EX-1.1 AGREEMENT AND PLAN OF MERGER

Exhibit 1.1

AGREEMENT AND PLAN OF MERGER

among

ALTRA HOLDINGS, INC.,

FOREST ACQUISITION CORPORATION

and

TB WOOD’S CORPORATION

Dated as of February 17, 2007

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ANNEX

EXHIBITS

DEFINED TERMS

          AGREEMENT AND PLAN OF MERGER, dated as of February 17, 2007 (this “ Agreement ”), by and among Altra Holdings, Inc., a Delaware corporation (“ Parent ”), Forest Acquisition Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent (“ Purchaser ”), and TB Wood’s Corporation, a Delaware corporation (the “ Company ”).

Background :

          WHEREAS, the Board of Directors (or an authorized committee thereof) of each of Parent, Purchaser and the Company has approved, and deems it advisable and in the best interests of their respective stockholders to consummate the acquisition of the Company by Parent upon the terms and subject to the conditions set forth herein;

          WHEREAS, in furtherance thereof and pursuant to this Agreement, Purchaser has agreed to commence a tender offer (the “ Offer ”) to purchase all of the outstanding shares of common stock, par value $0.01 per share, of the Company (the “ Shares ”), at a price per Share of $24.80 (such amount or any different amount per Share that may be paid pursuant to the Offer and the terms and conditions of this Agreement being hereinafter referred to as the “ Offer Price ”), subject to any withholding of Taxes required by law, net to the seller in cash;

          WHEREAS, following the consummation of the Offer, upon the terms and subject to the conditions set forth in this Agreement, Purchaser will be merged with and into the Company with the Company as the Surviving Corporation (the “ Merger ,” and together with the Offer and the other transactions contemplated by this Agreement, the “ Transactions ”), in accordance with the General Corporation Law of the State of Delaware (the “ DGCL ”), whereby each issued and outstanding Share not owned directly or indirectly by Parent, Purchaser or the Company will be converted into the right to receive the Offer Price in cash;

          WHEREAS, the Board of Directors of the Company (the “ Company Board of Directors ”) has unanimously, on the terms and subject to the conditions set forth herein, (i) determined that the Transactions contemplated by this Agreement are in the best interests of its stockholders, (ii) approved and declared advisable this Agreement and the Transactions contemplated hereby, including the Offer and the Merger, and (iii) determined to recommend that the Company’s stockholders accept the Offer, tender their Shares to Purchaser and, to the extent applicable, adopt this Agreement;

          WHEREAS, the Board of Directors of, or an authorized committee thereof, Parent and Purchaser have, on the terms and subject to the conditions set forth herein, approved and declared advisable this Agreement and the Transactions contemplated hereby, including the Offer and the Merger;

          WHEREAS, Parent has required, as a condition to its willingness to enter into this Agreement, that Thomas C. Foley (the “ Principal Stockholder ”) enter into a Support Agreement, dated as of the date hereof and in the form attached hereto as Exhibit A (the “ Support Agreement ”), simultaneously herewith, pursuant to which, among other things, the Principal Stockholder has agreed to tender all Shares he beneficially owns in the Offer, and in order to induce Parent and Purchaser to enter into this Agreement, the board of directors of the Company,

or a committee thereof, has approved the execution and delivery of the Support Agreement by the Principal Stockholder; and

          WHEREAS, Parent, Purchaser and the Company desire to (i) make certain representations and warranties in connection with the Transactions, (ii) make certain covenants and agreements in connection with the Transactions, and (iii) prescribe various conditions to the Transactions.

          NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement and for other good and valuable consideration and intending to be legally bound, the receipt and adequacy of which are hereby acknowledged, the parties to this Agreement agree as follows:

ARTICLE I

THE OFFER AND THE MERGER

     Section 1.1. The Offer .

          (a) Provided that this Agreement shall not have been terminated in accordance with Section 7.1, as promptly as practicable (and in any event within ten (10) Business Days from the date hereof, Purchaser shall (and Parent shall cause Purchaser to) commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”)) the Offer to purchase for cash all Shares at the Offer Price, subject to:

               (i) there being validly tendered in the Offer and not withdrawn prior to any then scheduled Expiration Date (as defined below) that number of Shares which, together with the Shares then beneficially owned by Parent or Purchaser (if any), represents at least sixty-six and two-thirds percent (66 2/3%) of: (x) all Shares then outstanding, plus (y) all Shares issuable upon the exercise, conversion or exchange of any Company Stock Options or Company Warrants then outstanding that are vested and exercisable, convertible or exchangeable as of any then scheduled Expiration Date or that would be vested and exercisable, convertible or exchangeable (including after giving effect to the acceleration of any vesting or exercisability, convertibility or exchangeability that may occur as a result of the Offer) at any time within sixty (60) days following the then scheduled Expiration Date assuming that the holder of such Company Stock Options satisfies the vesting or exercisability, convertibility or exchangeability conditions applicable thereto during such time period (the “ Minimum Condition ”); and

               (ii) the satisfaction, or waiver by Parent or Purchaser, of the other conditions and requirements set forth in Annex I .

          (b) Subject to Section 1.1(a), Purchaser shall (and Parent shall cause Purchaser to) consummate the Offer in accordance with its terms and accept for payment and pay for all Shares validly tendered and not withdrawn pursuant to the Offer as promptly as practicable. The Offer Price payable in respect of each Share validly tendered and not

withdrawn pursuant to the Offer shall be paid net to the seller in cash subject to withholding as provided in Section 2.2(e).

          (c) The Offer shall be made by means of an offer to purchase (the “ Offer to Purchase ”) that contains the terms set forth in this Agreement, the Minimum Condition and the other conditions and requirements set forth in Annex I . Parent and Purchaser expressly reserve the right to increase the Offer Price or to make any other changes in the terms and conditions of the offer; provided , however, that unless otherwise provided by this Agreement or as previously approved by the Company in writing, Purchaser shall not (i) decrease the Offer Price, (ii) change the form of consideration payable in the Offer, (iii) reduce the maximum number of Shares to be purchased in the Offer, (iv) impose conditions to the Offer that are different from, or in addition to, the conditions set forth in Annex I , (v) amend or waive the Minimum Condition, (vi) amend any of the conditions to the Offer set forth in Annex I or (vii) extend the expiration of the Offer in a manner, other than as required by this Agreement, without the prior written consent of the Company.

          (d) Unless extended pursuant to and in accordance with the terms of this Agreement, the Offer shall expire at midnight (New York City time) on the date that is twenty (20) Business Days (for this purpose calculated in accordance with Rule 14d-1(g)(3) under the Exchange Act) following the commencement (within the meaning of Rule 14d-2 under the Exchange Act) of the Offer (the “ Initial Expiration Date ”) or, in the event the Initial Expiration Date has been extended pursuant to, and in accordance with this Agreement, the date to which the Offer has been so extended (the Initial Expiration Date, or such later date to which the Initial Expiration Date has been extended pursuant to and in accordance with this Agreement, is referred to as the “ Expiration Date ”).

          (e) The Offer shall be extended from time to time as follows:

               (i)  Offer Conditions Not Satisfied . If on or prior to any then scheduled Expiration Date, all of the conditions to the Offer (including the Minimum Condition and all other conditions and requirements set forth in Annex I ) shall not have been satisfied, or waived by Parent or Purchaser if permitted hereunder, Purchaser shall (and Parent shall cause Purchaser to) extend the Offer for successive periods of ten (10) Business Days each in order to permit the satisfaction of such conditions, or any lesser period ending on April 30, 2007 (the “ Initial Outside Date ”), or on June 15, 2007 in the event that the HSR Condition shall not have been satisfied, or waived by Parent and Purchaser if permitted hereunder, by the Initial Outside Date (the “ Extended Outside Date ”), if any such ten-day extension would otherwise end after the Initial Outside Date or the Extended Outside Date, as applicable.

               (ii)  Required by Applicable Law or NASDAQ . Purchaser shall extend the Offer for any period or periods required by applicable law, rule, regulation, interpretation or position of the SEC (or its staff) or NASDAQ.

          (f) In the event that more than sixty-six and two-thirds percent (66 2/3%), but less than eighty percent (80%) of the then outstanding Shares have been validly tendered and not withdrawn pursuant to the Offer following the Expiration Date, Purchaser, in its sole discretion, may (and Parent may cause Purchaser to) provide for a “subsequent offering period” in

accordance with Rule 14d-11 under the Exchange Act of at least ten (10) Business Days immediately following the Expiration Date. In the event that more than eighty percent (80%) of the then outstanding Shares have been validly tendered and not withdrawn pursuant to the Offer following the Expiration Date, Purchaser shall (and Parent shall cause Purchaser to) provide for a “subsequent offering period” in accordance with Rule 14d-11 under the Exchange Act of at least ten (10) Business Days immediately following the Expiration Date. Subject to the terms and conditions of this Agreement and the Offer, Purchaser shall (and Parent shall cause Purchaser to) accept for payment, and pay for, all Shares that are validly tendered and not withdrawn pursuant to the Offer during such “subsequent offering period” promptly after any such Shares are tendered during such “subsequent offering period.” The Offer Documents will provide for the possibility of a “subsequent offering period” in a manner consistent with the terms of this Section 1.1(f). For purposes of this Section 1.1(f), the phrase “then outstanding Shares” shall be deemed to include (x) all Shares then outstanding, plus (y) all Shares issuable upon the exercise, conversion or exchange of any Company Stock Options or Company Warrants then outstanding that are vested and exercisable, convertible or exchangeable as of any then scheduled Expiration Date or that would be vested and exercisable, convertible or exchangeable (including after giving effect to the acceleration of any vesting or exercisability, convertibility or exchangeability that may occur as a result of the Offer) at any time within sixty (60) days following the then scheduled Expiration Date assuming that the holder of such Company Stock Options satisfies the vesting or exercisability, convertibility or exchangeability conditions applicable thereto during such time period.

