SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER

Exhibit 10.2

SECOND AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER

     SECOND AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the “ Agreement ”), dated March 12, 2009 amends and restates in its entirety that Agreement and Plan of Merger dated September 9, 2008, as amended by that First Amendment to Agreement and Plan of Merger dated November 10, 2008 among Flow International Corporation, a Washington corporation (“ Parent ”), Orange Acquisition Corporation, a Washington corporation and a wholly-owned subsidiary of Parent (“ Sub ”), OMAX Corporation, a Washington corporation (“ Company ”), John B. Cheung, John H. Olsen, James M. O’Connor and Puget Partners, L.P., the holders of forty-five percent (45%) of the issued and outstanding ownership interests (other than holders of Company Options) in the Company (collectively referred to as the “ Major Shareholders ”), and John B. Cheung, Inc., a personal holding corporation owned by John B. Cheung (the “ Shareholders’ Representative ”) as agent and attorney-in-fact for the holders of Company Shares (as defined in Section 2.1).

     WHEREAS, in order to induce the parties to enter into this Agreement, Parent has agreed to pay, contemporaneously with the execution of this Agreement, Company $2,000,000 in cash from Parent, receipt of which amount is hereby acknowledged;

     INTENDING TO BE LEGALLY BOUND, and in consideration of the premises and the mutual representations, warranties, covenants, and agreements in this Agreement, the parties hereby agree as follows:

ARTICLE I
THE MERGER

      1.1 Effective Time of the Merger . Subject to the provisions of this Agreement, Sub will be merged with and into Company (the “ Merger ”). Articles of Merger (“ Articles of Merger ”) will be duly prepared by the parties, executed by Surviving Corporation (as defined below) and thereafter delivered to the Secretary of State of Washington for filing, as provided in the Washington Business Corporation Act (the “ WBCA ”) as soon as practicable on or after the Closing Date (as defined in Section 1.2). The Merger will become effective upon the later of the acceptance for filing of the Articles of Merger by the Secretary of State of Washington or at such later time as is provided in the Articles of Merger (the “ Effective Time ”).

      1.2 Closing . The closing of the Merger (“ Closing ”) will take place as soon as practicable after satisfaction or waiver of the last to be fulfilled of the conditions set forth in Article VII (the “ Closing Date ”), at the offices of K&L Gates LLP at 925 Fourth Avenue, Suite 2900, Seattle, Washington 98104, unless another date or place is agreed to in writing by Parent and Company.

      1.3 Effects of the Merger . At the Effective Time: (i) the separate existence of Sub will cease and Sub will be merged with and into Company and Company will continue as the surviving corporation and as a wholly owned subsidiary of Parent (after the Merger, Company is

sometimes referred to in this Agreement as the “ Surviving Corporation ”); (ii) the certificate of incorporation of Company will be amended in its entirety to be the same as the certificate of incorporation of Sub, as in effect immediately before the Effective Time, until later amended in accordance with the WBCA; (iii) the bylaws of Surviving Corporation will be amended and restated in their entirety to be the same as the bylaws of Sub, as in effect immediately before the Effective Time, until later amended in accordance with the provisions thereof, the certificate of incorporation and the WBCA; (iv) the directors and officers of Sub immediately before the Effective Time will be the directors and officers of the Surviving Corporation in each case until their respective successors 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; and (v) the Merger will, from and after the Effective Time, have all the effects provided by Chapter 23B.11 RCW of the WBCA and other applicable law.

ARTICLE II
EFFECT OF THE MERGER; DELIVERY OF CONSIDERATION

      2.1 Effect on Capital Stock . As of the Effective Time, by virtue of the Merger and without any action (except as provided in Section 4.5 and in this Section 2.1) on the part of Sub, Parent, Company, or the holder of any shares of Company capital stock (“ Company Shares ”):

          2.1.1 Capital Stock of Sub . Each share of Sub common stock, no par value per share, issued and outstanding immediately before the Effective Time, will be converted into one validly issued, fully paid, and nonassessable share of Surviving Corporation common stock (“ Surviving Corporation Common Stock ”), with the stock certificate of Sub evidencing ownership of such share of Surviving Corporation Common Stock.

          2.1.2 Cancellation of Company Shares . Each Company Share owned directly or indirectly by Company or by any subsidiary (as defined in Section 10.2) of Company will automatically be cancelled and retired and will cease to exist and no consideration will be delivered or deliverable in exchange for such Company Shares. Company will obtain a written consent to such cancellation from any subsidiary, whether or not wholly owned, that owns Company Shares.

          2.1.3 Conversion of Company Securities . Subject to the limitations on payments and the timing of payments as set forth in Section 2.2, Section 2.3 and Article VIII, each Company Share and Company Option (as defined below) validly issued and outstanding immediately before the Effective Time (other than Appraisal Shares, as defined in Section 2.1.6, and those Company Shares referred to in Section 2.1.2), will, without any action on the part of the holder thereof (except as set forth in this Section 2.1.3) be converted into, or with respect to Company Options, cancelled in exchange for, their respective conversion payment (“ Conversion Payment ”), which will be calculated as follows:

               (a) Each share of Company common stock, no par value (the “ Company Common Shares ”), issued and outstanding immediately before the Effective Time will convert into the right to receive (i) an amount in cash equal to the Per Share Cash Consideration (as defined below), (ii) the Per Share Stock Consideration (as defined below), and (iii) the Per Share Contingent Consideration (as defined below).

               (b) Each Company Option (as defined below) that is validly issued and unexpired, unexercised, and outstanding immediately before the Closing will be exercised immediately before Closing, with the consent of the holder thereof, (such person, the “ Option Holder ”), for Company Shares; provided that the right of the Option Holder to receive the Per Share Cash Consideration (as defined below) shall be subject first to deduction for (i) the respective aggregate exercise price of the Company Option(s) being exercised, (ii) any previous loans or advances to such Option Holder related to the previous acquisition of Company Shares by the exercise of options, and (iii) the amount of any applicable payroll, income tax or other withholding taxes being paid on behalf of the Option Holder arising from the exercise of a Company Option (collectively, the “ Option Advances ”), which shall be treated as a partial payment of the Per Share Cash Consideration due the former Option Holder.

     At the Effective Time, all Company Shares will be cancelled and will cease to exist and each certificate (a “ Certificate ”) previously representing any Company Shares will represent only the right to receive the applicable Conversion Payment as provided by this Section 2.1.3. The amount that the holders of Company Shares are entitled to receive at Closing under this Section 2.1.3 will be reduced by their pro rata share of (i) the Escrow Amount (as defined in Section 2.2.1), (ii) the Employee Retention Pool Amount (as defined in Section 2.2.2), and (iii) in the case of the Option Holders, the amount of Option Advances.

     The numbers used below and in the pro forma calculations in the attached Schedule 2.1, each rounded to the nearest dollar are for purposes of illustration of the Per Share Cash Consideration only and will be adjusted and set forth in the final Schedule 2.1, which will be determined in accordance with the following procedures, adjustments, and definitions and when approved in writing by Parent and Company before Closing will be the final and determinative interpretation of the following, each term used as defined below:

The following definitions will be used in making the above calculation and for purposes of this Article II:

     “ Base Cash Amount ” means $61,000,000, increased by ALI and less the Employee Retention Pool Amount and less the amounts provided for in Section 6.9.

     “ Company Options ” means each unexpired, unexercised vested (following vesting immediately prior to Closing in accordance with Section 3.1.23) Company Option that is outstanding immediately before the Closing with an exercise price less than the Per Share Amount as finally determined.

     “ Expenses ” means the fees (including financial advisory and professional fees), costs, expenses, bonuses, and charges incurred by Company in connection with the Transactions, including fees for services provided by the parties as listed on Schedule 2.1.3, which schedule shall be provided by Company to Parent prior to Closing, and fees to be paid by Parent pursuant to Section 6.9, except to the extent such fees, costs, expenses, bonuses and charges were paid or accrued prior to the computation of Net Working Capital or are included in the computation of Net Working Capital.

     “ Gross Distributable Cash Amount ” means the Base Cash Amount, plus the Option Consideration and the Working Capital Credit, and less (a) the Working Capital Deficit, and (b) Expenses.

     “ Gross Distributable Contingent Consideration ” means the contingent consideration payable pursuant to Section 2.1.5below.

     “ Gross Distributable Stock Consideration ” means the consideration payable pursuant to Section 2.1.4below.

     “ Option Consideration ” means the aggregate exercise price of all Company Options outstanding immediately before Closing (and before the exercise of such Company Options pursuant to this Section), and including the aggregate of any previous loans or advances to Option Holders related to the previous acquisition of Company Shares by the exercise of options.

     “ PCSEs ” or “ Participating Common Stock Equivalents ” means all of the Company Common Shares including Company Common Shares issued upon exercise of Company Options outstanding immediately before Closing.

     “ Per Share Cash Consideration ” means the Gross Distributable Cash Amount divided by the PCSEs.

     “ Per Share Contingent Consideration ” means the Gross Distributable Contingent Consideration divided by the PCSEs.

     “ Per Share Stock Consideration ” means the Gross Distributable Stock Consideration divided by the PCSEs.

