AGREEMENT AND PLAN OF MERGER among PROTECTION ONE, INC., TARA ACQUISITION CORP. and INTEGRATED ALARM SERVICES GROUP, INC. Dated as of December 20, 2006

Exhibit 2.1

Execution Copy

AGREEMENT AND PLAN OF MERGER

among

PROTECTION ONE, INC.,

TARA ACQUISITION CORP.

and

INTEGRATED ALARM SERVICES GROUP, INC.

Dated as of December 20, 2006

TABLE OF CONTENTS

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EXHIBITS

Index of Defined Terms

AGREEMENT AND PLAN OF MERGER , dated as of December 20, 2006 (the " Agreement "), among PROTECTION ONE, INC. , a Delaware corporation (" Parent "), TARA ACQUISITION CORP. , a Delaware corporation and a direct wholly owned subsidiary of Parent (" Merger Sub "), and INTEGRATED ALARM SERVICES GROUP, INC. , a Delaware corporation (the " Company ").

W   I   T   N   E   S   S   E   T   H :

WHEREAS , the Boards of Directors of Parent, Merger Sub and the Company have each determined that it is in the best interests of their respective stockholders for Parent to acquire the Company upon the terms and subject to the conditions set forth herein;

WHEREAS , in furtherance of such acquisition, the Boards of Directors of Parent, Merger Sub and the Company have each approved the merger (the " Merger ") of Merger Sub with and into the Company, in accordance with the General Corporation Law of the State of Delaware (the " DGCL ") and subject to the terms and conditions set forth herein, which Merger will result in, among other things, the Company becoming a wholly owned subsidiary of Parent;

WHEREAS , as a condition to the willingness of, and an inducement to, Parent and Merger Sub to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, Parent, the Company and certain holders of Company Notes (as defined herein), have entered into a lock-up and consent agreement (the " Consent Agreement ") in the form of Exhibit A attached hereto, providing for the exchange of Company Notes for new notes to be issued by a subsidiary of Parent;

WHEREAS , as a condition to the willingness of, and an inducement to, Parent and Merger Sub to enter into this Agreement, contemporaneously with the execution and delivery of this Agreement, certain holders of Company Common Stock (as defined herein), have entered into an agreement (the " Stockholders Agreement ") in the form of Exhibit B attached hereto, providing for certain actions relating to the transactions contemplated by this Agreement; and

WHEREAS , for federal income tax purposes, it is intended that the Merger shall qualify as a tax-free reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the " Code ");

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

ARTICLE I

THE MERGER

1.1          The Merger .  At the Effective Time (as defined in Section 1.2 ) and subject to and upon the terms and conditions of this Agreement and in accordance with the terms and requirements of the DGCL, (a) Merger Sub shall be merged with and into the Company, (b) the separate corporate existence of Merger Sub shall cease, and (c) the Company shall, as the

surviving corporation in the Merger, continue its existence under Delaware law as a wholly owned subsidiary of Parent.  The Company as the surviving corporation after the Merger is hereinafter sometimes referred to as the " Surviving Corporation ."

1.2          Effective Time .  At the Closing the parties hereto shall cause the Merger to be consummated by filing a certificate of merger (the " Certificate of Merger ") with the Secretary of State of the State of Delaware, in such form as required by and executed in accordance with the relevant provisions of the DGCL (the date and time of such filing, or such later date and time as may be specified in the Certificate of Merger by mutual agreement of Parent, Merger Sub and the Company, being the " Effective Time ").

1.3          Effect of the Merger .  From and after the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL, including Section 259 thereof.  Without limiting the generality of the foregoing, and subject thereto, from and after the Effective Time, all the assets, property, rights, privileges, immunities, powers and franchises of the Company and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.4          Certification of Incorporation; Bylaws .  At the Effective Time and without any further action on the part of the parties hereto, (a) the Certificate of Incorporation of the Company shall be amended and restated so as to read in its entirely as set forth on Exhibit C hereto and, as so amended, shall be the Certificate of Incorporation of the Surviving Corporation until thereafter amended as provided by the DGCL and (b) the Bylaws of Merger Sub shall be the Bylaws of the Surviving Corporation until thereafter amended as provided by the DGCL.

1.5          Directors and Officers .  The directors of Merger Sub immediately prior to the Effective Time shall be the initial directors of the Surviving Corporation, each to hold office in accordance with the Certificate of Incorporation and the Bylaws of the Surviving Corporation until their respective successors are duly elected or appointed and qualified or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s Certificate of Incorporation and Bylaws.  The officers of Merger Sub immediately prior to the Effective Time shall be the initial officers of the Surviving Corporation.

1.6          Conversion of Company Common Stock, Etc .  At the Effective Time, by virtue of the Merger and without any action on the part of the parties hereto or the holders of the following securities:

(a)   Subject to the provisions of this Article I , each share of Common Stock, par value $0.001 per share, of the Company (the " Company Common Stock ") issued and outstanding immediately prior to the Effective Time (other than any shares of the Company Common Stock to be canceled pursuant to Section 1.7 and subject to Section 1.10 and Section 1.11 ) will be converted automatically into the right to receive 0.29 of a fully paid and nonassessable share (the " Exchange Ratio ") of the Common Stock, par value $0.01 per share (the " Parent Common Stock "), of Parent (the " Merger Consideration ").

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(b)   Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time shall automatically be canceled and retired and shall cease to exist, and each holder of a certificate representing any such Company Common Stock shall cease to have any rights with respect thereto, except the right to receive the Merger Consideration and any cash in lieu of fractional shares of Parent Common Stock to be issued or paid in consideration therefor upon surrender of such certificate in accordance with Section 1.12 hereof, without interest.

1.7          Cancellation of Treasury Stock and Parent-Owned Stock .  Each share of Company Common Stock held in the treasury of the Company, if any, and each share of Company Common Stock, if any, owned by Parent or Merger Sub, in each case immediately prior to the Effective Time, shall be canceled and extinguished without any conversion thereof and no payment or distribution shall be made with respect thereto.

1.8          Stock Options .

(a)   At the Effective Time, all Outstanding Stock Options (as defined herein) (other than Outstanding Stock Options cancelled or exercised prior to the Effective Time) shall, by virtue of the Merger and without any action on the part of the holder thereof, be assumed by Parent in accordance with Section 5.5 .

(b)   The Company and its Board of Directors shall promptly take all actions reasonably necessary to ensure that following the Effective Time no holder of any options or other rights pursuant to, nor any participant in or party to, the Option Plans (as defined herein) or any other Company Employee Plan (as defined herein) or other plan, program, arrangement, agreement or other commitment providing for the issuance or grant of any interest in respect of the capital stock of the Company or any Subsidiary (as defined herein) of the Company will have any rights thereunder to acquire equity securities, or any right to payment in respect of the equity securities, of Parent, the Company or the Surviving Corporation, or any of their Subsidiaries, except as provided herein.

1.9          Capital Stock of Merger Sub .  Each share of Common Stock, par value $0.01 per share, of Merger Sub (the " Merger Sub Common Stock ") issued and outstanding immediately prior to the Effective Time shall be automatically converted into one validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation and shall thereafter constitute all of the issued and outstanding capital stock of the Surviving Corporation.  Each stock certificate of Merger Sub evidencing ownership of any shares of Merger Sub Common Stock shall continue to evidence ownership of such shares of capital stock of the Surviving Corporation.

1.10        Adjustments to Exchange Ratio .  Without limiting any other provision of this Agreement, the Exchange Ratio shall be appropriately adjusted to provide to the holders of Company Common Stock the same economic effect as contemplated by this Agreement if there is any stock split, reverse split, stock dividend (including any dividend or distribution of securities convertible into Parent Common Stock or Company Common Stock), reorganization, recapitalization or other like change with respect to Parent Common Stock or Company Common Stock occurring on or after the date hereof and prior to the Effective Time.

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1.11        Fractional Shares .  No certificates or scrip representing fractional shares of Parent Common Stock shall be issued in connection with the Merger, and such fractional interests will not entitle the owner thereof to any rights of a stockholder of Parent.  In lieu thereof, each holder of shares of Company Common Stock exchanged pursuant to Section 1.6 or of options exchanged pursuant to Section 1.8(b) who would otherwise be entitled to a fraction of a share of Parent Common Stock (after aggregating all fractional shares of Parent Common Stock to have been otherwise received by such holder) shall receive from Parent an amount of cash (rounded to the nearest whole cent and without interest) equal to the product of such fractional part of a share of Parent Common Stock multiplied by the average closing price per share of Parent Common Stock (rounded to the nearest cent) on the OTC Bulletin Board for the 20 trading days ending on the trading day immediately prior to (and excluding the date of) the Effective Time.

1.12        Surrender of Certificates .

(a)   Exchange Agent .   Prior to the Effective Time, Parent shall designate a bank or trust company reasonably acceptable to the Company to act as the Exchange Agent (as defined herein) in the Merger.

