act) the Offer at the Offer Price. The obligations of Merger Sub to, and of Parent to cause Merger Sub to, accept for payment and to pay for Shares validly tendered pursuant to the Offer and not withdrawn prior to the expiration of the Offer shall be subject solely to those conditions set forth in Annex A . The conditions to the Offer set forth on Annex A are for the benefit of Merger Sub and may be asserted or waived only by Merger Sub; provided, however , that without the prior consent of the Company, Merger Sub shall not waive the Minimum Condition (as defined in Annex A ). The initial expiration date of the Offer (the " Initial Expiration Date ", and any expiration date after the Initial Expiration Date, the " Expiration Date ") shall be the 20th Business Day following the commencement of the Offer.

(b) Merger Sub expressly reserves the right, in its sole discretion, to modify the terms and conditions of the Offer; provided, however , that without the prior consent of the Company, no modification or change may be made which (i) decreases the Offer Price ( except as permitted by this Agreement), (ii) changes the form of consideration payable in the Offer (other than by adding consideration), (iii) changes the Minimum Condition, (iv) reduces or limits the number of Shares sought pursuant to the Offer, (v) changes the conditions to the Offer in a manner adverse to the holders of the Shares, (vi) imposes additional conditions to the Offer, (vii) extends the Offer except as provided in the next sentence, or (viii) makes any other change which is adverse to the holders of the Shares. Notwithstanding the foregoing, Merger Sub may, without the consent of the Company, (i) if at the then-scheduled expiration date of the Offer any of the conditions to Merger Sub’s obligations to accept for payment and pay for Shares shall not be satisfied or waived, extend and re-extend the Offer on one or more occasions for such period as is reasonably necessary to permit such conditions to be satisfied, (ii) extend and re-extend the Offer for any period required by any rule, regulation, interpretation or position of the Securities and Exchange Commission (the " SEC ") or the staff thereof applicable to the Offer, and (iii) extend and re-extend the Offer on one or more occasions for an aggregate period of not more than 20 Business Days beyond the latest Expiration Date that would otherwise be permitted under clause (i) or (ii) of this sentence if, as of such date, the Minimum Condition has been satisfied but less than 90% of the outstanding Shares (on a fully diluted basis, excluding any Shares issuable pursuant to Section 1.5) have been validly tendered and not properly withdrawn; provided that Parent and Merger Sub irrevocably waive (A) the conditions to the Offer set forth on Annex A and agree not to assert such conditions as a basis for not consummating the Offer, and (B) the right to terminate this Agreement pursuant to Sections 9.1(b)(i), (iii) and (iv). Subject to the terms and the conditions of the Offer and this

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Agreement, as soon as practicable after expiration of the Offer, Merger Sub shall accept for payment and pay for, and Parent shall cause Merger Sub to accept for payment and pay for, all Shares validly tendered and not withdrawn pursuant to the Offer. Notwithstanding the foregoing, Merger Sub may in its sole discretion elect to provide for a subsequent offering period pursuant to, and on the terms required by, Rule 14d-11 under the Securities Exchange Act of 1934, as amended (" Exchange Act ").

(c) At the request of the Company, Merger Sub shall, and Parent shall cause Merger Sub to, extend the Offer until such date as the conditions set forth in Annex A have been satisfied; provided that such conditions are reasonably capable of being satisfied before the Outside Date. Notwithstanding the foregoing, nothing contained in this Agreement shall require Merger Sub to extend the Offer beyond the Outside Date.

(d) On the date of commencement of the Offer, Parent and Merger Sub shall file with the SEC with respect to the Offer a Tender Offer Statement on Schedule TO (together with all amendments and supplements thereto and including all exhibits thereto, the " Schedule TO ") which will on the date filed with the SEC and the date first published, sent or given to the Company’s stockholders comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder and any other applicable U.S. federal securities laws, and will contain the offer to purchase relating to the Offer and form of the related letter of transmittal (such Schedule TO and the documents included therein pursuant to which the Offer shall be made, together with any supplements or amendments thereto and including the exhibits thereto, are referred to herein collectively as the " Offer Documents "), provided, however , that no representation, warranty or covenant hereby is made or will be made by Parent or Merger Sub with respect to information supplied by the Company for inclusion in, or information derived from the Company’s public SEC filings which is incorporated by reference or included in the Offer Documents. Merger Sub shall cause the Offer Documents to be disseminated to holders of Shares as and to the extent required by the U.S. federal securities laws. Parent shall deliver copies of the proposed forms of the Offer Documents to the Company and its counsel in advance of filing with the SEC and the commencement of the Offer and shall provide a reasonable opportunity for review and comment by the Company and its counsel. The Offer Documents shall be in a form reasonably acceptable to the Company. The Company and its counsel shall be given a reasonable opportunity to review any amendments and supplements to the initial Offer Documents prior to their filing with the SEC or dissemination to the Company’s stockholders. Parent shall promptly provide the Company and its counsel any comments, written or oral, that Merger Sub, Parent or their counsel may receive from the SEC or its staff with respect to the Offer Documents promptly after receipt of any such comments, and provide the Company and its counsel a reasonable opportunity to participate in preparation of responses to SEC comments. Each of Parent, Merger Sub and the Company shall promptly correct any information provided by it for use in the Offer Documents that shall have become false or misleading in any material respect and Parent and Merger Sub further agree to take all steps necessary to cause the Schedule TO as so corrected to be filed with the SEC and the other Offer Documents as so corrected to be disseminated to the stockholders of the Company, in each case, as and to the extent required by applicable U. S. federal securities laws.

(e) Parent hereby guarantees the full and timely performance of all of Merger Sub’s obligations under this Agreement and shall provide or cause to be provided to Merger Sub on a timely basis the funds necessary to accept for payment, and pay for, any Shares and Company Warrants that Merger Sub becomes obligated to accept for payment, and pay for, pursuant to the Offer.

1.2 Company Action .

(a) The Company hereby consents to the Offer and represents and warrants that the Company Board, at a meeting duly called and held and acting upon a unanimous recommendation of a

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special committee of the Company Board comprised entirely of independent directors (the " Transaction Committee "), has (i) declared the advisability of the Merger and this Agreement, (ii) approved the Offer, the Merger, this Agreement and the other transactions contemplated hereby, (iii) determined that the terms of the Offer and the Merger are fair to, and in the best interests of, the Company’s stockholders, and (iv) subject to Section 7.4(d), resolved to recommend that the Company’s stockholders accept the Offer and tender their Shares to Merger Sub and, if required, approve the Merger and the other transactions contemplated hereby. The Company hereby consents to the inclusion in the Offer Documents of the recommendations of the Company Board described in this Section 1.2(a).

(b) The Company shall file with the SEC on the date of the commencement of the Offer a Solicitation/Recommendation Statement on Schedule 14D-9 (together with all amendments and supplements thereto and including the exhibits thereto, the " Schedule 14D-9 ") which will on the date filed with the SEC and the date first published, sent or given to the Company’s stockholders comply in all material respects with the provisions of the Exchange Act and the rules and regulations thereunder and any other applicable U.S. federal securities laws, and that, subject to Section 7.4(d), will contain the recommendations of the Company Board referred to in subsection (a) above, and shall disseminate the Schedule 14D-9 to the Company’s stockholders as and to the extent required by applicable U.S. federal securities laws. The Company shall deliver copies of the proposed form of the Schedule 14D-9 to Parent and its counsel in advance of the filing with the SEC and shall provide a reasonable opportunity for review and comment by Parent and its counsel. The Schedule 14D-9 shall be in a form reasonably acceptable to Parent. Parent and its counsel shall be given a reasonable opportunity to review and comment on any amendments and supplements to the Schedule 14D-9 prior to their filing with the SEC or dissemination to the Company’s stockholders. The Company shall provide Parent and its counsel any comments that the Company or its counsel may receive from the SEC or its staff with respect to the Schedule 14D-9 promptly after receipt of any such comments. Each of the Company, Parent and Merger Sub shall promptly correct any information provided by it for use in the Schedule 14D-9 that shall have become false or misleading in any material respect and the Company further agrees to take all steps necessary to cause such Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the Company’s stockholders, in each case, as and to the extent required by applicable U.S. federal securities laws.