          2.1.4 Stock Consideration . Subject to the terms and conditions of Section 2.1.3 above, the Conversion Payment shall include the right to receive shares of Parent Common Stock, $.01 par value (“ Parent Common Stock ”) to be issued pro rata to the holders of PCSEs, in a number reflecting a value, at Parent’s discretion, up to $14,000,000, based upon the average daily closing price per share of Parent Common Stock quoted on the The NASDAQ Global Market during the ten (10) trading day period ending two (2) business days prior to Closing (“ Closing Share Price ”). For each whole dollar of value that the Parent Common Stock exceeds $4,000,000, the Base Cash Amount will be reduced by one (1) whole dollar. For each whole dollar of value that the Stock Consideration is less than $4,000,000, the Base Cash Amount will be increased by one (1) whole dollar. Notwithstanding any other provision of this Agreement, neither certificates nor scrip for fractional shares of Parent Common Stock shall be issued in the Merger. Each holder of Company Common Shares who otherwise would have been entitled to a fraction of a share of Parent Common Stock (after taking into account all PCSEs delivered by such holder) shall receive in lieu thereof cash (without interest) in an amount determined by multiplying the fractional share interest to which such holder would otherwise be entitled by the Closing Share Price, rounded to the nearest whole cent.

          2.1.5 Contingent Consideration . Subject to the terms of Section 2.1.3 above, and subject to the right of a holder of PCSEs to make an Interim Election as set forth below, the Conversion Payment shall include the right to receive an aggregate amount up to $52,000,000, which shall be paid on the third anniversary of Closing based on the average daily closing share price for Parent Common Stock quoted on The NASDAQ Global Market or similar quotation service for the six (6) months ending thirty six (36) months after Closing, or if no such quotation is available, the average daily closing share price for Parent Common Stock for the last six (6) months that such quotations were available (“ Average Share Price ”). The calculation of Average Share Price shall be adjusted as appropriate in the event of any stock split or stock dividend by Parent. If any amounts become payable pursuant to this Section 2.1.5, Parent shall have the option of distributing Parent Common Stock to the holders of PCSEs in lieu of such cash, which shall be based on the Average Share Price, or if an Interim Election is made as described below, the Interim Average Share Price. If the Average Share Price is:

     a. less than or equal to $6.99, no payment or distribution shall be made under this Section 2.1.5;

     b. equal to $7.00, a payment of an additional $5,000,000 shall be paid to the holders of the PCSEs; or

     c. between $7.01 and $14.00, additional amounts shall be derived on a straight line interpolation basis between $5,000,000 and $52,000,000 and distributed to the holders of PCSEs accordingly .

     If, during the period beginning on the last day of the sixth (6th) full month after Closing and ending on the last day of the thirty-fifth (35th) full month after Closing (“ Interim Election Period ”), the average daily closing share price of Parent Common Stock for the trailing six (6) month period quoted on The NASDAQ Global Market or similar quotation service is equal to or greater than $7.00 (“ Interim Average Share Price ”), a holder of PCSEs may elect to receive contingent consideration under this Section 2.1.5 on the basis of the Interim Average Share Price

in lieu of the Average Share Price (“ Interim Election ”). No later than the fifth (5th) day of every calendar month during the Interim Election Period, Parent shall publish on its website, a monthly statement of the Interim Average Share Price for the applicable trailing six month period and all prior trailing six month periods in a format reasonably acceptable to the Shareholders’ Representative. A holder of PCSEs may only make an Interim Election once for all the PCSEs held, any Interim Election is permanent and may not be revoked, and any Interim Election will also be subject to the terms and conditions of the Escrow Agreement. Any Interim Election will be reported to Parent on an Interim Election form substantially in the form attached hereto as Exhibit 2.1.5, and may be made in the first fifteen (15) calendar days of any month, following the sixth (6th) full calendar month after Closing, with reference to the Interim Average Share Price occurring during the prior six (6) calendar months then elapsed. For example, if the Closing occurs on June 15, 2009, and the Interim Average Share Price for the 6 months beginning July 1, 2009 and ending December 31, 2009 is $7.50, then a holder of PCSEs may elect between January 1 to January 15, 2010 to make an Interim Election on a $7.50 basis. Such election will be deemed valid if postmarked or otherwise sent with a documented confirmation, on or before the end of business (5:00 PM Pacific Time) of the 15 ^th day of the open election period (the first fifteen calendar days of each month). If a holder of PCSEs does not make a valid Interim Election during the Interim Election Period, then that holder shall receive contingent consideration using the Average Share Price as described above. The right to any payment under this Section 2.1.5 shall be personal, non-negotiable, and non-transferable except by operation of law or by will.

          2.1.6 Appraisal Rights . Company Shares validly issued and outstanding immediately before the Effective Time and held by a holder who has not consented to the Merger in writing and who is entitled to demand and properly demands appraisal rights for such Company Shares in accordance with the WBCA (the “ Appraisal Shares ”) will not be converted into a right to receive the Conversion Payment unless such holder fails to perfect or withdraws or otherwise loses such holder’s appraisal rights. If, after the Effective Time, such holder fails to perfect or withdraws or otherwise loses such holder’s appraisal rights, such Company Shares will be treated as if they had been converted as of the Effective Time in accordance with Section 2.1.3, without any interest. Company will give Parent prompt notice of any demands received by Company for appraisal rights, and Parent will have the right to participate in all negotiations and proceedings with respect to such demands. Company will not, except with the prior written consent of Parent, make any payment with respect to, or settle or offer to settle, any such demands. Any amounts paid to a holder by Company in accordance with appraisal rights in excess of the Per Share Amount such holder would have otherwise received will be deducted from the Escrow Amount (as defined in Section 2.2 below) and will not be reimbursed by Parent or any affiliate of Parent.

      2.2 Escrow .

          2.2.1 Escrow Amount . At Closing, an amount equal to $8,450,000 (pro rata based upon the total consideration to be received by such holder at Closing, the “ Escrow Amount ”) will not be distributed to holders of Company Shares in accordance with Section 2.1.3 but rather will be deposited by Parent with, and held by BNY Mellon Shareowner Services or other bank or trust company as Parent may choose in its discretion, as escrow agent, in an escrow fund in accordance with the Escrow Agreement substantially in the form attached hereto as

Exhibit 2.2.1(a) (the “ Escrow Agreement ”) to fund payments related to Net Working Capital to the extent required by Section 2.3 and to be the sole and exclusive remedy to secure claims by Parent or Surviving Corporation for indemnification under this Agreement, in accordance with and subject to the terms of Article VIII. The Escrow Amount will be funded by an unsecured promissory note substantially as attached hereto as Exhibit 2.2.1(b) (the “ Escrow Note ”). Parent will have the option of paying the Escrow Note, upon release of the Escrow Amount, in either cash or Parent Common Stock. Any Parent Common Stock that Parent elects to use to pay the Escrow Note pursuant to this Section 2.1.1 will be valued based on the average daily closing share price for Parent Common Stock quoted on The NASDAQ Global Market or similar quotation service for the ten (10) trading days prior to payment of the Escrow Note The release of the Escrow Amount will occur promptly following eighteen (18) months from the Closing, and shall be subject to the terms hereof and of the Escrow Agreement; provided, however , that in the event of any conflict between this Agreement and the Escrow Agreement, the terms of the Escrow Agreement will control. The Escrow Agreement shall provide that interest accruing to the Escrow Amount shall become part of the escrowed funds and that for purposes of distribution, such interest shall follow the principal amount.

          2.2.2 Employee Retention Pool . At Closing, cash in the aggregate amount as provided on Schedule 2.2.2, which schedule shall be provided by Company to Parent at least five business days prior to Closing (the “ Employee Retention Pool Amount ”, and together with the Escrow Amount, the “ Escrow Amounts ”) that would otherwise be received by holders of Company Shares in accordance with Section 2.1.3 (pro rata based upon the total consideration to be received by such holder at Closing) will not be distributed to or made available for holders of Company Shares in accordance with Section 2.1.3 but rather will be deposited by Parent with, and held by Foster Pepper PLLC or such bank or trust company as Parent may choose in its discretion, as escrow agent, in an escrow fund (the “ Employee Retention Escrow ”) in accordance with the Employee Retention Escrow Agreement substantially in the form attached hereto as Exhibit 2.2.2 (the “ Employee Retention Escrow Agreement ”, and together with the Escrow Agreement, the “ Escrow Agreements ”) to fund payments related to the employee retention pool to be created in accordance with Section 6.8(d). The release to Parent or Company of the portion of the Employee Retention Pool Amount earned by eligible employees, as listed on Schedule 2.2.2, who are employed with Parent or Company on the six (6) month anniversary of the Closing or who have satisfied any other conditions necessary to earn their respective retention bonuses, as specified on Schedule 2.2.2, plus the employer’s share of FICA (OASDI and Medicare) taxes on such portion will occur shortly after the six (6) month anniversary of Closing or earlier for eligible employees terminated prior to the six month anniversary of Closing, with the remaining portion (if any) of the Employee Retention Pool Amount to be used to pay fees and expenses of the Employee Retention Escrow or retained under the Employee Retention Escrow Agreement until immediately prior to the distribution of the Escrow Amount. As soon as practicable after the six (6) month anniversary of the Closing, or earlier for eligible employees terminated prior to the six month anniversary of Closing, and Company’s or Parent’s receipt of the applicable funds from the Employee Retention Escrow, Company or Parent shall pay retention bonuses (less applicable tax withholdings and any other required withholdings or deductions) to the eligible employees who earned the right to receive such bonuses and remit the employees’ withheld taxes plus the employer’s share of FICA taxes to the applicable taxing authority. Immediately prior to the distribution of the Escrow Amount,

the remaining Employee Retention Escrow Amount (including any interest accruing thereto but less any fees and expenses of the Employee Retention Escrow) will be thereupon deposited with the Disbursing Agent for distribution. For the avoidance of doubt, such remaining Employee Retention Escrow Amount shall not be available for the securing of indemnification claims, the reimbursement of fees and expenses, or the funding of payments relating to Net Working Capital. All releases of the Employee Retention Pool Amount will be subject to the terms hereof and of the Employee Retention Escrow Agreement; provided further, that in the event of any conflict between this Agreement and the Employee Retention Escrow Agreement, the terms of the Employee Retention Escrow Agreement will control.