          (g) Purchaser shall not terminate the Offer prior to any scheduled Expiration Date without the prior written consent of the Company, except in the event that this Agreement is terminated pursuant to Section 7.1. In the event that this Agreement is terminated pursuant to Section 7.1, Purchaser shall (and Parent shall cause Purchaser to) promptly (and in any event within twenty four (24) hours of such termination), irrevocably and unconditionally terminate the Offer.

          (h) As soon as practicable after the commencement of the Offer (within the meaning of Rule 14d-2 under the Exchange Act), Parent and Purchaser shall file with the Securities and Exchange Commission (the “ SEC ”), pursuant to Regulation M-A under the Exchange Act (“ Regulation M-A ”), a Tender Offer Statement on Schedule TO with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule TO ”). The Schedule TO shall include, as exhibits, the Offer to Purchase and a form of letter of transmittal and summary advertisement (collectively, together with any amendments and supplements thereto, the “ Offer Documents ”). Parent and Purchaser agree to take all steps necessary to cause the Offer Documents, and any amendments thereto, to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the Exchange Act. Parent and Purchaser, on the one hand, and the Company, on the other hand, agree to promptly provide each other with all information about either the Parent and Purchaser or Company, respectively, that is required to be included in the Offer Documents. Parent and Purchaser, on the one hand, and the Company, on the other hand, agree to promptly correct any information provided by it for use in the Offer Documents if and to the extent that such information shall have become false or misleading in any material respect or as otherwise required by applicable law. The Company and its counsel shall be given a reasonable

opportunity to review the Schedule TO and the Offer Documents before they are filed with the SEC, and Parent and Purchaser shall give due consideration to all the reasonable additions, deletions or changes suggested thereto by the Company and its counsel. In addition, Parent and Purchaser shall provide the Company and its counsel with copies of any written comments, and shall inform them of any oral comments, that Parent, Purchaser or their counsel may receive from time to time from the SEC or its staff with respect to the Schedule TO or the Offer Documents promptly after receipt of such comments, and any written or oral responses thereto. The Company and its counsel shall be given a reasonable opportunity to review any such written responses and Parent and Purchaser shall give due consideration to all reasonable additions, deletions or changes suggested thereto by the Company and its counsel.

          (i) If the Offer is terminated or withdrawn by Purchaser, or this Agreement is terminated prior to the purchase of Shares in the Offer, Purchaser shall promptly return, and shall cause any depository, acting on behalf of Purchaser to return, all tendered Shares to the registered holders thereof.

          (j) The Offer Price shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Shares), cash dividend (except for any cash dividend permitted by this Agreement), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to Shares occurring on or after the date hereof and prior to the Effective Time.

     Section 1.2. Company Actions .

          (a) Contemporaneous with the filing of the Schedule TO, the Company shall, in a manner that complies with Rule 14d-9 under the Exchange Act, file with the SEC a Tender Offer Solicitation/ Recommendation Statement on Schedule 14D-9 with respect to the Offer (together with all amendments, supplements and exhibits thereto, the “ Schedule 14D-9 ”) that shall, subject to the provisions of Section 5.4(d), contain the Company Recommendation. The Company further agrees to take all steps necessary to cause the Schedule 14D-9 and any amendments thereto to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the Exchange Act. The Company, on the one hand, and Parent and Purchaser, on the other hand, agree to promptly correct any information provided by it for use in the Schedule 14D-9 if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by applicable law and the Company shall cause the Schedule 14D-9, as so corrected, to be filed with the SEC and disseminated to holders of Shares, in each case as and to the extent required by the Exchange Act. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review the Schedule 14D-9 before it is filed with the SEC and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel. In addition, the Company shall provide Parent, Purchaser and their counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Schedule 14D-9 promptly after the Company’s receipt of such comments, and any written or oral responses thereto. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review any such written responses and the

Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel.

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

     Section 1.3. Directors .

          (a) Promptly after Purchaser accepts for payment and pays for any Shares tendered and not withdrawn pursuant to the Offer (the “ Appointment Time ”), and at all times thereafter, Purchaser shall be entitled to elect or designate such number of directors, rounded up to the next whole number, on the Company Board of Directors as is equal to the product of the total number of directors on the Company Board of Directors (giving effect to the directors elected or designated by Purchaser pursuant to this sentence) multiplied by the percentage that the aggregate number of Shares beneficially owned by Parent, Purchaser and any of its affiliates bears to the total number of Shares then outstanding. The Company shall, upon Purchaser’s request at any time following the purchase of and payment for Shares pursuant to the Offer, take such actions, including but not limited to promptly filling vacancies or newly created directorships on the Company Board of Directors, promptly increasing the size of the Company Board of Directors (including by amending the Bylaws of the Company if necessary so as to increase the size of the Company Board of Directors) and/or promptly securing the resignations of such number of its incumbent directors as are necessary or desirable to enable Purchaser’s designees to be so elected or designated to the Company Board of Directors, and shall use its reasonable best efforts to cause Purchaser’s designees to be so elected or designated at such time. The Company shall, upon Purchaser’s request following the Appointment Time, also cause Persons elected or designated by Purchaser to constitute the same percentage (rounded up to the next whole number) as is on the Company Board of Directors of (i) each committee of the Company Board of Directors, (ii) each board of directors (or similar body) of each Company Subsidiary and (iii) each committee (or similar body) of each such board, in each case to the extent permitted by applicable law and the Marketplace Rules of the Nasdaq Global Market (the “ Nasdaq Marketplace Rules ”). Promptly after the Appointment Time, the Company shall take all action necessary to elect to be treated as a “controlled company” as defined by Nasdaq Marketplace Rule 4350(c) and make all necessary filings and disclosures associated with such status. The Company’s obligations under this Section 1.3(a) shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall promptly upon

execution of this Agreement take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this Section 1.3(a), including mailing to stockholders (together with the Schedule 14D-9) the information required by Section 14(f) and Rule 14f-1 as is necessary to enable Purchaser’s designees to be elected or designated to the Company Board of Directors. Purchaser shall supply the Company with information with respect to Purchaser’s designees and Parent’s and Purchaser’s respective officers, directors and affiliates to the extent required by Section 14(f) and Rule 14f-1. The provisions of this Section 1.3(a) are in addition to and shall not limit any rights that any of Purchaser, Parent or any of their respective affiliates may have as a record holder or beneficial owner of Shares as a matter of applicable law with respect to the election of directors or otherwise.

          (b) In the event that Purchaser’s designees are elected or designated to the Company Board of Directors pursuant to Section 1.3(a), then, until the Effective Time, the Company shall seek to cause the Company Board of Directors to maintain three (3) directors who are members of the Company Board of Directors on the date hereof, each of whom shall be an “independent director” as defined by Rule 4200(a)(15) of the Nasdaq Marketplace Rules and eligible to serve on the Company’s audit committee under the Exchange Act and the Nasdaq Marketplace Rules (the “ Continuing Directors ”); provided , however, that if any Continuing Director is unable to serve due to death, disability or resignation, the Company shall take all necessary action (including creating a committee of the Company Board of Directors) so that the Continuing Director(s) shall be entitled to elect or designate another Person (or Persons) to fill such vacancy, and such Person (or Persons) shall be deemed to be a Continuing Director for purposes of this Agreement. If no Continuing Director then remains, the other directors shall designate three (3) Persons to fill such vacancies and such Persons shall be deemed Continuing Directors for all purposes of this Agreement. Notwithstanding anything in this Agreement to the contrary, if Purchaser’s designees constitute a majority of the Company Board of Directors after the Appointment Time and prior to the Effective Time, then the affirmative vote of a majority of the Continuing Directors shall (in addition to the approval rights of the Company Board of Directors or the stockholders of the Company as may be required by the Restated Certificate of Incorporation of the Company (as amended, the “ Company Certificate ”), the Bylaws of the Company (as amended, the “ Company Bylaws ”, and together with the Company Certificate, the “ Company Governing Documents ”) or applicable law) be required (i) for the Company to amend or terminate this Agreement; (ii) to exercise or waive any of the Company’s rights, benefits or remedies hereunder, if such action would materially and adversely affect the holders of Shares (other than Parent or Purchaser); (iii) to amend the Company Governing Documents if such action would materially and adversely affect the holders of Shares (other than Parent or Purchaser); or (iv) to take any other action of the Company Board of Directors under or in connection with this Agreement if such action would materially and adversely affect the holders of Shares (other than Parent or Purchaser). Subject to the foregoing, in no event shall the requirement to have Continuing Directors as provided above result in Persons elected or designated by Purchaser constituting less than a majority of the directors on the board of directors of the Company unless Parent shall have failed to designate a sufficient number of persons to constitute at least a majority.

     Section 1.4. The Merger .

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

          (b) Purchaser and the Surviving Corporation shall take all necessary action such that (i) the certificate of incorporation of the Surviving Corporation shall be amended so as to read in its entirety in the form set forth as Exhibit B hereto until thereafter changed or amended as provided therein or by applicable law and (ii) the bylaws of the Surviving Corporation shall be amended so as to read in their entirety in the form set forth as Exhibit C until thereafter changed or amended as provided therein or by applicable law.

     Section 1.5. Effective Time . Parent, Purchaser and the Company shall cause an appropriate certificate of merger or other appropriate documents (the “ Certificate of Merger ”) to be executed and filed on the Closing Date (or on such other date as Parent and the Company may agree) with the Secretary of State of the State of Delaware in accordance with the relevant provisions of the DGCL and shall make all other filings or recordings required under the DGCL. The Merger shall become effective at the time such Certificate of Merger have been duly filed with the Secretary of State of the State of Delaware or such date and time as is agreed upon by the parties and specified in the Certificate of Merger, such date and time hereinafter referred to as the “ Effective Time ”.