(b)   Deposit of Common Stock and Cash .  Immediately prior to the Effective Time, Parent shall deposit with the Exchange Agent for exchange in accordance with this Article I , sufficient shares of Parent Common Stock to be exchanged pursuant to Section 1.6 .  In addition, Parent shall deposit with the Exchange Agent an amount in cash sufficient to make the payments in lieu of fractional shares pursuant to Section 1.11 .

(c)   Exchange Procedures .  Promptly after the Effective Time, the Surviving Corporation shall cause to be mailed to each holder of record of a certificate or certificates (collectively, the " Certificates ") that represented immediately prior to the Effective Time outstanding shares of Company Common Stock to be exchanged pursuant to Section 1.6 , 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 delivery of the Certificates to the Exchange Agent and shall be in such form and have such other provisions as Parent and the Company may reasonably agree prior to Closing) and instructions for use in effecting the surrender of the Certificates in exchange for certificates representing shares of Parent Common Stock.  Upon surrender of a Certificate to the Exchange Agent, together with such letter of transmittal, duly completed and validly executed in accordance with the instructions thereto, and such other documents as may be required pursuant to such instructions, the holder of such Certificate shall be entitled to receive in exchange therefor a certificate representing the number of whole shares of Parent Common Stock and payment in lieu of fractional shares which such holder has the right to receive pursuant to Sections 1.6 and 1.11 , after giving effect to any required (as defined herein) Tax withholdings, and the Certificate so surrendered shall forthwith be canceled.  At any time following six months after the Effective Time, all or any number of shares of Parent Common Stock (and any or all cash payable in lieu of fractional shares of Parent Common Stock) deposited with the Exchange Agent pursuant to Section 1.12(b) , which remain undistributed to the holders of the Certificates representing shares of Company Common Stock, shall be delivered to Parent upon demand, and thereafter such holders of unexchanged shares of Company Common Stock shall be entitled to look only to Parent (subject to abandoned property, escheat or other similar Laws) for payment

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of their claim for shares of Parent Common Stock and any cash in lieu of fractional shares, and any dividends or distributions made thereon pursuant to Section 1.12(d) .

(d)   Distributions With Respect to Unexchanged Shares .  No dividends or other distributions declared or made after the Effective Time with respect to shares of Parent Common Stock with a record date after the Effective Time will be paid to the holder of any unsurrendered Certificate with respect to the whole shares of Parent Common Stock represented thereby until the holder of record of such Certificate shall surrender such Certificate.  Subject to applicable Law, following surrender of any such Certificate, there shall be paid to the record holder of the certificates representing whole shares of Parent Common Stock issued in exchange therefor, without interest, at the time of such surrender, the amount of dividends or other distributions with a record date after the Effective Time and payable between the Effective Time and the time of such surrender with respect to such whole shares of Parent Common Stock.  For purposes of dividends or distributions in respect of Parent Common Stock, all shares of Parent Common Stock to be issued pursuant to the Merger shall be entitled to dividends or distributions pursuant to the immediately preceding sentence as if issued and outstanding as of the Effective Time.

(e)   Transfers of Ownership .  If any certificate for shares of Parent Common Stock is to be issued in a name other than the name in which the Certificate surrendered in exchange therefor is registered, it will be a condition of the issuance thereof that (i) the Certificate so surrendered will be properly endorsed and otherwise in proper form for transfer and that the Person (as defined herein) requesting such exchange will have paid any transfer or other Taxes required by reason of the issuance of a certificate for shares of Parent Common Stock in a name other than the name of the registered holder of the Certificate surrendered or (ii) established to the reasonable satisfaction of Parent, or any agent designated by Parent, that such Tax has been paid or is not applicable.

(f)    No Liability .  Notwithstanding anything to the contrary in this Agreement, none of the Exchange Agent, Parent, the Merger Sub or the Surviving Corporation shall be liable to a holder of a Certificate for any Parent Common Stock (and any cash payable for fractional shares of Parent Common Stock or any other amount due, if any) that was properly delivered to a public official pursuant to any applicable abandoned property, escheat or similar Law.

(g)   Withholding of Tax .  Parent or the Exchange Agent will be entitled to deduct and withhold from the consideration payable pursuant to this Agreement to any Person such amounts as Parent or the Exchange Agent is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of federal, state, local or foreign Tax Law.  To the extent that amounts are so deducted or withheld by Parent or the Exchange Agent, such deducted or withheld amounts will be treated for all purposes of this Agreement as having been paid to the Person in respect of whom such deduction and withholding were made by Parent or the Exchange Agent.

1.13        Further Ownership Rights in Company Common Stock .  All shares of Parent Common Stock issued upon the surrender for exchange of Company Common Stock in accordance with the terms of this Article I (together with any cash paid for any fractional share

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of Parent Common Stock) shall be deemed to have been issued in full satisfaction of all rights pertaining to such Company Common Stock.  At the Effective Time, the stock transfer books of the Company shall be closed, and thereafter there shall be no further registration of transfers of shares of Company Common Stock on the records of the Surviving Corporation.  From and after the Effective Time, the holders of Certificates evidencing ownership of shares of Company Common Stock outstanding shall cease to have any rights with respect to such shares of Company Common Stock except as otherwise provided for herein.  If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be canceled and exchanged as provided in this Article I .

1.14        Closing .  Unless this Agreement shall have been terminated and the transactions contemplated by this Agreement abandoned pursuant to the provisions of Article VII , and subject to the provisions of Article VI , the closing of the Merger (the " Closing ") will take place at 10:00 a.m. (New York time) on the third Business Day (the " Closing Date ") following the satisfaction (or waiver in accordance with Section 7.5 , to the extent the same may be waived) of the conditions to the Closing set forth in Article VI (other than those conditions that by their nature are to be satisfied at the Closing).  The Closing shall take place at the offices of Simpson Thacher & Bartlett LLP, 425 Lexington Avenue, New York, New York or such other place as the parties hereto otherwise agree.

1.15        Lost, Stolen or Destroyed Certificates .  In the event any Certificates evidencing Company Common Stock shall have been lost, stolen or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen or destroyed Certificates, upon the making of an affidavit of that fact by the holder thereof, such shares of Parent Common Stock and cash for fractional shares, if any, as may be required pursuant to Section 1.11 ; provided , however , that Parent may, in its reasonable discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificates to deliver a bond in such sum as it may reasonably direct as indemnity against any claim that may be made against Parent or the Exchange Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

1.16        Tax Consequences .  For federal income tax purposes, the parties intend that the Merger be treated as a reorganization within the meaning of Section 368(a) of the Code, and that this Agreement shall be, and is hereby, adopted as a plan of reorganization for purposes of Section 368 of the Code.  The parties shall not take a position on any Tax Return (as defined herein) inconsistent with this Section 1.16 .

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to Parent and Merger Sub as follows:

2.1          Organization and Qualification; Subsidiaries .

(a)   The Company is a corporation duly organized, validly existing and in good standing under Delaware Law and has all the requisite corporate power and authority,

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and is in possession of all franchises, grants, authorizations, licenses, permits, easements, consents, waivers, qualifications, certificates, Orders (as defined herein) and approvals (collectively, " Approvals ") necessary to own, lease and operate its properties and to carry on its business as it is now being conducted, except for such Approvals, the failure of the Company to be in possession of would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect (as defined herein).  The Company is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where (i) the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary and (ii) the Company markets, sells, installs or services alarm systems, or provides alarm monitoring services and such marketing, selling, installing, servicing or provision of services makes such qualification or licensing necessary, except, in each case, where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(b)   Except as set forth in Section 2.1(b) of the Company Disclosure Schedule, each Subsidiary of the Company is a legal entity, duly organized, validly existing and in good standing under the Laws of its respective jurisdiction of incorporation or organization and has all the requisite power and authority, and is in possession of all Approvals necessary to own, lease and operate its properties and to carry on its business as it is now being conducted, except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.  Each such Subsidiary is duly qualified or licensed as a foreign entity to do business, and is in good standing, in each jurisdiction where (i) the character of the properties owned, leased or operated by it or the nature of its activities makes such qualification or licensing necessary and (ii) such Subsidiary markets, sells, installs or services alarm systems, or provides alarm monitoring services and such marketing, selling, installing, servicing or provision of services makes such qualification or licensing necessary, except, in each case, where the failure to be so qualified, licensed or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(c)   Section 2.1(c) of the Company Disclosure Schedule sets forth, as of the date hereof, a true and complete list of all of the Company’s directly and indirectly owned Subsidiaries, together with the jurisdiction of incorporation or organization of each such Subsidiary and the percentage of each such Subsidiary’s outstanding capital stock or other equity or other interest owned by the Company or another Subsidiary of the Company.  Except as set forth in Section 2.1(c) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries owns any equity or similar interest in, or any interest convertible into or exchangeable or exercisable for, directly or indirectly, any equity or similar interest in, any Person.