      2.3 Net Working Capital .

               (a) On the Closing Date, Company will have Net Working Capital that is not less than $7,000,000 (“ Minimum Working Capital ”), nor more than $9,000,000 (“ Maximum Working Capital ”) To the extent that Company has Net Working Capital on the Closing Date that is less than the Minimum Working Capital, such deficiency will be deducted from the Base Amount in accordance with Section 2.1.3 as the “ Working Capital Deficit. ” To the extent that Company has Net Working Capital on the Closing Date that is greater than the Maximum Working Capital, such excess will be added to the Base Amount in accordance with Section 2.1.3 as the “ Working Capital Credit .”

               (b) For purposes of this Agreement, the term “ Net Working Capital ” means: (i) Total Current Assets (as defined below) less (ii) all accrued Total Current Liabilities (as defined below) and less (iii) ALI. “ ALI ” is defined as $10,000,000 adjusted by amounts described on Schedule 2.3(b)(i). “Fixed assets, net,” “intangible assets,” deferred tax assets and deferred tax liabilities will be excluded from the determination of Net Working Capital. For avoidance of doubt, “ Total Current Assets ” as reflected on the Closing Balance Sheet will include: (i) cash and cash equivalents; (ii) short-term investments; (iii) accounts receivable outstanding not more than sixty (60) days from their due date and other receivables net of doubtful accounts; (iv) inventories (net of allowance for obsolete inventory) and (v) prepaid expenses and other current assets. “ Total Current Liabilities ” as reflected on the Closing Balance Sheet will include: (w) accounts payable; (x) accrued taxes, payroll and benefits; (y) other “Current Liabilities”; and (z) the current portion (due within twelve (12) months) of any Debt. Each of the foregoing terms will be determined in accordance with GAAP, as consistently applied, to the extent described above except as otherwise provided in this Section 2.3(b). “ Debt ” means all funded indebtedness, determined without duplication, and includes notes; capitalized leases; bank term and revolving credit loans; obligations related to drawn letters of credit; bonds evidencing funded indebtedness; debentures; borrowings from lending institutions other than banks; subordinated loans and subordinated debt securities with or without stated maturity; bank bills; bank overdrafts; obligations with respect to the factoring or discounting of accounts receivable and other instruments; any dividends payable to the holders of Company Shares; and accrued interest and expense and penalties on any of the foregoing (including prepayment penalties). For the avoidance of doubt, a sample calculation of Net Working Capital is attached hereto as Schedule 2.3(b)(ii).

               (c) At least thirty (30) business days before the anticipated Closing Date, Company will prepare, subject to the reasonable approval of Parent, a computation of the pro forma Net Working Capital and ALI based upon the financial information reflected in the most recent unaudited month-end balance sheet of the Company (the “ Pro Forma Calculations ”). Parent will be provided access to the books and records of the Company as may be reasonably necessary to review the Pro Forma Calculations.

               (d) At least three (3) business days before the anticipated Closing Date, Company will prepare, subject to the reasonable approval of Parent, an unaudited estimated balance sheet of Company as of the anticipated Closing Date as mutually expected by the parties (the “ Preliminary Closing Balance Sheet ”), a computation of the Net Working Capital as of the expected Closing Date based upon the financial information reflected in the Preliminary Closing Balance Sheet (the “ Preliminary Closing Date NWC ”) and a computation of ALI as of the expected Closing Date based upon the financial information reflected in the Preliminary Closing Balance Sheet (the “ Preliminary Closing Date ALI ”). The Preliminary Closing Balance Sheet, the Preliminary Closing Date NWC and the Preliminary Closing Date ALI calculation will be provided as Schedule 2.3(c) and become a part of this Agreement. The Preliminary Closing Balance Sheet will be prepared in accordance with GAAP consistently applied by the Company, except as otherwise provided in Section 2.3(b) above, and will fairly and accurately present the financial position of Company as of the anticipated Closing Date. The parties will use the Preliminary Closing Balance Sheet, the Preliminary Closing Date NWC and the Preliminary Closing Date ALI to calculate the Per Share Amount for purposes of payment at the Closing in accordance with Section 2.1.3.

               (e) Within thirty (30) days after the Closing Date, Parent will prepare and deliver to the Shareholders’ Representative an unaudited balance sheet of Company as of the Closing Date, determined in accordance with GAAP, except as otherwise provided in Section 2.3(b) above, and which, to the knowledge of Parent, fairly and accurately presents the financial position of Company as of the date of such balance sheet (the “ Proposed Closing Balance Sheet ”), along with its calculation of Net Working Capital as of the Closing Date (“ Proposed Closing Date NWC ”) and its calculation of ALI as of the Closing Date (“ Proposed Closing Date ALI ” ). The Shareholders’ Representative will be provided access to the books and records of the Company as may be reasonably necessary for the execution of its duties hereunder.

               (f) Within ten (10) days after the delivery by Parent of the Proposed Closing Balance Sheet and calculation of its Proposed Closing Date NWC and Proposed Closing Date ALI under Section 2.3(e), the Shareholders’ Representative will deliver to Parent a written notice either approving or objecting to the Proposed Closing Balance Sheet and the accompanying Proposed Closing Date NWC calculation and Proposed Closing Date ALI (the “ Review Notice ”). The Review Notice will reasonably state a description of the Shareholders’ Representative’s differences, if any, with Parent’s determination of the Proposed Closing Balance Sheet and the Proposed Closing Date NWC and Proposed Closing Date ALI calculations, together with proposed revisions (such revised Proposed Closing Balance Sheet being referred to as the “ Counter Proposed Closing Balance Sheet ”), along with revisions to the Proposed Closing Date NWC and Proposed Closing Date ALI calculations. A failure by the Shareholders’ Representative to so deliver the Review Notice to Parent within such period will be deemed an approval of and agreement with the Proposed Closing Balance Sheet and the Proposed Closing Date NWC and Proposed Closing Date ALI calculations of Parent, and such Proposed Closing Balance Sheet and the accompanying Proposed Closing Date NWC and Proposed Closing Date ALI calculations of Parent will be deemed the Closing Balance Sheet and the final and conclusive calculation of the Proposed Closing Date NWC (the “ Final Closing Date NWC ” ) and the Proposed Closing Date ALI (the “ Final Closing Date ALI ” ).

               (g) If the Proposed Closing Balance Sheet and the accompanying Proposed Closing Date NWC and Proposed Closing Date ALI calculation of Parent are disputed by the Shareholders’ Representative in accordance with this Section 2.3, the Shareholders’ Representative and Parent will negotiate in good faith in an effort to resolve any differences regarding such determination. If Parent and the Shareholders’ Representative agree on the Proposed Closing Balance Sheet, Proposed

Closing Date NWC and Proposed Closing Date ALI, the amount they agree upon will be final, conclusive and binding as the Final Closing Date NWC and Final Closing Date ALI, but if the objection cannot be resolved by such negotiation within thirty (30) days after Parent’s receipt of the Review Notice (the “ Reconciliation Deadline ”), the Proposed Closing Balance Sheet, the Counter Proposed Closing Balance Sheet, the Review Notice, and all work papers related thereto (collectively, the “ Determination Materials ”), will be submitted to the Seattle, Washington offices of KPMG LLP or of a nationally recognized accounting firm as Parent and the Shareholders’ Representative may mutually agree to (which agreement will not be unreasonably withheld or delayed) (the “ Accounting Arbitrator ”), which will review the Determination Materials and will determine the Final Closing Date NWC, which will include a determination of the Final Closing Date ALI. The Accounting Arbitrator will not undertake any review of any matters not specifically identified by the Shareholders’ Representative as being in dispute in the Review Notice and may not assign a value to any item greater than the greatest value for such items claimed by either party or less than the smallest value for such items claimed by either party, and its determination may not be outside the range comprised of Parent’s calculation of Proposed Closing Date NWC and Proposed Closing Date ALI and Shareholders’ Representative’s calculation of Proposed Closing Date NWC and Proposed Closing Date ALI. The Accounting Arbitrator will make its determination in accordance with GAAP and in accordance with the provisions herein defining Net Working Capital to the extent they are inconsistent with GAAP. The Accounting Arbitrator’s decision as to Proposed Closing Date NWC and Proposed Closing Date ALI as of the Closing Date will be final, conclusive, and binding as the Final Closing Date NWC and Final Closing Date ALI. The parties will cause the Accounting Arbitrator to notify the parties in writing of its determination within thirty (30) days following the receipt of the Determination Materials. The fees and expenses of the Accounting Arbitrator will be borne equally by Parent and the Shareholders’ Representative (who shall in turn have recourse to the Escrow Amount for reimbursement of such expenses pursuant to Section 10.13(c) below). All determinations in accordance with this Section 2.3(g) will be in writing and will be delivered to the parties hereto.