     Section 1.6. Closing . The closing of the Merger (the “Closing”) will take place at 10:00 a.m., New York Time, on a date to be specified by the parties, such date to be no later than the second business day after satisfaction or waiver of all of the conditions set forth in Article VI (the “Closing Date”), at the offices of Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153 unless another date or place is agreed to in writing by the parties hereto.

     Section 1.7. Directors and Officers of the Surviving Corporation . The directors of Purchaser immediately prior to the Effective Time shall, from and after the Effective Time, continue as the directors of the Surviving Corporation, and the officers of the Company immediately prior to the Effective Time, from and after the Effective Time, shall continue as the officers of the Surviving Corporation, in each case until their respective successors shall have been duly elected, designated or qualified, or until their earlier death, resignation or removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

     Section 1.8. Subsequent Actions . If, at any time after the Effective Time, the Surviving Corporation shall determine, in its sole discretion, or shall be advised, that any deeds, bills of sale, instruments of conveyance, assignments, assurances or any other actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in the Surviving

Corporation its right, title or interest in, to or under any of the rights, properties or assets of either of the Company or Purchaser acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out this Agreement, then the officers and directors of the Surviving Corporation shall be authorized to execute and deliver, in the name and on behalf of either the Company or Purchaser, all such deeds, bills of sale, instruments of conveyance, assignments and assurances and to take and do, in the name and on behalf of each of such corporations or otherwise, all such other actions and things as may be necessary or desirable to vest, perfect or confirm any and all right, title or interest in, to and under such rights, properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.

     Section 1.9. Stockholders’ Meeting . If approval of the stockholders of the Company is required under the DGCL in order to consummate the Merger:

          (a) As promptly as practicable following the Appointment Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, the Company shall prepare and file as promptly as practicable with the SEC a proxy or information statement for the Special Meeting (together with any amendments thereof or supplements thereto and any other required proxy materials, the “ Proxy Statement ”) relating to the Merger and this Agreement; provided , that Parent, Purchaser and their counsel shall be given a reasonable opportunity to review the Proxy Statement before it is filed with the SEC and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel with the intention that the Proxy Statement be in a form ready to print and mail to the stockholders of the Company as promptly as practicable following the Appointment Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable. The Company shall include in the Proxy Statement the recommendation of the Company Board of Directors that stockholders of the Company vote in favor of the adoption of this Agreement in accordance with the DGCL. The Company shall use its reasonable best efforts to obtain and furnish the information required to be included by the SEC in the Proxy Statement and, after consultation with Purchaser, respond promptly to any comments made by the SEC with respect to the Proxy Statement. The Company shall provide Parent, Purchaser and their counsel with copies of any written comments, and shall inform them of any oral comments, that the Company or its counsel may receive from time to time from the SEC or its staff with respect to the Proxy Statement promptly after the Company’s receipt of such comments, and any written or oral responses thereto. Parent, Purchaser and their counsel shall be given a reasonable opportunity to review any such written responses and the Company shall give due consideration to all reasonable additions, deletions or changes suggested thereto by Parent, Purchaser and their counsel. The Company, on the one hand, and Parent and Purchaser, on the other hand, agree to promptly correct any information provided by it for use in the Proxy Statement if and to the extent that it shall have become false or misleading in any material respect or as otherwise required by applicable law and, the Company further agrees to cause the Proxy Statement, as so corrected (if applicable), to be filed with the SEC and, if any such correction is made following the mailing of the Proxy Statement as provided in Section 1.9(b)(ii), mailed to holders of Shares, in each case as and to the extent required by the Exchange Act or the SEC (or its staff).

          (b) The Company, acting through the Company Board of Directors, shall, in accordance with and subject to the requirements of applicable law:

               (i) (A) as promptly as practicable following the Appointment Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, duly set a record date for, call and give notice of a special meeting of its stockholders (the “ Special Meeting ”) for the purpose of considering, approving and adopting this Agreement (with the record date and meeting date set in consultation with Purchaser), and (B) as promptly as practicable following the Appointment Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, convene and hold the Special Meeting;

               (ii) cause the definitive Proxy Statement to be mailed to its stockholders; and

               (iii) use its reasonable best efforts to (A) solicit from its stockholders proxies in favor of the adoption of this Agreement and (B) secure any approval of stockholders of the Company that is required by the DGCL and any other applicable Law to effect the Merger.

          (c) At the Special Meeting or any postponement or adjournment thereof, Parent shall vote, or cause to be voted, all of the Shares then owned by it, Purchaser or any of their other subsidiaries and affiliates in favor of the adoption of this Agreement and to deliver or provide, in its capacity as a stockholder of the Company, any other approvals that are required by the DGCL and any other applicable law to effect the Merger.

     Section 1.10. Merger Without Meeting of Stockholders . Notwithstanding the terms of Section 1.9, in the event that Parent, Purchaser and their respective subsidiaries and affiliates shall hold, in the aggregate, at least ninety percent (90%) of the outstanding shares of each class of capital stock of the Company entitled to vote on the adoption of this Agreement under the DGCL (the “ Short Form Threshold ”), following the Appointment Time and the expiration of any “subsequent offering period” provided by Purchaser pursuant to and in accordance with this Agreement, if applicable, Parent, Purchaser and the Company shall cause the Merger to become effective as promptly as practicable, without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL.

     Section 1.11. Option to Acquire Additional Shares . The Company hereby grants to Purchaser an option (the “ Purchaser Option ”) to purchase up to that number of newly issued Shares (the “ Purchaser Option Shares ”) equal to the number of Shares that, when added to the number of Shares owned by Parent and its Subsidiaries immediately following consummation of the Offer, shall constitute one Share more than ninety percent (90%) of the Shares then outstanding (after giving effect to the issuance of the Purchaser Option Shares) for a cash purchase price per Purchaser Option Share equal to the Offer Price; provided , that (i) the number of Purchaser Option Shares shall not exceed that number which is equal to nineteen and nine-tenths percent (19.9%) of the Shares outstanding on the date of this Agreement and (ii) the Purchaser Option may not be exercised unless, following the Appointment Time or after a subsequent offer period, more than eighty percent (80%) of the then outstanding Shares have been validly tendered and not withdrawn pursuant to the Offer. The obligation of the Company

to deliver the Purchaser Option Shares upon the exercise of the Purchaser Option is subject to the condition that no provision of any applicable Law and no judgment, injunction, order or decree shall prohibit the exercise of the Purchase Option or the delivery of the Purchaser Option Shares in respect of such exercise. The Purchaser Option may be exercised by Purchaser at any time during the five (5) Business Days after the Appointment Time or subsequent offer period at which the criteria for exercise of the Purchaser Option are satisfied. If Purchaser wishes to exercise the Purchaser Option, Purchaser shall give the Company written notice within such five (5) Business Day period specifying the number of Shares that Purchaser wishes to purchase pursuant to the Purchaser Option and a place and a time (which shall be at least two (2), but not more than five (5), Business Days after the date of delivery of such written notice) for the closing of such purchase. At such closing, (i) the purchase price in respect of such exercise of the Purchaser Option (which shall equal the product of (A) the number of Purchaser Option Shares and (B) the Offer Price) shall be paid to the Company in immediately available funds by wire transfer to an account designated by the Company, and (ii) the Company shall deliver to Purchaser a certificate or certificates representing the number of Shares so purchased. The Company agrees that it shall reserve (and maintain free from preemptive rights) sufficient authorized but unissued Shares (none of which shall be treasury shares) so that the Purchaser Option may be exercised without additional authorization of Shares (after giving effect to all other Company Stock Options, Company Warrants, convertible securities and other rights to purchase Shares).

ARTICLE II

CONVERSION OF SECURITIES

     Section 2.1. Conversion of Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of the holders of any securities of the Company or common stock, par value $0.01 per share, of Purchaser (the “ Purchaser Common Stock ”):

          (a) Purchaser Common Stock . Each issued and outstanding share of Purchaser Common Stock shall be converted into and become one fully paid and nonassessable share of common stock, par value $0.01 per share, of the Surviving Corporation.

          (b) Cancellation of Treasury Stock and Parent-Owned Stock . All Shares that are owned by the Company and any Shares owned by Parent, Purchaser or any of their respective subsidiaries or affiliates shall be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor.

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

          (d) Adjustment to Merger Consideration . The Merger Consideration shall be adjusted appropriately to reflect the effect of any stock split, reverse stock split, stock dividend (including any dividend or distribution of securities convertible into Shares), cash dividend (except for any cash dividend permitted by this Agreement), reorganization, recapitalization, reclassification, combination, exchange of shares or other like change with respect to the Shares occurring on or after the date hereof and prior to the Effective Time.

     Section 2.2. Exchange of Certificates .

          (a) Paying Agent . Purchaser shall designate a bank or trust company reasonably acceptable to the Company to act as the payment agent in connection with the Merger (the “ Paying Agent ”). Prior to the Effective Time, Parent or Purchaser shall deposit, or cause to be deposited, with the Paying Agent the aggregate Merger Consideration. Such funds shall be invested by the Paying Agent as directed by Parent, in its sole discretion, pending payment thereof by the Paying Agent to the holders of the Shares. Earnings from such investments shall be the sole and exclusive property of Parent, and no part of such earnings shall accrue to the benefit of holders of Shares.