2.2          Certificate of Incorporation and Bylaws .  Except as set forth in Section 2.2 of the Company Disclosure Schedule, the Company has made available to Parent true and complete copies of each of its and each of its Subsidiaries’ Certificate of Incorporation and Bylaws or equivalent organizational documents, as amended or restated to the date hereof.  Such Certificate of Incorporation and Bylaws and equivalent organizational documents of the Company and each of its Subsidiaries are in full force and effect, and no other organizational documents are applicable to or binding upon the Company or its Subsidiaries.

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2.3          Capitalization .

(a)   The authorized capital of the Company consists of 103,000,000 shares, divided into 100,000,000 shares of Company Common Stock and 3,000,000 shares of preferred stock, par value $0.001 per share (the " Company Preferred Stock ").  As of the date of this Agreement, (i) 24,368,836 shares of Company Common Stock are issued and outstanding; (ii) no shares of Company Preferred Stock are issued or outstanding; (iii) 312,626 shares are held in the treasury of the Company; (iv) no shares of Company Common Stock are held by any Subsidiary of the Company; and (v) 419,300 shares of Company Common Stock are duly reserved for future issuance pursuant to the Plan Options (as defined herein) and 2,040,000 shares of the Company Common Stock are duly reserved for future issuance pursuant to the Non-Plan Options (as defined herein).  None of the outstanding shares of Company Common Stock are subject to, nor were they issued in violation of any, purchase option, call option, right of first refusal, preemptive right, subscription right or any similar right.  Except as set forth above and in Section 2.3(a) of the Company Disclosure Schedule, as of the date hereof, no shares of voting or non-voting capital stock, other equity interests, or other voting securities of the Company were issued, reserved for issuance or outstanding.  Except for the Non-Plan Options, all outstanding options, rights or warrants to purchase Company Common Stock were granted under the Option Plans.  Section 2.3(a) of the Company Disclosure Schedule lists all outstanding options, rights and warrants to purchase Company Common Stock and, with respect to each, the record holder, the exercise price, the grant date and the vesting schedule.  Except as set forth in Section 2.3(a) of the Company Disclosure Schedule, each Outstanding Stock Option has an exercise price per share that, as of the applicable date of grant, was equal to, or in excess of, the fair market value per share of the underlying Company Common Stock.  All outstanding shares of capital stock of the Company are, and all shares which may be issued upon the exercise of stock options, rights and warrants will be when issued, duly authorized, validly issued, fully paid and nonassessable and not subject to any kind of preemptive (or similar) rights.  There are no bonds, debentures, notes or other indebtedness of the Company with voting rights (or convertible into, or exchangeable for, securities with voting rights) on any matters on which stockholders of the Company may vote.

(b)   Section 2.3(b) of the Company Disclosure Schedule sets forth the number of authorized and outstanding shares of capital stock, and ownership thereof, of each of the Company’s Subsidiaries.  All of the outstanding shares of capital stock of each of the Company’s Subsidiaries have been duly authorized, validly issued, fully paid and nonassessable, are not subject to, and were not issued in violation of, any preemptive (or similar) rights, and are owned, of record and beneficially, by the Company or one of its direct or indirect Subsidiaries, free and clear of all Liens (as defined herein).  Except as set forth in Section 2.3(b) of the Company Disclosure Schedule or pursuant to applicable Laws of the jurisdiction in which it is organized, there are no restrictions of any kind which prevent the payment of dividends by any of the Company’s Subsidiaries, and neither the Company nor any of its Subsidiaries is subject to any obligation or requirement to provide funds for or to make any investment (in the form of a loan or capital contribution) to or in any Person, other than loans to dealers in the ordinary course of business.

(c)   Except as described in Section 2.3(a) , Section 2.3(b) , or Section 2.3(c) of the Company Disclosure Schedule, as of the date hereof, there are no

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outstanding securities, options, warrants, calls, rights, convertible or exchangeable securities, commitments, agreements, arrangements or undertakings of any kind (contingent or otherwise) to which the Company or any of its Subsidiaries is a party or by which any of them is bound obligating the Company or any of its Subsidiaries to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock or other voting securities of the Company or any of its Subsidiaries or obligating the Company or any of its Subsidiaries to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking.  There are no outstanding contractual obligations of the Company or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock (or options or warrants to acquire any such shares) of the Company or any of its Subsidiaries.  Except as described in Section 2.3(c) of the Company Disclosure Schedule, as of the date hereof, there are no stock-appreciation rights, stock-based performance units, "phantom" stock rights or other agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which any Person is or may be entitled to receive any payment or other value based on the revenues, earnings or financial performance, stock price performance or other attribute of the Company or any of its Subsidiaries or assets or calculated in accordance therewith (collectively, " Company Stock-Based Rights ") or to cause the Company or any of its Subsidiaries to file a registration statement under the Securities Act, or which otherwise relate to the registration of any securities of the Company.  Except as set forth in Section 2.3(c) of the Company Disclosure Schedule or the Stockholders Agreement, there are no voting trusts, proxies or other agreements, commitments or understandings of any character to which the Company or any of its Subsidiaries is a party or by which any of them is bound with respect to the issuance, holding, acquisition, voting or disposition of any shares of capital stock of the Company or any of its Subsidiaries.

2.4          Authority; Enforceability .  Subject to obtaining the Company Stockholder Approval (as defined herein), the Company has all requisite corporate power and authority to execute and deliver this Agreement, each Related Agreement (as defined herein) to which it is a party and each instrument required hereby to be executed and delivered by it at the Closing, and to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by the Company of this Agreement, each Related Agreement to which it is a party and each instrument required hereby to be executed and delivered by it at the Closing and the performance of its obligations hereunder and thereunder and the consummation by the Company of the transactions contemplated hereby and thereby, have been duly and validly authorized by all corporate action and no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or any Related Agreement to which it is a party or to consummate the transactions so contemplated (other than the approval and authorization of this Agreement by votes of the holders of a majority of the outstanding Company Common Stock (the " Company Stockholder Approval ") in accordance with Delaware Law and the Company’s Certificate of Incorporation and Bylaws and the filing of the Certificate of Merger) herein or therein.  Each of this Agreement and the Related Agreements to which it is a party has been duly and validly executed and delivered by the Company and, assuming the due authorization, execution and delivery hereof and thereof by Parent and Merger Sub, constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to the Enforceability Limitations.

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2.5          Required Vote .  Subject to Section 4.3 , as of the date hereof, the Board of Directors of the Company has, at a meeting duly called and held, (i) approved and declared advisable this Agreement and each Related Agreement to which the Company is a party, (ii) determined that the transactions contemplated hereby and thereby are advisable, fair to and in the best interests of the holders of Company Common Stock, (iii) resolved to recommend adoption of this Agreement, the Merger and the other transactions contemplated hereby and thereby to the stockholders of the Company and (iv) directed that this Agreement be submitted to the stockholders of the Company for their approval and authorization.  The vote to obtain the Company Stockholder Approval is the only vote of the holders of any class or series of capital stock of the Company necessary to approve and authorize this Agreement, the Merger and the other transactions contemplated hereby and thereby.

2.6          No Conflict; Required Filings and Consents .

(a)   The execution and delivery by the Company of this Agreement, the Related Agreements to which it is a party or any instrument required by this Agreement to be executed and delivered by the Company or any of its Subsidiaries at the Closing do not, and the performance of this Agreement, the Related Agreements to which it is a party or any instrument required by this Agreement to be executed and delivered by the Company or any of its Subsidiaries at the Closing, shall not, (i) conflict with or violate the Certificate of Incorporation or Bylaws or equivalent organizational documents of the Company or any of its Subsidiaries, (ii) conflict with or violate any Law or Order in each case applicable to the Company or any of its Subsidiaries or by which its or any of their respective properties, rights or assets is bound or affected, or (iii) result in any breach or violation of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or impair the Company’s or any of its Subsidiaries’ rights or alter the rights or obligations of any third party under, or give to others any rights of termination, amendment, acceleration or cancellation of, or result in the creation of a Lien on any of the properties, rights or assets of the Company or any of its Subsidiaries pursuant to, any note, bond, mortgage, indenture, Contract (as defined herein), permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries or its or any of their respective properties, rights or assets is bound or affected, except (A) as set forth in Section 2.6(a) of the Company Disclosure Schedule or (B) in the case of clause (ii) or (iii) above, for any such conflicts, breaches, violations, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

(b)   The execution and delivery by the Company of this Agreement, the Related Agreements to which it is a party or any instrument required by this Agreement to be executed and delivered by the Company or any of its Subsidiaries at the Closing do not, and the performance by the Company of this Agreement, any Related Agreements to which it is a party and any instrument required by this Agreement to be executed and delivered by the Company or any of its Subsidiaries at the Closing, shall not, require the Company or any of its Subsidiaries to obtain any Approval of any Person, observe any waiting period imposed by, or make any filing with or notification to, any Governmental Authority, except (i) as set forth in Section 2.6(b) of the Company Disclosure Schedule, (ii) for compliance with applicable requirements of the Securities Act of 1933, as amended (the " Securities Act "), the Securities Exchange Act of 1934,