(c) In connection with the Offer and the Merger, the Company shall cause its transfer agent or agents to furnish Merger Sub promptly with mailing labels containing the names and addresses of the record holders of Shares as of the latest practicable date and of those persons becoming record holders subsequent to such date, together with copies of all lists of stockholders, security position listings and computer files and all other information in the Company’s possession or control, to the extent reasonably available to the Company, regarding the beneficial owners of Shares and any securities convertible into Shares, and shall furnish to Merger Sub such information and assistance (including updated lists of stockholders, security position listings and computer files) as Parent may reasonably request in communicating the Offer to the Company’s stockholders. Subject to the requirements of applicable law, and except for such steps as are necessary to disseminate the Offer Documents and any other documents necessary to consummate the Merger, Parent and Merger Sub and their agents shall hold in confidence the information contained in any such labels, listings and files, will use such information only in connection with the Offer and the Merger and, if this Agreement shall be terminated in accordance with Section 9.1, will, upon request, deliver, and will use their commercially reasonable efforts to cause their agents to deliver, to the Company all copies of such information then in their possession or control.

1.3 Directors; Section 14(f) .

(a) Effective upon Merger Sub’s purchase of Shares pursuant to the Offer, Parent shall be entitled to designate such number of directors, rounded up to the next whole number, for election

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or appointment to the Company Board as will give Parent representation on the Company Board equal to the product of (i) the total number of directors on the Company Board (giving effect to the increase in the size of such board pursuant to this Section 1.3), and (ii) a fraction equal to the number of Shares beneficially owned by Merger Sub and Parent (including Shares so accepted for payment) divided by the number of Shares then outstanding. In furtherance thereof, upon request of Parent, the Company shall take all action reasonably requested by Parent to cause such designees of Parent and Merger Sub to be so elected or appointed at such time, including increasing the size of the board and seeking resignations of incumbent directors. At such time, the Company shall, if reasonably requested by Parent, cause persons designated by Parent to constitute at least the same percentage (rounded up to the next whole number) as is on the Company Board of (i) each committee of the Company Board other than the Transaction Committee, and (ii) each board of directors of each subsidiary of the Company (and each committee thereof), in each case only to the extent permitted by the rules of The American Stock Exchange (" AMEX ") and U.S. federal securities laws.

(b) The Company’s obligations to appoint Parent’s designees to the Company Board of directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly take all actions, and shall include in the Schedule 14D-9 such information with respect to the Company and its officers and directors and Parent’s designees, as Section 14(f) and Rule 14f-1 of the Exchange Act require in order to fulfill its obligations under this Section, so long as Parent shall have provided to the Company on a timely basis the information with respect to Parent and its nominees, officers, directors and affiliates required by Section 14(f) and Rule 14f-1 of the Exchange Act.

(c) Notwithstanding the foregoing, (i) the Company shall use its commercially reasonable efforts to ensure that, if Parent’s designees are elected to the Company Board, such board of directors shall have, at all times prior to the Effective Time, at least two directors who are directors on the date of this Agreement and who are not officers, employees or affiliates of the Company, Parent or any of their respective subsidiaries (it being understood that for purposes of this sentence, a director of the Company or Parent shall not be deemed an affiliate of the Company solely as a result of his or her status as a director of the Company or Parent) and who are "independent directors" as defined in the rules of the AMEX (the " Independent Directors "), (ii) if the number of Independent Directors shall be reduced below two for any reason whatsoever, the remaining Independent Director may designate a person to fill such vacancy who is not an officer, employee or affiliate of the Company, Parent, or any of their respective subsidiaries and such person shall be deemed to be an Independent Director for purposes of this Agreement, and (iii) if no Independent Directors then remain, the other directors may designate two persons to fill such vacancies who shall not be officers, employees or affiliates of the Company, Parent or any of their respective subsidiaries, and such persons shall be deemed to be Independent Directors for purposes of this Agreement.

(d) Notwithstanding anything in this Agreement to the contrary, during the period after election of directors designated by Parent pursuant to this Section 1.3 but prior to the Effective Time, the Company Board shall delegate to a committee of the Company Board comprised solely of the Independent Directors (which may be the Transaction Committee) (the " Independent Committee ") the sole responsibility for (i) any amendment or any termination of this Agreement by the Company, (ii) any extension of time for performance of any of the obligations of Parent or Merger Sub pursuant to this Agreement for which the Company’s consent or approval is required, (iii) the exercise or waiver of any of the Company’s rights or remedies hereunder, (iv) any amendment to the Company’s Certificate of Incorporation or Bylaws, and (v) any waiver of compliance with any covenant of Parent or Merger Sub or any condition to any obligation of the Company or of any of the Company’s rights under this Agreement. Any action of the Independent Committee with respect to the above matters in the preceding sentence shall be deemed to constitute the action of the full Company Board to approve the actions contemplated

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hereby and no other action on the part of the Company, including any action by any other director of the Company, shall be required for such authorization. The Independent Committee shall have the authority to retain one separate counsel at the reasonable expense of the Company.

1.4 Adjustment to Offer Price . If, following the date of this Agreement, the Company changes or establishes a record date for changing the number of Shares outstanding as a result of a stock split, stock dividend, recapitalization, subdivision, reclassification, combination or other similar transaction in respect of the outstanding Shares and the record date therefor shall be prior to the Effective Time, then, in any such event, and in addition to any other rights and remedies that may be available to it, the Offer Price shall be proportionately adjusted to reflect that change.

1.5 Top-Up Option .

(a) Subject to the terms and conditions herein, the Company hereby grants to Parent an irrevocable option (the " Top-Up Option ") to purchase, at a price per share equal to the Offer Price, up to that number of shares of the Common Stock (the " Top-Up Option Shares ") equal to the lesser of (i) the lowest number of shares of Common Stock that, when added to the number of shares of Common Stock collectively owned by Parent, Merger Sub and any of their respective Affiliates immediately following consummation of the Offer shall constitute 90% of the shares of Common Stock then outstanding (after giving effect to the issuance of the Top-Up Option Shares) and (ii) an aggregate number of shares of Common Stock that is equal to 19.9% of the shares of Common Stock issued and outstanding immediately prior to the exercise of the Top-Up Option. Notwithstanding the foregoing provisions of this Section 1.5(a), the Top-Up Option shall not be exercisable if the aggregate number of shares issuable upon exercise of the Top-Up Option, plus the aggregate number of then-outstanding shares of Common Stock, plus the aggregate number of shares of Common Stock issuable upon exercise of all options and other rights to purchase Common Stock, plus the aggregate number of shares reserved for issuance pursuant to the Company Stock Option Plans would exceed the number of authorized shares of Common Stock.

(b) Parent may, at its election, exercise the Top-Up Option, in whole, but not in part, at any one time prior to Top-Up Termination Date, provided , however , that the Top-Up Option shall not be exerciseable unless, immediately after such exercise and the issuance of the Top-Up Option Shares, the Short Form Merger Threshold would be reached (assuming the issuance of the Top-Up Option Shares).

(c) If Parent wishes to exercise the Top-Up Option, Parent shall send to the Company a written notice (a " Top-Up Exercise Notice ", and the date of receipt of which notice is referred to herein as the " Top-Up Notice Date ") specifying the place for the closing of the purchase and sale of shares of Common Stock pursuant to the Top-Up Option (the " Top-Up Closing ") and a date not earlier than one (1) Business Day nor later than ten (10) Business Days after the Top-Up Notice Date for the Top-Up Closing. The Company shall, promptly after receipt of the Top-Up Exercise Notice, deliver a written notice to Parent confirming the number of Top-Up Option Shares and the aggregate purchase price therefor.

(d) At the Top-Up Closing, subject to the terms and conditions of this Agreement, (i) the Company shall deliver to Parent a certificate or certificates evidencing the applicable number of Top-Up Option Shares, provided that the obligation of the Company to deliver Top-Up Option Shares upon the exercise of the Top-Up Option is subject to the condition that no provision of any applicable law or any ruling, judgment, decision, order or injunction issued by any Court or other Government Entity shall prohibit the exercise of the Top-Up Option or the delivery of the Top-Up Option Shares in respect of any such exercise and (ii) Parent shall purchase each Top-Up Option Share from the Company at the

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Offer Price. Payment by Parent of the purchase price for the Top-Up Option Shares may be made, at Parent’s option, by delivery of (A) immediately available funds by wire transfer to an account designated by the Company or (B) a demand note issued by Parent in customary form that is reasonably acceptable to the parties and in a principal face amount equal to the aggregate amount of the cash portion of the purchase price for the Top-Up Option Shares. Any demand note issued pursuant to the preceding sentence shall be accompanied by a credit support arrangement reasonably acceptable to the parties hereto.