          (b) Exchange Procedures . Promptly after the Effective Time, the Paying Agent shall mail to each holder of record of a certificate or certificates which immediately prior to the Effective Time represented outstanding Shares (the “ Certificates ”) and whose Shares were converted pursuant to Section 2.1 into the right to receive the Merger Consideration (i) a letter of transmittal (which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon delivery of the Certificates to the Paying Agent and shall be in such form and have such other provisions as Parent may reasonably specify) and (ii) instructions for effecting the surrender of the Certificates in exchange for payment of the Merger Consideration. Upon surrender of a Certificate for cancellation to the Paying Agent or to such other agent or agents as may be appointed by Parent, together with such letter of transmittal, duly executed, the holder of such Certificate shall be entitled to receive in exchange therefor the Merger Consideration for each Share formerly represented by such Certificate and the Certificate so surrendered shall forthwith be cancelled. If payment of the Merger Consideration is to be made to a Person other than the Person in whose name the surrendered Certificate is registered, it shall be a condition precedent of payment that (x) the Certificate so surrendered shall be properly endorsed or shall be otherwise in proper form for transfer and (y) the Person requesting such payment shall have paid any transfer and other similar taxes required by reason of the payment of the Merger Consideration to a Person other than the registered holder of the Certificate surrendered or shall have established to the satisfaction of the Surviving Corporation that such tax either has been paid or is not required to be paid. Until surrendered as contemplated by this Section 2.2, each Certificate shall be deemed at any time after the Effective Time to represent only the right to receive the Merger Consideration in cash as contemplated by this Section 2.2, without interest thereon.

          (c) Transfer Books; No Further Ownership Rights in Shares . At the Effective Time, the stock transfer books of the Company shall be closed and thereafter there shall be no further registration of transfers of Shares on the records of the Company. From and after the Effective Time, the holders of Certificates outstanding immediately prior to the Effective Time

shall cease to have any rights with respect to such Shares except as otherwise provided for herein or by applicable law. If, after the Effective Time, Certificates are presented to the Surviving Corporation for any reason, they shall be cancelled and exchanged as provided in this Article II.

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

          (e) Withholding Rights . Parent, Purchaser, the Surviving Corporation and the Paying Agent, as the case may be, shall be entitled to deduct and withhold from the relevant Merger Consideration or Offer Price otherwise payable pursuant to this Agreement to any holder of Shares such amounts that Parent, Purchaser, the Surviving Corporation or the Paying Agent is required to deduct and withhold with respect to the making of such payment under the Internal Revenue Code of 1986, as amended (the “ Code ”), the rules and regulations promulgated thereunder or any provision of applicable state, local or foreign law. To the extent that amounts are so withheld by Parent, Purchaser, the Surviving Corporation or the Paying Agent, such amounts shall be treated for all purposes of this Agreement as having been paid to the holder of Shares in respect of which such deduction and withholding was made by Parent, Purchaser, the Surviving Corporation or the Paying Agent.

          (f) Lost, Stolen or Destroyed Certificates . In the event that any Certificates shall have been lost, stolen or destroyed, the Paying 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, the Merger Consideration payable in respect thereof pursuant to Section 2.1 hereof; provided , however, that Parent may, in its discretion and as a condition precedent to the payment of such Merger Consideration, require the owners 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, the Surviving Corporation or the Paying Agent with respect to the Certificates alleged to have been lost, stolen or destroyed.

     Section 2.3. Dissenting Shares .

          (a) Notwithstanding anything in this Agreement to the contrary, Shares outstanding immediately prior to the Effective Time and held by a holder who is entitled to demand and properly demands appraisal of such Shares (“ Dissenting Shares ”) pursuant to, and who complies in all respects with, Section 262 of the DGCL (the “ Appraisal Rights ”) shall be entitled to payment of the fair value of such Dissenting Shares in accordance with the Appraisal Rights (and at the Effective Time, such Dissenting Shares shall no longer be outstanding and

shall automatically be cancelled and cease to exist, and such holder of Dissenting Shares shall cease to have any rights with respect thereto, except the right to receive the appraised value of such Dissenting Shares in accordance with the provisions of Section 262 of the DGCL); provided , however, that if any such holder shall fail to perfect or otherwise shall waive, withdraw or lose the right to dissent under the Appraisal Rights, then the right of such holder to be paid the fair value of such holder’s Dissenting Shares shall cease and such Dissenting Shares shall be deemed to have been converted as of the Effective Time into, and to have become exchangeable solely for the right to receive the Merger Consideration.

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

     Section 2.4. Effect of the Merger on Company Stock Options .

          (a) Each outstanding option to acquire Shares (each, a “ Company Stock Option ”), whether or not then vested or exercisable, that is outstanding immediately prior to the Effective Time shall, as of the Effective Time, become fully vested and shall be converted into the right to receive a payment in cash, payable in U.S. dollars and without interest, equal to the product of (i) the excess, if any, of (x) the Merger Consideration over (y) the exercise price per share for such Company Stock Option, multiplied by (ii) the number of Shares for which such Company Stock Option shall not theretofore have been exercised, whether or not then vested or exercisable. The Surviving Corporation shall pay the holders of Company Stock Options the cash payments described in this Section 2.4(a) on or as soon as reasonably practicable after the Closing Date, but in any event within three Business Days following the Closing Date.

          (b) The Surviving Corporation shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Section 2.4 to any holder of Company Stock Options such amounts as the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax Law, and the Surviving Corporation shall make any required filings with and payments to tax authorities relating to any such deduction or withholding. To the extent that amounts are so deducted and withheld by the Surviving Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Stock Options in respect of which such deduction and withholding was made by the Surviving Corporation.

          (c) Prior to the Effective Time, the Company shall take all actions necessary to terminate all Company Stock Plans, such termination to be effective at the Effective Time.

          (d) The Compensation Committee of the Board of Directors of the Company shall adopt such necessary resolutions with respect to Company Stock Options to implement the foregoing provisions of this Section 2.4.

     Section 2.5. Effect of the Merger on Company Warrants .

          (a) Prior to the record date for the Special Meeting, the Company shall give notice to the holders of the Company Warrants of the expected Effective Time in accordance with the notice provisions of the Company Warrants.

          (b) Each outstanding Company Warrant, whether or not then vested or exercisable, that is outstanding immediately prior to the Effective Time shall, as of the Effective Time, become fully vested and shall be converted into the right to receive a payment in cash, payable in U.S. dollars and without interest, equal to the product of (i) the excess, if any, of (x) the Merger Consideration over (y) the exercise price per share for such Company Warrant, multiplied by (ii) the number of Shares for which such Company Warrant shall not theretofore have been exercised, whether or not then vested or exercisable.

          (c) The Surviving Corporation shall be entitled to deduct and withhold from the amounts otherwise payable pursuant to this Section 2.5 to any holder of Company Warrants such amounts as the Surviving Corporation is required to deduct and withhold with respect to the making of such payment under the Code, or any provision of state, local or foreign tax Law, and the Surviving Corporation shall make any required filings with and payments to tax authorities relating to any such deduction or withholding. To the extent that amounts are so deducted and withheld by the Surviving Corporation, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the holder of the Company Warrants in respect of which such deduction and withholding was made by the Surviving Corporation.

          (d) The Compensation Committee of the Board of Directors of the Company shall adopt any necessary resolutions with respect to Company Warrants to implement the foregoing provisions of this Section 2.5.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except as disclosed (1) in reasonable detail in the Company SEC Documents filed after December 31, 2005, but before the date hereof (other than disclosures related to risk factors, environmental matters or forward-looking statements) or (2) in the disclosure letter delivered by the Company to Parent concurrent with the execution of this Agreement (the “ Company Disclosure Letter ”), it being agreed that disclosure of any item in any section of the Company Disclosure Letter shall also be deemed disclosure with respect to any other section only to the extent that such disclosure is reasonably apparent on it face, the Company represents and warrants to Parent and Purchaser as follows:

     Section 3.1. Qualification, Organization, Subsidiaries, etc .

          (a) Each of the Company and its Subsidiaries is validly existing and in good standing under the Laws of the jurisdiction in which it is organized. Each of the Company and its Subsidiaries has the corporate, partnership or similar power and authority, as applicable, to own, lease and operate its properties and to carry on its business as presently conducted.

          (b) Each of the Company and its Subsidiaries is duly licensed and qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such license or qualification, except where the failure to be so licensed, qualified or in good standing would not, individually or in the aggregate, have a Company Material Adverse Effect.

          (c) The Company has made available to Parent complete and correct copies of its Company Governing Documents and complete and correct copies of the certificates of incorporation and bylaws (or comparable organizational documents) of each of its Subsidiaries (the “ Subsidiary Governing Documents ”), in each case, as amended to the date of this Agreement. All such Company Governing Documents and Subsidiary Governing Documents are in full force and effect and neither the Company nor any of its Subsidiaries is in violation of any of their respective provisions in any material respect.

     Section 3.2. Capital Stock .

          (a) The authorized capital stock of the Company consists of 10,000,100 Shares and 100 shares of preferred stock, par value $0.01 per share (the “ Company Preferred Stock ”). As of February 15, 2007, (i) 3,773,727 Shares were issued and outstanding, (ii) 1,895,658 Shares were held in treasury, and (iii) 998,916 Shares were reserved for issuance under the Company Stock Plans (of which 575,316 Shares were reserved for issuance pursuant to the outstanding Company Stock Options) and (iv) 177,698 Shares were reserved for the issuance upon exercise of warrants (the “ Company Warrants ”). All outstanding Shares, and all Shares reserved for issuance as noted in clauses (iii) and (iv) of the foregoing sentence, when issued in accordance with the respective terms thereof, were or will be duly authorized, validly issued, fully paid and non-assessable and free of pre-emptive rights and issued in compliance with all applicable securities Laws. As of the date hereof, no Preferred Stock is issued and outstanding. Set forth in Section 3.2(a) of the Company Disclosure Letter is a correct and complete list, as of February 15, 2007, of all outstanding Company Stock Options and Company Warrants, all other rights to purchase or receive Shares and all rights to receive any compensation determined by reference to the price of Shares granted under the Company Stock Plans or otherwise, and, for each such Company Stock Option or other right, the number of Shares subject thereto, the terms of vesting, the grant and expiration dates, exercise price and the name of the holder thereof.