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as amended (the " Exchange Act "), state securities Laws (" Blue Sky Laws "), the pre-Merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the " HSR Act "), or Foreign Competition Laws (as defined herein), (iii) for the filing of the Certificate of Merger in accordance with Delaware Law or (iv) where the failure to obtain such Approvals, or to make such filings or notifications, would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

2.7          Material Agreements .

(a)   Section 2.7(a) of the Company Disclosure Schedule sets forth a true and complete list, and if oral, an accurate and complete summary, of all Contracts of the following types to which the Company or any of its Subsidiaries is a party or by which any of them or their properties, rights or assets are bound as of the date hereof (collectively, " Company Material Agreements "):

• (i)    any "material contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) with respect to the Company and its Subsidiaries;

  (ii)   employment Contracts with current or former officers or directors of the Company and other Contracts with current or former officers or directors of the Company, and all severance, retention, stay-bonus, change in control or similar Contracts with any current or former directors, officers, employees or agents of the Company that will result in any obligation (absolute or contingent) of the Company or any of its Subsidiaries to make any payment in connection with or as a result of either the consummation of the transactions contemplated hereby, termination of employment (or the relevant relationship), or both;

  (iii)  any collective bargaining agreements with labor organizations;

  (iv)  license agreements that are required to be disclosed in Section 2.20(c) of the Company Disclosure Schedule;

  (v)   Contracts for the purchase of inventory/supplies by the Company or any of its Subsidiaries which are not cancelable (without material penalty, cost or other liability) within one (1) year;

  (vi)  Contracts involving annual expenditures or liabilities of the Company or any of its Subsidiaries in excess of $100,000 per annum which are not cancelable (without material penalty, cost or other liability) within 60 days;

  (vii) Contracts involving annual revenues payable to the Company or any of its Subsidiaries in excess of $100,000 per annum;

  (viii)                promissory notes, loans, agreements, indentures, evidences of indebtedness or other instruments and Contracts providing for the borrowing of

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• money, relating to indebtedness or obligations in excess of $100,000, other than accounts payable in the ordinary course of business;

  (ix)   promissory notes, loans, agreements, indentures, evidences of indebtedness or other instruments and Contracts providing for the lending of money, whether as lender or guarantor, relating to indebtedness or obligations in excess of $500,000, other than accounts or notes receivable in the ordinary course of business;

  (x)    Contracts containing a covenant limiting the freedom of the Company or any of its Subsidiaries (or which purport to limit the freedom of Parent or its Affiliates) to engage in any line of business or compete with any Person or operate at any location in the world;

  (xi)   joint venture or partnership agreements or joint development, distribution or similar agreements pursuant to which any third party is entitled or obligated to develop or distribute any products on behalf of the Company or any of its Subsidiaries or pursuant to which the Company or any of its Subsidiaries is entitled or obligated to develop or distribute any products on behalf of any third party;

  (xii)  Contracts for the acquisition, directly or indirectly (by merger or otherwise) of material assets (whether tangible or intangible) or the capital stock of another Person;

  (xiii) Contracts involving the issuance or repurchase of any capital stock of the Company or any of its Subsidiaries (including newly formed Subsidiaries), other than, with respect to the issuance of Company Common Stock, the options listed in Section 2.3(a) of the Company Disclosure Schedule;

  (xiv)                Contracts under which the Company or any of its Subsidiaries has granted or received exclusive rights; and

  (xv) any interest rate swaps, caps, floors or option agreements or any other interest rate risk management arrangement or foreign exchange Contracts.

True and complete copies of all written Company Material Agreements have been made available to Parent by the Company.

(b)   Other than (i) Company Material Agreements that have terminated or expired (or that will, prior to the Closing Date, terminate or expire) in accordance with their terms or (ii) as set forth in Section 2.7(b) of the Company Disclosure Schedule, each Company Material Agreement is in full force and effect in all material respects, is a valid and binding obligation of the Company or such Subsidiary in all material respects and, to the Knowledge of the Company, of each other party thereto and is enforceable, in all material respects, in accordance with its terms, against the Company or such Subsidiary and, to the Knowledge of the Company, against each other party thereto, subject to the Enforceability Limitations.  Other than as set forth in Section 2.7(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is or is alleged to be and, to the Knowledge of the Company, no other party is or is alleged to be in default under, or in breach or violation of, in any material respect, any

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Company Material Agreement and, to the Knowledge of the Company, no event has occurred that, with the giving of notice or passage of time or both, would constitute such a material default, breach or violation.  The designation or definition of Company Material Agreements for purposes of this Section 2.7 and the disclosures made pursuant thereto will not be construed or utilized to expand, limit or define the terms "material" and "Company Material Adverse Effect" as otherwise referenced and used in this Agreement.

2.8          Compliance .  Except as set forth in Section 2.8 of the Company Disclosure Schedule, the Company and each of its Subsidiaries are in compliance with, and are not in default or violation of, (i) the Certificate of Incorporation and Bylaws of the Company or the equivalent organizational documents of such Subsidiary, (ii) any Law or Order or by which any of their respective assets, rights or properties are bound or affected, and their own posted or internal privacy policies, and (iii) the terms of all Contracts, permits, franchises and other instruments or obligations to which any of them are a party or by which any of them or any of their respective assets, rights or properties are bound or affected, except, in the case of clauses (ii) and (iii) , for any such failures of compliance, defaults and violations which would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.  The Company and its Subsidiaries are in compliance with the terms of all Approvals, except where the failure to so comply would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.  Except as set forth in Section 2.8 of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has received notice of any revocation or modification from any Governmental Authority of any Approval of such Governmental Authority that is material to the Company or any of its Subsidiaries.

2.9          SEC Filings; Financial Statements .

(a)   Except as set forth in Section 2.9(a) of the Company Disclosure Schedule, the Company has filed all forms, reports, schedules, statements and documents required to be filed with the Securities and Exchange Commission (" SEC ") since January 1, 2005 (collectively, the " Company SEC Reports ") pursuant to the federal securities Laws and the Regulations of the SEC promulgated thereunder, and all Company SEC Reports have been filed in all material respects on a timely basis.  The Company SEC Reports (including any financial statements or schedules included or incorporated by reference therein) were prepared in accordance, and complied as of their respective filing dates in all material respects, with the requirements of the Exchange Act and the Securities Act and the Regulations of the SEC promulgated thereunder and did not at the time they were filed (or if amended or superseded by a filing prior to the date hereof, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.  None of the Company’s Subsidiaries has filed, or is obligated to file, any forms, reports, schedules, statements or other documents with the SEC.

(b)   The principal executive officer and principal financial officer of the Company have made all certifications required by the Sarbanes-Oxley Act of 2002, as amended (the " Sarbanes-Oxley Act ") and the Regulations of the SEC promulgated thereunder,

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and the statements contained in all such certifications were as of the respective dates made, and are, complete and correct.  Except as set forth in Section 2.9(b) of the Company Disclosure Schedule, the Company is, and through the Closing Date will be, otherwise in material compliance with all applicable effective provisions of the Sarbanes-Oxley Act.

(c)   Except as set forth in Section 2.9(c) of the Company Disclosure Schedule, each of the audited and unaudited consolidated financial statements (including, in each case, any related notes thereto) contained in the Company SEC Reports (i) complied in all material respects with applicable accounting requirements and the published Regulations of the SEC with respect thereto, (ii) was prepared in accordance with U.S. generally accepted accounting principles (" GAAP ") (except, in the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis throughout the periods involved (except as may be expressly described in the notes thereto) and (iii) fairly presents in all material respects the consolidated financial position of the Company and its Subsidiaries as at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated, except that the unaudited interim financial statements included in the Company’s Form 10-Q reports were or are subject to normal and recurring year-end adjustments that have not been and are not expected to be material to the Company.

2.10        Absence of Certain Changes or Events .

(a)   Except as described in Section 2.10(a) of the Company Disclosure Schedule or as expressly contemplated by this Agreement, since January 1, 2006, the Company and its Subsidiaries have conducted their businesses only in the ordinary course and in a manner consistent with past practice, and, since such date, there has not been any change, development, circumstance, condition, event, occurrence, damage, destruction or loss that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.

(b)   Except as described in Section 2.10(b) of the Company Disclosure Schedule or as expressly contemplated by this Agreement, during the period from January 1, 2006 to the date hereof, (i) there has not been any change by the Company in its accounting methods, principles or practices (in each case, except as required by a change in GAAP) or, other than in the ordinary course of business, any revaluation by the Company of any of its assets, including, writing down the value of inventory or writing off notes or accounts receivable and (ii) there has not been any action or event, and neither the Company nor any of its Subsidiaries has agreed in writing or otherwise to take any action, that would have required the consent of Parent pursuant to Section 4.1 had such action or event occurred or been taken after the date hereof and prior to the Effective Time.