               (h) If the Final Closing Date NWC (as determined in accordance with Sections 2.3(f) or 2.3(g) above) is less than the Preliminary Closing Date NWC, then an amount equal to the difference between (i) the Preliminary Closing Date NWC, and (ii) the Final Closing Date NWC will be paid to Parent out of the Escrow Amount to the extent the Final Closing Date NWC is less than the Minimum Working Capital, in accordance with the terms of the Escrow Agreement. Such adjustment will not be subject to the Threshold Amount (as defined in Section 8.6). If the Final Closing Date NWC is greater than the Preliminary Closing Date NWC, then Parent will cause the amount equal to the difference between (i) the Final Closing Date NWC, and (ii) the Preliminary Closing Date NWC, to be delivered, within ten (10) days after such final determination, to the Disbursing Agent for disbursement as provided in Section 2.4 below to the extent the Final Closing Date NWC is greater than the Maximum Working Capital. In addition, if the Preliminary Closing Date NWC is (i) more than the Maximum Working Capital and the Final Closing Date NWC is less than the Maximum Working Capital, the amount equal to the difference between the Preliminary Closing Date NWC and the Maximum Working Capital will be paid to Parent out of the Escrow Amount, or (ii) less than the Minimum Working Capital and the Final Closing Date NWC is more than the Minimum Working Capital then Parent will cause the amount equal to the difference between the Preliminary Closing Date NWC and the Minimum Working Capital to be delivered, within ten (10) days after such final determination, to the Disbursing Agent for disbursement as provided in Section 2.4 below.

               (i) If the Final Closing Date ALI (as determined in accordance with Sections 2.3(f) or 2.3(g) above) is less than the Preliminary Closing Date ALI, then an amount equal to the difference between (i) the Preliminary Closing Date ALI, and (ii) the Final Closing Date ALI will be paid to Parent out of the Escrow Amount If the Final Closing Date ALI is greater than the Preliminary Closing Date ALI, then Parent will cause the amount equal to the difference between (i) the Final Closing

Date ALI, and (z) the Preliminary Closing Date ALI, to be delivered, within ten (10) days after such final determination, to the Disbursing Agent for disbursement as provided in Section 2.4.

               (j) Nothing in this Section 2.3 will be deemed to limit the indemnification rights of the Indemnified Parties in accordance with Article VIII hereof with respect to any breach of any representation and warranty of this Agreement, including without limitation, a breach of any of the representations contained in Section 3.1.5.

               (k) For purposes of this Agreement, “ Closing Balance Sheet ” means the balance sheet of Company as of the Closing Date determined in accordance with this Section 2.3.

      2.4 Delivery of Consideration.

          2.4.1 Disbursing Agent. Promptly after the Effective Time, Parent will (i) make available to BNY Mellon Shareowner Services or other bank or trust company as Parent may choose in its discretion (the “ Disbursing Agent ”), the shares of Parent Common Stock issuable pursuant to Section 2.1.4, in exchange for shares of Company Common Stock outstanding immediately prior to the Effective Time less the Escrow Amounts to be contributed therefrom pro rata, and (ii) deposit with the Disbursing Agent an amount of cash sufficient to pay the aggregate Gross Distributable Cash Amount and any cash amounts payable under Section 2.1.4, less the Escrow Amounts to be contributed therefrom pro rata.

           2.4.2 Exchange Procedures . Promptly after the Effective Time, Parent will instruct the Disbursing Agent to pay by check or wire transfer of same day funds the cash portion of any applicable Conversion Payments, under Section 2.1 and subject to Section 2.2 hereof, and to send a certificate or certificates (or book entry) representing the stock portion of any applicable Conversion Payments under Section 2.1.3 and subject to Section 2.2 hereof to each record holder of Company Shares as of the Effective Time (or to such broker or institution as any such record holder may designate), other than to those holders of Appraisal Shares not entitled to payment, as promptly as practicable following (i) the submission of a Certificate to the Disbursing Agent and a duly executed letter of transmittal (the “ Letter of Transmittal ”) by such holder of record, which will specify that risk of loss and title to the Certificates will pass, only upon proper delivery of such documents to the Disbursing Agent, and which will be in the form and have such provisions as Parent and Company may reasonably specify, and (ii) the surrender of the Certificates in exchange for the applicable Conversion Payment by such holder of record (which Certificates will then be canceled). If any Certificate has been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the Person claiming such document to be lost, stolen, or destroyed and, if required by the Surviving Corporation, the payment of any reasonable fees, and the posting by such Person of a bond, in such reasonable amount as Parent may direct as indemnity against any claim that may be made against it with respect to such document, the Disbursing Agent will issue in exchange for such lost, stolen, or destroyed document, the applicable Conversion Payments to which the holder is entitled under this Article II.

          2.4.3 No Further Ownership Rights in Company Shares . The applicable Conversion Payment delivered upon surrender in exchange for Company Shares in accordance with the terms hereof will be deemed to have been delivered in full satisfaction of all rights pertaining to such Company Shares. After the Effective Time, no further transfers will be made

on the stock transfer books of Company of Company Shares issued before the Effective Time. When the Merger becomes effective, all Company Shares issued before then (other than Appraisal Shares) will cease to exist, and each Certificate previously representing any such shares will represent only the right to receive the applicable Conversion Payment as described in Section 2.1.3 subject to the terms of this Agreement. If, after the Effective Time, Certificates are presented to Surviving Corporation or the Disbursing Agent for transfer, they will be cancelled and exchanged as provided in this Article II, except as otherwise provided by law.

          2.4.4 Return to Parent . The Disbursing Agent will redeliver or repay to Parent any cash made available to the Disbursing Agent and not exchanged for Certificates within twelve (12) months after the Effective Time. After such time any holder of Certificates who has not yet delivered or surrendered such Certificates to the Disbursing Agent, subject to applicable law, will look as a general creditor only to Parent for payment of the applicable Conversion Payment. Despite any provision of this Agreement, to the fullest extent permitted by applicable law, neither Parent, the Disbursing Agent, Surviving Corporation, the Shareholders’ Representative, nor any other party will be liable to any holder of Company Shares for any cash delivered to a public official according to applicable abandoned property, escheat, or similar law.

          2.4.5 Withholding Rights . Parent or the Disbursing Agent will be entitled to deduct and withhold from the applicable Conversion Payment otherwise payable under this Agreement to any Person (as defined in Section 10.2) who was a holder of Company Shares immediately before the Effective Time, such amounts as Parent or the Disbursing 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 ”), or any provision of state, local, or foreign tax law. Any such withheld amounts will be timely paid over to the appropriate Governmental Entity (as defined in Section 3.1.4). To the extent that amounts are so withheld by Parent or the Disbursing Agent, such withheld amounts will be treated for all purposes of this Agreement as having been paid to the holder of the Certificates in respect of which such deduction and withholding was made by Parent or the Disbursing Agent.

ARTICLE III
REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of Company . Except as set forth in a correspondingly numbered disclosure schedule delivered by Company to Parent dated as of the date hereof (the “ Company Disclosure Schedule ”), Company represents to Parent and Sub as follows (all references in the subsections of this Section 3.1 to “Company” will include Company’s subsidiaries except to the extent specifically excluded or except as otherwise clearly required by the context):

          3.1.1 Organization, Standing, and Power .

               (a) Each of Company and its subsidiaries is an entity duly organized and validly existing under the laws of its jurisdiction of incorporation or organization. Company has all requisite corporate power and authority to own, lease, and operate its properties and to carry on its businesses as now being conducted. Company is duly qualified and in good standing to do business in each jurisdiction in which the character of the property owned, leased, or operated by it or the nature of its

activities makes such qualification necessary (all such jurisdictions are listed in Section 3.1.1(a) of the Company Disclosure Schedule), except in such jurisdictions in which a failure to be so organized, existing, or in good standing or to have such corporate power and authority would not materially impair the ability of Company to consummate the Transactions or would not result, or reasonably be expected to result, individually or in the aggregate, in a material adverse effect on the financial condition, business, assets or results of operations of Company and its subsidiaries, taken as a whole, other than any effect resulting from (1) the announcement of the Transactions or the proposal thereof or this Agreement and the transactions contemplated hereby, (2) changes after the date hereof in general economic conditions or the industry in which the Company operates, provided that the impact of such fact, circumstance, event, change, effect or occurrence is not disproportionately adverse to the Company, or (3) actions taken by Company after the date hereof at, and in accordance with the written direction or request of Parent (“ Company Material Adverse Effect ”).