          (b) Except as set forth in subsection (a) above and in Schedule 3.2 of the Company Disclosure Letter, as of the date hereof, (i) the Company does not have any shares of its capital stock issued or outstanding other than Shares that have become outstanding after February 15, 2007 upon exercise of Company Stock Options or Company Warrants outstanding as of such date and (ii) there are no outstanding subscriptions, options, warrants, calls, convertible securities or other similar rights, agreements or commitments relating to the issuance

of capital stock or other equity interests to which the Company or any of its Subsidiaries is a party obligating the Company or any of its Subsidiaries to (A) issue, transfer or sell any shares of capital stock or other equity interests of the Company or any of its Subsidiaries or securities convertible into or exchangeable for such shares or equity interests; (B) grant, extend or enter into any such subscription, option, warrant, call, convertible securities or other similar right, agreement or arrangement; (C) redeem or otherwise acquire any such shares of capital stock or other equity interests; or (D) provide a material amount of funds to, or make any material investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary.

          (c) Except for awards to acquire Shares under the Company Stock Plans and the Company Warrants, neither the Company nor any of its Subsidiaries has outstanding bonds, debentures, notes or other obligations, the holders of which have the right to vote (or which bonds, debentures, notes or other obligations are convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter.

          (d) Except as set forth in Section 3.2 of the Company Disclosure Letter, there are no stockholder agreements, voting trusts or other agreements or understandings to which the Company or any of its Subsidiaries is a party or to the Knowledge of the Company written agreements between holders of equity securities of the Company with respect to the voting of the capital stock or other equity interest of the Company or any of its Subsidiaries.

          (e) Except as set forth in Section 3.2 of the Company Disclosure Letter, no holder of Shares has any right to have such Shares or the offering or sale thereof registered under or pursuant to any securities Laws by the Company.

          (f) Other than grants of Company Stock Options, no grants or awards having any rights to or relationship with Shares, or the price thereof, have been made under the Company Stock Plans. With respect to the Company Stock Options granted within five years of the date hereof, (i) each such Company Stock Option intended to qualify as an “incentive stock option” under Section 422 of the Code so qualifies and is identified as so in Section 3.2(a) of the Company Disclosure Letter, (ii) each grant of such a Company Stock Option was duly authorized no later than the date on which the grant of such Company Stock Option was by its terms to be effective (the “ Grant Date ”) by all necessary corporate action, including, as applicable, approval by the board of directors of the Company, or a committee thereof, or a duly authorized delegate thereof, and any required approval by the stockholders of the Company by the necessary number of votes or written consents, and the award agreement governing such grant, if any, was duly executed and delivered by each party thereto within a reasonable time following the Grant Date, (iii) each such grant was made, in all material respects, in accordance with the terms of the applicable Company Stock Plan, the Exchange Act and all other applicable Law, including the rules of Nasdaq, (iv) the per share exercise price of each Company Stock Option was not less than the fair market value of a Share on the applicable Grant Date, (v) each such grant was properly accounted for in all material respects in accordance with GAAP in the financial statements (including the related notes) of the Company and disclosed in the Company SEC Documents (as defined below) in accordance with the Exchange Act and all other applicable Laws and (vi) since January 1, 2006, no modifications have been made to any such grants after the Grant Date (other than as set forth in Section 3.2 of the Company Disclosure

Schedule). There is and has been no Company policy or practice to grant and, to the Company’s Knowledge, the Company has not granted, Company Stock Options prior to, or otherwise coordinate the grant of Company Stock Options with, the release or other public announcement of material information regarding the Company or any of its Subsidiaries or their financial results or prospects.

          (g) There is no rights plan or other anti-takeover agreement obligating the Company or any Subsidiary of the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of Company capital stock or obligating the Company or any Subsidiary of the Company to grant, extend or enter into any such agreement or commitment.

     Section 3.3. Subsidiaries . Section 3.3 of the Company Disclosure Letter sets forth a complete and correct list of each of the Company’s direct and indirect Subsidiaries. Section 3.3 of the Company Disclosure Letter also sets forth the jurisdiction of organization and percentage of outstanding equity interests (including partnership interests and limited liability company interests) owned by the Company or its Subsidiaries. All equity interests (including partnership interests and limited liability company interests) of the Company’s Subsidiaries held by the Company or by any other Subsidiary (i) have been duly and validly authorized, (ii) are validly issued, fully paid and non-assessable and (iii) either (x) in the case of the Company and Subsidiaries organized in the United States, have been issued in compliance with the material provisions of the Securities Act and (y) in the case of Subsidiaries organized outside the United States, have been issued in compliance with all other applicable securities Laws, except where failure to do so would not, individually or in the aggregate, have a Company Material Adverse Effect. All such equity interests owned by the Company or its Subsidiaries are free and clear of any Liens or limitation in voting rights, other than restrictions imposed by applicable Law. Except as set forth in Section 3.3 of the Company Disclosure Letter, the Company and its Subsidiaries do not own, directly or indirectly, any capital stock, voting securities or equity interests in any Person other than its Subsidiaries.

     Section 3.4. Corporate Authority Relative to This Agreement; No Violation .

          (a) The Company has the requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly and validly authorized by the Company Board of Directors and, except for (i) in the case of the Merger, approval of this Agreement by the holders of sixty-six and two-thirds percent (66 2/3%) of all of the Shares entitled to be cast, if required by applicable law and (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, no other corporate proceedings on the part of the Company are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by the Company and, assuming this Agreement constitutes the valid and binding agreement of Parent and Purchaser, constitutes the valid and binding agreement of the Company, enforceable against the Company in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally, general equitable principles (whether considered in a proceeding in equity or at Law).

          (b) Other than in connection with or in compliance with (i) the filing with the Secretary of State of the State of Delaware of the Certificate of Merger and (ii) the approvals referenced in Annex I (collectively, the “ Company Approvals ”), no authorization, consent or approval of, or filing with, any United States or foreign governmental or regulatory agency, commission, court, body, entity or authority (each, a “ Governmental Entity ”) is necessary, under applicable Law, for the consummation by the Company of the transactions contemplated hereby, except for such authorizations, consents, approvals, permits, actions, notifications or filings that, if not obtained or made, would not have a Company Material Adverse Effect.

          (c) The Company Board of Directors has unanimously approved this Agreement and the transactions contemplated hereby (including the Offer and the Merger), which approval, to the extent applicable, constituted approval under the provisions of Section 203 of the DGCL as a result of which this Agreement and the Transactions are not and will not be subject to the restrictions on “business combinations” under, the Section 203 of the DGCL.

          (d) Except as described in Section 3.4 of the Company Disclosure Letter, the execution and delivery by the Company of this Agreement does not, and the consummation of the transactions contemplated hereby and compliance with the provisions hereof by the Company will not, (i) result in any violation of, or default (with or without notice or lapse of time, or both) under, require consent under, or give rise to a right of termination, cancellation or acceleration of any obligation or to the loss of any benefit under any loan, guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture, lease, agreement, contract, instrument, permit, Company Permit, concession, franchise, right or license binding upon the Company or any of its Subsidiaries or result in the creation of any liens, claims, mortgages, encumbrances, pledges, security interests, equities or charges of any kind (each, a “ Lien ”) upon any of the properties or assets of the Company or any of its Subsidiaries; (ii) conflict with or result in any violation of any provision of the certificate or articles of incorporation or bylaws or other equivalent organizational document of the Company or any of its Subsidiaries; or (iii) assuming that the consents and approvals referred to in Section 3.4 of the Company Disclosure Letter are duly obtained, conflict with or violate any applicable Laws, other than, in the case of clauses (i) and (iii), as would not have a Company Material Adverse Effect.

          (e) The affirmative vote (in person or by proxy) of the holders of sixty-six and two-thirds percent (66 2/3%) of the outstanding Shares in favor of the adoption of this Agreement is the only vote or approval of the holders of any class or series of capital stock of the Company or any of its Subsidiaries which is necessary to adopt this Agreement and approve the Transactions.

     Section 3.5. Reports and Financial Statements .

          (a) The Company has filed or otherwise transmitted all forms, documents, certifications, statements and reports, including any amendments thereto (the “ Company SEC Documents ”) required to be filed prior to the date hereof by it with the SEC since January 1, 2005. As of their respective dates, or, if amended, as of the date of the last such amendment prior to the date hereof, the Company SEC Documents complied as to form, in all material

respects, with the requirements of the Securities Act of 1933, as amended (the “ Securities Act ”), and the Exchange Act, as the case may be, and the applicable rules and regulations promulgated thereunder. None of the Company SEC Documents so filed contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary in order make the statements therein, in the light of the circumstances under which they were made, not misleading. To the Knowledge of the Company, none of the Company SEC Documents is the subject of ongoing SEC review, investigation or enforcement action. None of the Company’s Subsidiaries is required to file periodic reports with the SEC pursuant to any contractual commitment or to the Exchange Act.

          (b) The consolidated financial statements (including any related notes thereto) of the Company included in the Company SEC Documents fairly present in all material respects the consolidated financial position of the Company and its Subsidiaries, as of the date thereof, and the consolidated statements of operations, cash flows and changes in stockholders’ equity for the respective periods indicated (subject, in the case of the unaudited statements, to normal year-end audit adjustments and to any other adjustments described therein, including the absence of notes thereto, none of which has been or will be, individually or in the aggregate, material to the Company and its Subsidiaries taken as a whole) and have been prepared in accordance with United States generally accepted accounting principles (“ GAAP ”) (except, in the case of the unaudited statements or foreign Subsidiaries, as permitted by the SEC, which have been prepared in accordance with GAAP of their respective jurisdictions) applied on a consistent basis during the periods involved (except as may be indicated therein or in the notes thereto).