2.11        No Undisclosed Liabilities .

(a)   Except as described in Section 2.11(a) of the Company Disclosure Schedule, as of the date hereof, there are no material liabilities of the Company or any of its Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than:

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• (i)    liabilities disclosed or provided for in the Balance Sheet or in the notes thereto;

  (ii)   liabilities incurred since the date of the Balance Sheet in the ordinary course of business consistent with past practice and which, individually or in the aggregate, would not be reasonably likely to have a Company Material Adverse Effect;

  (iii)  liabilities or obligations that have been discharged or paid in full in the ordinary course of business; and

  (iv)  liabilities under this Agreement.

(b)   Except as described in Section 2.11(b) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any Contract or arrangement (including any Contract or arrangement relating to any transaction or relationship between or among the Company and any of its Subsidiaries, on the one hand, and any Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand), where the result, purpose or intended effect of such contract or arrangement is to avoid disclosure of any material transaction involving, or material liabilities of, the Company or any of its Subsidiaries in the Company’s or its Subsidiaries’ published financial statements.

(c)   Except as described in Section 2.11(c) of the Company Disclosure Schedule, the Company has made available to Parent a complete and correct copy of any amendments or modifications which have not yet been filed with the SEC to agreements, documents or other instruments which previously had been filed by the Company with the SEC pursuant to the Securities Act or the Exchange Act, and the Regulations promulgated thereunder.

2.12        Absence of Litigation .  Except as described in Section 2.12 of the Company Disclosure Schedule, there is no Litigation (as defined herein) pending on behalf of or against or, to the Knowledge of the Company, threatened against the Company, any of its Subsidiaries, or any of their respective properties, assets or rights, before or subject to any Court (as defined herein) or other Governmental Authority which if adversely determined would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.  Neither the Company nor any of its Subsidiaries is subject to any pending or outstanding Litigation or Order which, individually or in the aggregate, has had or would reasonably be expected to have a Company Material Adverse Effect.

2.13        Employee Benefit Plans .

(a)   Section 2.13(a) of the Company Disclosure Schedule lists all "employee benefit plans" (as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (" ERISA ")), other than "multiemployer plans" within the meaning of Section 3(37) of ERISA, and all bonus, stock option, stock purchase, stock appreciation rights, incentive, deferred compensation, retirement or supplemental retirement, severance, golden parachute, change-in-control, vacation, cafeteria, dependent care, medical care, employee assistance or loan program, education or tuition assistance programs, insurance and other similar fringe or employee benefit plans, programs or arrangements, and any

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employment or executive compensation or severance agreements, written or otherwise, for the benefit of, or relating to, any present or former employee, officer, director or consultant of the Company or any of its Subsidiaries, which is or has been entered into, contributed to, established by, participated in and/or maintained by the Company, its Subsidiaries or with respect to which the Company, any of its Subsidiaries or any of the Company’s ERISA Affiliates has or could have any liability (together, the " Company Employee Plans "). The Company has made available to Parent correct and complete copies of (where applicable) (a) all plan documents, summary plan descriptions, summaries of material modifications and amendments related to such plans, (b) the most recent determination letters received from the Internal Revenue Service (the " IRS "), (c) the three most recent Form 5500 Annual Reports, (d) the most recent audited financial statement, and if applicable, actuarial valuation, and (e) all material related agreements, insurance Contracts and other Contracts which implement each such Company Employee Plan.

(b)   Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect or as set forth in Section 2.13(b) of the Company Disclosure Schedule, (i) each Company Employee Plan has been established and administered in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other applicable Laws; (ii) each Company Employee Plan which is intended to be qualified within the meaning of Section 401(a) of the Code has received a favorable determination letter as to its qualification, and nothing has occurred, whether by action or failure to act, that would reasonably be expected to cause the loss of such qualification; (iii) no event has occurred and no condition exists that would reasonably be expected to subject the Company or any of its Subsidiaries, either directly or by reason of their affiliation with any ERISA Affiliate, to any tax, fine, lien, or penalty imposed by ERISA, the Code or other applicable Laws with respect to any Company Employee Plan; (iv) for each Company Employee Plan with respect to which a Form 5500 has been filed, no material change has occurred with respect to the matters covered by the most recent Form since the end of the period covered thereby; (v)  no nonexempt "prohibited transaction" (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has occurred with respect to any Company Employee Plan; (vi) no Company Employee Plan is a split-dollar life insurance program or otherwise provides for loans to executive officers (within the meaning of the Sarbanes-Oxley Act) and (vii) neither the Company nor any of its Subsidiaries has incurred any current, projected or contingent liability in respect of post-employment or post-retirement health, medical, life insurance or similar benefits for current, former or retired employees, officers, directors or consultants of the Company or any of its Subsidiaries, except as required to avoid an excise tax under Section 4980B of the Code or otherwise except as may be required pursuant to any other applicable Law.

(c)   No Company Employee Plan is an "employee pension benefit plan" (within the meaning of Section 3(2) of ERISA) subject to Title IV of ERISA. None of the Company or any of its Subsidiaries has or could have any liability under or with respect to any "multiemployer plan" (within the meaning of Section 3(37) of ERISA) or "single-employer plan under multiple controlled groups" as described in Section 4063 of ERISA, and neither the Company nor any Subsidiary or ERISA Affiliate has any obligation to contribute to any multiemployer plan.

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(d)   With respect to any Company Employee Plan, except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (i) no actions, suits or claims (other than routine claims for benefits in the ordinary course) are pending or, to the Knowledge of the Company, threatened, (ii) no facts or circumstances exist that would reasonably be expected to give rise to any such actions, suits or claims, and (iii) no administrative investigation, audit or other administrative proceeding by the Department of Labor, the IRS or other Governmental Authority are, to the Knowledge of the Company, pending, threatened or in progress.

(e)   Except as set forth in Section 2.13(e) of the Company Disclosure Schedule, no Company Employee Plan exists that, as a result of the execution of this Agreement, stockholder approval of this Agreement, or the transactions contemplated by this Agreement (whether alone or in connection with any subsequent event(s)), could (i) result in severance pay or any increase in severance pay upon any termination of employment after the date of this Agreement, (ii) accelerate the time of payment or vesting or result in any payment or funding (through a grantor trust or otherwise) of compensation or benefits under, increase the amount payable or result in any other material obligation pursuant to, any of the Company Employee Plans, (iii) limit or restrict the right of the Company to merge, amend or terminate any of the Company Employee Plans, (iv) cause the Company to record additional compensation expense on its income statement with respect to any outstanding stock option or other equity-based award, or (v) result in payments or benefits payable to any employee, officer, director or consultant which would not be deductible under Section 280G of the Code.

(f)    Except as would not reasonably be expected to result in a Company Material Adverse Effect, there have been no amendment to, written interpretation of or announcement (whether or not written) by the Company or any of its Subsidiaries relating to, or any change in employee participation or coverage under, any Company Employee Plan that would increase the expense of maintaining such Company Employee Plan above the level of the expense incurred in respect thereof for the most recent fiscal year ended prior to the date hereof.

2.14        Employment and Labor Matters .

(a)   Section 2.14(a) of the Company Disclosure Schedule identifies all employees and consultants employed or engaged by the Company with an annual base salary or compensation rate of $100,000 or higher and sets forth each such individual’s rate of pay or annual compensation, job title and date of hire.  Except as set forth in Section 2.14(a) of the Company Disclosure Schedule, there are no collective bargaining agreements between the Company or any Subsidiary of the Company and any labor organization or other representative of any of the Company’s or Subsidiary’s employees, nor is any such Contract presently being negotiated.  Except as set forth in Section 2.14(a) of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (i) neither the Company nor any Subsidiary of the Company is delinquent in payments to any of its employees or consultants for any wages, salaries, commissions, bonuses, benefits or other compensation for any services or otherwise owed under any policy, practice, agreement, plan, program or Law; (ii) none of the Company’s or any of its Subsidiaries’ employment policies or practices is currently being audited or investigated by any Governmental Authority; and (iii) there is no pending or, to the Knowledge of the Company,

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threatened Litigation, unfair labor practice charge, or other charge or inquiry against the Company or any of its Subsidiaries brought by or on behalf of any employee, prospective employee, former employee, retiree, labor organization or other representative of the Company’s or Subsidiary’s employee, or other individual or any Governmental Authority with respect to employment practices brought by or before any Court or other Governmental Authority.

(b)   Except as set forth in Section 2.14(b) of the Company Disclosure Schedule, (i) neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or other labor union Contract applicable to Persons employed by the Company or any of its Subsidiaries nor are there any activities or proceedings of any labor union to organize any such employees of the Company or any of its Subsidiaries; (ii) during the past three years there have been no strikes, slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to any employees of the Company or any of its Subsidiaries; (iii) there are no grievances pending or, to the Knowledge of the Company, threatened, which, if adversely decided, would reasonably be expected to have a Company Material Adverse Effect; (iv) except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, neither the Company nor any Subsidiary of the Company is a party to, or otherwise bound by, any consent decree with, or citation or other Order by, any Governmental Authority relating to employees or employment practices; and (v) the Company and each of any of its Subsidiaries are in compliance in all material respects with all applicable Laws, Contracts, and policies relating to employment, employment practices, wages, hours, and terms and conditions of employment, including the obligations of the Worker Adjustment and Retraining Notification Act of 1988, as amended (" WARN ") and any similar state or local laws, and all other notification and bargaining obligations arising under any collective bargaining agreement, by Law or otherwise.  Neither the Company nor any Subsidiary of the Company has effectuated a "plant closing" or "mass layoff" as those terms are defined in WARN, affecting in whole or in part any site of employment, facility, operating unit or employee of the Company, without complying with all provisions of WARN or implemented any early retirement, separation or window program within the past 12 months, nor has the Company or any of its Subsidiaries announced any such action or program for the future, except as set forth in Section 2.14(b) of the Company Disclosure Schedule.