               (b) Company has delivered or made available to Parent or its counsel complete and correct copies of Company’s articles of incorporation, bylaws, stock records and minute books and the comparable governing instruments and minutes of each of its subsidiaries, in each case, as amended to the date hereof. The minute books of Company contain correct and complete records of all material proceedings and actions taken at all meetings of, or effected by written consent of, the shareholders of Company and its board of directors (and each committee thereof), and the stock records of Company contain correct and complete records of all original issuances and subsequent transfers, repurchases, and cancellations of Company’s capital stock. Company is the owner, directly or indirectly, of all outstanding shares of capital stock of each of its subsidiaries (other than directors’ qualifying and similar shares, the ownership of which is identified in Section 3.1.1(b) of the Company Disclosure Schedule) free and clear of all liens, pledges, security interests, claims, or other encumbrances and all such shares are duly authorized, validly issued, fully paid, and nonassessable. Section 3.1.1(b) of the Company Disclosure Schedule lists all subsidiaries of Company, together with each subsidiary’s jurisdiction of incorporation or formation, the jurisdictions in which it is qualified to conduct business, and its authorized capitalization. Other than the subsidiaries so listed, Company does not own or control, directly or indirectly, shares of capital stock of any other corporation, or any interest in any partnership, joint venture, or other non-corporate business entity or enterprise.

          3.1.2 Capital Structure .

               (a) The authorized capital stock of Company consists of (i) 10,750,000 shares of stock consisting of 10,000,000 Company Common Shares, no par value, of which, as of the date hereof, 4,741,128 shares are issued and outstanding, and (ii) 750,000 shares of Preferred Stock, no par value (“ Company Preferred Shares ”), 333,334 of which have been designated Series A Convertible Preferred Stock, none of which as of the date hereof are issued and outstanding. As of the date hereof, 1,866,500 Company Common Shares are reserved for issuance under the OMAX Corporation 2005 Stock Option Plan, including carryover from the issuance of options for Company Common Shares are reserved for issuance under the OMAX Corporation 1993 Stock Option Plan (together, the “ Incentive Plans ”). Options for 1,494,850 Company Common Shares (“ Company Options ”) have been granted and remain outstanding. All Company Shares, Company Options, and any other securities of Company outstanding as of the date hereof (collectively referred to as “ Company Securities ”), and the record owners of such securities are as set forth in Section 3.1.2 of the Company Disclosure Schedule, and no such securities are held by Company in its treasury. True and complete copies of all Company stock option plans and the forms of any other instruments setting forth the rights of all Company Securities as of the date hereof have been delivered to Parent or its counsel.

               (b) All outstanding Company Common Shares are, and Company Shares issued upon exercise of any Company Options when issued in accordance with the respective terms thereof will be, validly issued, fully paid, nonassessable, and not subject to any preemptive rights or similar rights under the WBCA, Company’s articles of incorporation or bylaws, or to any agreement to which Company is a party or by which Company may be bound. Except for the shares described above issuable in connection with the exercise of Company Options (all as set forth in Section 3.1.2(a) of the Company Disclosure Schedule) there are no options, warrants, calls, conversion rights, commitments, agreements, contracts, understandings, restrictions, equity-linked securities, or rights of any character to which Company is a party or by which Company may be bound obligating Company to issue additional shares of the capital stock of Company. Other than as set forth in Section 3.1.2(a) Company does not have outstanding any bonds, debentures, notes nor does it owe any other indebtedness, the holders of which (i) have the right to vote (or are convertible or exercisable into securities having the right to vote) with holders of Company Common Shares on any matter or (ii) are or will become entitled to receive any payment as a result of the Transactions. Other than as set forth in Section 3.1.2(a) Company does not have outstanding any restricted stock, restricted stock units, stock appreciation rights, stock performance awards, dividend equivalents, or other stock-based or equity-linked securities of a similar nature. There is no agreement or right allowing for the repurchase or redemption of any capital stock or convertible securities of Company, and Company has not repurchased any of its capital stock. There are no agreements requiring Company to contribute to the capital of, or lend or advance funds to, any subsidiaries of Company. Company is not party to nor to its knowledge is any shareholder of Company a party to, any voting agreement, voting trust, or similar agreement or arrangement relating to any class or series of its capital stock, or any agreement or arrangement providing for registration rights with respect to any capital stock or other securities of Company. There are no accrued and unpaid dividends with respect to any outstanding shares of Company capital stock. Company does not own or hold the right to acquire any shares of capital stock or any other security or interest in any other Person.

               (c) All of the issued and outstanding Company Securities have been offered, issued, and sold by Company in compliance with applicable federal and state securities laws.

               (d) To Company’s knowledge, no shareholder of Company has granted options or other rights to purchase any Company Securities from such shareholder.

          3.1.3 Authority . Company has all requisite corporate power and authority to execute and deliver this Agreement, subject to approval of the shareholders of Company to consummate the Transactions. The execution and delivery by Company of this Agreement and the performance of Company’s obligations hereunder have been duly and validly authorized by all necessary corporate action on the part of Company, subject only to approval of the Merger and this Agreement by the shareholders of Company. This Agreement has been duly executed and delivered by Company and constitutes a valid and binding obligation of Company enforceable in accordance with its terms, except to the extent that enforceability may be limited by the effect of (a) any applicable bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting the enforcement of creditors’ rights generally, and (b) general equitable principles, regardless of whether such enforceability is considered in a proceeding at law or in equity.

          3.1.4 Consents and Approvals; No Violations . Subject to the satisfaction of the conditions in Sections 7.1 and 7.3, the execution and delivery of this Agreement or any other agreement or document contemplated by this Agreement do not, and the consummation of the Transactions will not, conflict with or result in any violation of, or default (with or without notice

or lapse of time, or both) under, or give rise to a right of termination, cancellation, or acceleration of any obligation or to loss of a material benefit under, or the creation of a lien, pledge, security interest, charge, or other encumbrance on assets (any such conflict, violation, default, right, loss, or creation, a “ Violation ”) under (a) any provision of the articles of incorporation or bylaws of Company or the comparable governing instruments of any subsidiary of Company, or (b) any loan or credit agreement, note, bond, mortgage, indenture, contract, lease, or other agreement or instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule, or regulation applicable to Company or its properties or assets, other than, in the case of clause (b), any such Violation that would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect. No consent, approval, order, or authorization of, or registration, declaration, or filing with or exemption by, any court, administrative agency, or commission or other governmental authority or instrumentality, whether domestic or foreign (each a “ Governmental Entity ”) (collectively any consents or waivers with respect to Violations under clauses (a) and (b) of the first sentence of this Section 3.1.4, “ Consents ”), is required by or with respect to Company in connection with the execution and delivery of this Agreement or the consummation by Company of the Transactions, except for Consents, if any, relating to the filing of the Articles of Merger in accordance with the WBCA and except for such other Consents that if not obtained or made would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.

           3.1.5 Financial Statements . The (a) audited consolidated balance sheets of Company and its subsidiaries as of December 31, 2006 and December 31, 2007 (the “ Balance Sheet Date ”) and the related audited consolidated statements of income, changes in owner’s equity, and cash flow for the 12 months ended December 31, 2005, December 31, 2006 and December 31, 2007, and (b) an unaudited consolidated balance sheet of Company and its subsidiaries as of December 31, 2008 (the “ Interim Balance Sheet Date ”), and the related unaudited consolidated statements of income, changes in owner’s equity, and cash flow for the year then ended (collectively, the “ Financial Statements ”) that have been provided to Parent or will be provided prior to Closing comply in all material respects with all accounting requirements applicable to Company and its subsidiaries, have been prepared in accordance with generally accepted accounting principles (“ GAAP ”) consistently applied (except as may be indicated in the notes thereto), and fairly present, in all material respects, the consolidated financial position of Company and its subsidiaries as at the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal, recurring audit adjustments not material in scope or amount). There has been no change in Company’s accounting policies or the methods of making accounting estimates or changes in estimates that are material to the Financial Statements. Section 3.1.5 of the Company Disclosure Schedule lists, and Company has delivered to Parent copies of the documentation creating or governing, all securitization transactions and “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation S-K promulgated by the SEC) effected by Company or its subsidiaries since the Balance Sheet Date. There are no material liabilities, claims or obligations of any nature, whether accrued, absolute, contingent, anticipated or otherwise, whether due or to become due, that are not reflected in the Financial Statements or the notes thereto. Except as disclosed in the Financial Statements, neither Company nor its

subsidiaries is a guarantor or indemnitor of any indebtedness or other liability of any other Person.

          3.1.6 No Defaults . Company is not, and has not received notice that it would be with the passage of time, in default or violation of any term, condition, or provision of (i) the articles of incorporation or bylaws of Company or any comparable governing instrument of any subsidiary, (ii) any judgment, decree, or order, or (iii) any loan or credit agreement, note, bond, mortgage, indenture, contract, agreement, lease, license, or other instrument to which Company is now a party or by which it or any of its properties or assets may be bound, except with respect to (iii) for Violations that would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.

