Exhibit 10.1

Execution Copy

MERGER AGREEMENT

by and among

CARDIONET, INC.

GARDEN MERGER SUB, INC.

and

BIOTEL INC.

Dated as of November 5, 2010

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

ARTICLE I

THE MERGER

 

2

 

Section 1.1

 

The Merger

 

2

 

Section 1.2

 

Closing

 

2

 

Section 1.3

 

Effective Date

 

2

 

Section 1.4

 

Effects of the Merger

 

2

ARTICLE II

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

 

2

 

Section 2.1

 

Effect on Capital Stock

 

2

 

Section 2.2

 

Exchange of Certificates

 

4

 

Section 2.3

 

Cancellation of Certain Shares

 

6

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

6

 

Section 3.1

 

Qualification, Organization, Subsidiaries, etc.

 

6

 

Section 3.2

 

Capital Stock

 

7

 

Section 3.3

 

Corporate Authority Relative to This Agreement; No Violation

 

8

 

Section 3.4

 

Reports and Financial Statements

 

10

 

Section 3.5

 

Assets

 

12

 

Section 3.6

 

No Undisclosed Liabilities

 

13

 

Section 3.7

 

Compliance with Law; Permits

 

13

 

Section 3.8

 

Environmental Laws and Regulations

 

13

 

Section 3.9

 

Employee Benefit Plans

 

14

 

Section 3.10

 

Absence of Certain Changes or Events

 

16

 

Section 3.11

 

Investigations; Litigation

 

17

 

Section 3.12

 

Proxy Statement; Other Information

 

17

 

Section 3.13

 

Regulatory Compliance

 

17

 

Section 3.14

 

Tax Matters

 

19

 

Section 3.15

 

Labor Matters

 

20

 

Section 3.16

 

Intellectual Property

 

21

 

Section 3.17

 

Opinion of Financial Advisor

 

22

 

Section 3.18

 

Required Vote of the Company Shareholders

 

22

 

Section 3.19

 

Material Contracts

 

23

 

Section 3.20

 

Insurance

 

24

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TABLE OF CONTENTS
(continued)

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

Section 3.21

 

Title To and Sufficiency of Property; Liens; Leases

 

24

 

Section 3.22

 

Finders or Brokers

 

25

 

Section 3.23

 

Voting Agreements

 

26

 

Section 3.24

 

Off-Balance Sheet Arrangements

 

26

 

Section 3.25

 

Compliance with Insider Trading Laws

 

26

 

Section 3.26

 

Illegal Payments

 

26

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

 

26

 

Section 4.1

 

Qualification; Organization, Subsidiaries, etc.

 

26

 

Section 4.2

 

Corporate Authority Relative to This Agreement; No Violation

 

27

 

Section 4.3

 

Investigations; Litigation

 

28

 

Section 4.4

 

Capitalization of Merger Sub

 

28

 

Section 4.5

 

No Vote of Parent Stockholders

 

28

 

Section 4.6

 

Finders or Brokers

 

28

 

Section 4.7

 

Lack of Ownership of Company Common Stock

 

28

 

Section 4.8

 

Absence of Arrangements with Management

 

29

ARTICLE V

COVENANTS AND AGREEMENTS

 

29

 

Section 5.1

 

Conduct of Business by the Company and Parent

 

29

 

Section 5.2

 

Investigation

 

32

 

Section 5.3

 

No Solicitation

 

33

 

Section 5.4

 

Proxy Statement; Company Meeting

 

35

 

Section 5.5

 

Reasonable Best Efforts

 

36

 

Section 5.6

 

Takeover Statute

 

38

 

Section 5.7

 

Public Announcements

 

38

 

Section 5.8

 

Control of Operations

 

38

 

Section 5.9

 

Notification of Certain Matters

 

38

 

Section 5.10

 

Security Holder Litigation

 

39

 

Section 5.11

 

Company Stock Options

 

39

 

Section 5.12

 

Termination of 401(a) Plans

 

40

ARTICLE VI

CONDITIONS TO THE MERGER

 

40

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TABLE OF CONTENTS
(continued)

 

 

 

 

 

 

 

 

 

 

 

Page

 

 

 

 

 

 

 

Section 6.1

 

Conditions to Each Party’s Obligation to Effect the Merger

 

40

 

Section 6.2

 

Conditions to Obligation of the Company to Effect the Merger

 

40

 

Section 6.3

 

Conditions to Obligation of Parent and Merger Sub to Effect the Merger

 

41

 

Section 6.4

 

Frustration of Closing Conditions

 

41

ARTICLE VII

TERMINATION

 

42

 

Section 7.1

 

Termination and Abandonment

 

42

 

Section 7.2

 

Effect of Termination

 

43

ARTICLE

VIII MISCELLANEOUS

 

44

 

Section 8.1

 

No Survival of Representations and Warranties

 

44

 

Section 8.2

 

Expenses

 

44

 

Section 8.3

 

Counterparts; Effectiveness

 

44

 

Section 8.4

 

Governing Law

 

44

 

Section 8.5

 

Jurisdiction; Enforcement

 

44

 

Section 8.6

 

WAIVER OF JURY TRIAL

 

45

 

Section 8.7

 

Notices

 

45

 

Section 8.8

 

Assignment; Binding Effect

 

46

 

Section 8.9

 

Severability

 

46

 

Section 8.10

 

Entire Agreement; No Third-Party Beneficiaries

 

46

 

Section 8.11

 

Amendments; Waivers

 

47

 

Section 8.12

 

Headings

 

47

 

Section 8.13

 

Interpretation

 

47

 

Section 8.14

 

Definitions

 

47

 

EXHIBITS

 

Exhibit A – Plan of Merger

Exhibit B - Voting Agreement

Exhibit C - Gray, Plant & Mooty Opinion

-iii-

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          MERGER AGREEMENT, dated as of November 5, 2010 (the “Agreement”),
among CARDIONET, INC., a Delaware corporation (“Parent”), GARDEN MERGER SUB,
INC., a Minnesota corporation and a direct wholly owned subsidiary of Parent
(“Merger Sub”), and BIOTEL INC., a Minnesota corporation (the “Company”).

W I T N E S S E T H :

          WHEREAS, the parties previously entered into a Merger Agreement, dated
as of April 1, 2009 (the “Prior Agreement”).

          WHEREAS, the merger transaction contemplated by the Prior Agreement
has not been consummated, and the parties have been engaged in litigation with
respect thereto.

          WHEREAS, the parties have entered into a Settlement Agreement, of even
date herewith (the “Settlement Agreement”), pursuant to which the parties have
agreed, among other things, (i) to terminate the Prior Agreement, (ii) to settle
the litigation with respect thereto and (iii) to enter into this Agreement, in
each case in accordance with the terms and conditions set forth in the
Settlement Agreement.

          WHEREAS the parties intend that Merger Sub be merged with and into the
Company (the “Merger”), with the Company surviving the Merger as a wholly owned
subsidiary of Parent.

          WHEREAS, the Board of Directors of the Company has unanimously (i)
determined that it is in the best interests of the Company and its shareholders,
and declared it advisable to enter into this Agreement, (ii) approved the
execution, delivery and performance of this Agreement, the Plan of Merger
attached hereto as Exhibit A (the “Plan”) and the consummation of the
transactions contemplated hereby and thereby, including the Merger, and (iii)
resolved to recommend to the shareholders of the Company approval of this
Agreement and the Plan.

          WHEREAS, the Board of Directors of Parent has approved the
transactions contemplated by this Agreement and the Plan and authorized the
execution and delivery of this Agreement by Parent.

          WHEREAS, the Board of Directors of Merger Sub has approved this
Agreement and the Plan and declared it advisable for Merger Sub to enter into
this Agreement.

          WHEREAS, Merger Sub and the Company are sometimes herein referred to
together as the “Constituent Corporations”; and the Company, as the surviving
corporation in the Merger, is sometimes hereinafter referred to as the
“Surviving Corporation”.

          WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements specified herein in
connection with this Agreement.

          NOW, THEREFORE, in consideration of the foregoing, which is
incorporated in this Agreement as if fully set forth below, and the
representations, warranties, covenants and

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agreements contained herein, and intending to be legally bound hereby, Parent,
Merger Sub and the Company agree as follows:

ARTICLE I

THE MERGER

          Section 1.1     The Merger. On the Closing Date (as hereinafter
defined), Merger Sub shall be merged with and into the Company on the terms and
subject to the conditions set forth in this Agreement and the Plan and in
accordance with the Minnesota Business Corporation Act (the “MBCA”).

          Section 1.2     Closing. The closing of the Merger (the “Closing”)
shall take place at the Philadelphia office of Morgan, Lewis & Bockius LLP at
10:00 a.m., local time, on a date to be specified by the parties (the “Closing
Date”) which shall be no later than the second business day after the
satisfaction or waiver (to the extent permitted by applicable Law (as
hereinafter defined)) of the conditions set forth in Article VI (other than
those conditions that by their nature are to be satisfied at the Closing, but
subject to the satisfaction or waiver of such conditions), or at such other
place, date and time as the Company and Parent may agree in writing.

          Section 1.3     Effective Date. The effective date of the Merger (the
“Effective Date”) shall be the Closing Date or such later date as may be agreed
by the Company and Merger Sub in writing and specified in the Articles of Merger
in accordance with the MBCA.

          Section 1.4     Effects of the Merger. The Merger shall have the
effects set forth in this Agreement, the Plan and the applicable provisions of
the MBCA. Without limiting the generality of the foregoing, and subject thereto,
from and after the Effective Date, all property, rights, privileges, immunities,
powers, franchises, licenses and authority of the Company and Merger Sub shall
vest in the Surviving Corporation, and all debts, liabilities, obligations,
restrictions and duties of each of the Company and Merger Sub shall become the
debts, liabilities, obligations, restrictions and duties of the Surviving
Corporation.

ARTICLE II

CONVERSION OF SHARES; EXCHANGE OF CERTIFICATES

          Section 2.1     Effect on Capital Stock. As set forth in the Plan, at
the Effective Date, by virtue of the Merger and without any action on the part
of the Company, Merger Sub or the holders of any securities of the Company or
Merger Sub:

                    (a)         Conversion of Company Common Stock. At the
Effective Date, each share of common stock, par value $.01 per share, of the
Company (such shares, collectively, “Company Common Stock,” and each, a “Share”)
outstanding immediately prior to the Effective Date other than Dissenting Shares
(as hereinafter defined), shall be converted automatically into, and shall
thereafter represent the right to receive a per Share amount equal to:

 

 

 

 

•

$11,000,000, plus or minus (as the case may be)

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•

the amount by which the Company’s consolidated working capital (current assets
(excluding deferred tax assets) minus current liabilities (excluding deferred
tax liabilities), determined in accordance with GAAP) immediately prior to the
Closing is greater than, or less than, $3,600,000 (only as agreed by the parties
at the Closing), minus

 

 

 

 

•

the aggregate Option Consideration, divided by

 

 

 

 

•

the number of shares of Company Common Stock outstanding immediately prior to
the Closing

(the “Merger Consideration”). All outstanding Shares that have been converted
into the right to receive the Merger Consideration as provided in this Section
2.1(a) shall be automatically cancelled and shall cease to exist, and the
holders of certificates which immediately prior to the Effective Date
represented such Shares shall cease to have any rights with respect to such
Shares other than the right to receive the Merger Consideration.

                    (b)         Conversion of Merger Sub Common Stock. Each
share of common stock, par value $.01 per share, of Merger Sub issued and
outstanding immediately prior to the Effective Date shall be converted into and
become one validly issued, fully paid and nonassessable share of common stock,
par value $.01 per share, of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation. From and after
the Effective Date, all certificates representing the common stock of Merger Sub
shall be deemed for all purposes to represent the number of shares of common
stock of the Surviving Corporation into which they were converted in accordance
with the immediately preceding sentence.

                    (c)         Dissenters’ Rights. As set forth in the Plan,
and notwithstanding any provision of this Agreement to the contrary, if required
by the MBCA (but only to the extent required thereby), Shares that are issued
and outstanding immediately prior to the Effective Date and that are held by
holders of such Shares who have not voted in favor of the approval of the Plan
or consented thereto in writing and who have properly exercised appraisal rights
with respect thereto in accordance with, and who have complied with, Section
302A.473 of the MBCA (the “Dissenting Shares”) will not be converted into the
right to receive the Merger Consideration, and holders of such Dissenting Shares
will be entitled to receive payment of the fair value of such Dissenting Shares
in accordance with the provisions of such Section 302A.473 unless and until any
such holder fails to perfect or effectively waives, withdraws or loses his, her
or its rights to appraisal and payment under the MBCA. If, after the Effective
Date, any such holder fails to perfect or effectively waives, withdraws or loses
such right, such Dissenting Shares will thereupon be treated as if they had been
converted into and have become exchangeable for, at the Effective Date, the
right to receive the Merger Consideration, without any interest thereon, and the
Surviving Corporation shall remain liable for payment of the Merger
Consideration for such Shares. At the Effective Date, any holder of Dissenting
Shares shall cease to have any rights with respect to the Company, except the
rights provided in Section 302A.473 of the MBCA and as provided in the previous
sentence. The Company will give Parent (i) notice of any demands received by the
Company for appraisals of Shares and (ii) the

- 3 -

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opportunity to participate in and direct all negotiations and proceedings with
respect to such notices and demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or settle any such demands.

                    (d)         Adjustments. If at any time during the period
between the date of this Agreement and the Effective Date, any change in the
outstanding shares of capital stock of the Company shall occur as a result of
any reclassification, recapitalization, stock split (including a reverse stock
split) or combination, exchange or readjustment of shares, or any stock dividend
or stock distribution is declared with a record date during such period, the
Merger Consideration shall be equitably adjusted to reflect such change.

          Section 2.2     Exchange of Certificates.

                    (a)         Paying Agent. At or prior to the Effective Date,
Parent shall deposit, or shall cause to be deposited (including by requesting
the Company to deposit unrestricted cash at Closing substantially as
contemplated by Parent’s financing plan previously provided to the Company,
which the Company hereby agrees to do to the extent legally permitted), with a
U.S. bank or trust company that shall be appointed by Parent to act as a paying
agent hereunder (the “Paying Agent”), in trust for the benefit of holders of the
Shares cash in U.S. dollars sufficient to pay the aggregate Merger Consideration
in exchange for all of the outstanding Shares immediately prior to the Effective
Date, payable upon due surrender of the certificates that immediately prior to
the Effective Date represented Shares (“Certificates”) (or effective affidavits
of loss in lieu thereof), pursuant to the provisions of this Article II (such
cash referred to herein being hereinafter referred to as the “Exchange Fund”).

                    (b)         Payment Procedures.

 

 

 

                         (i)         As soon as reasonably practicable after the
Effective Date, Parent shall instruct the Paying Agent to mail to each holder of
record of Shares whose Shares were converted into the Merger Consideration
pursuant to Section 2.1, (A) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to Certificates shall
pass, only upon delivery of Certificates (or effective affidavits of loss in
lieu thereof) to the Paying Agent and shall be in such form and have such other
customary provisions as Parent and the Company may mutually agree), and (B)
instructions for effecting the surrender of Certificates (or effective
affidavits of loss in lieu thereof) in exchange for the Merger Consideration.

 

 

 

                         (ii)         Upon surrender of Certificates (or
effective affidavits of loss in lieu thereof) to the Paying Agent together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may reasonably be
required by the Paying Agent, the holder of such Certificates shall be entitled
to receive in exchange therefor a check in an amount equal to the product of (x)
the number of Shares represented by such holder’s properly surrendered
Certificates (or effective affidavits of loss in lieu thereof) multiplied by (y)
the Merger Consideration. No interest will be paid or accrued on any amount
payable upon due surrender of Certificates. In the event of a transfer of
ownership of Shares that

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is not registered in the transfer records of the Company, a check for any cash
to be paid upon due surrender of the Certificate may be paid to such a
transferee if the Certificate formerly representing such Shares is presented to
the Paying Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer Taxes (as
hereinafter defined) have been paid or are not applicable.