2.15        Registration Statement; Proxy Statement/Prospectus .  None of the information supplied by the Company for inclusion in the registration statement on Form S-4, or any amendment or supplement thereto, pursuant to which the shares of Parent Common Stock to be issued in the Merger will be registered with the SEC (including any amendments or supplements, the " Registration Statement ") shall, at the time such document is filed, at the time amended or supplemented and at the time the Registration Statement is declared effective by the SEC, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  None of the information supplied by the Company for inclusion in the proxy statement/prospectus to be sent to the stockholders of the Company in connection with the meeting of the stockholders of the Company to consider the Merger and vote on a proposal to adopt this Agreement (the " Company Stockholders’ Meeting ") (such proxy statement/prospectus, as amended or supplemented, the " Proxy Statement ") shall, on the date the Proxy Statement is first mailed to the stockholders of the Company, at the time of the Company Stockholders’ Meeting and at the Effective Time, contain any untrue statement of a

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material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they are made, not misleading or omit to state any material fact necessary to correct any statement in any earlier communication with respect to the Company Stockholders’ Meeting that has become false or misleading.  If at any time prior to the Effective Time any event relating to the Company or any of its Subsidiaries, officers or directors is discovered by the Company which should be set forth in an amendment or supplement to the Registration Statement or the Proxy Statement, the Company shall promptly inform Parent and Merger Sub.  The Proxy Statement shall comply in all material respects as to form and substance with the requirements of the Exchange Act and the Regulations of the SEC promulgated thereunder.  Notwithstanding the foregoing, the Company makes no representation, warranty or covenant with respect to any information supplied by Parent or the Merger Sub which is contained in the Registration Statement or the Proxy Statement.

2.16        Absence of Restrictions on Business Activities .  Except as set forth in Section 2.16 of the Company Disclosure Schedule, there is no agreement or Order binding upon the Company or any of its Subsidiaries or any of their assets, rights or properties which has had or would reasonably be expected to have the effect of prohibiting or materially impairing any business practice of the Company or any of its Subsidiaries or the conduct of business by the Company or any of its Subsidiaries as currently conducted by the Company or any of its Subsidiaries.  Except as set forth in Section 2.16 of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is subject to any material non-competition, non-solicitation or similar restriction on their respective businesses.

2.17        Title to Assets; Leases .

(a)   Section 2.17(a) of the Company Disclosure Schedule contains a true and complete list of all of the real property and interests in real property owned by the Company or any of its Subsidiaries (the " Company Owned Real Property "), identifying the record owner and address thereof.  Except as described in Section 2.17(a) of the Company Disclosure Schedule, the Company and each of its Subsidiaries has good, valid and marketable title to all of the Company Owned Real Property, free and clear of all Liens.

(b)   Section 2.17(b) of the Company Disclosure Schedule contains a true and complete list of all of the material real property leased by the Company or any of its Subsidiaries (the " Company Leased Real Property "), identifying the address thereof.  With respect to the Company Leased Real Property, except as set forth in Section 2.17(b) of the Company Disclosure Schedule, (i) all of the leases relating to the Company Leased Real Property under which the Company or any of its Subsidiaries is a tenant or subtenant, if any, are in full force and effect and the Company has made available to Parent prior to the date hereof true and correct copies of such leases (including all amendments, modifications and renewals thereof), (ii) neither the Company nor any of its Subsidiaries nor, to the Knowledge of the Company, any other party to any of these leases, is in material breach or violation or default under any lease relating to the Company Leased Real Property and neither the Company nor any of its Subsidiaries has received notice that an event has occurred which, with such notice or with lapse of time, would constitute a material breach or default under any lease relating to the Company Leased Real Property, and (iii) neither the Company nor any of its Subsidiaries has

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assigned, transferred, conveyed, mortgaged or encumbered any material interest in any Company Leased Real Property.

2.18        Taxes .  For purposes of this Agreement, " Taxes " shall mean taxes and governmental impositions of any kind in the nature of (or similar to) taxes, payable to any federal, state, local or foreign taxing authority, including those on or measured by or referred to as income, franchise, profits, gross receipts, capital ad valorem, custom duties, alternative or add-on minimum taxes, estimated, environmental, disability, registration, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers’ compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premiums, windfall profits, transfer and gains taxes, and interest, penalties and additions to tax imposed with respect thereto; and " Tax Returns " shall mean returns, declarations, reports, information statements or similar statements, including any schedule, attachment or amendment thereto, with respect to Taxes required to be filed with the IRS or any other Governmental Authority (including any other domestic or foreign taxing authority or agency), including consolidated, combined and unitary tax returns.  Except as set forth in Section 2.18 of the Company Disclosure Schedule:

(a)   Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, all Tax Returns required by applicable Law to be filed by or on behalf of the Company, each of its Subsidiaries, and each affiliated, combined, consolidated or unitary group of which the Company or any of its Subsidiaries is a member have been timely filed, and all such Tax Returns are true, complete and correct in all respects.

(b)   Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (i) all Taxes payable by or with respect to the Company and each of its Subsidiaries (whether or not shown on any Tax Return) have been timely paid, and adequate reserves (other than a reserve for deferred Taxes established to reflect timing differences between book and Tax treatment) determined in accordance with GAAP are provided on the Company’s Balance Sheet for any Taxes not yet due; (ii) all assessments for such Taxes due and owing by or with respect to the Company and each of its Subsidiaries with respect to completed and settled examinations or concluded litigation have been paid; and (iii) neither the Company nor any of its Subsidiaries has incurred a Tax liability from the date of the latest Balance Sheet other than a Tax liability in the ordinary course of business.

(c)   Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, no action, suit, proceeding, investigation, claim or audit has formally commenced and no notice has been given that such audit or other proceeding is pending or, to the Knowledge of the Company, threatened with respect to the Company or any of its Subsidiaries or any group of corporations of which any of the Company and its Subsidiaries has been a member in respect of any Taxes, and all deficiencies proposed as a result of such actions, suits, proceedings, investigations, claims or audits have been paid, reserved against or settled.

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(d)                                  Neither the Company nor any of its Subsidiaries has requested, or been granted any waiver of any federal, state, local or foreign statute of limitations with respect to, or any extension of a period for the assessment of, any Tax, which Tax Return has not since been filed.  No extension or waiver of time within which to file any Tax Return of, or applicable to, the Company or any of its Subsidiaries has been granted or requested which has not since expired.

(e)                                   Neither the Company nor any of its Subsidiaries is or has ever been (or has any liability for unpaid Taxes because it once was) a member of an affiliated, consolidated, combined or unitary group other than a group the common parent of which is the Company, and neither the Company nor any of its Subsidiaries is a party to any Tax allocation or sharing agreement or is liable for the Taxes of any other person under Treasury Regulation §1.1502-6 (or any similar provision of state, local or foreign Law), as transferee or successor, by Contract, or otherwise.

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

(g)                                  Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company and each of its Subsidiaries have complied with all applicable Laws relating to the payment and withholding of Taxes (including withholding of Taxes pursuant to Sections 1441, 1442 and 3406 of the Code or similar provisions under any foreign Laws) and have, within the time and in the manner required by Law, withheld from employee wages and paid over to the proper Governmental Authorities all amounts required to be so withheld and paid over under all applicable Laws.

(h)                                  Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, none of the Company and its Subsidiaries will be required to include any amount in taxable income, or exclude any items of deduction, for any taxable period (or portion thereof) ending after the Closing Date as a result of a change in the method of accounting for a taxable period ending prior to the Closing Date, any deferred gains arising prior to the Closing Date, any "closing agreement" as described in Section 7121 of the Code (or any corresponding provision of state, local or foreign Tax Laws) entered into prior to the Closing Date or any sale reported on the installment method that occurred prior to the Closing Date.

(i)                                      Neither the Company nor any of its Subsidiaries has constituted either a "distributing corporation" or a "controlled corporation" in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code in the five years prior to the date of this Agreement.

(j)                                      Neither the Company nor any of its Subsidiaries has participated in a "reportable transaction" within the meaning of Treasury Regulation § 1.6011-4(b)(1).