          3.1.7 Litigation . There is no claim, action, suit, or proceeding pending or, to the knowledge of Company, threatened, against or affecting Company, any of its officers, directors, or employees, or any of its properties before any court or arbitrator or any Governmental Entity. There is no investigation pending or, to the knowledge of Company, threatened against Company, before any Governmental Entity. Section 3.1.7 of the Company Disclosure Schedule sets forth as of the date hereof, with respect to any pending action, suit, proceeding, or investigation to which Company is a party, the forum, the parties thereto, the subject matter thereof, and the amount of damages claimed, or the nature of any other relief sought.

          3.1.8 No Material Adverse Change . Since the Balance Sheet Date, there has not been a Company Material Adverse Effect. Except as contemplated by this Agreement, since the Balance Sheet Date, there has not been:

               (a) any declaration, setting aside, or payment of any dividend or other distribution, stock split, reclassification, subdivision, or exchange with respect to any Company Shares;

               (b) any amendment of any provision of the articles of incorporation or bylaws of, or of any term of any outstanding security issued by, Company;

               (c) any incurrence, assumption, or guarantee by Company of any indebtedness for borrowed money, or any mortgage, pledge, imposition of any security interest, claim, encumbrance, or other restriction on any of the assets, tangible or intangible, of Company;

               (d) a material change to any tax election or any accounting method, or any settlement or consent to any claim or assessment relating to taxes incurred, or incurrence of any obligation to make any payment of, or in respect of, taxes, except in the ordinary course of business, or agreement to extend or waive the statutory period of limitations for the assessment or collection of taxes;

               (e) any (i) grant of severance or termination pay to any director, officer, or employee of Company, (ii) entry into any employment, deferred compensation (based upon the meaning of such term before the adoption of Code Section 409A), or other similar agreement (or any material amendment to any such existing agreement) with any director, officer, or employee of Company, (iii) increase in benefits payable under any existing severance or termination pay policies or employment agreements, (iv) increase in compensation, bonus, or other benefits payable to directors, officers, or employees of Company in excess of 4% of total compensation for such individual as of January 1, 2008, in each case other than those required by written contractual agreements, or (v) acceleration of, or

amendment or change to, the period of exercisability, vesting, or exercise price of options, restricted stock, stock bonus, or other awards granted under the Incentive Plans (including any discretionary acceleration of the exercise periods by Company’s board of directors, the compensation committee of Company’s board of directors, or a committee overseeing the Incentive Plans as permitted under such plans) or authorization of cash payments in exchange for any options, warrants, restricted stock, stock bonus, or other awards granted under any of such plans except, in each case, as may be required under applicable law or the existing terms of the Incentive Plans or other related agreements;

               (f) any issuance of capital stock or securities convertible into capital stock of Company (including grants or other issuances of options, warrants, or other rights to acquire capital stock of Company) other than in accordance with the exercise of Company Options;

               (g) any acquisition or disposition of assets (other than in the ordinary course of business), any acquisition or disposition of capital stock of any third party, or any merger or consolidation with any third party;

               (h) any entry by Company into any joint venture, partnership, or limited liability company or operating agreement with any Person;

               (i) any damage, destruction, or loss (whether or not covered by insurance) affecting Company’s properties or business that has resulted, or would reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect;

               (j) any granting by Company of a security interest in or lien on any material property or assets of Company;

               (k) any cancellation of debt or waiver of any claim or right individually or in the aggregate in excess of $25,000;

               (l) any capital expenditure or acquisition of any property, plant, and equipment by Company for a cost in excess of $100,000 in the aggregate;

               (m) any discharge or satisfaction by Company of any lien or encumbrance, or any payment of any obligation or liability (absolute or contingent) other than current liabilities shown on the balance sheet included in the Financial Statements as of the Balance Sheet Date and current liabilities incurred since the Balance Sheet Date in the ordinary course of business;

               (n) any termination, modification, or rescission of, or waiver by Company of rights under, any existing contract resulting, or reasonably likely to result, individually or in the aggregate, in a Company Material Adverse Effect;

               (o) any material grant or assignment of Company Intellectual Property;

               (p) any event or condition resulting individually or in the aggregate in a Company Material Adverse Effect; or

               (q) any agreement, authorization, or commitment, whether in writing or otherwise, to take any action described in this Section 3.1.8.

           3.1.9 Absence of Undisclosed Liabilities . Company has no liabilities, obligations, or contingencies (whether absolute, accrued, or contingent) except (i) liabilities, obligations, or contingencies (each a “ Liability ” and collectively, “ Liabilities ”) that are accrued or reserved against in the consolidated balance sheet of Company as of the Balance Sheet Date; (ii) additional Liabilities reserved against since the Balance Sheet Date that (x) have arisen in the ordinary course of business, and (y) are accrued or reserved against on the books and records of Company; (iii) additional Liabilities incurred since the Balance Sheet Date that (x) have arisen in the ordinary course of business, and (y) are not accrued or reserved against on the books and records of Company and none of which, individually or in the aggregate, are expected to exceed $100,000; (iv) additional Liabilities that are expressly provided for in any of Company’s contracts that are not required to be reflected in Company’s financial statements under GAAP; or (v) Liabilities reflecting expenses with respect to any litigation or dispute between Company and Parent as set forth in Section 3.1.9 (v) of the Company Disclosure Schedule.

          3.1.10 No Violations . Company is in compliance with all applicable federal, state, local, or foreign statutes, laws, ordinances, rules, judgments, orders, and regulations of any Governmental Entity applicable to its business and operations, except for violations that would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect. Neither Company, nor any Person acting on behalf of Company has, directly or indirectly, on behalf of or with respect to Company (i) made or received any unreported political contribution, (ii) made or received any payment that was not legal to make or receive, (iii) created or used any “off-book” bank or cash account or “slush fund,” or (iv) violated the Foreign Corrupt Practices Act of 1977, as amended. All permits required to conduct the business of Company as currently conducted have been obtained, are in full force and effect, and are being complied with, except where the failure to hold or to be in compliance with such permits would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.

          3.1.11 Certain Agreements . Except as contemplated by this Agreement, neither the execution and delivery of this Agreement nor the consummation of the Transactions will (i) result in any payment (including severance, unemployment compensation, parachute payment, bonus, or otherwise) becoming due to any director, employee, or independent contractor of Company, from Company under any Plan (as defined in Section 3.1.13), agreement, document, or otherwise, (ii) increase any benefits payable under any Plan, agreement, or document, or (iii) result in the acceleration of the time of payment or vesting of any such benefits.

          3.1.12 Employees . Since the inception of Company (or any predecessor entity, if applicable), Company has been in compliance with all then applicable laws and regulations respecting employment, termination of employment, hiring, discrimination in employment, terms and conditions of employment, wages, hours, and occupational safety and health and employment practices, and has not engaged in any unfair labor practice. Since the inception of Company (or any predecessor entity, if applicable), Company has withheld all amounts required by law or by agreement to be withheld from the wages, salaries, and other payments to its employees, including any common law employees, and is not liable for any arrears of wages (including commissions, bonuses, or other compensation), or any taxes or any penalty for failure

to comply with any of the foregoing (or, if any arrears, penalty, or interest were assessed against Company regarding the foregoing, it has been fully satisfied). Company is not liable for any payment to any trust or other fund or to any governmental or administrative authority with respect to unemployment compensation benefits, social security, social benefits, or other benefits or obligations for employees (other than routine payments to be made in the normal course of business and consistent with past practice). There are no pending claims against Company under any workers’ compensation plan or policy or for long-term disability. There are no controversies pending or, to Company’s knowledge, threatened, between Company and any of its employees, or any works council or similar body, which controversies have or could reasonably be expected to result in an action, suit, proceeding, claim, arbitration, or investigation before any agency, court, or tribunal, foreign or domestic, including claims for compensation, severance benefits, vacation time, vacation pay, or pension benefits, or any other claim pending in any court or administrative agency from any current or former employee or any other Person arising out of Company’s status as employer or purported employer or any workplace practices or policies whether in the form of claims for discrimination, harassment, unfair labor practices, grievances, wage and hour violations, wrongful discharge, or otherwise. Company is not a party to any collective bargaining agreement or other labor union contract nor does Company know of any activities or proceedings of any labor union to organize any employees of Company. Section 3.1.12 of the Company Disclosure Schedule lists all countries in which a works council or similar employee organization represents employees of Company. To Company’s knowledge, no employees of Company are or have in the past been in violation of any term of any employment contract, non-competition agreement, or any restrictive covenant to a former employer relating to the right of any such employee to be employed by Company because of the nature of the business conducted by Company or work performed by the employee or to the use of trade secrets or proprietary information of others. All releases of employment claims in favor of Company obtained from employees during the three-year period preceding the Effective Date are effective and binding to release all employment claims for each such employee.