                    (c)         Closing of Transfer Books. At the Effective
Date, the stock transfer books of the Company shall be closed, and there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares that were outstanding immediately prior to
the Effective Date. If, after the Effective Date, Certificates are presented or
delivered to the Surviving Corporation or Parent for transfer, they shall be
cancelled and exchanged for a check in the proper amount pursuant to this
Article II.

                    (d)         Termination of Exchange Fund. Any portion of the
Exchange Fund (including the proceeds of any investments thereof) that remains
undistributed to the former holders of Shares one year after the Effective Date
shall be delivered to the Parent upon demand, and any former holders of Shares
who have not surrendered their Shares in accordance with this Section 2.2 shall
thereafter look only to the Parent for payment of their claim for the Merger
Consideration, without any interest thereon, upon due surrender of their Shares.

                    (e)         No Liability. Notwithstanding anything herein to
the contrary, none of the Company, Parent, Merger Sub, the Surviving
Corporation, the Paying Agent or any other person shall be liable to any former
holder of Shares for any amount properly delivered to a public official pursuant
to any applicable abandoned property, escheat or similar Law.

                    (f)         Investment of Exchange Fund. The Paying Agent
shall invest all cash included in the Exchange Fund as reasonably directed by
Parent. Any interest and other income resulting from such investments shall be
paid to the Parent upon demand.

                    (g)         Withholding Rights. Parent, the Surviving
Corporation or the Paying Agent, as appropriate, shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this Agreement
(including any payments made in respect of the Dissenting Shares) to any holder
of Certificates such amounts as may be required to be deducted and withheld with
respect to the making of such payment under the Internal Revenue Service Code,
as amended (the “Code”) or under any provision of state, local or foreign Tax
Law. To the extent that amounts are so withheld, (i) such withheld amounts shall
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
and (ii) Parent, the Surviving Corporation or the Paying Agent, as appropriate,
shall provide to the holders of such Certificates written notice of the amounts
so deducted or withheld.

                    (h)         Lost Certificates. In the case of any
Certificate that has been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such Certificate to be lost,
stolen or destroyed and, if required by the Paying Agent or Parent, the posting
by such person of a bond in customary amount as indemnity against any claim that
may be made against

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it with respect to such Certificate, as the case may be, the Paying Agent will
issue in exchange for such lost, stolen or destroyed Certificate, as the case
may be, a check in the amount of the number of Shares represented by such lost,
stolen or destroyed Certificate pursuant to this Article II.

          Section 2.3     Cancellation of Certain Shares. Each Share of Company
Common Stock and all other shares of capital stock of the Company that are
owned, directly or indirectly, by the Company or any Subsidiary of the Company
shall automatically be canceled and retired and shall cease to exist and no cash
or other consideration shall be delivered or deliverable in exchange therefor.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

          Except as disclosed in the Company SEC Documents (as hereinafter
defined) filed at least ten (10) business days prior to the date hereof, to the
extent the relevance of the disclosure is readily apparent and excluding any
disclosures included in any such Company SEC Document that are predictive or
cautionary in nature, or in the disclosure schedule delivered by the Company to
Parent immediately prior to the execution of this Agreement (the “Company
Disclosure Schedule”), the Company represents and warrants, on behalf of itself
and each of its Subsidiaries, to Parent and Merger Sub as follows:

          Section 3.1     Qualification, Organization, Subsidiaries, etc.

                    (a)         Each of the Company and its Subsidiaries is a
legal entity duly organized, validly existing and in good standing under the
Laws of its respective jurisdiction of organization and has all requisite
corporate or similar power and authority to own, lease and operate its
properties and assets and to carry on its business as presently conducted and is
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership, leasing or operation of its assets or
properties or conduct of its business requires such qualification, all of which
are listed in Section 3.1(a) of the Company Disclosure Schedule, except where
the failure to be so organized, validly existing, qualified or in good standing,
or to have such power or authority, would not have, individually or in the
aggregate, a Company Material Adverse Effect. As used in this Agreement, any
reference to any facts, circumstances, events or changes having a “Company
Material Adverse Effect” means such facts, circumstances, events or changes that
are or are reasonably likely to be materially adverse to (A) the business,
financial condition, assets, liabilities or continuing operations of the Company
and its Subsidiaries, taken as a whole or (B) the Company’s ability to perform
its obligations under this Agreement or consummate the Merger prior to the End
Date (regardless of whether or not such adverse effect or change can be or has
been cured at any time or whether the Parent has knowledge of such effect or
change on the date hereof), but that are not a result of the announcement or
consummation of the transactions contemplated by the Agreement. For the
avoidance of doubt, neither the loss of business, business prospects or
suppliers of the Company as a result of the announcement or consummation of the
transactions contemplated by the Agreement, nor the Company’s failure to meet
internal or published projections, forecasts or

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revenue or earnings predictions for any period shall in and of itself constitute
a Company Material Adverse Effect, but the underlying causes of such failure
shall, to the extent applicable, be considered in determining whether there is a
Company Material Adverse Effect. The Company has provided to Parent prior to the
date of this Agreement a true and complete copy of (i) the Company’s amended and
restated articles of incorporation and by-laws, each as amended through the date
hereof and (ii) the minutes (or, in the case of draft minutes, the most recent
drafts thereof) of all meetings of the Company’s stockholders, the Company Board
and each committee of the Company Board of Directors held since January 1, 2004
through the date hereof (except, in each case, minutes related to the
transactions contemplated by this Agreement or other alternative strategic
transactions considered).

                    (b)         Section 3.1(b) of the Company Disclosure
Schedule sets forth a true and complete list of all the Subsidiaries of the
Company (identifying its jurisdiction of incorporation, each jurisdiction in
which it is qualified or licensed to do business, and the number of shares owned
and percentage ownership represented by such share ownership). The Company owns,
directly or indirectly, all of the outstanding shares of the capital stock or
other equity interest of each of the Company’s Subsidiaries free and clear of
any Lien. Neither the Company nor any of its Subsidiaries owns, directly or
indirectly, any capital stock, equity or other ownership interest in any other
person.

                    (c)         The copies of the organizational documents of
each Subsidiary, in each case as amended to date and provided to Parent’s and
Merger Sub’s counsel, are true and complete copies thereof, and no amendments
thereto are pending. None of the Company’s Subsidiaries is in default in the
performance, observation or fulfillment of its obligations under its respective
organizational documents. The Company has provided to Parent prior to the date
hereof (i) complete and correct copies of by-laws or similar governing documents
of each of its Subsidiaries and (ii) the minutes (or, in the case of draft
minutes, the most recent drafts thereof) of all meetings of its Subsidiaries’
stockholders, boards of directors and each committee of such Boards of Directors
held since inception through the date hereof (except, in each case, minutes
related to the transactions contemplated by this Agreement or other alternative
strategic transactions considered).

          Section 3.2     Capital Stock.

                    (a)         The authorized capital stock of the Company
consists of 10,000,000 shares of Company Common Stock and 2,000,000 shares of
preferred stock, par value $0.01 per share (“Company Preferred Stock”). As of
September 30, 2010, (i) 2,783,827 shares of Company Common Stock were issued and
outstanding, (ii) 7,236,123 shares of Company Common Stock were held in
treasury, (iii) 650,000 shares of Company Common Stock were reserved for
issuance under the employee and director stock plans of the Company’s 1999
Incentive Compensation Plan (the “Company Stock Plan”), (iv) 141,000 shares of
Company Common Stock were issuable upon exercise of duly and validly issued
Company Stock Options, (v) no shares of Company Preferred Stock were issued and
outstanding, and (vi) each outstanding Company Stock Option was granted with an
exercise price at least equal to the fair market value of a share of Company
Common Stock on the date of grant. All outstanding shares of Company Common
Stock, and all shares of Company Common Stock reserved for issuance as noted in

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clause (iii), when issued in accordance with the respective terms thereof, are
or will be duly authorized, validly issued, fully paid and non-assessable and
free of pre-emptive rights and have not been issued in violation of any federal
or state securities Laws. As of the date of this Agreement, the authorized
capital stock of Agility Centralized Research Services, Inc., a Minnesota
corporation, consists of 10,000,000 shares of common stock, par value $0.01 per
share, 1,000,000 of which are validly issued and outstanding and the authorized
capital stock of Braemar, Inc., a North Carolina corporation, consists of
1,000,000 shares of common stock, no par value per share. All of the issued and
outstanding capital stock of each of the Company’s Subsidiaries is, and at the
Effective Date will be, owned by the Company. None of the Company’s Subsidiaries
has outstanding any option, warrant, right, or any other agreement pursuant to
which any person other than the Company may acquire any equity security of the
Company’s Subsidiaries.

                    (b)         Except as set forth in subsection (a) above, the
Company does not have any shares of its capital stock issued or outstanding
other than shares of Company Common Stock. Included in Section 3.2(b) of the
Company Disclosure Schedule is a correct and complete list, as of November 5,
2010, of all outstanding Company Stock Options (all of which have been duly and
validly issued) and, for each such option, the number of shares of Company
Common Stock subject thereto, the exercise price thereof, the expiration date
and the name of the holder thereof. Except for the foregoing, there are no
outstanding subscriptions, options, warrants, calls, convertible securities or
other similar rights, agreements or commitments relating to the issuance of
capital stock to which the Company or any of the Company’s Subsidiaries is a
party obligating the Company or any of the Company’s Subsidiaries to (i) issue,
transfer or sell any shares of capital stock or other equity interests of the
Company or any Subsidiary of the Company or securities convertible into or
exchangeable for such shares or equity interests, (ii) grant, extend or enter
into any such subscription, option, warrant, call, convertible securities or
other similar right, agreement or arrangement, (iii) redeem or otherwise acquire
any such shares of capital stock or other equity interests, or (iv) provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any Subsidiary. Except for the issuance of shares of Company
Common Stock that were reserved for issuance pursuant to Company Stock Options
or otherwise set forth in this Section 3.2(b), the Company has not issued, sold,
repurchased, redeemed or otherwise acquired any Company Common Stock, and its
Board of Directors have not authorized any of the foregoing. Pursuant to the
terms of the Company Stock Plan, all Company Stock Options shall immediately
vest on the Closing Date and shall be fully exercisable on such date. The
Company has not declared or paid any dividend or distribution in respect of the
Company Common Stock.

                    (c)         Except for the Company Stock Options listed in
Section 3.2(b) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries has outstanding bonds, debentures, notes or other
obligations, the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with
the shareholders of the Company on any matter.

                    (d)         There are no voting trusts or other agreements
or understandings to which the Company or any of its Subsidiaries is a party
with respect to the voting of the capital stock or other equity interest of the
Company or any of its Subsidiaries.

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          Section 3.3     Corporate Authority Relative to This Agreement; No
Violation.

                    (a)         The Company has requisite corporate power and
authority to enter into this Agreement and, subject to receipt of the Company
Shareholder Approval (as hereinafter defined), to consummate the transactions
contemplated hereby. The Board of Directors of the Company at a duly held
meeting has unanimously (i) determined that it is in the best interests of the
Company and its shareholders, and declared it advisable, to enter into this
Agreement including the Merger, the Plan, the Voting Agreements and the
transactions contemplated hereby and thereby, (ii) approved the execution,
delivery and performance of this Agreement and the Plan and the consummation of
the transactions contemplated hereby and thereby, including the Merger, and
(iii) resolved, subject to Section 5.3, to recommend that the shareholders of
the Company approve this Agreement and the Plan (the “Recommendation”) and
directed that such matter be submitted for consideration of the shareholders of
the Company at the Company Meeting (as hereinafter defined). Except for the
Company Shareholder Approval and the filing of the Articles of Merger with the
Secretary of State of the State of Minnesota, no other corporate proceedings on
the part of the Company are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming this Agreement constitutes
the valid and binding agreement of Parent and Merger Sub, constitutes the valid
and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws of general application affecting or relating to the
enforcement of creditors’ rights generally and (ii) is subject to general
principles of equity, whether considered in a proceeding at law or in equity
(the “Bankruptcy and Equity Exception”).

                    (b)        The execution, delivery and performance by the
Company of this Agreement and the consummation of the Merger by the Company do
not and will not require any consent, approval, authorization or permit of,
action by, filing with or notification to any state, federal or foreign
governmental or regulatory agency, commission, court, body, entity or authority
(each, a “Governmental Entity”) other than (i) the filing of the Articles of
Merger, (ii) compliance with applicable federal or state antitrust, competition
or similar Laws of any foreign jurisdiction, (iii) compliance with the
applicable requirements of the Securities Exchange Act of 1934 (the “Exchange
Act”), including the filing of the Proxy Statement (as hereinafter defined),
(iv) compliance with any applicable foreign or state securities or blue sky
laws, and (v) the other consents and/or notices set forth on Section 3.3(b) of
the Company Disclosure Schedule (collectively, clauses (i) through (v), the
“Company Approvals”), and other than any other consent, approval, authorization,
permit, action, filing or notification the failure of which to make or obtain
would not (A) individually or in the aggregate, have a Company Material Adverse
Effect (the definition of which, for the purposes of this Section 3.3(b) and for
purposes of Section 6.3(a) as it relates to this Section 3.3(b), shall be
interpreted so that facts or changes resulting from the announcement or
consummation of the transactions contemplated by this Agreement shall not be
excluded from the definition of Company Material Adverse Effect) or (B) prevent
or materially delay the consummation of the Merger.

                    (c)        The execution, delivery and performance by the
Company of this Agreement and the consummation by the Company of the Merger and
the other transactions

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contemplated hereby do not and will not (i) contravene or conflict with the
organizational or governing documents of the Company or any of its Subsidiaries,
(ii) assuming compliance with the matters referenced in Section 3.3(b) and the
receipt of the Company Shareholder Approval, contravene or conflict with or
constitute a violation of any provision of any Law binding upon or applicable to
the Company or any of its Subsidiaries or any of their respective properties or
assets, or (iii) 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 material obligation or to the loss of a
material benefit under, any loan, guarantee of indebtedness or credit agreement,
note, bond, mortgage, indenture, lease, agreement, contract, instrument, permit,
concession, franchise, right or license binding upon the Company or any of the
Company’s Subsidiaries or result in the creation of any liens, claims,
mortgages, encumbrances, pledges, security interests, equities or charges of any
kind (each, a “Lien”), other than any such Lien (A) for Taxes or governmental
assessments, charges or claims of payment not yet due or being contested in good
faith, provided adequate accruals or reserves have been established in
accordance with GAAP, or (B) which is disclosed on the most recent consolidated
balance sheet of the Company included in the Company SEC Documents (each of the
foregoing, a “Company Permitted Lien”), upon any of the properties or assets of
the Company or any of the Company’s Subsidiaries, other than, in the case of
clauses (ii) and (iii), any such violation, conflict, default, termination,
cancellation, acceleration, right, loss or Lien that would not have,
individually or in the aggregate, a Company Material Adverse Effect (the
definition of which, for the purposes of this Section 3.3(c) and for purposes of
Section 6.3(a) as it relates to this Section 3.3(c), shall be interpreted so
that facts or changes resulting from the announcement or consummation of the
transactions contemplated by this Agreement shall not be excluded from the
definition of Company Material Adverse Effect).

          Section 3.4     Reports and Financial Statements.