(k)                                   Neither the Company nor any of its Subsidiaries has taken, agreed to take or failed to take any action or knows of any fact or circumstance that would reasonably be

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expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

2.19                         Environmental Matters .

(a)                                   Except as described in Section 2.19 of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect:

• (i)                                      each of the Company and its Subsidiaries is, and has been, in compliance with all applicable Environmental Laws, and possesses and complies with all Environmental Permits required under such Environmental Laws;

  (ii)                                   there is no investigation, suit, claim, action or proceeding relating to Environmental Liabilities or relating to or arising under Environmental Laws that is pending or, to the Knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries or any real property currently or formerly owned, operated or leased by the Company or any of its Subsidiaries;

  (iii)                                to the Knowledge of the Company, there are and have been no Releases of Hazardous Materials or other conditions at any property currently or formerly owned, leased, operated or otherwise used by the Company or any of its Subsidiaries that would reasonably be expected to give rise to any Environmental Liabilities of the Company or any of its Subsidiaries or result in material costs to the Company or any of its Subsidiaries;

  (iv)                               to the Knowledge of the Company, there has been no transportation, treatment, storage or off-site disposal of any Hazardous Materials from the Company’s or any of its Subsidiaries’ operations that would reasonably be expected to give rise to any Environmental Liabilities of the Company or any of its Subsidiaries or result in material costs to the Company or any of its Subsidiaries;

  (v)                                  neither the Company nor any of its Subsidiaries has received any notice of, or entered into or assumed by Contract or, to the Knowledge of the Company, by operation of law, any obligation, liability or Order relating to Environmental Liabilities or relating to or arising under Environmental Laws; and

  (vi)                               to the Knowledge of the Company, no past, present or reasonably anticipated future events, practices, plans, facts, circumstances, conditions, or legal requirements exist or are proposed with respect to the Company or any of its Subsidiaries that would reasonably be expected to prevent the Company or any of its Subsidiaries from (or materially increase the burden on the Company or any of its Subsidiaries of) complying with applicable Environmental Laws or obtaining, renewing, or complying with all Environmental Permits required under such Environmental Laws.

(b)                                  The Company has provided to Parent true and complete copies of all Environmental Reports containing material information that are in the possession or control of the Company or any of its Subsidiaries.

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(c)                                   For purposes of this Agreement, the terms below are defined as follows:

• " Environmental Laws " shall mean all Laws relating in any way to the environment, preservation or reclamation of natural resources, the presence, management or Release of, or exposure to, Hazardous Materials, or to human health and safety, including the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 5101 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Safe Drinking Water Act (42 U.S.C. § 300f et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), and the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C. § 136 et seq.), each of their state and local counterparts or equivalents, each of their foreign and international equivalents and any transfer of ownership notification or approval statute (including the Industrial Site Recovery Act (N.J. Stat. Ann. § 13:1K-6 et seq.), as each has been amended and the Regulations promulgated pursuant thereto.

  " Environmental Liabilities " shall mean, with respect to any Person, all liabilities, obligations, responsibilities, remedial actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigation and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any other Person, whether known or unknown, accrued or contingent, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, to the extent based upon, related to, or arising under or pursuant to any Environmental Law or Environmental Permit, or arising out of or related to the presence, Release or threatened Release, or the alleged presence, Release or threatened Release of Hazardous Materials.

  " Environmental Permits " means any Approval required by any Governmental Authority pursuant to any applicable Environmental Law.

  " Environmental Reports " shall mean any report and other material environmental documents relating to the Company’s or any of its Subsidiaries’ past or current properties, facilities or operations that are in the Company’s or any of its Subsidiaries’ possession or under the Company’s or any of its Subsidiaries’ reasonable control.

  " Hazardous Materials " shall mean any material, substance or waste that is regulated, classified, or otherwise characterized under or pursuant to any Environmental Law as "hazardous", "toxic", a "pollutant", a "contaminant", "radioactive" or words of similar meaning or effect, including petroleum and its by-products, asbestos, polychlorinated biphenyls, radon, mold, urea formaldehyde insulation, chlorofluorocarbons and all other ozone-depleting substances.

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• " Release " shall mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing of or migrating into or through the environment or any natural or man-made structure.

2.20                         Intellectual Property .

(a)                                   Section 2.20(a) of the Company Disclosure Schedule sets forth all Intellectual Property registrations and applications owned or exclusively licensed by the Company or its Subsidiaries.  All of the abovementioned registrations and applications have not expired or been abandoned or cancelled and, to the Knowledge of the Company, are valid and enforceable.

(b)                                  Except as set forth in Section 2.20(b) of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (i) the Company and its Subsidiaries own or have the valid right to use all of the Intellectual Property necessary for the conduct of the Company’s and each of its Subsidiaries’ business as currently conducted or contemplated to be conducted, free of all Liens, (ii) the Company and each of its Subsidiaries have taken all reasonable steps to maintain and enforce all Intellectual Property owned, held or used by the Company or any of its Subsidiaries (" Company IP ").  Except under written confidentiality obligations, to the Knowledge of the Company, there has been no material disclosure of any of the Company’s or any of its Subsidiaries’ confidential information or trade secrets to any third party.  Except as disclosed in Section 2.20(b) of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, (A) to the Knowledge of the Company, the conduct of the Company’s and its Subsidiaries’ businesses as currently conducted or proposed to be conducted does not infringe, misappropriate, dilute or otherwise violate or breach (" Infringe ") any Intellectual Property or contractual rights of any third party, and to the Knowledge of the Company, the Company IP is not being Infringed by any third party, and (B) there is no Litigation or Order pending or outstanding, to the Knowledge of the Company, threatened or imminent (including cease and desist letters or invitations to take a license), that seeks to limit or challenge or that concerns the ownership, use, validity or enforceability of any Company IP.

(c)                                   Section 2.20(c) of the Company Disclosure Schedule sets forth a complete and accurate list of all licenses, sublicenses, consent, royalty or other agreements concerning Company IP to which the Company or any Subsidiary of the Company is a party or by which any of their assets, rights or properties are bound (other than (i) Contracts disclosed pursuant to Section 2.7(a)(iii) and (ii) generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than $50,000) (collectively, " Company IP Agreements ").  To the Knowledge of the Company, all of the Company IP Agreements are valid and binding obligations of Company or any of its Subsidiaries that are parties thereto, enforceable in accordance with their terms (subject to Enforceability Limitations), and there exists no event or condition which will result in a violation or breach of, or constitute (with or without due notice or lapse of time or both) a default by the Company or any of its Subsidiaries under, any such Company IP Agreement, in each case except as would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.

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(d)                                  Except as set forth in Section 2.20(d) of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the consummation of the transactions contemplated hereby will not result in the alteration, loss or impairment of the validity, enforceability or the Company’s or any of its Subsidiaries’ right to own or use any of the Intellectual Property necessary to the operation of the Company’s and its Subsidiaries’ businesses as currently operated, nor will such transactions require the Approval of any Governmental Authority or third party in respect of any Intellectual Property.

(e)                                   Section 2.20(e) of the Company Disclosure Schedule lists all Software (as defined herein) owned, held or used by the Company or any of its Subsidiaries (other than generally commercially available, non-custom, off-the-shelf software application programs having a retail acquisition price of less than $10,000), and identifies whether such Software is owned, licensed, leased or otherwise used, as the case may be, and whether such Software is sold, licensed, leased or otherwise distributed by the Company or any of its Subsidiaries to any third party. All Software owned by the Company or any of its Subsidiaries, and, to the Knowledge of the Company, all Software licensed from third parties by the Company or any of its Subsidiaries, (i) is free from any material defect, bug, virus, or programming, design or documentation error, (ii) operates and runs in a reasonable and efficient business manner, and (iii) conforms in all material respects to the specifications and purposes thereof, except in the case of clauses (i) , (ii) and (iii) as would not, individually or in the aggregate, reasonably be expected to cause a Company Material Adverse Effect.  No Software owned, held or used by the Company or any of its Subsidiaries is, in whole or in part, subject to the provisions of any open source or similar license agreement, or any other agreement obligating the Company or any of its Subsidiaries to distribute or otherwise make any source code of the Software available to third parties, except as would not, individually or in the aggregate, reasonably be expected to cause a Company Material Adverse Effect.

(f)                                     Except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company and its Subsidiaries have taken all reasonable steps to protect the Company’s and its Subsidiaries’ rights in their Intellectual Property, including confidential information and trade secrets.  Without limiting the foregoing, except as disclosed in Section 2.20(f) of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company and its Subsidiaries require (i) each employee to acknowledge in writing and, each employee has acknowledged in writing receipt of an employee handbook or other similar documentation (true and complete copies of which have been made available to Parent) which sets forth certain confidentiality obligations and (ii) all Persons who contribute or have contributed any proprietary Intellectual Property to assign all of their rights in the same to the Company or its Subsidiaries.

2.21                         Insurance .  Section 2.21 of the Company Disclosure Schedule sets forth a true and complete list of all material insurance policies and performance bonds providing coverage in favor of the assets, business, equipment, rights, properties, operations, employees, officers and directors of the Company and its Subsidiaries.  There is no claim by the Company or any of its Subsidiaries pending under any of such policies or bonds as to which coverage has been questioned, denied or disputed in writing by the underwriters of such policies or bonds.  All

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premiums payable under all such policies and bonds have been paid and, except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company and its Subsidiaries are otherwise in full compliance with the terms of such policies and bonds (or other policies and bonds providing substantially similar insurance coverage).  Such policies of insurance and bonds are of the type and in amounts customarily carried by Persons conducting businesses similar to those of the Company and its Subsidiaries, except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect.  To the Knowledge of the Company, there is not any threatened termination of or material increase with respect to any such policies or bonds.