     Section 3.6. Internal Controls and Procedures .

          (a) The Company has established and maintains disclosure controls and procedures and internal control over financial reporting (as such terms are defined in paragraphs (e) and (f), respectively, of Rule 13a-15 under the Exchange Act) as required by Rule 13a-15 under the Exchange Act. The Company’s disclosure controls and procedures are reasonably designed to ensure that material information required to be disclosed by the Company in the reports that it files under the Exchange Act are communicated to the management of the Company as appropriate to allow timely decisions regarding required disclosure and to make the certifications required pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002, as amended, and the rules and regulations promulgated thereunder (the “ Sarbanes-Oxley Act ”). The Company’s principal executive officer and its principal financial officer have disclosed, based on their most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Board of Directors of the Company (x) all significant deficiencies in the design or operation of internal controls which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information and (y) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting. The principal executive officer and the principal financial officer of the Company have made all certifications required by the Sarbanes-Oxley Act, the Exchange Act and any related rules and regulations promulgated by the SEC with respect to the Company SEC Documents, and the statements contained in such certifications are complete and correct.

          (b) The Company has maintained whistleblower procedures that satisfy and comply with the requirements of the Sarbanes-Oxley Act and all other applicable Laws. Neither the Company nor any of its Subsidiaries has received or otherwise had or obtained Knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any of its Subsidiaries or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any of its Subsidiaries has engaged in questionable accounting or auditing practices. To the Knowledge of the Company, no attorney representing the Company or any of its Subsidiaries, whether or not employed by the Company or any of its Subsidiaries, has reported evidence of a material violation of federal securities Laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the board of directors of the Company or any committee thereof or to any director or officer of the Company.

          (c) The Company has adopted a code of ethics, as defined by Item 406(b) of Regulation S-K, for senior financial officers, applicable to its principal financial officer, comptroller or principal accounting officer, or persons performing similar functions. The Company has promptly disclosed any change in or waiver of the Company’s code of ethics with respect to any such persons, as required by Section 406(b) of the Sarbanes-Oxley Act. To the Knowledge of the Company, there have been no violations of provisions of the Company’s code of ethics by, or any waivers thereof for the benefit of, any such persons.

     Section 3.7. No Undisclosed Liabilities .

          (a) Except (i) as reflected or reserved against in the Company’s consolidated balance sheets (or the notes thereto) included in the Company SEC Documents; (ii) for the Transactions contemplated by this Agreement; and (iii) for liabilities and obligations incurred in the ordinary course of business since September 30, 2006, the Company has no liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, whether known or unknown and whether due or to become due that, individually or in the aggregate, have had or would have a Company Material Adverse Effect.

          (b) Except as disclosed in Section 3.7(b) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is a party to, or has any commitment to become a party to, any joint venture, off-balance sheet partnership or any similar Contract (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 unconsolidated Affiliate, including any structured finance, special purpose or limited purpose entity or Person, on the other hand or any “off-balance sheet arrangements” (as defined in Item 303(a) of Regulation S-K of the SEC)).

     Section 3.8. Compliance with Law; Permits .

          (a) Except for any non-compliance, default or violation that would not have a Company Material Adverse Effect, the Company and each of its Subsidiaries, since December 31, 2004, has been in compliance with and is not in default under or in violation of any applicable law, rule, regulation, judgment, order, decree or other legal requirement

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(including common law) (collectively, “ Laws ” and each, a “ Law ”) and any Company Permits, applicable to the Company or any of its Subsidiaries, any of their properties or other assets or any of their businesses or operations. Since December 31, 2004, neither the Company nor any of its Subsidiaries has received written notice to the effect that a Governmental Entity claimed or alleged that the Company or any of its Subsidiaries was not in compliance in any material respect with all Laws applicable to the Company or any of its Subsidiaries, any of their properties or other assets or any of their businesses or operations. No representation or warranty is made in this Section 3.8 with respect to (a) compliance with the federal securities laws to the extent such compliance is covered by Sections 3.5, 3.6, 3.14 and 3.23 hereof, representations and warranties with respect to which are covered in such sections to such extent, (b) applicable laws with respect to Taxes, which are covered by Section 3.15 hereof, (c) Environmental Laws, which are covered by Section 3.9 hereof or (d) Company Benefit Plan matters, which are covered by Section 3.10 hereof.

          (b) The Company and its Subsidiaries are in possession of all authorizations, licenses, permits, exceptions, consents, approvals and franchises of any Governmental Entity necessary for the Company and its Subsidiaries to carry on their businesses as they are now being conducted (the “ Company Permits ”), except where the failure to have any of the Company Permits would not, individually or in the aggregate, have a Company Material Adverse Effect.

     Section 3.9. Environmental Laws and Regulations .

          (a) Except as would not reasonably be expected to result in a material liability under Environmental Law or as set forth in Section 3.9 of the Company Disclosure Letter, (i) the Company and each of its Subsidiaries are and have been in compliance since February 13, 2002 with all applicable Environmental Laws; (ii) there has been no release of any Hazardous Substance by the Company or any of its Subsidiaries at any properties, while owned or operated by the Company or any Subsidiary, in any manner that would reasonably be expected to give rise to any remedial obligation or corrective action requirement under applicable Environmental Laws; (iii) neither the Company nor any of its Subsidiaries has received in writing any notices, demand letters or requests for information from any federal, state, local or foreign or provincial Governmental Entity asserting that the Company or any of its Subsidiaries is in violation of, or liable under, any Environmental Law; (iv) to the Company’s Knowledge, no Hazardous Substance generated by the Company or any Subsidiary has been disposed of, or released at or transported to any other property in violation of any applicable Environmental Law, or in a manner giving rise to any liability of the Company or any Subsidiary under Environmental Law; (v) neither the Company nor its Subsidiaries are subject to, or, to the Knowledge of the Company, have been threatened with any suit, preceding, settlement, court order, administrative order, judgment or written claim arising under any Environmental Law relating to environmental liabilities; (vi) to the Company’s Knowledge, no environmental conditions exist with respect to the operations of the business by the Company or Subsidiaries or real property currently or formerly owned or leased by the Company or its Subsidiaries that would reasonably be expected to result in the Company or its Subsidiaries incurring material liabilities under Environmental Law; and (vii) to the Company’s Knowledge, the Company has made available for inspection copies of all environmental reports, assessments, such as Phase I or Phase II assessments, risk assessments or other sampling reports, and material correspondence related to environmental

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claims or matters involving the Company or any Subsidiaries in the last five years in the possession, custody, or control of the Company or its Subsidiaries.

          (b) The representations and warranties in this Section 3.9 are the exclusive representations and warranties in this Agreement with respect to environmental matters, including without limitation, Hazardous Substances and Environmental Laws.

     Section 3.10. Employee Benefit Plans .

          (a) Section 3.10(a) of the Company Disclosure Letter lists all Company Benefit Plans and Company Foreign Plans. “ Company Benefit Plans ” means all compensation or employee benefit plans, programs, policies, agreements or other arrangements, whether or not “employee benefit plans” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”), whether or not subject to ERISA), providing cash- or equity-based compensation or incentives, health, medical, dental, disability, accident or life insurance benefits or vacation, severance, change in control, retention, retirement, pension or savings benefits, that are sponsored, maintained or contributed to by the Company or any of its Subsidiaries, affiliates or any trade or business (whether or not incorporated) which is under common control, or which is treated as a single employer with any of them under Section 414(b), (c), (m) or (o) of the Code (“ ERISA Affiliate ”) for the benefit of employees, directors or consultants employed or formerly employed by, or providing services to, the Company or its Subsidiaries in the United States and all employment or related agreements providing compensation, vacation, severance, change in control, retention or other benefits to any employee or consultant employed or formerly employed by, or providing services to, the Company or its Subsidiaries in the United States.

          (b) No material action, dispute, suit, claim, arbitration, or legal, administrative or other proceeding or governmental action (other than claims for benefits in the ordinary course) is pending or, to the Knowledge of the Company, threatened with respect to any Company Benefit Plan (other than a “multiemployer plan” (within the meaning of Section 4001(a)(3) of ERISA) (a “ Multiemployer Plan ”)) by any current or former employee, officer or director of the Company or any of its Subsidiaries.

          (c) Except as set forth in Section 3.10(c) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries or ERISA Affiliates has any obligation or liability, contingent or otherwise, with respect to any Multiemployer Plan or any plan subject to Title IV of ERISA (“ Title IV Plan ”). Furthermore, except as set forth in Section 3.10(c) of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries or ERISA Affiliates has terminated any Title IV Plan or incurred any outstanding liability under Section 4062 of ERISA within the past six (6) years.

          (d) Correct and complete copies of the following documents, with respect to each of the Company Benefit Plans (other than a Multiemployer Plan), have been made available or delivered to Purchaser, to the extent applicable: (i) any plans, all amendments thereto and related trust documents, and amendments thereto; (ii) the most recent Form 5500 and all schedules thereto and the most recent actuarial report, if any; (iii) the most recent IRS

determination letter and (iv) summary plan descriptions and all summaries of material modifications.

          (e) Each Company Benefit Plan (other than a Multiemployer Plan) has been established and administered in compliance with its terms and in compliance with ERISA and the Code to the extent applicable thereto, except for such non-compliance which would not have a Company Material Adverse Effect. Any Company Benefit Plan (other than a Multiemployer Plan) intended to be qualified under Section 401(a) of the Code has received a favorable determination letter from the United States Internal Revenue Service that has not been revoked and to the Knowledge of the Company, no fact or event has occurred since the date of such determination letter or letters from the Internal Revenue Service that would reasonably be expected to affect adversely the qualified status of any such Company Benefit Plan.