                    (a)        The Company has timely filed or furnished (or
filed or furnished within any applicable extension periods, themselves timely
invoked) all forms, documents and reports required to be filed or furnished
prior to the date hereof by it with the Securities and Exchange Commission (the
“SEC”) since July 1, 2005 (such documents and reports, together with any reports
filed by the Company with the SEC on a voluntary basis on Form 8-K, the “Company
SEC Documents”). As of their respective dates, or, if amended, as of the date of
the last such amendment, the Company SEC Documents complied, and all documents
and reports required to be filed or furnished after the date hereof and prior to
the Effective Date by the Company (together with any reports filed by the
Company with the SEC on a voluntary basis on Form 8-K, the “New Company SEC
Documents”) with the SEC (which will be filed on a timely basis) will comply, in
all material respects with the requirements of the Securities Act of 1933 and
the Exchange Act, as the case may be, and the applicable rules and regulations
promulgated thereunder. None of the Company SEC Documents contained, and none of
the New Company SEC Documents will contain, any untrue statement of a material
fact or omitted or will omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. As of the date of this
Agreement, there are no outstanding or unresolved comments received by the
Company from the SEC staff with respect to any Company SEC Documents. To the
knowledge of the Company, none of the Company SEC Documents is the subject of
ongoing SEC review or investigation.

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                    (b)          Each offering or sale of securities by the
Company since January 1, 1998 (i) was either registered under the Securities Act
or made pursuant to a valid exemption from registration, (ii) complied in all
material respects with the applicable requirements of the Law, and (iii) was
made pursuant to offering documents which did not, at the time of the offering
(or, in the case of registration statements, at the effective date thereof)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in the offering documents or necessary in order to make
the statements in such documents not misleading. The Company has delivered to
Parent all comment letters received since January 1, 1998, by the Company from
the staff of the SEC and all responses to such letters by or on behalf of with
all respect to all SEC Documents. The Company’s principal executive officer and
principal financial officer (and the Company’s former principal executive
officers and principal financial officers, as applicable) have made the
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act of
2002 (the “Sarbanes-Oxley Act”) and the rules and regulations of the Exchange
Act thereunder with respect to the Company’s SEC Documents to the extent such
rules or regulations applied at the time of the filing. For purposes of the
preceding sentence, “principal executive officer” and “principal financial
officer” shall have the meanings given to such terms in the Sarbanes-Oxley Act.
Such certifications contain no qualifications or exceptions to the matters
certified therein and have not been modified or withdrawn; and neither the
Company nor any of its officers has received notice from any Governmental Entity
questioning or challenging the accuracy, completeness, content, form or manner
of filing or submission of such certifications. No Company Subsidiary is
required to file any Company SEC Documents.

                    (c)          The consolidated financial statements of the
Company included in the Company SEC Documents and the New Company SEC Documents
comply and will comply in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, fairly present in all material respects the consolidated financial
position of the Company and its consolidated Subsidiaries, as at the respective
dates thereof, and the consolidated results of their operations and their
consolidated cash flows for the respective periods then ended is in conformity
with United States generally accepted accounting principles (“GAAP”) applied on
a consistent basis during the periods involved.

                    (d)          The Company’s independent public accountants,
which have expressed their opinion with respect to the financial statements of
the Company and its Subsidiaries whether or not included in the Company SEC
Documents, is and has been throughout the periods covered by such financial
statements (x) a registered public accounting firm (as defined in Section
2(a)(12) of the Sarbanes-Oxley Act), (y) “independent” with respect to the
Company within the meaning of Regulation S-X, and (z) with respect to the
Company, in compliance with subsections (g) through (l) of Section 10A of the
Exchange Act and related securities Laws. Section 3.4(d) of the Company
Disclosure Schedule lists all non-audit services performed by the Company’s
independent public accountants for the past three fiscal years and year to date.

                    (e)          The Company maintains disclosure controls and
procedures required by Rule 13a-15 or 15d-15 under the Exchange Act; such
controls and procedures are effective to ensure that all material information
concerning the Company and its Subsidiaries is made known on a timely basis to
the principal executive officer and the principal financial officer.

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Section 3.4(e) of the Company Disclosure Schedule lists, and the Company has
delivered to Parent copies of, all written descriptions of, and all policies,
manuals and other documents promulgating, such disclosure controls and
procedures. The Company’s management has completed assessments of the
effectiveness of the Company’s internal control over financial reporting in
compliance with the requirements of Section 404 of the Sarbanes-Oxley Act for
the years ended June 30, 2008, 2009 and 2010, and such assessments concluded
that as of June 30, 2008, 2009 and 2010, such controls were effective. The
Company has disclosed, in the Company’s SEC Reports, any changes in the
Company’s internal control over financial reporting that materially affected, or
were reasonably likely to materially affect, the Company’s internal control over
financial reporting, and the Company has further disclosed, based on its most
recent evaluation of such internal control over financial reporting that
occurred prior to the date of this Agreement, to the Company’s auditors and the
audit committee of the Company Board of Directors (i) any significant
deficiencies or material weaknesses in the design or operation of internal
control over financial reporting that are reasonably likely to adversely affect
in the Company’s ability to record, process, summarize and report financial
information and (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in the Company’s
internal control over financial reporting.

          Section 3.5     Assets.

                    (a)         The Company and each of its Subsidiaries have
good and marketable title, free and clear of all Liens, to all of their
respective assets. All such assets used in the businesses of the Company or any
of its Subsidiaries are in good operating condition and repair for assets of
like type and age, subject to ordinary wear and tear, are adequate for the
conduct of such businesses as currently conducted. Section 3.5(a) of the Company
Disclosure Schedule separately lists all assets used in the businesses of the
Company and any of its Subsidiaries, including molds, tools, dies and
schematics, that are in the possession of third parties, including suppliers,
identifying with respect to each asset the third party in possession thereof.

                    (b)         The Company and each of its Subsidiaries
currently maintain insurance with reputable insurers. None of the Company or any
of its Subsidiaries has received written notice from any insurance carrier, or
have any reason to believe that (i) any policy of insurance will be canceled or
that coverage thereunder will be reduced or eliminated, (ii) premium costs with
respect to such policies of insurance will be substantially increased, or (iii)
similar coverage will be denied or limited or not extended or renewed with
respect to the Company or any of its Subsidiaries, any act or occurrence, or
that any asset, officer, director, employee or agent of the Company or any
Subsidiary will not be covered by such insurance or bond. There are presently no
claims for amounts exceeding $1,000 individually or in the aggregate pending
under such policies of insurance or bonds, and no notices of claims in excess of
such amounts have been given by the Company or any Subsidiary under such
policies. The Company has made no claims, and no claims are contemplated to be
made, under any errors and omissions or other insurance or blanket bond.

                    (c)         The assets of the Company and its Subsidiaries
include all assets required by the Company and its Subsidiaries to operate the
business of the Company and its Subsidiaries

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as presently conducted. The current assets of the Company and its Subsidiaries
are appropriately valued in their books and records and on their financial
statements at the lower of cost or market.

          Section 3.6     No Undisclosed Liabilities. Except (a) as reflected or
reserved against in the Company’s consolidated balance sheets included in the
Company SEC Documents, and (b) as expressly permitted or contemplated by this
Agreement, as of the date hereof, neither the Company nor any Subsidiary of the
Company has any liabilities or obligations of any nature, whether or not
accrued, contingent or otherwise, that would be required by GAAP to be reflected
on a consolidated balance sheet of the Company and its Subsidiaries.

          Section 3.7     Compliance with Law; Permits.

                    (a)         The Company and each of the Company’s
Subsidiaries are in compliance with, and are not in any respect in default under
or in violation of, any applicable federal, state, local or foreign law,
statute, ordinance, rule, regulation, judgment, order, injunction, decree or
agency requirement or any other legal requirement of any Governmental Entity
(collectively, “Laws” and each, a “Law”) which is material to their business or
where the failure to comply would not have, individually or in the aggregate, a
Company Material Adverse Effect.

                    (b)         The Company and the Company’s Subsidiaries are
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Entity necessary for the Company and the Company’s
Subsidiaries to own, lease and operate their properties and assets or to carry
on their businesses as they are now being conducted (the “Company Permits”). All
Company Permits are in full force and effect.

          Section 3.8     Environmental Laws and Regulations.

                    (a)         The Company and its Subsidiaries and their
respective businesses are in and have been in compliance with all applicable
Environmental Laws (as hereinafter defined), which compliance included
obtaining, maintaining and complying with all Permits required under
Environmental Laws for the operation of the Company and any of its Subsidiaries
and their respective businesses. There are no Hazardous Substances (as
hereinafter defined) present in amounts exceeding the levels permitted by
applicable Environmental Laws on, in, at, under or from any of the properties
currently or previously owned or currently leased by the Company or any of its
Subsidiaries. There are no underground storage tanks owned by the Company or any
of its Subsidiaries, or located at any facility currently owned or operated by
the Company or any of its Subsidiaries. There are no unsatisfied financial
assurance or closure requirements under Environmental Laws pertaining to any
property now or at any time owned, operated, leased or otherwise used by the
Company or any of its Subsidiaries or former subsidiaries. From January 1, 1998
to the date hereof, neither the Company nor any of its Subsidiaries has received
any notices, claims, demand letters or requests for information or other written
communication from any Governmental Entity or any other person indicating that
the Company or any of its Subsidiaries may be in violation of, or liable under,
any Environmental Law in connection with the ownership or operation of its
businesses or any real property currently or formerly owned or currently leased
by the Company or any of its Subsidiaries (collectively, “Environmental

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Claims”) and, to the knowledge of the Company, no Environmental Claims have been
threatened. No Hazardous Substance has been disposed of, released or transported
in violation of any applicable Environmental Law, or in a manner giving rise to
any liability under Environmental Law, from any properties currently or
previously owned or currently leased by the Company or any of its Subsidiaries.
Neither the Company, its Subsidiaries nor any of their respective current, or to
the knowledge of the Company, former owned or leased properties are subject to
any liabilities relating to any suit, settlement, court order, administrative
order, regulatory requirement, judgment or written claim asserted or arising
under any Environmental Law. The Company has provided to Parent copies of all
environmental assessments, audits, investigations or similar reports relating to
the environment or Hazardous Substances as well as any correspondence related to
any pending or threatened Environmental Claim, to the extent in the possession,
custody or control of the Company.

                    (b)         As used herein, “Environmental Law” means any
Law (including common law) relating to (x) the protection, preservation or
restoration of the environment (including air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource), or (y) the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing, handling,
labeling, production, release or disposal of, Hazardous Substances, in each case
as in effect at the date hereof.

                    (c)         As used herein, “Hazardous Substance” means any
chemicals, materials or substances which are now defined as or included in the
definition of “hazardous substances,” “hazardous wastes,” “hazardous materials,”
“extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,”
“toxic pollutants,” or words of similar import, under any Environmental Law.
Hazardous Substance includes any substance to which exposure is regulated by any
Governmental Entity or any Environmental Law including any toxic waste,
pollutant, contaminant, hazardous substance, toxic substance, hazardous waste,
special waste, industrial substance or any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, and transformers or other equipment that contain dielectric
fluid containing polychlorinated biphenyls above regulated levels and radon gas
(except as may be naturally occurring).

                    (d)         All references in this Section 3.8 to the
Company and its Subsidiaries shall include all predecessors and predecessors in
business of the Company and each of its Subsidiaries, as applicable.

          Section 3.9     Employee Benefit Plans.

                    (a)         Section 3.9(a)(i) of the Company Disclosure
Schedule lists all Company Benefit Plans. “Company Benefit Plans” means all
benefit plans, programs, policies, agreements or other arrangements, including
any employee welfare plan within the meaning of Section 3(1) of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), any employee
pension benefit plan within the meaning of Section 3(2) of ERISA (whether or not
such plan is subject to ERISA), any employment, individual consulting or other
compensation agreements and any bonus, incentive, equity or equity-based
compensation, deferred compensation, vacation, stock purchase, stock option,
severance, employment, change of control,

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salary continuation, health or life insurance or fringe benefit plan, program or
agreement, in each case that are sponsored, maintained or contributed to by the
Company, its Subsidiaries or any of its ERISA Affiliates (as hereinafter
defined) for the benefit of current or former employees, directors or
consultants of the Company, its Subsidiaries or any of its ERISA Affiliates or
to which the Company, its Subsidiaries or any of its ERISA Affiliates has any
obligation or liability (contingent or otherwise).

                    (b)         The Company has heretofore provided to Parent
true and complete copies of each of the Company Benefit Plans and certain
related documents, including, but not limited to, (i) each writing constituting
a part of such Company Benefit Plan, including all amendments thereto; (ii) the
three most recent Annual Reports (Form 5500 Series) or other annual report, as
applicable, and accompanying schedules, if any; (iii) the most recent
determination letter from the U.S. Internal Revenue Service (“IRS”) (if
applicable) for such Company Benefit Plan; (iv) the most recent actuarial
report, if any; (v) the most recent summary plan descriptions; and (vi) written
summaries of all non-written Company Benefit Plans.

                    (c)         Each Company Benefit Plan has been maintained
and administered in compliance in all material respects with its terms and with
applicable Law, including ERISA and the Code, to the extent applicable thereto.
Each of the Company Benefit Plans intended to be “qualified” within the meaning
of Section 401(a) of the Code is so qualified, and there are no existing
circumstances or any events that have occurred that could reasonably be expected
to adversely affect the qualified status of any such plan. With respect to each
Company Benefit Plan that is subject to Title IV of ERISA, the present value of
the accrued benefits under such Company Benefit Plan, based upon the actuarial
assumptions used for funding purposes in the most recent actuarial report
prepared for such Company Benefit Plan’s actuary with respect to such Company
Benefit Plan, did not, as of its latest valuation date, materially exceed the
then current value of the assets of such Company Benefit Plan allocable to such
accrued benefits. No Company Benefit Plan provides a material amount of health
benefit coverage (whether or not insured), with respect to current or former
employees or directors of the Company, its Subsidiaries or any of its ERISA
Affiliates beyond their retirement or other termination of service, other than
coverage mandated by applicable Law and at the expense of the employee or the
employee’s beneficiary. No liability under Title IV of ERISA has been incurred
by the Company, its Subsidiaries or any ERISA Affiliate of the Company that has
not been satisfied in full (other than with respect to amounts not yet due), and
no condition exists that presents a risk to the Company, its Subsidiaries or any
ERISA Affiliate of the Company of incurring a liability thereunder. No Company
Benefit Plan is a “multiemployer pension plan” (as such term is defined in
Section 3(37) of ERISA) or a plan that has two or more contributing sponsors, at
least two of whom are not under common control, within the meaning of Section
4063 of ERISA. All contributions or other amounts payable by the Company, its
Subsidiaries or any of its ERISA Affiliates as of the date hereof with respect
to each Company Benefit Plan in respect of current or prior plan years have been
timely paid or accrued in accordance with GAAP and no material accumulated
funding deficiencies exist with respect to any of the Company Benefit Plans
subject to Title IV of ERISA or Section 412 of the Code. Neither the Company nor
its Subsidiaries or ERISA Affiliates has engaged in a transaction in connection
with which the Company, its Subsidiaries or its ERISA Affiliates reasonably
could be subject to either a civil penalty assessed pursuant to Section 409 or
502(i) of ERISA or a Tax imposed pursuant to Section 4975 or 4976

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of the Code. There are no pending, threatened or anticipated claims (other than
routine claims for benefits) by, on behalf of or against any of the Company
Benefit Plans, or any trusts related thereto (including claims by any
Governmental Entity), which could reasonably be expected to result in liability
to the Company, its Subsidiaries and its ERISA Affiliates taken as a whole.
“ERISA Affiliate” means, with respect to any entity, trade or business, any
other entity, trade or business (whether or not incorporated) that is a member
of a group described in Section 414(b), (c), (m) or (o) of the Code or Section
4001(b)(1) of ERISA that includes the first entity, trade or business, or that
is a member of the same “controlled group” as the first entity, trade or
business pursuant to Section 4001(a)(14) of ERISA.