2.22                         No Restrictions on the Merger; Takeover Statutes .  No provision of the Certificate of Incorporation or Bylaws, or other organizational documents or governing instruments of the Company or any of its Subsidiaries or any Company Material Agreement to which any of them is a party, and assuming the accuracy of the representation in Section 3.21 , no Delaware Law or other takeover statute or similar Law applicable to the Company or its Subsidiaries (a) would or would purport to impose restrictions which might adversely affect or delay the consummation of the transactions contemplated by this Agreement and the Related Agreements, or (b) as a result of the consummation of the transactions contemplated by this Agreement or the acquisition of securities of the Company or the Surviving Corporation by Parent or Merger Sub (i) would or would purport to restrict or impair the ability of Parent to vote or otherwise exercise the rights of a stockholder with respect to securities of the Company or any of its Subsidiaries that may be acquired or controlled by Parent or (ii) would or would purport to entitle any Person to acquire securities of the Company.

2.23                         Brokers .  No broker, financial advisor, finder or investment banker or other Person is entitled to any broker’s, financial advisor’s, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company, except for Houlihan Lokey Howard & Zukin Capital (the " Company Financial Advisor ").  Section 2.23 of the Company Disclosure Schedule sets forth, and the Company has made available to Parent a true and complete copy of, all agreements between the Company and the Company Financial Advisor pursuant to which such Persons would be entitled to any payment relating to the transactions contemplated hereunder.

2.24                         Certain Business Practices .  To the Knowledge of the Company, since January 1, 2003, neither the Company nor any of its Subsidiaries nor any director, officer, employee or agent of the Company or any of its Subsidiaries has (i) used any funds of the Company or any of its Subsidiaries for unlawful contributions, gifts, entertainment or other unlawful payments relating to political activity or (ii) made any unlawful payment to any foreign or domestic government official or employee or to any foreign or domestic political party or campaign or violated any provision of the Foreign Corrupt Practices Act of 1977, as amended.

2.25                         Interested Party Transactions .  Except as disclosed in Section 2.25 of the Company Disclosure Schedule, (i) there are no existing, and since August 1, 2003 there has been no Contract, transaction, indebtedness or other arrangement, or any related series thereof, between the Company and its Subsidiaries, on the one hand, and any of the directors, officers, significant stockholders or other Affiliates of the Company and its Subsidiaries, or any of their respective Affiliates or family members, on the other (except for amounts due as normal salaries

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and bonuses and in reimbursement of ordinary expenses), and (ii) except for the Outstanding Stock Options, at the Closing, all such Contracts, transactions, indebtedness and other arrangements shall be terminated (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses).

2.26                         Opinion of Financial Advisor .  The Company has received the written opinion of the Company Financial Advisor to the effect that, subject to the limitations set forth in the opinion, as of the date of this Agreement, the Exchange Ratio is fair to the holders of Company Common Stock from a financial point of view, and the Company has provided copies of such opinion to Parent.  The Company has been authorized by the Company Financial Advisor to include the text of such fairness opinion and a description thereof in the Registration Statement and Proxy Statement, provided that the fairness opinion is reproduced therein only in its entirety and that the content and context of such inclusion and description is subject to the Company Financial Advisor’s prior review and written consent.

2.27                         Suppliers .

(a)                                   Section 2.27(a) of the Company Disclosure Schedule sets forth a true and complete list of the 10 largest suppliers of the Company in terms of purchases during the most recently completed fiscal year and the portion of current fiscal year ended September 30, 2006 (collectively, the " Major Suppliers ").

(b)                                  Since January 1, 2005, except as set forth on Section 2.27(b) of the Company Disclosure Schedule, there has not been any material dispute between the Company or any of its Subsidiaries and any Major Supplier, and, no Major Supplier has stated in writing to the Company or to any of its Subsidiaries that such Major Supplier intends to materially reduce sales to, or to otherwise materially reduce its business relationship with, the Company or any of its Subsidiaries.

2.28                         Names; Prior Acquisitions; Business Locations .

(a)                                   All names under which the Company or any of its Subsidiaries does business are specified in Section 2.28(a) of the Company Disclosure Schedule.

(b)                                  Except as set forth in Section 2.28(b) of the Company Disclosure Schedule, the Company has not changed its name or used any assumed or fictitious name, or been the surviving entity in a merger, acquired any business or changed its principal place of business or chief executive office, within the past three years.

(c)                                   All of the Company’s and its Subsidiaries’ offices and places of business, including their respective principal places of business and chief executive offices, are listed in Section 2.28(c) of the Company Disclosure Schedule.  To the Knowledge of the Company, except for equipment leased to customers in the ordinary course of business, all of the material equipment, inventory, chattel paper and books and records of the Company and its Subsidiaries are located in the offices and places of business listed in Section 2.28(c) of the Company Disclosure Schedule.

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2.29                         Customer Contracts .

(a)                                   Set forth in Section 2.29(a) of the Company Disclosure Schedule is a list of the Company’s or any of its Subsidiaries’ contracts with their 20 largest customers, in the aggregate, as of September 30, 2006, as measured by recurring revenues attributable to such customers (the " Large Customer Agreements ").  Except as would not, individually or in the aggregate, be reasonably expected to result in a Company Material Adverse Effect, each such Large Customer Agreement is in full force and effect, is a valid and binding obligation of the Company or such Subsidiary and, to the Knowledge of Company, of each other party thereto and is enforceable, in accordance with its terms, against the Company or such Subsidiary and, to the Knowledge of the Company, against each other party thereto, in each case subject to the Enforceability Limitations. Except as set forth in Section 2.29(a) of the Company Disclosure Schedule or as would not, individually or in the aggregate, be reasonably expected to result in a Company Material Adverse Effect, the Company and its Subsidiaries are in compliance with all of the material terms of the Large Customer Agreements and, to the Knowledge of the Company, no default or event of default, or event or condition that with notice or lapse of time or both would constitute such a default, on its part or on the part of any other party thereto exists with respect to any liability to such customer party to any Large Customer Agreement.

(b)                                  To the Knowledge of Company, except as set forth in Section 2.29(b) of the Company Disclosure Schedule or as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company has written agreements with all its customers (including the Large Customer Agreements) that (i) contain terms and conditions which are standard in the electronic security industry, including those involving limitation of liability/liquidated damages, third-party indemnification, automatic renewals (except where prohibited by law) and the right to increase monitoring rates, and (ii) do not require the consent of or notice to any other party thereto for a change in control of the Company.

(c)                                   No single customer of the Company or any of its Subsidiaries accounts for more than 3% of the Company’s consolidated annual revenue.  The average gross monthly revenue generated for the Company by the Company’s and its Subsidiaries’ customers is listed in Section 2.29(c) of the Company Disclosure Schedule for the nine-month period commencing on January 1, 2006 and ending on September 30, 2006.

(d)                                  Each of the Company and its Subsidiaries has provided each residential customer that it originated since January 1, 2004 (and did not acquire from a third party) with the three-day right of rescission in compliance with the provisions of 16 C.F.R. Part 429 ("Cooling Off Period for Door to Door Sales") and any applicable state Laws.

(e)                                   To the Knowledge of Company, except as would not, individually or in the aggregate, reasonably be expected to result in a Company Material Adverse Effect, all alarm systems installed or taken over by the Company since January 1, 2004 are in good working order and condition (excepting situations where a customer has failed to report to the Company any problem with an alarm system), and have been installed, inspected, tested and maintained in accordance with practices prevailing in the security alarm industry in the U.S., and in accordance with any applicable specifications and standards of underwriters laboratories and local governmental authorities, other than in each case of customers whose service has been suspended for nonpayment.  To the Knowledge of Company, except as would not, individually or in the

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aggregate, reasonably be expected to result in a Company Material Adverse Effect, the Company has the sole right to use all of the telephone lines and numbers applicable to the monitoring of its customer accounts.

(f)                                     The Company’s total recurring monthly revenue for the month of November 2006 was not less than $6,900,000, excluding wholesale revenue associated with owned accounts.

2.30                         Internal Controls and Disclosure Controls .  The Company maintains a system of internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) sufficient to provide reasonable assurances regarding the reliability of financial reporting.  The Company (a) maintains disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) to ensure that material information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s Regulations and forms and is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure and (b) has disclosed, based on its most recent evaluation of such disclosure controls and procedures prior to the date hereof, to the Company’s auditors and the audit committee of the Company’s Board of Directors (i) any significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting that are reasonably likely to adversely affect in any material respect the Company’s ability to record, process, summarize and report financial information and (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

Parent and Merger Sub hereby, jointly and severally, represent and warrant to the Company as