          (f) All contributions (including all employer contributions and employee salary reduction contributions) required to be made to any Company Benefit Plan or related trust by applicable Law or by any plan document or other contractual undertaking, and all premiums due or payable with respect to insurance policies funding any Company Benefit Plan, for any period through the date hereof have been timely made or paid in full or, to the extent not required to be made or paid on or before the date hereof, have been fully reflected on the financial statements included in the Company SEC Documents.

          (g) Except as set forth in Section 3.10(g) of the Company Disclosure Letter, the consummation of the transactions contemplated by this Agreement will not, either alone or in combination with another event, (i) entitle any current or former employee, consultant or officer of the Company or any of its Subsidiaries to severance pay, retention bonuses, parachute payments, non-competition payments, unemployment compensation or any other payment, except as required by applicable Law; (ii) accelerate the time of payment, vesting, or funding of benefits, or increase the amount of compensation due any such current or former employee, consultant or officer, except as expressly provided in this Agreement; or (iii) result in any forgiveness of indebtedness or obligation to fund benefits with respect to any such employee, director or officer. Except as set forth in Section 3.10(g) of the Company Disclosure Letter, no payments made a result of the transactions contemplated by this Agreement shall constitute “excess parachute payments” within the meaning of Section 280G of the Code.

          (h) Except as would not have a Company Material Adverse Effect, all Company Foreign Plans (i) have been maintained in accordance with all applicable requirements; (ii) if they are intended to qualify for special Tax treatment meet all necessary requirements for such treatment; and (iii) if they are intended to be funded and/or book-reserved are funded and/or book-reserved, as appropriate, based upon reasonable actuarial assumptions and in accordance with applicable Law.

          (i) Except as set forth in Section 3.10(i) of the Company Disclosure Letter, none of the Company Benefit Plans provide for post-employment life or health insurance, benefits or coverage for any participant or any beneficiary of a participant, except as may be required under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

     Section 3.11. Interested Party Transactions . Except for employment Contracts filed with or incorporated in a Company SEC Document or Company Benefit Plans, Section 3.11 of the Company Disclosure Letter sets forth a correct and complete list of the contracts or arrangements that are in effect as of the date of this Agreement under which the Company has any existing or future material liabilities between the Company or any of its Subsidiaries, on the one hand, and, on the other hand, any (a) present officer or director of either the Company or any of its Subsidiaries or any person that has served as such an officer or director or any of such officer’s or director’s immediate family members or (b) record or beneficial owner of more than 5% of the Shares as of the date hereof (each, an “ Affiliate Transaction ”). The Company has provided to Parent correct and complete copies of each Contract or other relevant documentation (including any amendments or modifications thereto) available as of the date hereof providing for each Affiliate Transaction.

     Section 3.12. Absence of Certain Changes or Events . Since September 30, 2006, except as otherwise required or contemplated by this Agreement, the business of the Company and its Subsidiaries has been conducted, in all material respects, in the ordinary course of business and there have not been any facts, circumstances, events, changes, effects or occurrences that, would not, individually or in the aggregate, have a Company Material Adverse Effect.

     Section 3.13. Investigations; Litigation . Except as disclosed in Section 3.13 of the Company Disclosure Letter, there are no (a) investigations, administrative, arbitral, legal or other proceedings pending (or, to the Knowledge of the Company, threatened) by any Governmental Entity with respect to the Company or any of its Subsidiaries or (b) actions, suits or proceedings pending against the Company or any of its Subsidiaries, or any of their respective properties before, and there are no orders, injunctions, judgments, rulings or decrees of, any Governmental Entity against the Company or any of its Subsidiaries, in each case of clause (a) or (b), other than that which would not reasonably be expected to be material to the Company and its Subsidiaries, taken as a whole. Except as disclosed in Section 3.13 of the Company Disclosure Letter, neither the Company nor any of its Subsidiaries is subject to any written settlement or compromise of a legal proceeding that is material to the Company and its Subsidiaries, taken as a whole.

     Section 3.14. Information in the Offer Documents and the Schedule 14D-9 . The information supplied by the Company expressly for inclusion in the Offer Documents will not, when filed with the SEC, when distributed or disseminated to the Company’s stockholders or at the expiration of the Offer, 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 made therein, in the light of the circumstances under which they were made, not misleading. The Schedule 14D-9 will comply as to form in all material respects with the provisions of Rule 14d-9 of the Exchange Act and any other applicable federal securities laws and will not when filed with the SEC or distributed or disseminated to the Company’s stockholders, 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 made therein, in the light of the circumstances under which they were made, not misleading, except that the Company makes no representation or warranty with respect to statements made in the Schedule 14D-9 based on information furnished by Parent or Purchaser expressly for inclusion therein.

     Section 3.15. Tax Matters .

          (a) Except as would not otherwise be material, (i) each of the Company and its Subsidiaries has timely filed or caused to be filed (taking into account any extension of time within which to file) all Tax Returns required to be filed by any of them and all such Tax Returns are true, correct and complete; (ii) all Taxes required to have been paid by, or on behalf of, the Company and its Subsidiaries have been paid; (iii) the unpaid Taxes of the Company did not, as of the date of the most recent financial statements contained in the Company SEC Documents filed prior to the date hereof, exceed the reserve for Taxes (excluding any reserve for deferred Taxes established to reflect timing differences between book and Tax income) set forth in the most recent balance sheet contained therein, unless such Taxes are being contested in good faith; (iv) there are no audits, examinations, investigations or other proceedings pending or threatened in writing in respect of Taxes or Tax matters of the Company or any of its Subsidiaries; (v) there are no Liens for Taxes on any of the assets of the Company or any of its Subsidiaries other than statutory Liens for Taxes not yet due and payable or Liens for Taxes that are being contested in good faith and for which adequate reserves have been established on the financial statements of the contained in the Company SEC Documents in accordance with GAAP; and (vi) neither the Company nor any of its Subsidiaries has waived any statute of limitations with respect to Taxes or agreed to an extension of time with respect to a Tax assessment or deficiency.

          (b) Except as would not otherwise material, (i) the Company and its Subsidiaries have withheld and timely paid all amounts of Taxes required to have been withheld and paid over by them and have complied in all material respects with all applicable laws relating to the withholding and payment of Taxes, (ii) neither the Company nor any of its Subsidiaries is a party to any tax sharing, allocation, indemnity or similar agreement or arrangement (whether or not written) pursuant to which it will have any obligation to make any payments after the Closing, and (iii) neither the Company nor any of its Subsidiaries has been a member of an affiliated group (within the meaning of Section 1504 of the Code or any similar provision of law) other than group of which the Company is the common parent. The Company is not, and has not been at any time during the past five years, a “United States real property holding corporation” within the meaning of Section 897(c) of the Code.

          (c) As used in this Agreement, (i) “ Tax ” or “ Taxes ” means (A) any and all federal, state, local or foreign or provincial taxes, imposts, levies or other assessments, including all net income, gross receipts, capital, sales, use, ad valorem, value added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property and estimated taxes, customs duties, fees, assessments and charges of any kind whatsoever, including any and all interest, penalties, fines, additions to tax or additional amounts imposed by any Governmental Entity in connection with respect thereto, and (B) any liability in respect of any item described in clause (A) payable by reason of Treasury Regulation Section 1.1502-6(a) (or any analogous or similar provision under law) or otherwise, and (ii) “ Tax Return ” means any return, report or similar filing (including any attached schedules, supplements and additional or supporting material) filed or required to be filed with respect to Taxes, including any information return, claim for refund, amended return or declaration of estimated Taxes (and including any amendments with respect thereto).

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     Section 3.16. Labor Matters . Except for such matters which would not have a Company Material Adverse Effect, neither the Company nor any of its Subsidiaries has received written notice during the past two years of the intent of any Governmental Entity responsible for the enforcement of labor, employment, occupational health and safety or workplace safety and insurance/workers compensation Laws to conduct an investigation of the Company or any of its Subsidiaries and, to the Knowledge of the Company, no such investigation is in progress. Except for such matters that would not have a Company Material Adverse Effect, (a) there are no (and have not been during the two year period preceding the date hereof) strikes or lockouts with respect to any employees of the Company or any of its Subsidiaries; (b) there is no unfair labor practice, labor dispute (other than routine individual grievances) or labor arbitration proceeding pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries; (c) there is no slowdown or work stoppage in effect or, to the Knowledge of the Company, threatened with respect to employees; and (d) there has been no “mass layoff” or “plant closing” as defined in the Worker Adjustment and Retraining Notification Act (“ WARN ”) with respect to the Company or any of its Subsidiaries within the six (6) months prior to Closing.

     Section 3.17. Intellectual Property . Section 3.17 of the Company Disclosure Schedule sets forth, but only to the extent material to the Company and its Subsidiaries taken as a whole, all issued or pending patents, registered or pending trademarks, trade names, service marks, registered copyrights and internet domain names owned or applied for by the Company or any of its Subsidiaries. Except as would not have a Company Material Adverse Effect: (i) except as set forth in Section 3.17 of the Company Disclosure Letter either the Company or a Subsidiary of the Company has the exclusive right, title and interest free and clear of any Liens to all material trademarks, trade names, service marks, service names, mark registrations, logos, assumed names, registered and unregistered copyrights, patents or applications and registrations (collectively, the “ Intellectual Property ”) owned or claimed to be owned by the Company or its Subsidiaries (the “ Company Intellectual Property ”), and has rights under valid and enforceable license agreements to use Intellectual Property licensed from third parties (“ Licensed Intellectual Property ”), and (ii) to the Knowledge of the Company, the operation of the Company’s and its Subsidiaries’ businesses as currently conducted do not infringe, constitute an unauthorized use of or misappropriate any Intellectual Property of any third Person. To the Knowledge of the Company, the Company Intellectual Property is valid and enforceable. Except as set forth in Section 3.17 of the Company Disclosure Letter, (i) in the last two years there have been no written claims or legal proceedings or, to the Knowledge of the Company, threatened claims by any person alleging infringement by the Company or any of its Subsidiaries with respect to any Company Intellectual Property or Licensed Intellectual Property; (ii) in the last two years neither the Company nor any of its Subsidiaries has made any written claim to a third Person asserting a violation or infringement by any third Person of its rights to or in connection with the Company Intellectual Property or the Licensed Intellectual Property; (iii) to the Knowledge of the Company, no person is infringing any material Company Intellectual Property; and (iv) none of the Company or its Subsidiaries is a party to any existing written agreement pursuant to which the Company or any Subsidiary has licensed to any unaffiliated third Person the use of any trademark listed on Schedule 3.17 of the Company Disclosure Agreement.