(e) Upon the delivery by Parent to the Company of the Top-Up Exercise Notice, and the delivery of the consideration described in Section 1.5(d), Parent 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 Parent or the Company shall have failed or refused to designate the bank account described in Section 1.5(d).

(f) Certificates evidencing Top-Up Option Shares delivered hereunder may include legends legally required including a legend in substantially the following form:

• THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.

ARTICLE 2

THE MERGER

2.1 The Merger .

(a) Upon the terms and subject to the conditions of this Agreement, at the Effective Time, in accordance with the Delaware General Corporation Law (the " DGCL "), Merger Sub shall be merged with and into the Company and the separate existence of Merger Sub shall thereupon cease. The Company shall be the surviving corporation in the Merger and is hereinafter sometimes referred to as the " Surviving Corporation ".

(b) In the event that Parent or Merger Sub acquires at least 90% of the outstanding Shares pursuant to the Offer or otherwise (the " Short Form Merger Threshold "), the parties hereto agree to take appropriate action to cause the Merger to become effective as soon as practicable after the satisfaction or waiver of the conditions to the Merger set forth in Article 8, in accordance with Section 253 of the DGCL without a meeting of stockholders as soon as practicable after the acceptance for payment and purchase of Shares by Parent or Merger Sub pursuant to the Offer.

(c) Subject to the terms of this Agreement, in the event that, following Parent’s or Merger Sub’s purchase of the Shares and the expiration of the Offer, Parent holds in the aggregate, a sufficient number of shares to satisfy the requirements of Section 8.1(a) but less than 90% of all outstanding Shares, the parties hereto agree to take all necessary and appropriate action to cause the Merger to become effective as soon as practicable after the satisfaction or waiver of the conditions to the Merger set forth in Article 8, in accordance with Section 251 of the DGCL. In furtherance and not in limitation of the foregoing agreement, the Company agrees that it shall, acting through its Board of Directors in accordance with applicable law, take the actions specified in Section 7.6 hereto to effect the Merger.

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2.2 Effective Time of the Merger . Subject to the provisions of this Agreement, a certificate of merger (or, if applicable, a certificate of ownership and merger as provided in Section 253 of the DGCL) (the " Certificate of Merger ") reasonably acceptable to the Company, Parent and Merger Sub, respectively, shall be executed and thereafter delivered to the Secretary of State of the State of Delaware for filing as provided for in the DGCL on the Closing Date. The Merger shall become effective upon the filing of the Certificate of Merger with the Secretary of State of the State of Delaware or at such later time provided in the Certificate of Merger (the " Effective Time ").

2.3 Closing . The closing of the Merger (the " Closing ") shall take place as promptly as practicable, but in no event later than 10:00 a.m. on the date (the " Closing Date ") that is the second Business Day following the satisfaction or waiver (subject to applicable law) of the conditions set forth in Article 8 (excluding conditions that, by their terms, are to be satisfied on the Closing Date), unless another time or date is agreed to in writing by the parties hereto. The Closing shall be held at the offices of Holland & Knight LLP, 1600 Tysons Boulevard, Suite 700, McLean, Virginia 22102, unless another place is agreed to in writing by the parties hereto.

2.4 Effects of the Merger . The Merger shall have the effects set forth in the DGCL.

2.5 Further Assurances . If, at any time after the Effective Time, the Surviving Corporation shall consider or be advised that any further deeds, assignments or assurances in law or any other actions are necessary, desirable or proper to vest, perfect or confirm of record or otherwise, in the Surviving Corporation, the title to any property or rights of the Company acquired or to be acquired by reason of, or as a result of, the Merger, the Company agrees that the Surviving Corporation and its proper officers and directors shall and will execute and deliver all such proper deeds, assignments and assurances in law and do all things necessary, desirable or proper to vest, perfect or confirm title to such property or rights in the Surviving Corporation and otherwise to carry out the purpose of this Agreement, and that the proper officers and directors of the Surviving Corporation are fully authorized and directed in the name of the Company or otherwise to take any and all such actions.

ARTICLE 3

THE SURVIVING CORPORATION

3.1 Certificate of Incorporation . The certificate of incorporation of Merger Sub as in effect immediately prior to the Effective Time shall be the certificate of incorporation of Surviving Corporation after the Effective Time, until thereafter amended in accordance with its terms and as provided in the DGCL.

3.2 Bylaws . The bylaws of Merger Sub as in effect immediately prior to the Effective Time shall be the bylaws of Surviving Corporation after the Effective Time, and thereafter may be amended in accordance with its terms and as provided by the certificate of incorporation of Surviving Corporation and the DGCL.

3.3 Directors and Officers . The directors and officers of Merger Sub in office immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation as of the Effective Time, and thereafter such directors and officers shall serve in accordance with the bylaws of Surviving Corporation until their respective successors are duly elected or appointed and qualified.

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ARTICLE 4

EFFECT OF THE MERGER ON THE

OWNERSHIP INTERESTS OF THE CONSTITUENT ENTITIES

4.1 Conversion of Company Common Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Parent, Merger Sub, or any holder of any stock or other equity ownership interest of the Company, Parent or Merger Sub:

(a) Each Share outstanding immediately prior to the Effective Time ( except as otherwise provided in this Section 4.1 and Dissenting Shares) shall be converted into the right to receive the Offer Price. All such Shares, when so converted, no longer shall be outstanding and automatically shall be cancelled and retired and shall cease to exist, and each holder of a certificate evidencing any such Shares shall cease to have any rights with respect thereto, except the right to receive the Offer Price per share therefor, without interest and subject to applicable withholding tax, upon the surrender of such certificate in accordance with Section 4.2.

(b) Each Share held in the treasury of the Company and each Share owned by Parent or any subsidiary of Parent or the Company, if any, immediately prior to the Effective Time shall be cancelled and extinguished without any conversion thereof and no payment shall be made with respect thereto.

(c) At the Effective Time, by virtue of the Merger and without any action on the part of Parent as the sole stockholder of Merger Sub, each issued and outstanding share of common stock of Merger Sub shall be converted into one share of common stock of Surviving Corporation.

4.2 Exchange of Certificates and Merger Consideration .

(a) No later than two (2) Business Days prior to the Effective Time, Parent will deposit, or cause to be deposited, with a bank or trust company designated by Parent (the " Exchange Agent "), for the benefit of the holders of Shares, Company Stock Options, Company SOSARs and Company Warrants, the cash required to make payments in respect of the Merger consideration as required by this Article 4 (such cash, together with any dividends or distributions with respect thereto, being hereinafter referred to as the " Exchange Fund "). The Exchange Agent will, pursuant to irrevocable instructions, deliver the cash payments contemplated to be issued pursuant to Section 4.1 and 4.4 out of the Exchange Fund. The Exchange Fund will not be used for any other purpose.

(b) Promptly after the Effective Time, Parent shall cause the Exchange Agent to mail to each holder of record of a certificate or certificates that immediately prior to the Effective Time evidenced outstanding Shares (the " Certificates "), and whose shares were converted into the right to receive the Offer Price pursuant to Section 4.1, (i) a letter of transmittal (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 actual delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent may reasonably specify, and (ii) instructions for use in effecting the surrender of the Certificates in exchange for the Offer Price. Upon surrender of Certificates for cancellation to the Exchange Agent, together with a duly executed Letter of Transmittal and such other documents as the Exchange Agent shall reasonably require, the holder of such Certificates shall be entitled to receive in exchange therefor the Offer Price for each Share formerly evidenced thereby, in accordance with Section 4.1(a), and the Certificates so surrendered shall be canceled. Until surrendered as provided in this Section 4.2(b), each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive upon such surrender the Offer Price for each Share evidenced thereby. No interest will be paid or accrue on any amounts payable upon surrender of any Certificate.

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(c) All Merger consideration paid upon exchange of the Shares in accordance with the terms hereof will be deemed to have been paid in full satisfaction of all rights pertaining to such Shares so exchanged.

(d) Any portion of the Exchange Fund that remains undistributed to the holders of Shares for six months after the Effective Time will be delivered to Parent, upon demand, and any holders of Shares who have not theretofore complied with this Article 4 will thereafter look only to Parent for the Merger consideration payable pursuant to this Agreement. Any portion of the Exchange Fund remaining unclaimed by holders of Shares as of a date which is immediately prior to such time as such amounts would otherwise escheat to or become property of any Government Entity will, to the extent permitted by applicable law, become the property of Parent free and clear of any claims or interest of any person previously entitled thereto.