                    (d)         The consummation of the transactions
contemplated by this Agreement will not, either alone or in combination with
another event, (i) entitle any current or former employee, consultant or officer
of the Company, its Subsidiaries or any of its ERISA Affiliates to severance
pay, unemployment compensation or any other payment, except as expressly
provided in this Agreement or as required by applicable Law, or (ii) accelerate
the time of payment or vesting, or increase the amount of compensation due any
such employee, consultant or officer, except as expressly provided in this
Agreement. No payments or benefits under a Company Benefit Plan or other
agreement of the Company, its Subsidiaries or any ERISA Affiliate of the Company
will be considered an “excess parachute payment” under Section 280G of the Code.
No Company Benefit Plan triggers the imposition of penalty taxes under Section
409A of the Code. Since January 1, 2009, each Company Benefit Plan that is
subject to Section 409A of the Code has complied with Section 409A of the Code
and the final regulations issued thereunder. No payments or benefits under a
Company Benefit Plan or other agreement of the Company, any of its Subsidiaries
or any of its ERISA Affiliates are, or are expected to be, subject to the
disallowance of a deduction under Section 162(m) of the Code. Neither the
Company, any of its Subsidiaries nor any of its ERISA Affiliates has declared or
paid any bonus compensation in contemplation of the transactions contemplated by
this Agreement.

                    (e)         Neither the Company, any of its Subsidiaries,
nor any of its ERISA Affiliates has made a plan or commitment, whether or not
legally binding, to create any additional Company Benefit Plan or to modify or
change any existing Company Benefit Plan. No statement, either written or oral,
has been made by the Company, any of its Subsidiaries or any of its ERISA
Affiliates to any person with regard to any Company Benefit Plan that was not in
accordance with the terms of an existing Company Benefit Plan and that could
have an material adverse economic consequence to the Company, any of its
Subsidiaries or any of its ERISA Affiliates. All Company Benefit Plans may be
amended or terminated without penalty by the Company, any of its Subsidiaries or
any of its ERISA Affiliates at any time on or after the Closing.

          Section 3.10    Absence of Certain Changes or Events.

                    (a)         Since June 30, 2008, except as otherwise
contemplated or required by this Agreement or the Prior Agreement, the
businesses of the Company and its Subsidiaries have been conducted, in all
material respects, in the ordinary course of business consistent with past
practice, and there has not been any event, development or state of
circumstances that has had, individually or in the aggregate, a Company Material
Adverse Effect.

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                    (b)         Since June 30, 2008, neither the Company nor any
of its Subsidiaries has taken any action described in Section 5.1(b) hereof that
if taken after the date hereof and prior to the Effective Date without the prior
written consent of Parent would violate such provision.

                    (c)         Since June 30, 2008, no condemnation or eminent
domain proceeding or any damage, destruction or casualty loss affecting any
assets of the Company or its Subsidiaries, whether or not covered by insurance,
has occurred which would have, individually or in the aggregate, a Company
Material Adverse Effect.

                    (d)         Except as set forth in Section 3.10(d) of the
Company Disclosure Schedule, since June 30, 2008, no termination of employment
(whether voluntary or involuntary) of any officer or key employee of the Company
or its Subsidiaries has occurred.

                    (e)         Since June 30, 2008, no material Tax election
has been made with respect to the Company, there has been no material change in
any of its methods of Tax accounting and no settlement of any claim for Taxes
with respect to the Company has been made.

          Section 3.11    Investigations; Litigation. Except as set forth in
Section 3.11 of the Company Disclosure Schedule, as of the date hereof, there is
no action, suit, proceeding, arbitration or, to the knowledge of the Company,
investigation pending or threatened (a) against the Company or any of its
Subsidiaries at Law or in equity or before any Governmental Entity or (b) that
seeks restraint, prohibition, damages or other extraordinary relief in
connection with this Agreement or the consummation of the transactions
contemplated hereby. There are no unsatisfied judgments or outstanding orders,
injunctions, decrees, writs, stipulations or awards by any Governmental Entity
against the Company or any of its Subsidiaries.

          Section 3.12    Proxy Statement; Other Information. The proxy
statement (including the letter to shareholders, notice of meeting and form of
proxy, the “Proxy Statement”) to be filed by the Company with the SEC in
connection with seeking the approval of this Agreement and the Plan and related
matters by the shareholders of the Company will not, at the time it is filed
with the SEC, or at the time it is first mailed to the shareholders of the
Company or at the time of the Company Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Company will cause
the Proxy Statement to comply as to form in all material respects with the
requirements of the Exchange Act applicable thereto as of the date of such
filing.

          Section 3.13    Regulatory Compliance.

                    (a)         All products and services of the Company or any
of its Subsidiaries that are subject to regulation by the United States Food and
Drug Administration (the “FDA”) and other applicable U.S. federal, state or
local regulatory agencies, are manufactured, produced, tested, developed,
processed, labeled, stored, distributed, and marketed in compliance in all
material respects with all applicable regulations, guidelines and orders
administered or issued by the FDA and any other applicable U.S. federal, state
and local regulatory agencies, including without limitation, the following:

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•

FDA Quality System Regulation;

 

 

 

 

•

FDA Establishment Registration requirements;

 

 

 

 

•

FDA Medical Device Listing requirements;

 

 

 

 

•

FDA Premarket Notification (510(k)) regulations;

 

 

 

 

•

FDA Labeling regulations; and

 

 

 

 

•

FDA Medical Device Reporting regulations.

                    (b)         All manufacturing sites and product and service
facilities of the Company and its Subsidiaries are operated in compliance in all
material respects with (i) the FDA’s Establishment Registration requirements and
Quality System Regulation requirements at 21 C.F.R. Part 820, and (ii) any state
requirements for manufacturing and distribution facilities, as applicable.

                    (c)         Each product manufactured, produced, tested,
developed, processed, labeled, stored, sold, or distributed by or on behalf of
the Company or any of its Subsidiaries (and any modification thereof, as
applicable) has received to the extent required Section 510(k) clearance(s) from
the FDA clearing such product for commercial distribution. None of the Company’s
or its Subsidiaries’ current products (including any products under development)
are the subject of or require FDA premarket approval, or the subject of any
pre-clinical or clinical trial.

                    (d)         Each product distributed, sold or leased, or
service rendered, by the Company or any of its Subsidiaries complies in all
material respects with all applicable product safety and electrical safety
standards of each applicable product and electrical safety agency, commission,
board or other Governmental Entity.

                    (e)         Neither the Company nor any of its Subsidiaries,
nor, to the knowledge of the Company, any officer, employee or agent of the
Company or any of its Subsidiaries, has made an untrue statement of a material
fact or fraudulent statement to the FDA or any other Governmental Entity, failed
to disclose a material fact required to be disclosed to the FDA or any other
Governmental Entity, or committed an act, made a statement, or failed to make a
statement that, at the time such disclosure was made, would reasonably be
expected to provide a basis for the FDA or any other Governmental Entity to
invoke its policy respecting fraud, untrue statements, bribery and illegal
gratuities or any similar policy.

                    (f)         There are no pending or, to the knowledge of the
Company, threatened FDA warning letters; recalls (either voluntary or
mandatory), market withdrawals, field actions, or seizures; revocations,
withdrawals, suspensions or cancellations of prior FDA or other governmental
approval or clearance; internal stop-ships; banned or administratively detained
products; or other enforcement actions or sanctions by or before the FDA in
connection with any

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products currently manufactured, produced, tested, developed, processed,
labeled, stored, sold, or distributed by or on behalf of the Company or any of
its Subsidiaries.

                    (g)         The Company and each of its Subsidiaries has
obtained all necessary foreign government agency licenses, approvals, permits
and authorizations for sale and distribution of its products and provision of
its services, as applicable, to each foreign country or jurisdiction in which
such products or services is currently sold, leased, marketed or otherwise
commercially distributed and provided and is in compliance with applicable Laws
of such countries and/or jurisdictions.

                    (h)         None of the Company or any of its Subsidiaries
has been required to enter into any business associate agreements pursuant to 45
C.F.R. Sections 164.502(e) or 504(e).

          Section 3.14    Tax Matters.

                    (a)         The Company and each of its Subsidiaries have
prepared and timely filed (taking into account any extension of time within
which to file) all Tax Returns required to be filed by any of them and all such
filed Tax Returns are complete and accurate in all material respects. The
Company and each of its Subsidiaries have paid all Taxes that are required to be
paid by any of them (whether or not show on a Tax Return), except with respect
to matters contested in good faith and for which adequate reserves have been
established in accordance with GAAP. All Tax Returns of the Company and each of
its Subsidiaries for all periods ending on or before December 31, 2005, have
been examined by the relevant taxing authority (or the period for assessment of
the Taxes in respect of which such Tax Returns were required to be filed has
expired). There are no pending or, to the knowledge of the Company, threatened
in writing, audits, examinations, investigations or other proceedings in respect
of Tax matters. There are no Liens for Taxes on any of the assets of the Company
or any of its Subsidiaries other than the Company Permitted Liens. None of the
Company or any of its Subsidiaries has been a “controlled corporation” or a
“distributing corporation” in any distribution occurring during the two-year
period ending on the date hereof that was purported or intended to be governed
by Section 355 of the Code (or any similar provision of state, local or foreign
Law). The Company and each of its Subsidiaries have withheld and paid all
amounts of Taxes required to have been withheld and paid in connection with any
amounts paid or owing to any employee, independent contractor, creditor,
stockholder or other third party. Neither the Company nor any of its
Subsidiaries is a party to or has any obligation under any Tax sharing, Tax
indemnity or Tax allocation agreement or similar contract or arrangement.
Neither the Company nor any of its Subsidiaries has participated in any “listed
transaction” within the meaning of Treasury Regulation 1.6011-4(b)(2). Neither
the Company nor any of its Subsidiaries will be required to include any item of
income in, or exclude any item of deduction from, taxable income for any taxable
period (or portion thereof) beginning after the Closing Date as a result of any
(A) change in method of accounting for a taxable period ending on or prior to
the Closing Date, (B) closing agreement as described in Section 7121 of the Code
(or any corresponding or similar provision of state, local or foreign Law)
executed on or prior to the Closing Date, (C) intercompany transactions or any
excess loss account described in Treasury Regulations under Section 1502 of the
Code (or any corresponding or similar provision of state, local or foreign Law),
(D) installment sale or open transaction disposition made on or prior to the
Closing Date, or (E)

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prepaid amount received on or prior to the Closing Date. Neither the Company nor
any of its Subsidiaries has operating losses or other tax attributes presently
subject to limitation under Sections 279, 382, 383, or 384 of the Code, or the
federal consolidated return regulations. No written claim has been made within
the previous five (5) years by a taxing authority in a jurisdiction where the
Company or any of its Subsidiaries does not file Tax Returns but where the
Company or any of its Subsidiaries is or may be subject to taxation or must file
Tax Returns. Since January 1, 2003, neither the Company nor any of its
Subsidiaries has been a member of an affiliated group of corporations within the
meaning of Section 1504 of the Code, other than the affiliated group of which
the Company is the common parent.

                    (b)         For purposes of Section 3.14(a), any reference
to the Company or a Subsidiary shall be deemed to include any person which
merged or was liquidated into such entity since January 1, 2003.

                    (c)         As used in this Agreement, (i) “Taxes” means any
and all domestic or foreign, federal, state, local or other taxes of any kind
(together with any and all interest, penalties, additions to tax and additional
amounts imposed with respect thereto) imposed by any Governmental Entity,
including taxes on or with respect to income, franchises, windfall or other
profits, gross receipts, property, sales, use, capital stock, payroll,
employment, unemployment, social security, workers’ compensation, or net worth,
and taxes in the nature of excise, withholding, ad valorem or value added, and
any liability for the foregoing payable by reason of contract, assumption,
operation of Law, Treasury Regulation Section 1.1502-6 (or any predecessor or
successor thereof of any analogous or similar provision under Law) or otherwise,
and (ii) “Tax Return” means any return, report or similar filing (including the
attached schedules) required to be filed with respect to Taxes, including any
information return, claim for refund, amended return or declaration of estimated
Taxes.

          Section 3.15    Labor Matters.

                    (a)         Neither the Company nor any of its Subsidiaries
is a party to, or bound by, any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization.
Neither the Company nor any of its Subsidiaries is subject to a strike or work
stoppage or to any labor dispute. To the knowledge of the Company, there are no
organizational efforts with respect to the formation of a collective bargaining
unit presently being made or threatened involving employees of the Company or
any of its Subsidiaries.

                    (b)         To the Company’s knowledge, no Company employee
has provided or is providing information to any law enforcement agency regarding
the commission or possible commission of any crime or the violation or possible
violation of any applicable Law. Neither the Company nor any of its Subsidiaries
nor, to the Company’s knowledge, any officer, employee, contractor,
subcontractor or agent of the Company or any such Subsidiaries has discharged,
demoted, suspended, threatened, harassed or in any manner discriminated against
a Company employee or any of its Subsidiaries in the terms and conditions of
employment because of any act of any such employee described in 18 U.S.C.
Section 1514A(a).

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                    (c)         All of the employees of the Company and each of
its Subsidiaries are either United States citizens or are legally entitled to
work in the United States under the Immigration Reform and Control Act of 1986,
as amended, other United States immigration Laws and the Laws related to the
employment of non-United States citizens applicable in the state in which the
employees are employed. Each of the Company and its Subsidiaries are in
compliance with all applicable Laws relating to employment, employment
practices, equal employment opportunity, immigration, collective bargaining,
payment of social security and similar Taxes, and wages and hours, except where
the failure to be in compliance would not have, individually or in the
aggregate, a Company Material Adverse Effect.

                    (d)         Except as set forth in Section 3.15(d) of the
Company Disclosure Schedule, (i) each current employee of the Company or any of
its Subsidiaries has, (ii) substantially all such former employees whose
relationships with the Company or a Subsidiary ended in the past five years
have, and (iii) substantially all current consultants to the Company or any of
its Subsidiaries (and substantially all such former consultants whose
relationships with the Company or a Subsidiary ended in the past five years) in
the electronic and software development areas have, executed and delivered to
the Company a Confidentiality, Assignment of Inventions and Non-Compete
Agreement substantially in the form included in Section 3.15(d) of the Company
Disclosure Schedule and all such agreements (and all other similar agreements
that may be listed in Section 3.15(d) of the Company Disclosure Schedule) are
enforceable by the Company or Subsidiary party thereto in accordance with their
terms, subject to general principles of equity, whether considered in a
proceeding at law or in equity.

          Section 3.16    Intellectual Property.

                    (a)         The Company through itself or its Subsidiaries
owns free and clear of all Liens or possesses valid and enforceable licenses to
use, all material patents, trademarks, trade names, service marks, copyrights
together with any registrations and applications therefor and any renewals,
modifications or extensions thereof, logos, brand names, trade dress, Internet
domain names, know-how, computer software programs or applications including all
object and source codes and tangible or intangible proprietary information or
material and all goodwill associated therewith that are used to conduct the
business of the Company and any of its Subsidiaries as currently conducted and
any similar, corresponding or equivalent rights to any of the foregoing anywhere
in the world (the “Company Intellectual Property”).

                    (b)         Section 3.16(b) of the Company Disclosure
Schedule includes a complete and accurate list of all granted and issued
material patents, registered and unregistered trademarks, registered and
unregistered service marks and trade names, registered domain names and
registered copyrights, and all applications for the same, included in the
Company Intellectual Property owned by the Company and its Subsidiaries,
indicating as to each item as applicable, (i) the jurisdictions in which the
item is issued or registered or in which any application for issuance or
registration has been filed; (ii) the respective issuance, registration, or
application number of the item; and (iii) the dates of application, issuance or
registration of the item.