     Section 3.18. Property . Section 3.18 of the Company Disclosure Letter sets forth all material real property owned by the Company and its Subsidiaries and all material real property

leases to which the Company or any of its Subsidiaries is a party or by which any of them are bound. The Company or a Subsidiary of the Company owns and has good and indefeasible title to all of its owned real property and has valid leasehold interests in all of its leased properties and has good title to all of its material personal property, sufficient to conduct their respective businesses as currently conducted, free and clear of all Liens (except in all cases for Liens permissible under any applicable loan agreements and indentures set forth in Section 3.21 of the Company Disclosure Letter and for title exceptions, defects, encumbrances, liens, charges, restrictions, restrictive covenants and other matters, whether or not of record, which in the aggregate do not materially affect the continued use of the property for the purposes for which the property is currently being used).

     Section 3.19. Opinion of Financial Advisor . (i) The Board of Directors of the Company has received the opinion (the “ Fairness Opinion ”) of Sagent Advisors Inc. (the “ Company Financial Advisor ”), to the effect that, as of the date hereof, the consideration to be received in the Offer and the Merger by the holders of the Shares is fair to such stockholders from a financial point of view, and such Fairness Opinion has not been modified or withdrawn, and (ii) the Company has been authorized by Sagent Advisors Inc. to include the Fairness Opinion and/or references thereto in the Offer Documents, the Schedule 14D-9 and any Proxy Statement, subject to prior review and consent by Sagent Advisors Inc.

     Section 3.20. Insurance . As of the date hereof, the Company and each of its Subsidiaries are insured against such losses and risks and in such amounts as are customary in the business in which they are engaged. Section 3.20 of the Company Disclosure Letter sets forth a correct and complete list of all material policies (including information on the premiums payable in connection therewith and the scope and amount of the coverage provided thereunder) maintained by the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries is in material breach or default of any such insurance policies, and neither the Company nor any of its Subsidiaries have taken any action or failed to take any action that, with notice or lapse of time, would constitute such a material breach or default, or permit termination or modification of such policies. No written notice of cancellation or termination has been received with respect to any such policy. The consummation of the transactions contemplated by this Agreement will not, in and of itself, cause the revocation, cancellation or termination of any insurance policy.

     Section 3.21. Material Contracts .

          (a) Except for this Agreement, the Company Benefit Plans or Contracts filed by the Company with the SEC as exhibits to its Annual Report on Form 10-K for the fiscal year ended December 31, 2005 or to subsequent Exchange Act reports filed prior to the date hereof, Section 3.21 of the Company Disclosure Letter sets forth all of the following Contracts to which the Company or any of its Subsidiaries is a party or by which it is bound (the “ Company Material Contracts ”):

               (i) Contracts that are a “material contract” (as such term is defined in Item 601(b)(10) of Regulation S-K of the SEC) to the Company;

               (ii) Contracts that contain any provision that prior to or following the Effective Time would by its terms materially restrict or alter the conduct of business of, or purport to materially restrict or alter the conduct of business of the Company or any of its Subsidiaries, Parent or, to the Company’s Knowledge, any Affiliate of Parent (other than any director, officer or employee of any of the Company or any of its Subsidiaries);

               (iii) Contracts for partnerships, joint ventures or strategic alliances;

               (iv) Contracts in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) per year (A) for the acquisition, sale or lease of material properties or assets (by merger, purchase or sale of stock or assets or otherwise) entered into since January 1, 2004, other than in the ordinary course of business, (B) that grant to any Person any preferential rights to purchase any of its properties or assets or (C) relating to the acquisition by the Company or any of its Subsidiaries of any operating business or the capital stock of any other Person;

               (v) Loan or credit agreements, mortgages, indentures, notes or other Contracts or instruments evidencing indebtedness for borrowed money by the Company or any of its Subsidiaries or any Contract or instrument pursuant to which indebtedness for borrowed money may be incurred or is guaranteed by the Company or any of its Subsidiaries;

               (vi) Contracts relating to the license of material Company Intellectual Property to a third Person;

               (vii) Mortgages, pledges, security agreements, deeds of trust or other Contracts granting a Lien on any material real property or any material property or assets of the Company or any of its Subsidiaries;

               (viii) Company real property leases and all leases related to any material tangible personal property of the Company or any of its Subsidiaries;

               (ix) Contracts, purchase agreements or other similar documents that obligate the Company or any of its Subsidiaries in an amount in excess of Two Hundred Fifty Thousand Dollars ($250,000) per year or for which another Person is obligated to the Company or any of its Subsidiaries in excess of such amount;

               (x) Collective bargaining agreements or other Contracts with any labor union and employment Contracts (other than for employment at-will or similar arrangements) that are not terminable by the Company without notice and without cost to the Company;

               (xi) Contracts for indemnification or guarantees that are or could be material to the Company and its Subsidiaries, taken as a whole (in each case, under which the Company or any of its Subsidiaries has continuing obligations as of the date hereof);

               (xii) Contracts that give any guarantee or warranty of products or services of the Company or its Subsidiaries, other than any warranty or guarantee implied by Law or consistent with those offered by the Company in the ordinary course of business; and

               (xiii) Contracts that (A) grant any exclusive distribution agreement or supply agreement or other exclusive rights, (B) grant any “most favored nation” rights, rights of first refusal, rights of first negotiation or similar rights with respect to any product, or (C) contain any provision that requires the purchase of all or a given portion of the Company’s or any of its Subsidiaries’ requirements from a given third party, or any similar provision.

          (b) (i) The Company has heretofore made available to Parent correct and complete copies of each Company Material Contract in existence as of the date hereof, together with any and all amendments and supplements thereto and material “side letters” and similar documentation relating thereto; (ii) each Company Material Contract is valid, binding and in full force and effect and is enforceable in all material respects in accordance with its terms by the Company and its Subsidiaries party thereto; and (iii) neither the Company nor any of its Subsidiaries is in default under, has received written notice of, or otherwise has Knowledge of, the existence of any event or condition which constitutes, or, after notice or lapse of time or both, will constitute, a default on the part of the Company or any of its Subsidiaries under any such Company Material Contract, except where such defaults would not, individually or in the aggregate, have a Company Material Adverse Effect.

     Section 3.22. Finders or Brokers .

          (a) Except for the Company Financial Advisor, neither the Company nor any of its Subsidiaries has engaged any investment banker, broker or finder in connection with the transactions contemplated by this Agreement who might be entitled to any fee or any commission in connection with or upon consummation of the Offer or the Merger based upon arrangements made by or on behalf of the Company. The Company has heretofore delivered to Parent a correct and complete copy of the Company’s engagement letter with the Company Financial Advisor, which letter describes all fees payable to the Company Financial Advisor in connection with the transactions contemplated hereby, all agreements under which any such fees or any expenses are payable and all indemnification and other agreements related to the engagement of the Company Financial Advisor (the “ Engagement Letter ”).

     Section 3.23. Foreign Corrupt Practices Act; Certain Business Practices . Neither the Company nor any of its Subsidiaries nor, to the Company’s Knowledge, any director, officer, agent, employee or other Person acting on behalf of the Company or any of its Subsidiaries, has, in any material respect, (i) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended, (ii) used any corporate or other funds for unlawful contributions, payments, gifts, or entertainment, or made any unlawful expenditures relating to political activity to foreign or domestic government officials, employees or others or established or maintained any unlawful or unrecorded funds in violation of Section 30A of the Exchange Act, (iii) accepted or received any unlawful contributions, payments, gifts or expenditures or (iv) made, offered or authorized any unlawful bribe, rebate, payoff, influence payment, kickback or other similar unlawful payment.

     Section 3.24. State Takeover Statutes . Assuming that the representations of Parent and Purchaser contained in Section 4.6 hereof are accurate, the Company Board of Directors has taken all necessary actions so that the restrictions on business combinations set forth in Section 203 of the DGCL and, to the Knowledge of the Company, any other similar applicable law are

not applicable to this Agreement and the transactions contemplated hereby, including the Offer and the Merger.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER

          Except as disclosed in the disclosure letter delivered by Parent to the Company concurrent with the execution of this Agreement (the “ Parent Disclosure Letter ”), Parent and Purchaser jointly and severally represent and warrant to the Company as follows:

     Section 4.1. Qualification; Organization .

          (a) Each of Parent and Purchaser is a corporation validly existing and in good standing under the Laws of its respective jurisdiction of organization. Each of Parent and Purchaser has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as presently conducted, except where the failure to have such power or authority would not, individually or in the aggregate, have a Parent Material Adverse Effect (as defined below). Parent has furnished to the Company a complete and correct copy of the certificate of incorporation and the bylaws of each of Parent and Purchaser as currently in effect.

          (b) Each of Parent and Purchaser is qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the ownership, leasing or operation of its assets or properties or conduct of its business requires such qualification, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, prevent or materially delay or materially impede t