(e) None of Parent, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any person in respect of any cash delivered to a public official pursuant to any applicable abandoned property, escheat or similar law. If any Certificates shall not have been surrendered prior to two years after the Effective Time (or immediately prior to such earlier date on which any of the Merger consideration would otherwise escheat or become the property of any Governmental Entity), any amounts payable in respect thereof shall, to the extent permitted by law, become the property of Parent, free and clear of all claims or interest on any person previously entitled thereto.

(f) Each of the Surviving Corporation and Parent will be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of Shares such amounts as it is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law. To the extent that amounts are so withheld by the Surviving Corporation or Parent, as the case may be, such withheld amounts will 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 Surviving Corporation or Parent, as the case may be. Any amounts deducted and withheld from the consideration otherwise payable pursuant to this Agreement shall be remitted by Parent or the Surviving Corporation to the appropriate Governmental Entity on a timely basis.

(g) If any Certificate has 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 Surviving Corporation, the posting by such person of a bond, in such reasonable amount as 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 the Merger consideration payable with respect to the Shares evidenced by such Certificate.

(h) Any portion of the Exchange Fund made available to the Exchange Agent pursuant to Section 4.2(a) to pay for Shares for which appraisal rights have been perfected shall be returned to the Surviving Corporation, upon demand.

4.3 Stock Transfer Books . At and after the Effective Time, holders of Certificates shall cease to have any rights as stockholders of the Company, except for the right to receive the Offer Price pursuant to Section 4.1, without interest. All cash paid upon the surrender of the Certificates in accordance with this Article 4 shall be deemed to have been paid in full satisfaction of all rights pertaining to the Shares formerly evidenced by such Certificates. At the Effective Time, the stock transfer books of the Company shall be closed and no transfer of Shares which were outstanding immediately prior to the Effective Time shall thereafter be made. If, after the Effective Time, subject to the terms and conditions of this Agreement, Certificates formerly evidencing Shares are presented to the Surviving Corporation, they shall be canceled and exchanged for the Offer Price in accordance with this Article 4.

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4.4 Treatment of Company Stock Options; Company Restricted Shares; Company Warrants; Company SOSARs; and Stock Purchase Plan .

(a) The Company shall take all actions necessary or appropriate, subject to prior review and reasonable approval of Parent, to provide that each outstanding option to purchase Shares (a " Company Stock Option ") granted under any stock option plan, program or agreement to which the Company or any of its subsidiaries is a party (the " Company Stock Option Plans ") which is outstanding immediately prior to the Effective Time, whether or not then exercisable, shall be cancelled as of the Effective Time and the holder thereof shall be entitled only to the right to receive an amount in cash payable at the time of cancellation of such Company Stock Option equal to the product of (A) the excess, if any, of (x) the Offer Price over (y) the per share exercise price of such Company Stock Option multiplied by (B) the number of Shares subject to such Company Stock Option. Such cash payment shall be subject to and reduced by all applicable Taxes to be withheld in respect of such payment. The surrender of a Company Stock Option in exchange for the consideration contemplated by this Section 4.4(a) shall be deemed a release of any and all rights the holder had or may have had in respect thereof.

(b) The Company shall take all actions necessary to provide that, on the Expiration Date (provided that, on such Expiration Date, Merger Sub accepts for payment all Shares validly tendered and not withdrawn pursuant to the Offer), (i) the Company Stock Option Plans and any similar plan or agreement of the Company shall be terminated, and (ii) no holder of any Company Stock Option will have any right to receive any shares of capital stock of the Company or, if applicable, the Surviving Corporation, upon exercise of any Company Stock Option. Nothing in this Agreement shall prohibit the Company from extending the termination date of one or more issued and outstanding Company Stock Options, but in no event later than December 31, 2007.

(c) Parent and Merger Sub acknowledge that all outstanding Company Restricted Shares shall automatically become fully vested and free of any forfeiture restrictions on the Expiration Date (provided that, on such Expiration Date, Merger Sub accepts for payment all Shares validly tendered and not withdrawn pursuant to the Offer), and the Company will take all necessary action, including obtaining any required consents or amendments to the Company’s equity incentive plan, to permit holders of outstanding Company Restricted Shares to participate in the Offer and be treated in the Merger on the same terms and conditions as all other holders of unrestricted Shares.

(d) The Company shall take all actions necessary or appropriate, subject to prior review and reasonable approval of Parent, to provide that each outstanding Company SOSAR granted under any Company Stock Option Plan, program or agreement to which the Company or any of its subsidiaries is a party which is outstanding immediately prior to the Effective Time, whether or not then exercisable, shall be cancelled as of the Effective Time and the holder thereof shall be entitled only to the right to receive an amount in cash payable at the time of cancellation of such Company SOSAR equal to the product of (A) the excess, if any, of (x) the Offer Price over (y) the per share exercise price of such Company SOSAR multiplied by (B) the number of Company SOSARs held by the holder thereof. Such cash payment shall be subject to and reduced by all Taxes to be withheld in respect of such payment. The surrender of a Company SOSAR in exchange for the consideration contemplated by this Section 4.4(d) shall be deemed a release of any and all rights the holder had or may have had in respect thereof.

(e) Pursuant to the Tender and Voting Agreement, as soon as practicable following the date of this Agreement, the Company will take such actions (including obtaining any required consents) as may be required to provide that each of the Company Warrants will, as of the Effective

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Time, be converted into the right to receive cash in the amount equal to the product of (i) the Offer Price minus the per share exercise price under such Company Warrant, and (ii) the number of Shares issuable pursuant to such Company Warrant immediately prior to the Effective Time.

(f) As soon as practicable following the date of this Agreement, the Company shall take such action as may be necessary that no new contributions shall be accepted by, or made to, the Company’s Stock Purchase Plan (the " Stock Purchase Plan "), and any cash remaining in participant’s accounts after the date such action is taken will be distributed to participants, and the Stock Purchase Plan shall be terminated effective as of the Effective Time. On or after the date hereof, no future offering periods under the Stock Purchase Plan shall be commenced, and no further options will be granted under the Stock Purchase Plan.

4.5 Treatment of the Convertible Instruments . Pursuant to the Tender and Voting Agreement, each holder of the Convertible Instruments has agreed to (i) convert or exercise, as applicable, effective as of the Expiration Date (provided that, on such Expiration Date, Merger Sub accepts for payment all Shares validly tendered and not withdrawn pursuant to the Offer), all Convertible Instruments held by such holder (other than Company Warrants, which such warrants shall be converted for cash as set forth in Section 4.4(e)), and (ii) tender their Shares (including the Shares acquired upon conversion or exercise of the Convertible Instruments) in the Offer. Parent and Merger Sub acknowledge that all such Shares shall participate in the Offer and be treated in the Merger on the same terms and conditions as all other holders of Shares. For purposes of calculating the Minimum Condition and for all other purposes under this Agreement, the Shares subject to the Convertible Instruments shall all be deemed to be Shares validly tendered and not withdrawn pursuant to the Offer.

4.6 Dissenting Shares . Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who has not voted in favor of the Merger or consented thereto in writing and who has properly demanded appraisal for such Shares in accordance with the requirements of Section 262 of the DGCL (collectively, the " Dissenting Shares ") shall not be converted into the right to receive the relevant Merger consideration. The holders of Dissenting Shares shall be entitled to only such rights as are granted by the DGCL, unless such holder fails to perfect, withdraws or otherwise loses the right to appraisal, in which case such Shares shall be treated as if they had been converted as of the Effective Time into the right to receive the relevant Merger Consideration, as set forth in Section 4.2, without any interest thereon. The Company shall give Parent prompt notice of any demands received by the Company for appraisal of Shares and withdrawals of such demands, any other instruments or documents served pursuant to the DGCL and received by the Company with respect to such demands, and the Company shall give Parent the opportunity to direct all negotiations and proceedings with respect to such demands. Except with the prior written consent of Parent, the Company shall not make any payment with respect to, or offer to settle or settle, any such demands. Each holder of Dissenting Shares who becomes entitled to payment for such Dissenting Shares under the provisions of Section 262 of the DGCL will receive payment thereof from the Surviving Corporation and as of the Effective Time such Shares will no longer be outstanding and will automatically be canceled and retired and will cease to exist.