                    (c)         Section 3.16(c) of the Company Disclosure
Schedule also includes a complete and accurate list of all material licenses or
other agreements (i) by which the Company

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or any of its Subsidiaries is authorized to use any third party’s intellectual
property that is currently used in the conduct of the Company’s or its
Subsidiaries’ business (excluding off-the-shelf computer programs), and (ii) by
which the Company or any of its Subsidiaries licenses or otherwise authorizes a
third party to use any Company Intellectual Property owned by Company or its
Subsidiaries. With respect to all intellectual property licensed from third
parties, the right to use such intellectual property is free and clear of all
Liens, and subject only to the restrictions and limitations set forth in the
applicable written license agreements.

                    (d)         There are no actions that must be taken within
120 days of the Closing, including payment of any registration, maintenance or
renewal fees or the filing of any documents, applications or certificates for
the purposes of maintaining, perfecting or preserving or renewing any Company
Intellectual Property described in Section 3.16(b) of the Company Disclosure
Schedule.

                    (e)         Except as set forth is Section 3.16(e) of the
Company Disclosure Schedule, the Company has not received any notice of any
conflict with or violation or infringement of or any claims of conflict with,
any rights of any other person with respect to the Company Intellectual Property
owned by the Company, nor, to the knowledge of the Company, does any third party
have any valid grounds for any bona fide claims against the use by the Company
or any of its Subsidiaries of any Company Intellectual Property owned by the
Company. All granted and issued patents, all registered trademarks, registered
service marks and registered copyrights described in Section 3.16(b) of the
Company Disclosure Schedule are valid, enforceable and subsisting. To the
knowledge of the Company, there has not been and there is not any unauthorized
use, infringement or misappropriation by any third person of any of the Company
Intellectual Property owned by the Company.

                    (f)         The Company and its Subsidiaries have used
commercially reasonable efforts to safeguard and maintain the rights of the
Company in the Company Intellectual Property, and the secrecy and
confidentiality of the material trade secrets and the source code of any
proprietary software owned, used or licensed by the Company in the operation of
the Company and its Subsidiaries. To the knowledge of the Company, there has not
been, and there is not, any unauthorized disclosure or misappropriation of any
such trade secrets. Without limiting the foregoing, the Company and each of its
Subsidiaries has and enforces a policy requiring each employee and contractor to
execute a proprietary information/nondisclosure agreement substantially in the
form(s) provided to Parent and all employees and contractors of the Company and
its Subsidiaries have executed such an agreement.

                    (g)         The Company and Subsidiaries have not entered
into any contracts with any Governmental Entity pursuant to which any of the
Company, Subsidiaries or any employees or consultants of the Company or
Subsidiaries are required to assign any rights in the Company Intellectual
Property in favor of the United States or foreign governments (or any of their
respective agencies).

          Section 3.17    Opinion of Financial Advisor. The Company has received
the opinion of Oak Ridge Financial Services Group, Inc., dated the date of this
Agreement, substantially to the effect that, as of such date and subject to the
limitations and assumptions set forth therein, the

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Merger Consideration to be received by the holders of shares of Company Common
Stock pursuant to this Agreement is fair, from a financial point of view, to
such holders.

          Section 3.18    Required Vote of the Company Shareholders. The
affirmative vote of the holders of outstanding shares of Company Common Stock
representing at least a majority of all the votes entitled to be cast thereupon
by holders of Company Common Stock is the only vote of holders of securities of
the Company which is required to approve this Agreement and the Plan (the
“Company Shareholder Approval”). No “fair price,” “moratorium,” “control share
acquisition” or other similar anti-takeover statute or regulation enacted under
state or federal Laws in the United States applicable to the Company is
applicable to the Merger or the other transactions contemplated hereby. The
action of the Board of Directors of the Company in approving this Agreement is
sufficient to render inapplicable to this Agreement and the transactions
contemplated hereby the restrictions on “control share acquisitions” and
“business combinations” (as each such term is defined in the MBCA).

          Section 3.19    Material Contracts.

                    (a)         Except as set forth in Section 3.19 of the
Company Disclosure Schedule and for this Agreement and the Company Benefit
Plans, as of the date hereof, neither the Company nor any of its Subsidiaries is
a party to or bound by (i) any “material contract” (as such term is defined in
Item 601(b)(10) of Regulation S-K of the Exchange Act) or (ii) any of the
following: (A) contract that purports to limit, curtail or restrict the ability
of the Company or any of its existing or future Subsidiaries or affiliates to
compete in any geographic area or line of business or restrict the persons to
whom the Company or any of its existing or future Subsidiaries or affiliates may
sell products or deliver services, (B) loan or credit agreement, mortgage,
indenture, note or other contract or instrument evidencing indebtedness for
borrowed money by the Company or any of its Subsidiaries or any contract or
instrument pursuant to which indebtedness for borrowed money may be incurred or
is guaranteed by the Company or any of its Subsidiaries, (C) mortgage, pledge,
security agreement, deed of trust or other contract granting a Lien on any
property or assets of the Company or any of its Subsidiaries, (D) (x) customer
or client contract, or (y) any supplier contract that is reasonably likely to
involve annual purchases by the Company and its Subsidiaries in excess of
$20,000 (in the aggregate) in any of fiscal years 2011, 2012 or 2013, (E)
contract (other than customer, client or supply contracts) that involve
consideration (whether or not measured in cash) of greater than $20,000, (F)
contract that restricts or otherwise limits the payment of dividends or other
distributions on equity securities, (G) to the extent material to the business
or financial condition of the Company and its Subsidiaries, taken as a whole,
(1) product or intellectual property design or development contract, (2) license
or royalty contract or (3) contract granting a right of first refusal or first
negotiation or “most favored nation” status, (H) investment banker engagement or
similar agreement pursuant to which any person would be entitled to payment in
connection with the Merger, (I) contract which would prohibit or delay the
consummation of any of the transactions contemplated by this Agreement, and (J)
commitment or agreement to enter into any of the foregoing (all contracts of the
type described in this Section 3.19(a) being referred to herein as “Company
Material Contracts”). Neither the Company nor any of its Subsidiaries is a party
to, or otherwise bound by or subject to, any agreement, contract, commitment or
understanding, oral or written, regarding the sale, license or other transfer of
rights or interests in any of the products

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listed in Section 3.19(a)(1) of the Company Disclosure Schedule. The Company has
provided to Parent correct and complete copies of each Company Material Contract
in existence as of the date hereof, together with any and all amendments and
supplements thereto, “side letters” and similar documentation relating thereto.

                    (b)         Each Company Material Contract to which any of
the Company or its Subsidiaries is a party or by which any of them is bound is
in full force and effect and constitutes the valid and binding obligation of the
Company or such Subsidiary, as the case may be, and, to the knowledge of the
Company, constitutes the valid and binding obligation of the other parties
thereto. To the knowledge of the Company, no other party to any Company Material
Contract is in breach of or default under the terms of any Company Material
Contract. Section 3.19(b)(i) of the Company Disclosure Schedule sets forth a
correct and complete list, as of the date hereof, of each current customer of
the Company or any of its Subsidiaries that has provided notice of an intention
(A) to terminate its contract(s) with the Company and/or a Company Subsidiary,
(B) not to renew its contract(s) with the Company and/or a Company Subsidiary at
the end of the current contract term(s), (C) to substantially reduce its
business under its contract or (D) to terminate its contract(s) or business
relationship with the Company and/or a Company Subsidiary as a result of the
announcement or consummation of the transactions contemplated by the Agreement.

          Section 3.20    Insurance. Section 3.20 of the Company Disclosure
Schedule sets forth a correct and complete list of all insurance policies
(including information on the premiums payable in connection therewith and the
scope and amount of the coverage provided thereunder) maintained by the Company
or any of its Subsidiaries (the “Policies”). The Policies (i) have been issued
by insurers which are reputable and (ii) are in full force and effect. Neither
the Company nor any of its Subsidiaries is in material breach or default, and
neither the Company nor any of its Subsidiaries have taken any action or failed
to take any action which, with notice or the lapse of time, would constitute
such a material breach or default, or permit termination or material
modification, of any of the Policies. No notice of cancellation or termination
has been received by the Company with respect to any of the Policies. The
consummation of the Merger will not, in and of itself, cause the revocation,
cancellation or termination of any Policy.

          Section 3.21    Title To and Sufficiency of Property; Liens; Leases.

                    (a)         Each of the Company and its Subsidiaries has
good, valid and marketable title to, or, in the case of leased properties and
assets, valid leasehold interests in, all of its real property and its tangible
properties and assets, in each case subject to no Liens, except for: (i) Liens
reflected in the consolidated balance sheet of the Company as of December 31,
2008; (ii) Liens consisting of zoning or planning restrictions, easements,
Permits and other restrictions or limitations on the use of real property or
irregularities in title thereto or matters that would be disclosed by an
accurate survey of the real property, and (iii) Liens for current Taxes,
assessments or governmental charges or levies on property not yet due or which
are being contested in good faith. Each of the Company and its Subsidiaries is
in compliance with the terms of all leases of tangible properties to which it is
a party and under which it is in occupancy, and all such leases are in full
force and effect and each of the Company and its Subsidiaries enjoys peaceful
and undisturbed possession under all such leases.

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                    (b)         All tangible assets owned or used by the Company
and its Subsidiaries in the operation of their respective businesses (including
all assets held by the Company and its Subsidiaries under leases and licenses)
are in good operating condition and repair for assets of like type and age,
subject to ordinary wear and tear, and are adequate for the conduct of such
businesses as currently conducted.

                    (c)         Section 3.21(c) of the Company Disclosure
Schedule sets forth the address or other description of each parcel of real
property owned by the Company or any of its Subsidiaries (“Owned Real
Property”). Neither the Company nor any of its Subsidiaries has collaterally
assigned or granted any security interest in such Owned Real Property.

                    (d)         Each lease (a “Real Property Lease”) of real
property used by the Company or its Subsidiaries in the conduct of their
business as currently conducted is listed in Section 3.21(d) of the Company
Disclosure Schedule (“Leased Real Property”).

 

 

 

                        (i)     Each Real Property Lease relating to a Leased
Real Property has been duly authorized and executed by the Company or such
Subsidiary, as applicable.

 

 

 

                        (ii)    Neither the Company nor any Subsidiary is in
default in any material respect under any Real Property Lease relating to a
Leased Real Property, nor has any event occurred which, with notice or the
passage of time, or both, would give rise to such a default in any material
respect by the Company or such Subsidiary, as applicable.

 

 

 

                        (iii)   To the knowledge of the Company, no other party
to any Real Property Lease relating to a Leased Real Property is in default in
any material respect under any such lease.

 

 

 

                        (iv)   Neither the Company nor any of its Subsidiaries
has assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered
any interest in any Real Property Lease relating to a Leased Real Property.

                    (e)         No assessment for public improvement, which is
due and remaining unpaid, has been made against any Owned Real Property or
Leased Real Property, and, to the Company’s knowledge, there are no currently
proposed or pending assessments for public improvements against the Owned Real
Property or Leased Real Property to which the Company or any of its Subsidiaries
will be responsible. Since January 1, 2004, there has been no condemnation or
eminent domain proceeding filed, or to the knowledge of the Company, threatened,
which has had, or would reasonably be expected to have, an adverse effect on a
portion of, or the Company or any Subsidiary’s use of a portion of, the Owned
Real Property or Leased Real Property.

          Section 3.22     Finders or Brokers. Except for fees relating to the
opinion described in Section 3.17, neither the Company nor any of its
Subsidiaries has employed any investment banker, broker or finder in connection
with the transactions contemplated by this Agreement who might be entitled to
any fee or any commission in connection with or upon consummation of the Merger.

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          Section 3.23     Voting Agreements. Each of the directors and
executive officers of the Company has executed and delivered to Parent the
voting agreements in the form of Exhibit B attached hereto (the “Voting
Agreements”).

          Section 3.24     Off-Balance Sheet Arrangements. Section 3.24 of the
Company Disclosure Schedule describes (to the extent not previously disclosed in
the Company SEC Documents), and the Company has delivered to Parent copies of
the documentation creating or governing, all securitization transactions and
other “off-balance sheet arrangements” (as defined in Item 303(c) of Regulation
S-K of the SEC) that existed or were effected by Company or its Subsidiaries
since January 1, 2004 in effect on the date hereof.

          Section 3.25     Compliance with Insider Trading Laws. As of the
Closing, neither the Company, nor its Subsidiaries, nor any director or officer
of the Company will have purchased or sold any securities of (a) Parent from
January 1, 2009 through the Closing or (ii) the Company from June 30, 2008
through the Closing.

          Section 3.26     Illegal Payments. Neither the Company, its
Subsidiaries or, to the knowledge of the Company, any officer, director or
employee of the Company or its Subsidiaries has: (a) used any funds of the
Company or its Subsidiaries for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (b) made any payment in
violation of applicable Law to any Governmental Entity official or employee or
to any foreign or domestic political party or campaign or violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended; or (c) made any other
payment in violation of applicable Law.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB

          Except as disclosed in forms, documents and reports required to be
filed or furnished prior to the date hereof by Parent with the SEC (such
documents and reports, together with any reports filed by Parent with the SEC on
a voluntary basis on Form 8-K, the “Parent SEC Documents”), to the extent the
relevance of the disclosure is readily apparent and excluding any disclosures
included in any such Parent SEC Document that are predictive or cautionary in
nature, or in the disclosure schedule delivered by Parent to the Company
immediately prior to the execution of this Agreement (the “Parent Disclosure
Schedule”), Parent and Merger Sub jointly and severally represent and warrant to
the Company as follows:

          Section 4.1     Qualification; Organization, Subsidiaries, etc. Each
of Parent and Merger Sub is a legal entity duly organized, validly existing and
in good standing under the Laws of its respective jurisdiction of organization
and has all requisite corporate or similar power and authority to own, lease and
operate its properties and assets and to carry on its business as presently
conducted and is qualified to do business and is in good standing as a foreign
corporation in each jurisdiction where the ownership, leasing or operation of
its assets or properties or conduct of its business requires such qualification,
except where the failure to be so organized, validly existing, qualified or in
good standing, or to have such power or authority, would not, individually or in
the aggregate, prevent or materially delay or materially impair the

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ability of Parent or Merger Sub to consummate the Merger and the other
transactions contemplated by this Agreement (a “Parent Material Adverse
Effect”). Parent has made available to the Company prior to the date of this
Agreement a true and complete copy of the certificate or articles of
incorporation and by-laws or other equivalent organizational documents of Parent
and Merger Sub, each as amended through the date hereof.

          Section 4.2     Corporate Authority Relative to This Agreement; No
Violation.

                    (a)         Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby (including the Plan). The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Boards of Directors of
Parent and Merger Sub and by Parent, as the sole shareholder of Merger Sub, and,
except for the filing of the Articles of Merger with the Secretary of State of
the State of Minnesota, no other corporate proceedings on the part of Parent or
Merger Sub are necessary to authorize the consummation of the transactions
contemplated hereby. This Agreement has been duly and validly executed and
delivered by Parent and Merger Sub and, assuming this Agreement constitutes the
valid and binding agreement of the Company, this Agreement constitutes the valid
and binding agreement of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms, subject to the Bankruptcy
and Equity Exception.

                    (b)         The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation of the Merger by
Parent and Merger Sub do not and will not require any consent, approval,
authorization or permit of, action by, filing with or notification to any
Governmental Entity, other than (i) the filing of the Articles of Merger, (ii)
compliance with applicable federal or state antitrust, competition or similar
Laws of any foreign jurisdiction, (iii) compliance with the applicable
requirements of the Exchange Act, (iv) compliance with any applicable foreign or
state securities or blue sky laws, and (v) the other consents and/or notices set
forth on Section 4.2(b) of the Parent Disclosure Schedule (collectively, clauses
(i) through (v), collectively, the “Parent Approvals”), and other than any other
consent, approval, authorization, permit, action, filing or notification the
failure of which to make or obtain would not, individually or in the aggregate,
have a Parent Material Adverse Effect.