          3.1.13 Employee Benefit Plans .

               (a) Section 3.1.13(a) of the Company Disclosure Schedule lists each employee benefit, equity incentive plan, or compensation plan or program covering currently active, former, or retired employees of Company (“ Plan ”). Company has provided or made available to Parent a copy of each Plan document (or, if there is no Plan document, a written description), and where applicable, any related trust agreement, annuity, or insurance contract and, where applicable, the three most recent annual reports (Form 5500) filed with the U.S. Department of Labor-EBSA, including all attachments and schedules thereto. To the extent applicable, each Plan complies in all material respects with the requirements of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) and the Code, and any Plan intended to be qualified under Code Section 401(a) or 423 is so qualified and has been so qualified since its creation, and its related trust is tax-exempt and has been since its creation. No Plan is covered by Title IV of ERISA or Code Section 412. No “prohibited transaction,” as defined in ERISA Section 406 or Code Section 4975, has occurred with respect to any Plan. Each Plan has been maintained and administered in compliance with its terms and with the requirements prescribed by all statutes, orders, rules, and regulations, including ERISA and the Code, applicable to such Plans. There are no pending or anticipated claims against or otherwise involving any of the Plans (excluding claims for benefits incurred in the ordinary course of Plan activities) and no suit, action, or other litigation has been brought against or with respect to any Plan. All contributions, reserves, or premium payments to each Plan accrued to the date hereof have been made or provided for. Company has not incurred any liability

under Subtitle C or D of Title IV of ERISA with respect to any “single-employer plan,” within the meaning of ERISA Section 4001(a)(15), currently or formerly maintained by Company, or any entity that is considered one employer with Company under ERISA Section 4001(a)(14). Company has not incurred, and will not incur as a result of the Transactions, any withdrawal liability under Subtitle E of Title IV of ERISA with respect to any “multiemployer plan,” within the meaning of ERISA Section 4001(a)(3). Company has no obligation for retiree health or life benefits under any Plan, except as required by applicable law or to avoid excise taxes under Code Section 4980B. There are no restrictions on the rights of Company to amend or terminate any Plan without incurring any liability thereunder (other than ordinary administrative expenses) and satisfaction of applicable notice. There have been no unwritten or unexpected amendments to, written interpretation of, or announcements (whether or not written) by Company relating to coverage under, any Plan. No tax under Code Section 4980B (other than a tax that has been fully satisfied) has been incurred in respect of any Plan that is a group health plan, as defined in Code Section 5000(b)(1). No act or omission has occurred (or will occur as a result of the transactions contemplated by this Agreement) and no condition exists with respect to any employee benefit plan (within the meaning of Section 3(3) of ERISA), equity incentive plan, or compensation plan or program, currently or previously sponsored, contributed to, maintained or administered by the Company or any subsidiary entity that is or was an ERISA Affiliate of the Company (as defined below) that would subject the Company (or the assets of any such plan or program) to any fine, penalty, tax or liability of any kind imposed under ERISA, the Code or other applicable legal requirements (other than liabilities for benefits accrued under plans or programs for employees of the Company and their beneficiaries).

               (b) Neither Company nor any entity that is or was considered one employer with Company under ERISA Section 4001(a)(14) or Code Sections 414(b), (c), or (m) (“ ERISA Affiliate ”) has ever maintained, had an obligation to contribute to, contributed to, or had any liability with respect to any current or former employee benefit plan that is or has been subject to Title IV of ERISA (including any “multiemployer plan” within the meaning of ERISA Section 4001(a)(3)). No Plan is a multiple employer welfare arrangement as defined in ERISA Section 3(40).

               (c) All Plans that are subject to the laws of any jurisdiction outside the United States are in compliance with and have been operated consistent with their terms and all applicable laws (including relevant tax laws), and the requirements of any trust deed under which they were established, in all material respects. Section 3.1.13(c) of the Company Disclosure Schedule identifies all of Company’s employee benefit plans that are subject to the laws of any jurisdiction outside the United States. With respect to each Plan, no event has occurred, and there exists no condition or set of circumstances, that would subject Company, directly or indirectly, to any material liability arising under any applicable laws, including relevant tax laws (including any liability to or under any such Plan or any indemnity agreement to which Company is a party), excluding liability for routine benefit claims and funding obligations. With respect to each such Plan, there are no funded benefit obligations for which the contributions have not been made or properly accrued and there are no unfunded benefit obligations that have not been accounted for by reserves, or otherwise properly footnoted, on the Financial Statements.

               (d) No Plan is subject to any ongoing or scheduled audit, investigation, or other administrative proceeding of the Internal Revenue Service (“ IRS ”), the U.S. Department of Labor, or any other federal, state, or local governmental entity.

               (e) No event has occurred or circumstance exists that could result in a material increase in premium costs of Plans that are insured, or a material increase in benefit costs of such Plans that are self-insured. For avoidance of doubt, general increases in the cost of medical services or supplies or prescription pharmaceuticals are not considered events or circumstances to be considered. Each Plan that provides self-insured benefits is subject to a stop-loss insurance policy under which the

Company is an insured party and the Company has complied with all terms of such stop-loss policy and has timely paid all premiums owing with respect to such stop-loss policy through the date of this Agreement. The transaction contemplated by this Agreement will not cancel, impair, or reduce amounts payable under any such stop-loss insurance policy.

           3.1.14 Real Property; Leases . Company does not own, and has never owned, real property. Company has made available to Parent copies of all leases or subleases in effect on the date hereof under which Company leases (i) real property (as either a tenant, subtenant, or lessor), or (ii) personal property that requires annual payments in excess of $25,000 with respect to each such lease or sublease of personal property (in case of either clause (i) or (ii), a “ Company Lease ”). No default exists under any Company Lease. No Company Lease is terminable because of the execution of this Agreement or the consummation of the Transactions. Section 3.1.14 of the Company Disclosure Schedule lists each Company Lease. Each Company Lease is in full force and effect in accordance with its respective terms. No consent is required from any party under any Company Lease in connection with the completion of the Transactions, and Company has not received notice that a party to any Company Lease intends to cancel, terminate, or refuse to renew any Company Lease or to exercise any option or other right thereunder, except where the failure to receive such consent, or where such cancellation, termination, or refusal, would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.

          3.1.15 Environmental .

               (a) Except as would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect, no Hazardous Material (as defined below) has been released by Company (except as specifically authorized, such as by permits issued by a Governmental Entity), onto or under any property occupied by Company or any affiliate of Company, nor, to Company’s knowledge, has any Hazardous Material migrated beneath such properties.

               (b) Except as would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect, Company has not transported, stored, used, manufactured, disposed of, released, or exposed its employees or others to, Hazardous Materials (collectively, “ Hazardous Materials Activities ”) in violation of any Environmental Law (as defined below) in effect on or before the Effective Time.

               (c) Company currently holds all environmental approvals, permits, licenses, clearances, and consents necessary for the conduct of Company’s Hazardous Material Activities and other businesses of Company as such activities and businesses are currently being conducted (collectively, “ Environmental Permits ”), except where the absence of such Environmental Permits would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect.

               (d) No legal action, proceeding, revocation proceeding, amendment procedure, writ, or injunction is pending and, to Company’s knowledge, no action, proceeding, revocation proceeding, amendment procedure, writ, or injunction has been threatened by any Governmental Entity against Company concerning any Environmental Permit, Hazardous Material, or any Hazardous Materials Activity of Company. Company has received no written notification that it is or may be liable for natural resource damages, the investigation or cleanup of Hazardous Materials, or for the response costs incurred by others in conducting such investigation or cleanup, which, in either case would not result, or

reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect. To the knowledge of Company, no fact or circumstance currently exists that is reasonably likely to involve Company in any material environmental litigation or impose upon Company any material environmental liability.

               (e) Company has not, either by agreement or (to Company’s knowledge) by operation of law, assumed or undertaken any liability (including future or contingent liabilities) of another person or entity under any Environmental Law, including any obligation for investigation, cleanup, corrective action, or natural resource damages with respect to Hazardous Materials.

               (f) Neither Company nor, to the knowledge of Company, any of its agents, possess copies of any reports concerning the presence or possible presence of released Hazardous Materials on real property currently or formerly owned, leased, or occupied by Company, including any environmental site assessment reports.

               (g)  “Hazardous Material ” means any substance that any Governmental Entity, in accordance with applicable federal, state, or local law, has designated to be radioactive, toxic, hazardous, or otherwise a danger to health or the environment, including PCBs, friable asbestos, petroleum, urea-formaldehyde, and all substances listed as hazardous substances in accordance with the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, or defined as a hazardous waste in accordance with the United States Resource Conservation and Recovery Act of 1976, as amended, and the regulations promulgated in accordance with said laws, but excluding office and janitorial supplies lawfully used or stored for their intended purposes.

               (h) “ Environmental Law ” means all applicable foreign, domestic, federal, state, local, or other laws, regulations, ordinances, or other binding requirements of Governmental Entities, all applicable orders, judgments, or binding determinations of administrative or judicial authorities, and any required permit, license, or other authorization, concerning public health and safety, worker health and safety, and pollution or protection of the environment, including all those relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened release, control, or cleanup of any Hazardous Material.