ARTICLE 5

REPRESENTATIONS AND WARRANTIES OF COMPANY

Except as disclosed in (a) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005, any Quarterly Report on Form 10-Q filed by the Company since January 1, 2006, or any Current Report on Form 8-K filed by the Company since January 1, 2006 (collectively, the " SEC Reports ") or (b) the disclosure letter (the " Company Disclosure Schedule ") delivered by the Company to Parent prior to the execution of this Agreement (which letter sets forth items of disclosure with specific

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reference to the particular section or subsection of this Agreement to which the information in the Company Disclosure Schedule relates; provided , however , that (i) any information set forth in one section of the Company Disclosure Schedule will be deemed to apply to each other section or subsection of this Agreement, so long as such disclosure is in sufficient detail to enable a reasonable reader to identify its applicability to the relevant provision in this Agreement and (ii) any information disclosed in the SEC Reports will be deemed to apply as a disclosure under this Agreement, so long as such disclosure in the SEC Reports is in sufficient detail to enable a reasonable reader to identify its applicability to the relevant provision in this Agreement; provided , further , that, notwithstanding anything in this Agreement to the contrary, the inclusion of an item in such schedule as an exception to a representation or warranty will not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had a Material Adverse Effect), the Company represents and warrants to Parent and Merger Sub:

5.1 Organization and Qualification . The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. The Company has the requisite corporate power and authority to own, lease and operate its assets and properties and to carry on its business as it is now being conducted. The Company is qualified to do business and is in good standing in each jurisdiction in which the assets and properties owned, leased and operated by it, or the nature of the business conducted by it, makes such qualification necessary, except where the failure to be so qualified or in good standing would not have, and would not be reasonably likely to have, a Material Adverse Effect. True, accurate and complete copies of the Company’s Certificate of Incorporation and Bylaws, in each case as in effect on the date hereof, including all amendments thereto, have heretofore been delivered to Parent. The Company is not in violation of any of the provisions of its Certificate of Incorporation or Bylaws or equivalent organizational documents, except for such violations that would not have and would not be reasonably likely to have a Material Adverse Effect.

5.2 Capitalization .

(a) The authorized capital stock of the Company consists of 100,000,000 shares, of which 65,000,000 shares are designated Common Stock and 35,000,000 of which are designated Preferred Stock, par value $0.02 per share, of which 12,000,000 are designated as Series A Convertible Preferred Stock (" Series A Preferred Stock ") and 13,500,000 are designated as Series B Convertible Preferred Stock (" Series B Preferred Stock "). As of December 31, 2006, 16,848,811 Shares, 6,726,457 shares of Series A Preferred Stock and 10,571,427 shares of Series B Preferred Stock were issued and outstanding, and no Shares or shares of Preferred Stock were held in treasury. All of such issued and outstanding shares are duly authorized, validly issued and are fully paid and nonassessable. No issued and outstanding shares of the Company capital stock are subject to a repurchase or redemption right or right of first refusal or condition of forfeiture in favor of the Company.

(b) Except pursuant to Section 1.5, there are no outstanding subscriptions, options, contracts, commitments, restrictions, stock appreciation rights, phantom stock, rights or warrants, including any right of conversion or exchange under any outstanding security, instrument or other agreement and also including any rights plan or other anti-takeover agreement, obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of the Company capital stock. There are no voting trusts, proxies or other agreements or understandings to which the Company is a party or is bound with respect to the voting of any shares of the Company capital stock. Section 5.2(b) of the Company Disclosure Schedule sets forth the number of Shares issuable upon conversion of the Company Preferred Stock, as well as pursuant to (i) exercise of options to purchase Shares granted pursuant to the Company Stock Option Plans and outstanding as of the date of this Agreement as identified on Section 5.2(b)(i) of the Company Disclosure Schedule, (ii) exercise of outstanding common stock purchase warrants as identified on Section 5.2(b)(ii) of the Company Disclosure Schedule (the

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" Company Warrants "), (iii) conversion of the Company’s Series A Convertible Notes as identified on Section 5.2(b)(iii) of the Company Disclosure Schedule (the " Company Convertible Notes "), (iv) outstanding restricted stock awards as identified on Section 5.2(b)(iv) of the Company Disclosure Schedule (the " Company Restricted Shares ") and (v) the exercise of stock-only stock appreciation rights (the " Company SOSARs ") issued under the Company Stock Option Plans as identified in Section 5.2(b)(v) of the Company Disclosure Schedule. The Company Stock Options, Company Preferred Stock, Company Warrants, Company Convertible Notes, Company Restricted Shares and Company SOSARs are collectively referred to as " Company Stock-Based Securities ". All of the Company’s Stock-Based Securities have been issued by the Company in compliance in all material respects with applicable laws, including applicable U.S. federal securities laws and all Company Stock Options were granted with a per share exercise price equal to the fair market value of a Share on the date of grant.

(c) Section 5.2(c) of the Company Disclosure Schedule sets forth a complete and accurate list of all holders of outstanding Company Stock-Based Securities, indicating with respect to each of the Company Stock-Based Securities, (i) the number of Shares subject to such Company Stock-Based Securities (whether by exercise, conversion or vesting), held by each such holder, and (ii) the exercise or conversion price, date of issuance or grant and expiration date, if any, of such Company Stock-Based Securities. The Company has made available to Parent accurate and complete copies of all Company agreements evidencing Company Stock-Based Securities (and all relevant Company Plans).

(d) There are (i) no bonds, debentures, notes or other indebtedness of the Company having the right to vote issued or outstanding, and (ii) no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of the Company capital stock or any shares of capital stock of any Subsidiary of the Company.

(e) Other than dividends with respect to the Company Preferred Stock pursuant to the Certificate of Incorporation, the Company Board has not declared any dividend or distribution with respect to any shares of the Company capital stock or any shares of capital stock of any Subsidiary of the Company, the record or payment date for which is on or after the date of this Agreement.

5.3 Subsidiaries .

(a) For each Subsidiary of the Company, Section 5.3(a) of the Company Disclosure Schedule lists the name, jurisdiction of incorporation or organization, and each jurisdiction such Subsidiary is qualified to do business.

(b) Each Subsidiary of the Company is a corporation duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation, and has all corporate powers, except where failure to be so incorporated, validly existing or in good standing, or to have such corporate powers would not have, and would not be reasonably likely to have, a Material Adverse Effect. Each Subsidiary of the Company is duly qualified to do business as a foreign corporation, and is in good standing in each jurisdiction where such qualification is necessary, except for those jurisdictions where failure to be so qualified or in good standing would not have, and would not be reasonably likely to have, a Material Adverse Effect. Each Subsidiary of the Company is in compliance with the provisions of its organizational or governing documents, except where the failure to be in compliance with such documents would not have, and would not be reasonably likely to have a Material Adverse Effect. Other than its Subsidiaries, neither the Company nor any of the Subsidiaries beneficially owns or controls, directly or indirectly, 5% or more of any class of equity or similar securities of any corporation or other entity whether incorporated or unincorporated.

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(c) All of the outstanding shares of capital stock of, or other voting securities or ownership interests in, each Subsidiary of the Company are duly authorized, validly issued, fully paid and nonassessable and are owned by the Company, directly or indirectly, free and clear of any Lien other than any restrictions imposed under the Securities Act of 1933, as amended (the " Securities Act "). Other than the outstanding shares of capital stock of, or other voting securities or ownership interests in, each Subsidiary of the Company that is owned by the Company, directly or indirectly through one or more Subsidiaries, there are no outstanding (i) shares of capital stock or other voting securities or ownership interests in any of the Company’s Subsidiaries, (ii) securities of the Company or any of its Subsidiaries convertible into or exchangeable for shares of capital stock or other voting securities or ownership interests in any of the Company’s Subsidiaries, or (iii) options or other rights by any Person other than the Company or any of its Subsidiaries to acquire from the Company or any of its Subsidiaries, or other obligation of the Company or any of its Subsidiaries to issue, any capital stock or other voting securities or ownership interests in, or any securities convertible into or exchangeable for any capital stock or other voting securities or ownership interests in, any of the Company’s Subsidiaries.

5.4 Authority; Non-Contravention; Approval .

(a) The Company has full corporate power and authority to enter into this Agreement and, subject to the Company Stockholders Approval and the Required Statutory Approvals, to consummate the Merger and the other transactions contemplated by this Agreement. The Company has duly executed and delivered this Agreement and, assuming the due authorization, execution and delivery thereof by Parent and Merger Sub, this Agreement constitutes a valid and binding agreement of the Company enforceable against the Company in accordance with its terms, except as such enforcement may be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (ii) general equitable principles.