                    (c)         The execution, delivery and performance by
Parent and Merger Sub of this Agreement and the consummation by Parent and
Merger Sub of the Merger and the other transactions contemplated hereby do not
and will not (i) contravene or conflict with the organizational or governing
documents of Parent or Merger Sub, (ii) assuming compliance with the matters
referenced in Section 4.2(b), contravene or conflict with or constitute a
violation of any provision of any Law binding upon or applicable to Parent or
Merger Sub or any of their respective properties or assets, or (iii) 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 material obligation or to the loss of a material benefit under any loan,
guarantee of indebtedness or credit agreement, note, bond, mortgage, indenture,
lease, agreement, contract, instrument, permit, concession, franchise, right or
license binding upon Parent or Merger Sub or result in the creation of any Lien
(other than Parent Permitted Liens) upon any of the properties

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or assets of Parent or Merger Sub, other than, in the case of clauses (ii) and
(iii), any such violation, conflict, default, termination, cancellation,
acceleration, right, loss or Lien that would not have, individually or in the
aggregate, a Parent Material Adverse Effect. “Parent Permitted Lien” means any
Lien (A) for Taxes or governmental assessments, charges or claims of payment not
yet due or being contested in good faith, provided adequate accruals or reserves
have been established in accordance with GAAP, (B) which is a carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Lien
arising in the ordinary course of business, (C) which is disclosed on the most
recent consolidated balance sheet of Parent or (D) which was incurred in the
ordinary course of business since the date of the most recent consolidated
balance sheet of Parent.

          Section 4.3     Investigations; Litigation. There is no action, suit,
proceeding or, to the knowledge of Parent, investigation pending or, to the
knowledge of Parent, threatened against or relating to Parent or Merger Sub at
Law or in equity, or before any Governmental Entity, that seeks restraint,
prohibition, material damages or other extraordinary relief in connection with
this Agreement or the consummation of the transactions contemplated hereby.

          Section 4.4     Capitalization of Merger Sub. As of the date of this
Agreement, the authorized capital stock of Merger Sub consists of one thousand
(1,000) shares of common stock, par value $.01 per share, one hundred (100) of
which are validly issued and outstanding. All of the issued and outstanding
capital stock of Merger Sub is, and at the Effective Date will be, owned by
Parent or a direct or indirect wholly owned Subsidiary of Parent. Merger Sub has
outstanding no option, warrant, right, or any other agreement pursuant to which
any person other than Parent may acquire any equity security of Merger Sub.
Except in respect of the Prior Agreement and the Settlement Agreement (to which
Merger Sub was and is a party, as the case may be), Merger Sub (a) has not
conducted any business prior to the date hereof and (b) has, and prior to the
Effective Date will have, no assets, liabilities or obligations of any nature
other than those incident to its formation and pursuant to this Agreement and
the Merger and the other transactions contemplated by this Agreement.

          Section 4.5     No Vote of Parent Stockholders. No vote of the
stockholders of Parent or the holders of any other securities of Parent (equity
or otherwise) is required by any applicable Law, the certificate of
incorporation or by-laws or other equivalent organizational documents of Parent
or the applicable rules of any exchange on which securities of Parent are
traded, in order for Parent to consummate the transactions contemplated hereby.

          Section 4.6     Finders or Brokers. Neither Parent nor any of its
Subsidiaries has employed any investment banker, broker or finder in connection
with the transactions contemplated by this Agreement who might be entitled to
any fee or any commission in connection with or upon consummation of the Merger.

          Section 4.7     Lack of Ownership of Company Common Stock. As of the
date of this Agreement, neither Parent nor any of its Subsidiaries nor, to
Parent’s knowledge, any of their affiliates, beneficially owns, directly or
indirectly, any shares of Company Common Stock or other securities convertible
into, exchangeable into or exercisable for shares of Company Common Stock. There
are no voting trusts or other agreements or understandings to which

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Parent or any of its Subsidiaries is a party with respect to the voting of the
capital stock or other equity interest of the Company or any of its
Subsidiaries.

          Section 4.8     Absence of Arrangements with Management. Other than as
contemplated by this Agreement, as of the date hereof, there are no contracts,
undertakings, commitments, agreements or obligations or understandings between
Parent or Merger Sub or any of their affiliates, on the one hand, and any member
of the Company’s management or Board of Directors, on the other hand, relating
to the transactions contemplated by this Agreement or the operations of the
Company after the Effective Date.

ARTICLE V

COVENANTS AND AGREEMENTS

          Section 5.1     Conduct of Business by the Company and Parent.

                    (a)         From and after the date hereof and prior to the
Effective Date or the date, if any, on which this Agreement is earlier
terminated pursuant to Section 7.1 (the “Termination Date”), and except (i) as
may be required by applicable Law, (ii) as may be agreed in writing by Parent,
or (iii) as may be contemplated or required by this Agreement, the Company
covenants and agrees with Parent that the business of the Company and its
Subsidiaries shall be conducted in, and such entities shall not take any action
except in, the ordinary course of business consistent with past practice and, to
the extent consistent therewith, the Company and its Subsidiaries shall use
commercially reasonable efforts to (i) preserve intact their current business
organization and (ii) preserve their relationships with customers, suppliers and
others having business dealings with them;

                    (b)         The Company agrees with Parent, on behalf of
itself and its Subsidiaries, that between the date hereof and the Effective
Date, without the prior written consent of Parent, the Company will not, and
will not permit any of its Subsidiaries to:

 

 

 

                       (i)      amend its articles or certificate of
incorporation, bylaws, partnership or joint venture agreements or other
organizational documents (except to the extent required to comply with
applicable Law or its obligations hereunder);

 

 

 

                       (ii)     combine or reclassify any shares of its capital
stock or declare, set aside or pay any dividend or other distribution or
redemption (whether in cash, stock or property or any combination thereof) in
respect of its capital stock, or redeem or otherwise acquire any of its
securities or any securities of its respective Subsidiaries;

 

 

 

                       (iii)    reclassify, combine, split, subdivide or redeem,
purchase or otherwise acquire, directly or indirectly, any of its capital stock,
stock options or debt securities;

 

 

 

                       (iv)     except as required by Company Benefit Plans, (A)
(1) increase the compensation or other benefits payable or provided to directors
or executive officers of the Company or, (2) except in the ordinary course of
business consistent with past

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practice, increase the compensation or other benefits payable or provided to
employees who are not directors or executive officers of the Company, (B) enter
into any employment, change of control, severance or retention agreement with
any employee of the Company or (C) except as permitted pursuant to clause (B)
above, establish, adopt, enter into or amend any collective bargaining
agreement, plan, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees or any of their
beneficiaries, except as would not result in a material increase in cost to the
Company;

 

 

 

                          (v)     change any of its financial accounting
policies or procedures or any of its methods of reporting income, deductions or
other items for financial accounting purposes, except as required by GAAP, SEC
rule or policy or applicable Law;

 

 

 

                          (vi)    issue, sell, pledge, dispose of or encumber,
or authorize the issuance, sale, pledge, disposition or encumbrance of, any
shares of its capital stock or other ownership interest in the Company or any
Subsidiaries or any securities convertible into or exchangeable for any such
shares or ownership interest, or any rights, warrants or options to acquire or
with respect to any such shares of capital stock, ownership interest or
convertible or exchangeable securities or take any action to cause to be
exercisable any otherwise unexercisable option under any existing stock option
plan (except as otherwise provided by the terms of this Agreement) other than
(A) issuances of shares of Company Common Stock in respect of any exercise of
Company Stock Options, and (B) the sale of shares of Company Common Stock
pursuant to the exercise of options to purchase Company Common Stock if
necessary to effectuate an optionee direction upon exercise or for withholding
of Taxes;

 

 

 

                          (vii)   directly or indirectly, purchase, redeem or
otherwise acquire any shares of its capital stock or any rights, warrants or
options to acquire any such shares;

 

 

 

                          (viii)   incur, assume, guarantee, prepay or otherwise
become liable for any indebtedness for borrowed money (directly, contingently or
otherwise), except for indebtedness for borrowed money incurred to replace,
renew, extend, refinance or refund any existing indebtedness for borrowed money
on materially no less favorable terms.

 

 

 

                          (ix)    sell, lease, license, transfer, exchange or
swap, mortgage or otherwise encumber (including securitizations), or subject to
any Lien (other than the Company Permitted Liens) or otherwise dispose of any
properties or assets, including any capital stock of Subsidiaries, except in the
ordinary course of business consistent with past practice or as may be required
by applicable Law or any Governmental Entity in order to permit or facilitate
the consummation of the transactions contemplated hereby, subject to the
limitations of Section 5.5(b);

 

 

 

                          (x)     alter, modify, amend, terminate, waive any
rights or exercise any option under any Company Material Contract in any
material respect in a manner which is adverse to the Company;

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                          (xi)    enter into any Company Material Contracts
other than in the ordinary course of business consistent with past practice or
enter into any collective bargaining agreement;

 

 

 

                          (xii)    (A) make, change or revoke any Tax election,
(B) file any amended Tax Return, (C) settle or compromise any liability for
Taxes or surrender any claim for a refund of Taxes, other than in the case of
clauses (B) and (C) hereof in respect of any Taxes that have been identified in
the reserves for Taxes in the Company’s GAAP financial statements included in
the Company’s SEC Documents, (D) change any accounting method, practice or
policy in respect of Taxes except as required by applicable Law, (E) prepare any
Tax Returns in a manner which is not consistent in all material respects with
the past practice of the Company and its Subsidiaries with respect to the
treatment of items on such Tax Returns, or (F) incur any liability for Taxes
other than in the ordinary course of business (including as a result of the
operation of the business in the ordinary course);

 

 

 

                          (xiii)   make any capital expenditure, financing or
expenditures which (i) involves the purchase of real property or (ii) is in
excess of $5,000 individually or $20,000 in the aggregate, other than capital
expenditures pursuant to contracts entered into prior to the date hereof (all of
which contracts are listed in Section 3.19 of the Company Disclosure Schedule);

 

 

 

                          (xiv)   acquire, sell, lease or dispose of any assets
outside the ordinary course of business;

 

 

 

                          (xv)    acquire, directly or indirectly (A) by merging
or consolidating with, or by purchasing all of or a substantial equity interest
in, or by any other manner, any person or division, business or equity interest
of any person or (B) except in the ordinary course of business consistent with
past practice, any assets;

 

 

 

                          (xvi)   make any investment (by contribution to
capital, property transfers, purchase of securities or otherwise) in, or loan or
advance (other than travel and similar advances to its employees in the ordinary
course of business consistent with past practice) to, any person;

 

 

 

                          (xvii)  pay, discharge, settle or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge, settlement or
satisfaction in accordance with the terms of such liabilities, claims or
obligations reflected or reserved against in the most recent consolidated
financial statements (or the notes thereto) of the Company included in the
Company SEC Documents or incurred since the date of such financial statements in
the ordinary course of business consistent with past practice;

 

 

 

                          (xviii) settle or compromise any litigation,
proceeding or investigation material to the Company and its Subsidiaries taken
as a whole;

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                          (xix)   adopt a plan of complete or partial
liquidation or resolutions providing for or authorizing such liquidation or a
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization, unless required by Law, administrative order or the terms of
this transaction;

 

 

 

                          (xx)    reduce the prices of products sold or services
performed for customers except in the ordinary course of business;

 

 

 

                          (xxi)   modify in any material respects any current
investment policies or investment practices, except as required by or to
accommodate changes in applicable Law;

 

 

 

                          (xxii)  enter into any transaction or take any action
or fail to take any action which would result in any of the representations and
warranties contained in this Agreement not being true and correct;

 

 

 

                          (xxiii) take any action or permit any other action to
occur which might have a Company Material Adverse Effect; or

 

 

 

                          (xxiv) agree, in writing or otherwise, to take any of
the foregoing actions.

                    (c)         Parent agrees with the Company, on behalf of
itself and its Subsidiaries, that, between the date hereof and the Effective
Date, Parent shall not, and shall not permit any of its Subsidiaries to take or
agree to take any action (including entering into agreements with respect to any
acquisitions, mergers, consolidations or business combinations) which would
reasonably be expected to result in, individually or in the aggregate, a Parent
Material Adverse Effect.

          Section 5.2     Investigation.

                    (a)         The Company shall afford to Parent and to its
officers, employees, accountants, consultants, legal counsel, financial advisors
and agents and other representatives (collectively, “Parent Representatives”)
reasonable access, throughout the period prior to the earlier of the Effective
Date and the Termination Date, to its and its Subsidiaries’ management,
employees, properties, contracts, commitments, books and records and any report,
schedule or other document filed or received by it pursuant to the requirements
of applicable Laws. Such reasonable access shall include, without limitation,
access to properties currently owned, operated, leased or otherwise used by the
Company or any of its Subsidiaries to conduct environmental sampling and
analysis. Within five (5) days from the date of this Agreement, the Company
shall, and cause its Subsidiaries and their respective Company Representatives
to, provide Parent Representatives reasonable access to its and its
Subsidiaries’ customers for the conduct of due diligence.

                    (b)         Parent hereby agrees that all information
provided to it or Parent Representatives in connection with this Agreement and
the consummation of the transactions contemplated hereby shall be deemed to be
Information, as such term is used in, and shall be treated in accordance with,
the Mutual Nondisclosure Agreement, dated as of September 24,

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2010, between the Company and Parent (the “Nondisclosure Agreement”), the terms
of which are hereby specifically incorporated into this Agreement.

          Section 5.3     No Solicitation.

                    (a)         The Company shall and shall cause its
Subsidiaries to, and shall use their best efforts to cause its and their
respective officers, employees, accountants, consultants, legal counsel,
financial advisor and agents and other representatives (collectively, “Company
Representatives”) to, (x) immediately cease and cause to be terminated any
discussions or negotiations with any person conducted heretofore with respect to
an Alternative Proposal or potential Alternative Proposal and (y) immediately
request the prompt return from all such persons, or the destruction by such
persons, of all copies of confidential information previously provided to such
persons by the Company, its Subsidiaries or their respective Company
Representatives and shall deny access to any virtual data room containing any
such information to any person (other than Parent and Parent Representatives).
The Company agrees that neither it nor any Subsidiary of the Company shall, and
that it shall use its best efforts to cause its and their respective Company
Representatives not to, directly or indirectly, (i) solicit, initiate, cause or
knowingly encourage directly or indirectly (including by way of furnishing
information) any inquiry with respect to, or the making, submission or
announcement of, any Alternative Proposal (as hereinafter defined), (ii)
participate in any negotiations regarding an Alternative Proposal with, or
furnish any information regarding the Company or any Alternative Proposal to,
any person that has made or, to the Company’s knowledge, is considering making
an Alternative Proposal, or (iii) engage in discussions regarding an Alternative
Proposal with any person that has made or, to the Company’s knowledge, is
considering making an Alternative Proposal, except to notify such person as to
the existence of the provisions of this Section 5.3. Without limiting the
foregoing, it is understood that any action taken by Company Representatives
that would be a violation of the restrictions set forth in Section 5.3 if taken
by the Company shall be deemed to be a breach of Section 5.3 by the Company.