          3.1.16 Customers and Suppliers .

               (a) As of the date hereof: (i) Company has no material outstanding dispute in excess of $50,000 that has been communicated orally or in writing, concerning its business operations, including any Company Technology (as defined in Section 3.1.20) or services with any distributor or customer who, in the 24 months ended as of the date of this Agreement, was one of the 20 largest sources of revenues recognized under GAAP for Company during such period (each, a “ Significant Customer ”); (ii) Section 3.1.16(a) of the Company Disclosure Schedule lists each Significant Customer and the percentage of Company’s total revenues such Significant Customer represented during such period; (iii) Company has not received any oral or written notice from any Significant Customer that such Significant Customer will not continue as a customer or distributor of Surviving Corporation after Closing or that such distributor or customer intends to terminate or materially modify existing agreements with Company or Surviving Corporation; and (iv) no purchaser, reseller, or distributor of Company’s services has asserted any claims of breach of warranty in excess of $5,000 with regard to such services nor does Company have any indemnity liability for any such services to purchasers, resellers, or distributors. To Company’s knowledge, Company could not reasonably be expected as a result of

warranty or liability claims against it to be required to modify in any material respect any of Company’s services that are material to Company.

               (b) As of the date hereof: (i) Company has no material outstanding dispute in excess of $50,000 that has been communicated orally or in writing, concerning technology, products, or services provided by any supplier who, in the 24 months ended as of the date of this Agreement, was (a) one of the ten largest suppliers of technology, products, or services to Company, based on amounts paid or payable, or (b) provided third-party software used in connection with any Company Technology, products, or services during such period (each, a “ Significant Supplier ”); (ii) Section 3.1.16(b) of the Company Disclosure Schedule lists each Significant Supplier; and (iii) Company has not received any oral or written notice from any Significant Supplier that such supplier will not continue as a supplier to the Surviving Corporation after the Closing or that such supplier intends to terminate or materially modify existing agreements with Company or the Surviving Corporation.

               (c) To Company’s knowledge no supplier, distributor, or customer has any interest in any real or personal, tangible or intangible property, including Company Owned Intellectual Property (as defined in Section 3.1.20(a)(ii)), used in or pertaining to the business of Company.

          3.1.17 Material Contracts .

               (a) Section 3.1.17 of the Company Disclosure Schedule sets forth all of the following contracts to which Company is a party as of the date of this Agreement (the “ Material Contracts ”):

                    (i) any agreement (A) relating to the employment of, or the performance of services by, any employee, consultant, or other Person other than ordinary course, at-will written or oral offers or agreements terminable without notice and without the payment of any severance or penalty and other than employment arrangements required by law, (B) in accordance with which Company is or may become obligated to make any severance, termination, or similar payment to any current or former employee or director, other than with respect to agreements listed or described in the Company Disclosure Schedule as applicable to all Company employees generally, or applicable to all Company employees in specified jurisdictions outside of the United States, (C) in accordance with which Company is or may become obligated to make any bonus, commission, or similar payment to any current or former employee or director, other than with respect to agreements listed or described in the Company Disclosure Schedule as applicable to all Company employees generally, or applicable to all Company employees in specified jurisdictions outside of the United States, or (D) in accordance with which Company may be required to provide, or accelerate the vesting of, any payments, benefits, or equity rights upon the occurrence of any of the Transactions, other than with respect to the acceleration of Options pursuant to their terms or pursuant to this Agreement;

                    (ii) any agreement that provides for indemnification of any officer, director, employee, or agent of Company;

                    (iii) any agreement imposing any restriction on the right or ability of Company, or that, after consummation of the Merger, would impose a restriction on the right or ability of Parent or any of its subsidiaries, to compete in any line of business or in any geographic region with any other Person or to transact business or deal in any other manner with any other Person;

                    (iv) any agreement with a third party in accordance with which Company (A) has paid $100,000 or more during the year ended December 31, 2008, or (B) is obligated to pay $100,000 or more during the year beginning January 1, 2009;

                    (v) any agreement with a distributor, VAR, reseller, OEM, marketing partner, or Significant Customer;

                    (vi) any agreement of partnership or joint venture, limited liability company or operating agreement that would give rise to an obligation on the part of Company to form a joint venture or to acquire securities of a third party;

                    (vii) any In-Licenses (as defined in Section 3.1.20);

                    (viii) any other contract, agreement, or commitment not otherwise listed in Section 3.1.17 of the Company Disclosure Schedule, (A) the termination of which would result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect, or (B) that, if no required consent regarding the Transactions is obtained, would result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect or a material adverse effect on the operation of the business of Company in the same manner as the business of Company is currently operated;

                    (ix) any union contract or collective bargaining agreement;

                    (x) any material Company Lease;

                    (xi) except for trade indebtedness incurred in the ordinary course of business and except as disclosed in the Financial Statements, any instrument evidencing or related in any way to indebtedness for borrowed money by way of direct loan, sale of debt securities, purchase money obligation, conditional sale, guarantee, or otherwise.

               (b) Each Material Contract is in full force and effect and is a valid and binding obligation of Company, and neither Company nor, to the knowledge of Company, any other party thereto is in breach of, or default under, any such Material Contract, except for such failures to be in full force and effect and such breaches and defaults that would not result, or reasonably be expected to result, individually or in the aggregate, in a Company Material Adverse Effect. As of the date hereof, none of the parties to any of the Material Contracts identified in Section 3.1.17 of the Company Disclosure Schedule has expressed in writing an intent to terminate or materially reduce the amount of its business with Company in the future.

               (c) Company acknowledges that it has provided only blank form versions of certain Material Contracts to Parent or Parent’s counsel in the course of due diligence leading to the execution of this Agreement. The actual Material Contracts corresponding to such disclosed form versions do not contain materially different terms than such form versions.

          3.1.18 Taxes .

               (a) For the purposes of this Agreement, the terms “ tax ” and “ taxes ” mean all federal, state, local, and foreign income taxes (including any tax on or based upon net income, gross income, income as specially defined, earnings, profits or selected items of income, earnings or profits), capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value

added taxes, transfer taxes, franchise taxes, license taxes, withholding taxes or other withholding obligations, payroll taxes, employment taxes, excise, severance, social security premiums, workers’ compensation premiums, employment insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes of any kind whatsoever imposed by any taxing authority (domestic or foreign) on such entity or for which such entity is responsible, and any interest, penalties, additional taxes, additions to tax or other amounts imposed with respect to the foregoing.

               (b) Company has timely filed (or caused to be filed) all federal, state, local, and foreign tax returns, reports, information statements, and similar statements (“ Returns ”) required to be filed, which Returns are true, correct, and complete in all respects. Company has timely paid when due, or fully accrued in accordance with GAAP on the Financial Statements, all taxes in respect of all periods (or portions thereof), whether or not any Return reflects such taxes. The unpaid taxes of Company will not, as of the Closing Date, exceed the reserves for tax liability set forth on the Closing Balance Sheet. Company has not engaged in any “reportable transaction” within the meaning of Code Section 6707A(c)(1). Company has not taken any position on any Return that is or would be subject to penalties under Code Section 6662. Company is not currently the beneficiary of any extension of time to file any Return that has not yet been filed. All material elections with respect to taxes made by or with respect to Company are set forth in Section 3.1.18(b) of the Company Disclosure Schedule. Company has provided to Parent or made available true and correct copies of all filed Returns and related work papers, all correspondence with any taxing authorities, any tax planning memoranda, or other material tax data of Company, in each case with respect to taxes and Returns for which the statute of limitations has not expired.

               (c) No deficiencies or adjustments that remain outstanding for any tax have been claimed, proposed, assessed, or threatened. No authority in a jurisdiction where Company does not file Returns has ever made any claim that Company is or may be subject to taxation by that jurisdiction. Section 3.1.18(c) of the Company Disclosure Schedule accurately sets forth the years for which Company’s federal, state, local, and foreign Returns have been audited and any years that are the subject of a pending audit by the IRS or any applicable state, local, or foreign taxing authorities. Except as so disclosed, Company has not received written notice of any pending or threatened tax audit or examination and Company has not waived or entered into any other agreement with respect to any statute of limitation with respect to its taxes or Returns. Section 3.1.18(c) of the Company Disclosure Schedule sets forth as of the date hereof (i) the tax basis of Company in its assets, (ii) the current and accumulated earnings and profits of Company, (iii) the amount of any net operating loss carryover, net capital loss carryover, unused investment credit or other credit carryover and charitable contribution carryover of Company, and (iv) the amount of any deferred gain or loss allocable to Company or excess loss account of Company. Section 3.1.18(c) of the Company Disclosure Schedule sets forth as of the date hereof a list of all joint ventures, partnerships, limited liability companies, or other business entities (within the meaning of Treasury Regulation Section 301.7701-3) in which Company has an interest. No consent or agreement has been made under former Code Section 341(f) by or on behalf of Company or any predecessor thereof. Company has no interests in real estate that would be subject to any real estate excise, transfer, or other similar tax because of the consummation of the Transactions.

               (d) There are no liens for taxes upon the assets of Company except for taxes not yet due and payable. Company has withheld all taxes required to be withheld by it in respect of wages, salaries, and other payments to all employees, officers, and directors and any taxes required to be