(b) The execution and delivery of this Agreement by the Company and the consummation by the Company of the Merger and the other transactions contemplated by this Agreement do not (i) violate, conflict with or result in a breach of, (ii) constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, (iii) result in the termination of, (iv) accelerate the performance required by the Company or any of its Subsidiaries under, (v) result in a right of termination or acceleration under, (vi) give rise to any obligation to make payments or provide compensation under, (vii) result in the creation of any Lien upon any of the properties or assets of the Company under, or (viii) give rise to any obligation to obtain any third party consent or provide any notice to any Person under, any of the terms, conditions or provisions of (A) the respective charters or bylaws of the Company or any of its Subsidiaries, (B) any statute, law, ordinance, rule, regulation, judgment, decree, order, injunction, writ, Permit or license of any court or Governmental Entity applicable to the Company or any of its Subsidiaries or any of their respective properties or assets, other than the Required Statutory Approvals, or (C) any note, bond, mortgage, indenture, deed of trust, license, franchise, Permit, concession, contract, lease, partnership agreement, joint venture agreement or other agreement to which the Company or any of its Subsidiaries is now a party except , with respect to clauses (B) and (C), such triggering of payments, Liens, encumbrances, filings, notices, Permits, authorizations, consents, approvals, violations, conflicts, breaches or defaults which would not have, and would not be reasonably likely to have, a Material Adverse Effect.

(c) No declaration, filing or registration with, or notice to, or authorization, consent or approval of, any Governmental Entity is necessary for the execution and delivery of this Agreement by the Company or the consummation by the Company of the Merger and the other transactions contemplated by this Agreement except for (i) (A) applicable requirements, if any, of the Securities Act, the Exchange Act, or state securities or "blue sky" laws (" Blue Sky Laws "), (B) the Required Statutory Approvals, (C) the filing with the SEC of a proxy statement relating to the Company Stockholders

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Meeting, if necessary (as amended or supplemented from time to time, the " Proxy Statement "), and other written communications that may be deemed "soliciting materials" under Rule 14a-12 of the Exchange Act, (D) any filings required under the rules and regulations of the AMEX, or (E) the filing of the appropriate merger documents as required by the DGCL, or (ii) where the failure to make such declaration, filings or registration or notifications to obtain such authorization, consents would not have, and would not be reasonably likely to have, a Material Adverse Effect.

(d) Assuming there are no shares of Series A Preferred Stock and Series B Preferred Stock outstanding after such shares’ conversion in accordance with the terms of the Tender and Voting Agreement, the affirmative vote of the holders of a majority of the outstanding Shares, if necessary, is the only vote of the holders of any class or series of the Company’s capital stock necessary to approve the Merger (the " Company Stockholders Approval ").

5.5 SEC Matters .

(a) The Company has timely filed all forms, reports and other documents required to be filed by it with the SEC since January 1, 2004 (collectively, the " Company Reports "). As of their respective dates (or, if amended, supplemented or superseded by a filing prior to the date of this Agreement, as of the date so amended, supplemented or superseded), the Company Reports (i) complied in all material respects with the applicable requirements of the Securities Act, the Exchange Act, and the rules and regulations thereunder, and (ii) did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. Each of the consolidated balance sheets included in the Company Reports (including the related notes and schedules) fairly presented in all material respects the consolidated financial position of the Company and its Subsidiaries as of the respective dates thereof and each of the consolidated statements of operations, cash flows and stockholders’ equity included in the Company Reports (including any related notes and schedules) fairly presents in all material respects the results of operations, cash flows or changes in stockholders’ equity, as the case may be, of the Company and its Subsidiaries for the periods set forth therein, in each case in accordance with GAAP consistently applied during the periods involved, except , as may be indicated in the notes thereto and, in the case of unaudited statements, for normal year-end audit adjustments. The principal executive officer of the Company and the principal financial officer of the Company (and each former principal executive officer or principal financial officer of the Company) have made the certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 (the " Sarbanes-Oxley Act "), and the rules and regulations of the SEC promulgated thereunder with respect to the Company Reports that were required to be accompanied by such certifications. For purposes of the preceding sentence, "principal executive officer" and "principal financial officer" shall have the meanings given to such terms in the Sarbanes-Oxley Act.

(b) The Company maintains disclosure controls and procedures and internal controls over financial reporting required by Rule 13a-15 or 15d-15 under the Exchange Act. Such controls and procedures are designed to provide reasonable assurance that all material information concerning the Company and its Subsidiaries required to be disclosed by the Company in the Company Reports is made known on a timely basis to the individuals responsible for the preparation of the Company’s filings with the SEC and other public disclosure documents and such internal controls over financial reporting are effective to provide reasonable assurance to the Company’s management and the Company Board regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.

(c) Since the enactment of the Sarbanes-Oxley Act, the Company has been and is in compliance in all material respects with (i) the applicable provisions of the Sarbanes-Oxley Act and the rules and regulations promulgated thereunder, and (ii) the applicable listing and corporate governance rules and regulations of the AMEX.

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(d) The Company has received no written notice of any investigation by the SEC with respect to the Company or any of its Subsidiaries, and, to the knowledge of the Company, no investigation by the SEC with respect to the Company or any of its Subsidiaries is pending or threatened.

5.6 Absence of Undisclosed Liabilities . The Company did not have at December 31, 2005, nor has it incurred since that date, any liabilities or obligations (whether absolute, accrued, contingent or otherwise) of any nature required by GAAP to be set forth in a consolidated balance sheet of the Company or in the notes thereto, except (i) to the extent such liabilities or obligations are disclosed in the SEC Reports filed with the SEC prior to the date hereof, (ii) such liabilities that have been discharged or paid in full prior to the date hereof, (iii) liabilities and obligations disclosed in Section 5.6 of the Company Disclosure Schedule, or (iv) such liabilities or obligations that were incurred after December 31, 2005 in the ordinary course of business and consistent with past practices that would not have, and would not be reasonably likely to have, a Material Adverse Effect.

5.7 Absence of Certain Changes or Events . Except as disclosed in the SEC Reports or as set forth in the Company Disclosure Schedule, since December 31, 2005 through the date hereof, (i) the Company and its Subsidiaries have conducted their businesses in the ordinary course consistent with past practice; (ii) neither the Company nor any Subsidiary has taken any action or agreed to take any action that would be prohibited by any of Sections 7.2(a), (b), (c)(i), (c)(iii), c(v), (d), (e), (g) and (k) if taken after the date hereof; (iii) the Company has not increased the compensation for substantially all or a material portion of its employees, except for its annual salary adjustments as of April 1, 2006; (iv) except as required by law or as is consistent with past practice, the Company has not made or changed any Tax election or entered into any closing agreement in respect of any Tax claim, audit or assessment, including the settlement of any Tax controversy, adoption or change of any accounting method in respect of Taxes, consented to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes (other than in connection with the timely filing of any Tax Return by its extended due date or any extension or waiver that ended on or before December 31, 2006 and which is not currently in effect) if such election, agreement, adoption, change, consent or waiver would have the effect of increasing the Tax liability of the Company and its Subsidiaries in any material respect for any period ending after the Closing Date or decreasing any Tax attribute of the Company and its Subsidiaries existing on the Closing Date in any material respect; and (v) there has not been an event, occurrence, effect or circumstance that has had, or that would be reasonably likely to have, a Material Adverse Effect.

5.8 Litigation . There are no (i) claims, suits, actions, proceedings, hearings, petitions, grievances, complaints or investigations pending against the Company or any of its Subsidiaries, or (ii) to the knowledge of the Company, threatened claims, suits, actions, proceedings, hearings, petitions, grievances, complaints or investigations against the Company or any of its Subsidiaries, in each case which would have, or would be reasonably likely to have, a Material Adverse Effect. Neither the Company nor any of its Subsidiaries nor any property or asset of the Company or any of its Subsidiaries is subject to any judgment, decree, injunction, rule or order of any court, governmental department, commission, agency, instrumentality or authority, or any arbitrator, which would have, or would be reasonably likely to have, a Material Adverse Effect. The parties acknowledge and agree that, for all purposes of the Agreement, no party makes any representation or warranty regarding the effect of the antitrust laws on such party’s ability to execute, deliver, or perform its obligations under the Agreement or to consummate the Merger as a result of the enactment, promulgation, application, or threatened or actual judicial or administrative investigation or litigation under, or enforcement of, any antitrust law with respect to the consummation of the Merger.