                    (b)         Notwithstanding the limitations set forth in
this Section 5.3, prior to obtaining the Company Shareholder Approval (but in no
event after obtaining the Company Shareholder Approval), if (A) the Company
receives a bona fide written Alternative Proposal made after the date hereof
which the Board of Directors of the Company determines in good faith, by
resolution duly adopted (i) constitutes a Superior Proposal or (ii) is
reasonably likely to result in a Superior Proposal, and (B) the Board of
Directors of the Company determines in good faith, after consultation with its
outside counsel, that the failure to do so would be reasonably likely to be
inconsistent with the directors’ fiduciary duties under applicable Law, the
Company may take the following actions (only after providing Parent concurrent
notice of its intention to take such actions and after receiving from the third
party an executed agreement containing confidentiality provisions that are no
less favorable to the Company than those contained in the Confidentiality
Agreement): (x) furnish information to the person (including such person’s
representatives) making such Alternative Proposal, and (y) engage in discussions
or negotiations with such person (including such person’s representatives) with
respect to the Alternative Proposal. The Company shall provide Parent with a
correct and complete copy of any confidentiality agreement entered into pursuant
to this paragraph within 24 hours after the execution thereof and shall provide
to Parent a correct and complete copy of any information

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provided or made available to any person pursuant to this paragraph at the same
time such information is provided or made available to such other person.

                    (c)         The Company will promptly notify Parent (within
24 hours) of the receipt of any Alternative Proposal and shall, in any such
notice to Parent, indicate the identity of the person making such proposal and
the material terms and conditions of such proposal, shall include with such
notice a copy of such proposal, and thereafter shall promptly keep Parent
reasonably informed of all material developments affecting the status and terms
of such proposal (and the Company shall provide Parent promptly (within 24
hours) with copies of any additional written materials received that relate to
such proposal).

                    (d)         Except as expressly permitted by this Section
5.3(d), neither the Board of Directors of the Company nor any committee thereof
shall (i)(A) withdraw or modify, or propose publicly to withdraw or modify, in a
manner adverse to Parent, the approval of this Agreement and the Plan or the
recommendation by such Board of Directors or committee that shareholders of the
Company approve this Agreement and the Plan, (B) approve or recommend, or
propose publicly to approve or recommend, any Alternative Proposal or (C) in the
event of a tender offer or exchange offer for any outstanding shares of Company
Common Stock, fail to recommend against acceptance of such tender offer or
exchange offer by the Company’s shareholders within fifteen (15) business days
of the commencement thereof (for the avoidance of doubt, the taking of no
position or a neutral position by the Board of Directors of the Company in
respect of the acceptance of any tender offer or exchange offer by its
shareholders shall constitute a failure to recommend against any such offer)
(any action described in this clause (i) being referred to as a “Change of
Recommendation”) or (ii) approve or recommend, or propose publicly to approve or
recommend, or cause or authorize the Company or any of its Subsidiaries to enter
into, any letter of intent, agreement in principle, memorandum of understanding,
merger, acquisition, purchase or joint venture agreement or other agreement
related to any Alternative Proposal (other than a confidentiality agreement in
accordance with Section 5.3(b)) (each a “Company Acquisition Agreement”).
Notwithstanding the foregoing, at any time prior to obtaining the Company
Shareholder Approval and subject to this Section 5.3(d), the Board of Directors
of the Company may (1) make a Change of Recommendation if the Board of Directors
of the Company determines in good faith, after consultation with its outside
counsel, that the failure to do so would be reasonably like to be inconsistent
with the directors’ fiduciary duties under applicable Law or (2) in response to
a Superior Proposal, cause the Company to terminate this Agreement and
concurrently with such termination enter into a Company Acquisition Agreement,
subject to satisfaction of its obligations under Section 7.2; provided, however,
that the Board of Directors of the Company shall not be entitled to exercise its
right to terminate this Agreement pursuant to Section 7.1(f) until immediately
after the third business day following Parent’s receipt of written notice (a
“Superior Proposal Termination Notice”) from the Company advising Parent that
the Board of Directors of the Company intends to take such action and specifying
the reasons therefor, including a description of the material terms of the
Superior Proposal that is the basis for the proposed action of the Board of
Directors of the Company (it being understood and agreed that, in the event of
an amendment to the financial terms or other material terms of such Superior
Proposal, the Board of Directors of the Company shall not be entitled to
exercise such right based on such Superior Proposal, as so amended, until
immediately after the third business day following Parent’s receipt of a
Superior Proposal Termination Notice with respect to such

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Superior Proposal as so amended). In connection with any Superior Proposal
Termination Notice, the Company agrees that, until immediately after the third
business day following Parent’s receipt of such Superior Proposal Termination
Notice, the Company and its Representatives shall (if Parent so requests)
negotiate in good faith with Parent and its Representatives regarding any
revisions to the terms of the transactions contemplated by this Agreement
proposed by Parent. In determining whether to make a Change of Recommendation or
terminate this Agreement in response to a Superior Proposal, the Board of
Directors of the Company shall take into account any amendment to this Agreement
entered into, or to which Parent irrevocably covenants to enter into and for
which all internal approvals of Parent have been obtained, since receipt of the
applicable Superior Proposal Termination Notice, and shall not make a Change of
Recommendation or terminate this Agreement unless, prior to the effectiveness of
such Change of Recommendation or termination, the Board of Directors of the
Company shall have determined in good faith, after considering the results of
any such negotiations and any revised proposals made by Parent, that the
Superior Proposal giving rise to such notice continues to be a Superior
Proposal.

                    (e)         Nothing contained in this Agreement shall
prohibit the Company or its Board of Directors from issuing a “stop, look and
listen” statement pending disclosure of its position, in accordance with the
provisions of Section 5.3(d), contemplated by Rules 14d-9 and 14e-2(a)
promulgated under the Exchange Act.

                    (f)         As used in this Agreement, “Alternative
Proposal” shall mean any bona fide inquiry, proposal or offer made by any person
or “group” (as defined in Section 13(d) of the Exchange Act) prior to the
receipt of the Company Shareholder Approval (other than a proposal or offer by
Parent or any of its Subsidiaries) regarding (i) a merger, reorganization, share
exchange, consolidation, business combination, recapitalization, dissolution,
liquidation or similar transaction involving the Company, (ii) the acquisition
by any person or group of fifteen percent (15%) or more of the fair market value
of the assets of the Company and its Subsidiaries or (iii) the acquisition by
any person or group of fifteen percent (15%) or more of the outstanding shares
of Company Common Stock.

                    (g)         As used in this Agreement “Superior Proposal”
shall mean a bona fide, written offer made by a third party to acquire, directly
or indirectly, more than 66 2/3% of the equity securities of the Company or of
the fair market value of the assets of the Company and its Subsidiaries on a
consolidated basis, which the Board of Directors of the Company determines in
good faith, after consultation with the Company’s financial and legal advisors,
and considering such factors as the Company’s Board of Directors considers to be
appropriate (including the timing and likelihood of consummation of such
proposal), are more favorable to the Company and its shareholders from a
financial point of view than the transactions contemplated by this Agreement.

          Section 5.4     Proxy Statement; Company Meeting.

                    (a)         As soon as practicable following the date of
this Agreement, and in no case more than thirty (30) days following the date of
this Agreement, the Company shall prepare and file with the SEC the Proxy
Statement, which shall, include the Recommendation. The

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Company shall use its best efforts to (i) respond to any comments on the Proxy
Statement or requests for additional information from the SEC as soon as
practicable after receipt of any such comments or requests, (ii) obtain
clearance from the SEC to mail the Proxy Statement as soon as practicable, and
(iii) cause the Proxy Statement to be mailed to the shareholders of the Company
promptly upon such clearance. The Company shall promptly (A) notify Parent upon
the receipt of any such comments or requests and (B) provide Parent with copies
of all correspondence between the Company and Company Representatives, on the
one hand, and the SEC and its staff, on the other hand. Prior to responding to
any such comments or requests or the filing or mailing of the Proxy Statement,
the Company shall provide Parent with a reasonable opportunity to review and
comment on any drafts of the Proxy Statement and related correspondence and
filings. If at any time prior to the Effective Date any event shall occur, or
fact or information shall be discovered, that should be set forth in an
amendment of or a supplement to the Proxy Statement, the Company shall, in
accordance with the procedures set forth in this Section 5.4(a), prepare and
file with the SEC such amendment or supplement as soon thereafter as is
reasonably practicable and to the extent required by applicable Law, cause such
amendment or supplement to be distributed to the shareholders of the Company.
Parent and Merger Sub shall provide to the Company, in a timely manner, with
such information as is required to be included in the Proxy Statement under the
Exchange Act with respect to it or them and the rules promulgated thereunder and
such other information as the Company may reasonably request for inclusion in
the Proxy Statement.

                    (b)         The Company shall (i) take all action necessary
in accordance with the MBCA and its articles of incorporation and by-laws to
duly call, give notice of, convene and hold a meeting of its shareholders as
promptly as reasonably practicable following the mailing of the Proxy Statement
for the purposes of (A) obtaining the Company Shareholder Approval and (B) in
the event such meeting is also the Company’s annual meeting of shareholders, the
election of directors and such other purposes as the Company may determine (the
“Company Meeting”), and (ii) use all reasonable efforts to solicit from its
shareholders proxies in favor of the approval of this Agreement and the Plan.
Without limiting the generality of the foregoing, the Company’s obligations
pursuant to the first sentence of this Section 5.4(b) shall not be affected by
the commencement, public proposal, public disclosure or communication to the
Company of any Alternative Proposal.

          Section 5.5     Reasonable Best Efforts.

                    (a)         Subject to the terms and conditions set forth in
this Agreement, each of the parties hereto shall use its reasonable best efforts
(subject to, and in accordance with, applicable Law) to take promptly, or cause
to be taken, all actions, and to do promptly, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable under applicable Laws to consummate and make effective the Merger and
the other transactions contemplated by this Agreement, including (i) the
obtaining of all necessary actions or nonactions, waivers, clearances, consents
and approvals, including the Company Approvals and the Parent Approvals, from
Governmental Entities and the making of all necessary registrations and filings
and the taking of all steps as may be necessary to obtain an approval or waiver
from, or to avoid an action or proceeding by, any Governmental Entity, (ii) the
obtaining of all necessary consents, approvals or waivers from third parties,
and (iii) the execution and

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delivery of any additional instruments necessary to consummate the transactions
contemplated by this Agreement; provided, however, that in no event shall any
party hereto be required to pay prior to the Effective Date any fee, penalty or
other consideration to any third party for any consent or approval required for
the consummation of the transactions contemplated by this Agreement under any
contract or agreement.

                    (b)         Without limiting the foregoing, the Company and
Parent shall (i) use reasonable best efforts to cooperate with each other in (x)
determining whether any filings are required to be made with, or consents,
permits, authorizations, waivers, clearances or approvals are required to be
obtained from, any third parties or other Governmental Entities in connection
with the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and (y) timely making all such filings and
timely seeking all such consents, permits, authorizations, clearances or
approvals, (ii) use reasonable best efforts to take, or cause to be taken, all
other actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated hereby,
including taking all such further action as may be necessary to resolve such
objections, if any, as the United States Federal Trade Commission, the Antitrust
Division of the United States Department of Justice, state antitrust enforcement
authorities or competition authorities of any other nation or other jurisdiction
or any other person may assert under Regulatory Law (as hereinafter defined)
with respect to the Merger and the other transactions contemplated hereby, and
(iii) subject to applicable legal limitations and the instructions of any
Governmental Entity, keep each other apprised of the status of matters relating
to the completion of the transactions contemplated thereby, including promptly
furnishing the other with copies of notices or other communications received by
the Company or Parent, as the case may be, or any of their respective
Subsidiaries, from any third party and/or any Governmental Entity with respect
to such transactions. The Company and Parent shall permit counsel for the other
party reasonable opportunity to review in advance, and consider in good faith
the views of the other party in connection with, any proposed written
communication to any Governmental Entity. Each of the Company and Parent agrees
not to participate in any substantive meeting or discussion, either in person or
by telephone, with any Governmental Entity in connection with the proposed
transactions unless it consults with the other party in advance and, to the
extent not prohibited by such Governmental Entity, gives the other party the
opportunity to attend and participate. Notwithstanding anything in this Section
5.5 to the contrary, in no event will Parent or Merger Sub be obligated to, and
the Company and its Subsidiaries will not, propose or agree to accept any
undertaking or condition, to enter into any consent decree or hold separate
order, to make any divestiture, to accept any operational restriction or
limitation, or to take any other action that would (i) involve assets or
operations of Parent or any of its affiliates or (ii) reasonably be expected to
result in a Company Material Adverse Effect; provided, that for solely the
purposes of this Section 5.5(b), a Company Material Adverse Effect shall
include, without limitation, the divestiture of businesses, product lines or
assets that accounted for 15% or more of the Company’s and its Subsidiaries’
consolidated fiscal year 2010 EBITDA. Notwithstanding anything to the contrary
in this Agreement, in no event will Parent or Merger Sub be obligated to, and
the Company and its Subsidiaries will not, propose or agree to accept any
undertaking or condition to enter into any consent decree or hold separate
order, to make any divestiture, to accept any operational restriction or
limitation, or to take any other action that would involve assets or operations
of the Company or any of its affiliates in order to satisfy the condition set
forth in Section 6.1.

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                    (c)         In furtherance and not in limitation of the
covenants of the parties contained in this Section 5.5, if any administrative or
judicial action or proceeding, including any proceeding by a private party, is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Regulatory Law, each of the
Company and Parent shall cooperate in all respects with each other and shall use
their respective reasonable best efforts to contest and resist any such action
or proceeding and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order, whether temporary, preliminary or
permanent, that is in effect and that prohibits, prevents or restricts
consummation of the transactions contemplated by this Agreement. Notwithstanding
the foregoing or any other provision of this Agreement, nothing in this Section
5.5 shall limit a party’s right to terminate this Agreement pursuant to Section
7.1(b) or Section 7.1(c) so long as such party has, prior to such termination,
complied with its obligations under this Section 5.5.

                    (d)         For purposes of this Agreement, “Regulatory Law”
means the Sherman Act of 1890, the Clayton Antitrust Act of 1914, the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, the Federal Trade
Commission Act of 1914 and all other federal, state or foreign statutes, rules,
regulations, orders, decrees, administrative and judicial doctrines and other
Laws, including without limitation any antitrust, competition or trade
regulation Laws, that are designed or intended to (i) prohibit, restrict or
regulate actions having the purpose or effect of monopolization or restraint of
trade or lessening competition through merger or acquisition or (ii) protect the
national security or the national economy of any nation.

          Section 5.6     Takeover Statute. If any “fair price,” “moratorium,”
“control share acquisition” or other form of anti-takeover statute or regulation
shall be or become applicable to the transactions contemplated hereby, each of
the Company and Parent and the members of their respective Boards of Directors
shall grant such approvals and take such actions as are reasonably necessary so
that the transactions contemplated hereby may be consummated as promptly as
practicable on the terms contemplated hereby and otherwise act to eliminate or
minimize the effects of such statute or regulation on the transactions
contemplated hereby.

          Section 5.7     Public Announcements. The Company and Parent will, to
the extent practicable, consult with and provide each other the opportunity to
review any press release or other public statement or comment prior to the
issuance of such press release or other public statement or comment relating to
this Agreement or the transactions contemplated herein and, to the extent
practicable, shall not issue any such press release or other public statement or
comment prior to such consultation except as may be required by applicable Law
or by obligations pursuant to any listing agreement with any national securities
exchange. Parent and the Company agree to issue a joint press release announcing
this Agreement.

          Section 5.8     Control of Operations. Nothing contained in this
Agreement shall give Parent, directly or indirectly, the right to control or
direct the Company’s operations prior to the Effective Date. Prior to the
Effective Date, the Company shall exercise, consistent with the terms and
conditions of this Agreement, complete control and supervision over its
operations.