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5.9 No Violation of Law . Neither the Company nor any of its Subsidiaries is in violation of or has been given notice or been charged with any violation of, any law, statute, order, rule, regulation, ordinance or judgment of any Governmental Entity, except for violations that would not have, and would not be reasonably likely to have, a Material Adverse Effect.

5.10 Permits . The Company and its Subsidiaries have all permits, licenses, approvals, and authorizations (collectively, " Permits ") of all Governmental Entities required by the Company and its Subsidiaries to own and operate their respective assets and carry on their respective businesses as currently conducted, except where the failure to obtain, have and maintain such Permits, or the suspension or cancellation of any of the Permits, would not have, and would not be reasonably likely to have, a Material Adverse Effect.

5.11 Compliance with Agreements . Neither the Company nor any of its Subsidiaries is in breach or violation of, or in default in the performance or observance of, any term or provision of, and no event has occurred which, with lapse of time or action by a third party, would result in a default under, any Material Contract except for such breach, violation, default or event that would not have, and would not be reasonably likely to have, a Material Adverse Effect, and the Company has not received any written notice of any such breach, violation, default or event. To the knowledge of the Company, there exists no breach, violation or default in performance or obligation by any other party to any Material Contract, except for such breach, violation or default that would not have, and would not be reasonably likely to have, a Material Adverse Effect.

5.12 Taxes .

(a) The Company and its Subsidiaries have (i) duly filed with the appropriate Governmental Entities all material Tax Returns required to be filed, and such filed Tax Returns are true, correct and complete in all material respects, (ii) duly paid in full or made adequate provision for the payment of all Taxes for all periods at or prior to the date hereof, and (iii) duly withheld and paid all Taxes required by applicable law to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, or other third party. No material written claim has ever been made by an authority in a jurisdiction where the Company or any of its Subsidiaries does not file Tax Returns that it is or may be subject to taxation by that jurisdiction. The liabilities and reserves for Taxes reflected in the balance sheet included in the SEC Reports are adequate to cover all material Taxes of the Company and its Subsidiaries for all periods ending at or prior to the date of such balance sheet and there are no material Liens for Taxes upon any property or asset of either of the Company or any of its Subsidiaries, except for Liens for Taxes not yet due. Except as set forth in Section 5.12 of the Company Disclosure Schedule, no audit or administrative or judicial Tax proceeding is pending or being conducted with respect to the Company or any of its Subsidiaries. Except as set forth in Section 5.12 of the Company Disclosure Schedule, neither the Company nor any Subsidiary has received any written notice indicating an intent to open an audit or other review, a request for information related to Tax matters, or notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted or assessed. The Company has delivered to Parent correct and complete copies of all federal income Tax Returns filed for 2003, 2004 and 2005 and for all other open years. Neither the Company nor any of its Subsidiaries has waived any statute of limitations in respect of a material amount of Taxes or agreed to any extension of time with respect to an assessment or deficiency for a material amount of Taxes (other than pursuant to extensions of time to file Tax Returns obtained in the ordinary course). Neither the Company nor any of its Subsidiaries has any request for a ruling in respect of Taxes pending before any Governmental Entity. Neither the Company nor any of its Subsidiaries has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which is the Company) or has any liability for the Taxes of any person (other than the Company or any Subsidiary) under Treasury regulation section 1.1502-6 (or any similar provision of state, local or foreign law), as a

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transferee, successor, by contract or otherwise. Neither the Company nor any of its Subsidiaries has been either a "distributing corporation" or a "controlled corporation" in a distribution occurring during the last five years in which the parties to such distribution treated the distribution as one to which Section 355 of the Code is applicable. Neither the Company nor any of its Subsidiaries is required to make any disclosure to the Internal Revenue Service with respect to a "listed transaction" pursuant to Treasury Regulation section 1.6011-4(b)(2).

(b) Neither the Company nor any Subsidiary is a party to any agreement, contract, arrangement or plan that has resulted or is reasonably likely to result, whether as a result of the Merger or the other transactions contemplated by this Agreement, separately or in the aggregate, in (i) any "excess parachute payment" within the meaning of Code Section 280G, or (ii) any amount that will not be fully deductible as a result of Code Section 162(m).

(c) Neither the Company nor any Subsidiary is a party to any indemnification, allocation or sharing agreement with respect to Taxes that could give rise to a material payment or indemnification obligation (other than (i) agreements among the Company and its Subsidiaries, (ii) customary Tax indemnifications contained in credit or other commercial lending agreements, (iii) customary Tax sharing provisions related to sales and use taxes or personal property taxes included in the ordinary course of business in Government Contracts and (iv) customary Tax sharing provisions contained in leases).

5.13 Employee Benefit Plans; ERISA .

(a) Section 5.13(a) of the Company Disclosure Schedule lists (i) each plan, program, arrangement, practice and policy under which one, or more than one, current or former officer, employee or director of the Company or a Subsidiary of the Company has any right to employment, to purchase or receive any stock or other securities of the Company or a Subsidiary of the Company or to receive any compensation (whether in the form of cash or stock or otherwise) or benefits of any kind or description whatsoever in any amount or under which the Company or a Subsidiary of the Company has or may have any liability, and (ii) each employee benefit plan within the meaning set forth in Section 3(3) of ERISA under which the Company or a Subsidiary has or may have any liability (collectively, the " Company Plans "). Section 5.13(a) of the Company Disclosure Schedule identifies the Company Plans pursuant to which the Company Stock Options may be granted.

(b) The Company has delivered to Parent (i) a current, complete and accurate copy of each Company Plan and a summary plan description which are set forth in writing (and any related trust, actuarial report, financial statement, insurance contract or other funding arrangement) and a written summary of each Company Plan which is not set forth in writing, and (ii) a copy of the three (3) most recent Annual Reports (Form 5500) and all related exhibits and reports for each Company Plan which is subject to ERISA. Neither the Company nor any Subsidiary has any plan or commitment to establish any new material Company Plan or to materially alter any Company Plan.

(c) Neither the Company nor any ERISA Affiliate has ever maintained, sponsored, established, participated in or contributed to, any (i) plan which is subject to Title IV of ERISA or Section 412 of the Code or (ii) a multiemployer plan within the meaning of Section 414(f) of the Code or a plan described in Section 413(c) of the Code (a " Multiemployer Plan "). Neither the Company nor any Subsidiary of the Company has any liability under Title IV of ERISA.

(d) There have been no prohibited transactions within the meaning of Section 406 or Section 407 of ERISA or Section 4975 of the Code with respect to any of the Company Plans that could result in material penalties, taxes, liabilities or indemnification obligations, and there has been no other event with respect to any Company Plan that could result in any material liability for the Company or any Subsidiary related to any excise Taxes under the Code or to any liabilities under ERISA.

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(e) Each Company Plan which is intended to be qualified under Section 401(a) of the Code has either received a favorable determination letter from the Internal Revenue Service, has pending an application for such a determination letter from the Internal Revenue Service or is entitled to rely on a prototype plan opinion letter, and the Company is not aware of any reason likely to result in the revocation of any such letter or in the Internal Revenue Service declining to issue a favorable determination letter on a pending application. The Company has provided to Parent a copy of the most recent Internal Revenue Service favorable determination or opinion letter with respect to each such Company Plan or a copy of the application to the Internal Revenue Service, as applicable.

(f) Each Company Plan has been established, maintained and administered in material compliance with its terms and with the requirements prescribed by any and all statutes, orders, rules and regulations, including but not limited to ERISA and the Code.

(g) The consummation of the Merger and the other transactions contemplated by this Agreement will not (either alone or together with any other event, including, any termination of employment) entitle any current or former officer, employee, director or other independent contractor of the Company or a Subsidiary to any change in control payment or benefit, transaction bonus or similar benefit or severance pay, result in the forgiveness of indebtedness, or accelerate the time of payment or vesting or trigger any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or trigger any other material obligation pursuant to, any Company Plan.

(h) Neither the Company nor any Subsidiary has any liability in respect of post-termination or post-retirement health, medical or life insurance benefits for any current or former officer, employee, director or independent contractor except as required to avoid excise Tax under Section 4980B of the Code.

(i) All contributions and other payment due from the Company or any Subsidiary with respect to each Company Plan and each Company union plan have been made or paid in full or are shown in the SEC Reports, and all of the assets which have been set aside in a trust, escrow account or insurance company separate account to satisfy any obligations under any Company Plan are shown on the books and records of each such trust or account at their current fair market value as of the most recent valuation date for such trust or account, and the fair market value of all such assets as of each such valuation date equals or exceeds the present value of any obligation under any Company Plan. If the Company (and all ERISA Affiliates) were to have a cessation of contributions, cessation of obligations to make contribution or other form of withdrawal from any Company Plan that is a Multiemployer Plans, it (and they) would incur no liabilities with respect to any such Company Plan under the terms of such Company Plans, any collective bargaining agreement or otherwise.

(j) There are no pending or, to the knowledge of the Company, threatened claims with respect to a Company Plan (other than routine and reasonable claims for benefits made in the ordinary course of the plan’s operations) or with respect to the terms and conditions of employment or termination of employment of any current or former officer, employee or independent contractor of the Company or a Subsidiary, which claims could be reasonably likely to result in any material liability to the Company or a Subsidiary, and no audit by any domestic or foreign governmental or other law enforcement agency is pending or, to the knowledge of the Company, has been proposed with respect to any Company Plan.

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(k) Each Person who performs, or has performed, services for the Company or a Subsidiary as an employee or as an independent contractor is, or has been, properly classified as an employee or as an independent contractor, except where failure to properly classify such Person(s) would not have, and would not be reasonably likely to have, a Material Adverse Effect.

(l) Vesting for options which are outstanding under Company Stock Option Plans, including accelerated vesting which will occur at the Effective Time, has been effected in accordance with the terms of the plans and with all applicable laws, and the interests in or shares available for issuance under each such Company Stock Option Plan are properly registered pursuant to the Securities Act on a Form S-8.

(m) No current or former officer or employee of the Company or its Subsidiaries is entitled to receive severance payments or severance benefits under more than one Company Plan. Section 5.13(m) of the Company Disclosure Schedule sets forth a list of all severance plans or policies maintained by the Company or any Subsidiary of the Company.

(n) No Company Plan provides, or provided, to any "service provider" (within the meaning of Section 409A of the Code) any compensation or benefits which could subject, or have subjected, such service provider to gross income inclusion or tax pursuant to Section 409A(a)(1) of the Code.

5.14 Labor; Employment Matters .

(a) Neither the Company nor any Subsidiary of the Company is, nor at any time in the last five (5) years has been, a party to any collective bargaining agreement or other contract or agreement with any group of employees, labor organization or other representative of any of the employees of the Company or any Subsidiary and, to the knowledge of the Company, there are no organizational efforts presently being made involving any of the employees of the Company or its Subsidiaries. To the Company’s knowledge, no executive or key employee or group of employees of the Company has any plan to terminate his or her employment with the Company or has threatened to do so. No work stoppage, slowdown or labor strike against the Company or any Subsidiary is pending or, to the Company’s knowledge, threatened. The Company and its Subsidiaries have no direct or indirect liability with respect to any misclassification of any Persons as an independent contractor rather than as an employee, except where such liability would not have, and would not be reasonably likely to have, a Material Adverse Effect. The Company and its Subsidiaries have complied with all laws relating to employment and labor, including, any provisions thereof relating to wages, hours, collective bargaining and the payment of social security and similar Taxes. No person has asserted that the Company or any of its Subsidiaries is liable for any arrears of wages or any Taxes or penalties for failure to comply with any of such laws.

(b) Section 5.14(b) of the Company Disclosure Schedule sets forth a list of all employees of the Company and its Subsidiaries showing for each the employee’s name, job title or description, salary level (including any bonus or deferred compensation arrangements other than arrangements under which payments are at the discretion of the Company) and also showing any bonus, commission or other remuneration other than salary paid during the Company’s last fiscal year. Except as set forth on Section 5.14(b) of the Company Disclosure Schedule, none of such employees is a party to a written employment agreement or contract with the Company or any Subsidiary for a specified length of time and each is employed "at will."

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5.15 Real Estate .

(a) Neither the Company nor any Subsidiary of the Company owns real property as of the date of this Agreement.

(b) Section 5.15(b) of the Company Disclosure Schedule sets forth the address of all real property in which the Company or any Subsidiary holds a leasehold or subleasehold estate (the " Leased Real Property ", and the leases or subleases for such Leased Real Property being referred to as the " Leases "). The Company has delivered to Parent a true and complete copy of each of the Leases. Each Lease creates a valid leasehold interest in the Leased Real Property to which it applies and is in full force and effect in all respects and the Company or any Subsidiary is entitled to the benefit of such Lease in accordance with its terms, with such exceptions as are not material and do not interfere with the use of the such premises. Such leasehold interests are free and clear of all Liens, except (i) Liens for current taxes and assessments not yet due, (ii) inchoate mechanics’ and materialmen’s Liens for construction in progress, (iii) workmen’s, repairmen’s, warehousemen’s and carriers’ Liens arising in the ordinary course of business of the Company or any Subsidiary consistent with past practice, and (iv) all Liens and other imperfections of title (including matters of record) and encumbrances that do not materially interfere with the conduct of the business of the Company and the Subsidiaries, taken as a whole, or as have not had, or would not be reasonably likely to have, a Material Adverse Effect. To the Company’s knowledge, no event has occurred which either entitles, or would, on notice or lapse of time or both, entitle any other party to any Lease to terminate such Lease prior to its scheduled term. Section 5.15(b) of the Company Disclosure Schedule sets forth any consents, waivers or other approvals required to be obtained by the Company as a result of the consummation of the Offer and the Merger so that the Leases will continue in accordance with their terms following the Merger.

5.16 Environmental Matters .

(a) The Company and its Subsidiaries have conducted their businesses in compliance with all Environmental Laws, including having all Permits, licenses and other approvals and authorizations necessary for the operation of their businesses as presently conducted, except for violations that would not have, or would not be reasonably likely to have, a Material Adverse Effect. In the past (5) years, the Company and its Subsidiaries have not received any written notices, demand letters or written requests for information from any Governmental Entity indicating that the Company or any of its Subsidiaries may be in material violation of, or liable in any material respect under, any Environmental Law. The Company has not received any written notice of any civil, criminal or administrative Action against the Company or any of its Subsidiaries relating to any material violation of or liability in any material respect under, or alleged material violation of or liability in any material respect under, any Environmental Law, and to the Company’s knowledge there are no, and have not been any, civil, criminal or administrative Action pending or threatened against the Company or any of its Subsidiaries relating to any violation of or liability under, or alleged violation of or liability under, any Environmental Law. Neither the Company nor any of its Subsidiaries has disposed of Hazardous Substances at a location that requires remediation under Environmental Laws, except for disposals that would not have, and would not be reasonably likely to have, a Material Adverse Effect. There has been no Release of Hazardous Substances at any property currently operated by the Company or its Subsidiaries, nor has there been a Release of Hazardous Substances at any property formerly owned or operated by the Company or its Subsidiaries during the period of such ownership or operation, except for releases that would not have, and would not be reasonably likely to have, a Material Adverse Effect.

(b) In the past (5) years, there has been no environmental investigation, study, audit, test, review or other analysis conducted by or on behalf of the Company or any of its Subsidiaries in relation to the current or prior business of the Company or any of its Subsidiaries or any property or

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facility now or previously owned or leased by the Company or any of its Subsidiaries, and the Company has provided to Parent any Phase 1 or Phase 2 reports in its possession or control, prepared in the last five (5) years, in connection with any property or facility now or previously owned or leased by the Company or any of its Subsidiaries.

5.17 Contracts and Commitments; Suppliers and Customers .

(a) Except as disclosed in or attached as exhibits to the SEC Reports and except for Classified Contracts, and subject to the last sentence of this Section 5.17(a), Section 5.17(a) of the Company Disclosure Schedule lists each of the following written contracts and agreements (and all material amendments, modifications and supplements thereto and all side letters to which the Company or any of its Subsidiaries is a party affecting the obligations of any party thereunder) to which the Company or any of its Subsidiaries is a party or by which any of their respective properties or assets are bound (each such agreement and contract, and each "material contract" filed as an exhibit to the Company Reports, a " Material Contract "):

• (i) any agreement or indenture relating to the borrowing of money or any guarantee of any such borrowing which involve more than $1,000,000;

  (ii) any partnership, joint venture, profit-sharing or similar agreement entered into with any Person other than the Company or any of its Subsidiaries;

  (iii) any indemnification agreements entered into by and