          Section 5.9     Notification of Certain Matters. The Company shall
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (i) any notice or other

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communication received by such party from any Governmental Entity in connection
with this Agreement or from any person alleging that the consent of such person
is or may be required in connection with the Merger or the transactions
contemplated hereby, if the subject matter of such communication or the failure
of such party to obtain such consent could be material to the Company, the
Surviving Corporation or Parent, (ii) any actions, suits, claims, investigations
or proceedings commenced or, to such party’s knowledge, threatened against,
relating to or involving or otherwise affecting such party or any of its
Subsidiaries which relate to the Merger or the transactions contemplated hereby,
and (iii) the discovery of any fact or circumstance that, or the occurrence or
non-occurrence of any event the occurrence or non-occurrence of which, would
cause the failure of any condition to consummation of the Merger; provided,
however, that the delivery of any notice pursuant to this Section 5.9 shall not
(A) cure any breach of, or non-compliance with, any other provision of this
Agreement or (B) limit the remedies available to the party receiving such
notice.

          Section 5.10     Security Holder Litigation. The Company shall give
Parent the opportunity to participate in the defense or settlement of any
security holder litigation against the Company, its Subsidiaries and/or their
respective directors relating to this Agreement, the Merger or the transactions
contemplated hereby, and no such settlement shall be agreed to without Parent’s
prior consent, which consent will not be unreasonably withheld or delayed.

          Section 5.11     Company Stock Options.

                    (a)         As soon as practicable following the date of
this Agreement, the Board of Directors of the Company (or, if appropriate, any
committee thereof administering any Company Benefit Plan) shall adopt such
resolutions and take such other actions as may be required to effect the
following related to each option to purchase or acquire shares of Company Common
Stock, held by an employee, director or consultant of the Company or any
Subsidiaries (collectively, the “Company Stock Options”):

 

 

 

                       (i)     effective as of the Effective Date, the vesting
of each unvested Company Stock Option shall be accelerated so that all Company
Stock Options shall be fully vested as of the Effective Date;

 

 

 

                       (ii)    effective as of the Effective Date, each Company
Stock Option (whether vested or not) outstanding immediately prior to the
Effective Date with an exercise price per share that is less than the Merger
Consideration shall be cancelled by the Company in exchange for the right to
receive, without interest, a cash amount equal to the product of (A) the excess,
if any, of (x) the Merger Consideration, over (y) the exercise price per share
of such Company Stock Option, multiplied by (B) the total number of shares of
Company Common Stock subject to such Company Stock Option (such product referred
to herein as “Option Consideration”); and

 

 

 

                       (iii)   effective as of the Effective Date, each Company
Stock Option outstanding as of the Effective Date with an exercise price per
share that is equal to or greater than the Merger Consideration shall be
terminated, without any consideration therefor.

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                    (b)         The Company shall ensure that following the
Effective Date, no holder of a Company Stock Option (or former holder of a
Company Stock Option) or any participant in any Company Benefit Plan shall have
any right thereunder to acquire any capital stock of the Company or the
Surviving Corporation or any other equity interest therein.

          Section 5.12    Termination of 401(a) Plans. Prior to the Closing, the
Company shall take all requisite corporate action to terminate any and all
Company Benefit Plans qualified under Section 401(a) of the Code that have been
provided to the employees of the Company, its Subsidiaries or any of its ERISA
Affiliates. The Company acknowledges and agrees that the employees’
participation, if any, in any such Company Benefit Plan shall be terminated
effective prior to the Closing.

ARTICLE VI

CONDITIONS TO THE MERGER

          Section 6.1     Conditions to Each Party’s Obligation to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment (or waiver by all parties) at or prior to the
Effective Date of the following conditions:

                    (a)         The Company Shareholder Approval shall have been
obtained.

                    (b)         No injunction by any court or other tribunal of
competent jurisdiction which prohibits the consummation of the Merger shall have
been entered and shall continue to be in effect.

                    (c)         All consents, approvals and actions of, filings
with and notices required in connection with consummation of the Merger on the
terms contemplated hereby shall have been obtained or made.

          Section 6.2     Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger is further subject to
the fulfillment of the following conditions:

                    (a)         The representations and warranties of Parent and
Merger Sub set forth herein shall be true and correct both when made and at and
as of the Closing Date, as if made at and as of such time (except to the extent
expressly made as of an earlier date, in which case as of such date), except
where the failure of such representations and warranties to be so true and
correct (without giving effect to any limitation as to “materiality” or
“material adverse effect” qualifiers set forth therein) would not have,
individually or in the aggregate, a Parent Material Adverse Effect.

                    (b)         Parent shall have in all material respects
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it prior to the Effective Date.

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                    (c)         Parent shall have delivered to the Company a
certificate, dated the Effective Date and signed by its Chief Executive Officer
or another senior officer, certifying to the effect that the conditions set
forth in Section 6.2(a) and 6.2(b) have been satisfied.

          Section 6.3     Conditions to Obligation of Parent and Merger Sub to
Effect the Merger. The obligations of Parent and Merger Sub to effect the Merger
is further subject to the fulfillment of the following conditions:

                    (a)         The representations and warranties of the
Company with respect to itself and its Subsidiaries set forth herein shall be
true and correct both when made and at and as of the Closing Date, as if made at
and as of such time (except to the extent expressly made as of an earlier date,
in which case as of such date), except where the failure of such representations
and warranties to be so true and correct (without giving effect to any
limitation as to “materiality” or “material adverse effect” qualifiers set forth
therein) would not have, individually or in the aggregate, a Company Material
Adverse Effect.

                    (b)         The Company shall have in all material respects
performed all obligations and complied with all covenants required by this
Agreement to be performed or complied with by it prior to the Effective Date.

                    (c)         During the period from the date of this
Agreement to the Closing Date, there shall not have occurred any Company
Material Adverse Effect that continues to exist on the Closing Date and as of
the Effective Date.

                    (d)         The equity capitalization of the Company and its
Subsidiaries (including all subscriptions, options, warrants, calls, convertible
securities or other similar rights, agreements or commitments relating to the
issuance of capital stock by the Company or any Subsidiary) shall, as of the
Closing Date and not as of the earlier dates set forth in Section 3.2, be as set
forth in Section 3.2 and in Section 3.2 of the Company Disclosure Schedule.

                    (e)         The Company shall have delivered to Parent a
certificate, dated the Closing Date and signed by its Chief Executive Officer or
another senior officer, certifying to the effect that the conditions set forth
in Section 6.3(a), 6.3(b), 6.3(c) and 6.3(d) have been satisfied.

                    (f)         Parent and Merger Sub shall have been furnished
with the opinion of Gray, Plant & Mooty, counsel to the Company, as dated of the
Closing Date, in the form of Exhibit C attached hereto.

          Section 6.4     Frustration of Closing Conditions. Neither the Company
nor Parent may rely, either as a basis for not consummating the Merger or
terminating this Agreement and abandoning the Merger, on the failure of any
condition set forth in Section 6.1, 6.2 or 6.3, as the case may be, to be
satisfied if such failure was caused by such party’s breach of any provision of
this Agreement or failure to use its reasonable best efforts to consummate the
Merger and the other transactions contemplated hereby, as required by and
subject to Section 5.5.

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ARTICLE VII

TERMINATION

          Section 7.1     Termination and Abandonment. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Date, whether before or after
any approval of the matters presented in connection with the Merger by the
shareholders of the Company:

                    (a)         by the mutual written consent of the Company and
Parent;

                    (b)         by either the Company or Parent if (i) the
Effective Date shall not have occurred on or before March 31, 2011 (the “End
Date”), and (ii) the party seeking to terminate this Agreement pursuant to this
Section 7.1(b) shall not have breached in any material respect its obligations
under this Agreement in any manner that shall have proximately caused the
failure to consummate the Merger on or before such date;

                    (c)         by either the Company or Parent if an injunction
shall have been entered permanently restraining, enjoining or otherwise
prohibiting the consummation of the Merger and such injunction shall have become
final and non-appealable, provided that the party seeking to terminate this
Agreement pursuant to this Section 7.1(c) shall have used its reasonable efforts
to remove such injunction;

                    (d)         by either the Company or Parent if the Company
Meeting (including any adjournments or postponements thereof) shall have
concluded and the Company Shareholder Approval contemplated by this Agreement
shall not have been obtained or by Parent if the Company Meeting shall not have
concluded prior to the close of business on the day prior to the End Date;

                    (e)         by the Company, if Parent shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would result in a failure of a condition set
forth in Section 6.1 or 6.2 and (ii) cannot be cured by the End Date, provided
that the Company shall have given Parent written notice, delivered at least
thirty (30) days prior to such termination, stating the Company’s intention to
terminate this Agreement pursuant to this Section 7.1(e) and the basis for such
termination;

                    (f)         by the Company, prior to the Company Shareholder
Approval, if the Board of Directors of the Company determines to accept and/or
enter into an agreement for a Superior Proposal; provided, however, that the
Company shall have complied with the provisions of Section 5.3;

                    (g)         by Parent, if the Company shall have breached or
failed to perform in any material respect any of its representations,
warranties, covenants or other agreements contained in this Agreement, which
breach or failure to perform (i) would result in a failure of a condition set
forth in Section 6.1 or 6.3 and (ii) cannot be cured by the End Date, provided
that Parent shall have given the Company written notice, delivered at least
thirty (30) days prior to such

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termination, stating Parent’s intention to terminate this Agreement pursuant to
this Section 7.1(g) and the basis for such termination;

                    (h)         by Parent, prior to the Company Shareholder
Approval, if the Board of Directors of the Company has failed to make the
Recommendation in the Proxy Statement or has made a Change of Recommendation;
and

                    (i)         by Parent if holders of five percent (5%) or
more of the Shares have exercised dissenters’ rights in accordance with Section
302A.471 et seq. of the MBCA.

          Section 7.2     Effect of Termination.

                    (a)         In the event that (i) this Agreement is
terminated by Parent pursuant to Section 7.1(h), (ii) this Agreement is
terminated after December 31, 2010 by the Company pursuant to Section 7.1(f) or
(iii) (A) an Alternative Proposal shall have been made to the Company or shall
have been made directly to the shareholders of the Company generally or shall
have otherwise become publicly known or any person shall have publicly announced
an intention (whether or not conditional) to make an Alternative Proposal, (B)
thereafter this Agreement is terminated (I) by Company pursuant to Section
7.1(b) or (II) by either Parent or the Company pursuant to Section 7.1(d) and
(C) within 12 months after such termination, the Company enters into a
definitive agreement to consummate, or consummates, the transactions
contemplated by any Alternative Proposal (regardless of whether such Alternative
Proposal is made before or after termination of this Agreement), then the
Company shall pay Parent a fee equal to $330,000 (the “Termination Fee”) plus
Expenses of up to $100,000, by wire transfer of same-day funds on the first
business day following (x) in the case of a payment required by clause (i) or
(ii) above, the date of termination of this Agreement and (y) in the case of a
payment required by clause (iii) above, the date of the first to occur of the
events referred to in clause (iii)(C) above. “Expenses” shall mean the cash
amount necessary to reimburse Parent, Merger Sub and each of their respective
affiliates for all out-of-pocket fees and expenses incurred (whether or not
billed) at any time (whether before or after the date of this Agreement) prior
to the termination of this Agreement by any of them or on their behalf in
connection with the Merger, this Agreement, their due diligence investigation of
the Company and the transactions contemplated by this Agreement (including the
fees and expenses of counsel, investment banking firms or financial advisors and
their respective counsel and representatives).

                    (b)         The Company and Parent acknowledge and agree
that the agreements contained in Section 7.2(a) are an integral part of the
transactions contemplated by this Agreement, and that, without these agreements,
Parent would not enter into this Agreement; accordingly, if the Company fails
promptly to pay the amount due pursuant to Section 7.2(a), and, in order to
obtain such payment, Parent commences a suit that results in a judgment against
the Company for the Termination Fee and/or Expenses, the Company shall pay to
Parent its costs and expenses (including attorneys’ fees and expenses) in
connection with such suit, together with interest on the amount of the
Termination Fee and/or Expenses, as the case may be, from the date such payment
was required to be made until the date of payment at the prime rate of Citibank,
N.A., in effect on the date such payment was required to be made.

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                    (c)         In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall become void and have no
effect, without any liability or obligation on the part of Parent, Merger Sub or
the Company under this Agreement, other than the provisions of Sections 5.2(b),
7.2, 8.2, 8.4, 8.5, 8.6 and 8.10, which provisions shall survive such
termination; provided, however, that no such termination shall relieve any party
hereto from any liability or damages resulting from the willful and material
breach by a party of any of its representations, warranties, covenants or
agreements set forth in this Agreement.

ARTICLE VIII

MISCELLANEOUS

          Section 8.1     No Survival of Representations and Warranties. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Merger.

          Section 8.2     Expenses. Whether or not the Merger is consummated,
all costs and expenses incurred in connection with the Merger, this Agreement
and the transactions contemplated hereby shall be paid by the party incurring or
required to incur such expenses.

          Section 8.3     Counterparts; Effectiveness. This Agreement may be
executed in two or more consecutive counterparts (including by facsimile), each
of which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument, and shall become effective when one or
more counterparts have been signed by each of the parties and delivered (by
facsimile or otherwise) to the other parties.

          Section 8.4     Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota, without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Minnesota or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Minnesota.

          Section 8.5     Jurisdiction; Enforcement. The parties agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions of this Agreement non-exclusively
in the Minnesota State Courts and any state appellate court therefrom (or, if
the Minnesota State Courts decline to accept jurisdiction over a particular
matter, any state or federal court within the State of Minnesota). In addition,
each of the parties hereto irrevocably agrees that any legal action or
proceeding with respect to this Agreement and the rights and obligations arising
hereunder, or for recognition and enforcement of any judgment in respect of this
Agreement and the rights and obligations arising hereunder brought by the other
party hereto or its successors or assigns, may be brought and determined
non-exclusively in the Minnesota State Courts and any state appellate court
therefrom (or, if the Minnesota State Courts decline to accept jurisdiction over
a particular matter, any state or federal court within the State of Minnesota).
Each of the parties hereto hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect

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of its property, generally and unconditionally, to the personal jurisdiction of
the aforesaid courts. Each of the parties hereto hereby irrevocably waives, and
agrees not to assert, by way of motion, as a defense, counterclaim or otherwise,
in any action or proceeding with respect to this Agreement, (a) any claim that
it is not personally subject to the jurisdiction of the above named courts for
any reason other than the failure to serve in accordance with this Section 8.5,
(b) any claim that it or its property is exempt or immune from jurisdiction of
any such court or from any legal process commenced in such courts (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution of judgment, execution of judgment or otherwise) and (c) to the
fullest extent permitted by the applicable law, any claim that (i) the suit,
action or proceeding in such court is brought in an inconvenient forum, (ii) the
venue of such suit, action or proceeding is improper or (iii) this Agreement, or
the subject matter hereof, may not be enforced in or by such courts. The parties
hereto agree that irreparable damage would occur in the event any of the
provisions of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or equity.

          Section 8.6     WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.

          Section 8.7     Notices. Any notice required to be given hereunder
shall be sufficient if in writing, and sent by facsimile transmission (provided
that any notice received by facsimile transmission or otherwise at the
addressee’s location on any business day after 5:00 p.m. (addressee’s local
time) shall be deemed to have been received at 9:00 a.m. (addressee’s local
time) on the next business day), by reliable overnight delivery service (with
proof of service), hand delivery or certified or registered mail (return receipt
requested and first-class postage prepaid), addressed as follows:

 

 

To Parent and Merger Sub:

 

 

 

CARDIONET, INC.

 

227 Washington Street #300

 

Conshohocken, PA 19428

 

Attn: Director of Legal Services

 

Phone: (610) 729-5066

 

Facsimile: (866) 924-2464

 

 

 

With copies to:

 

 

 

MORGAN, LEWIS & BOCKIUS LLP

 

1701 Market Street

 

Philadelphia, PA 19103

 

Attn: Timothy Maxwell, Esq.

 

Phone: (215) 963-5438

 

Facsimile: (215) 963-5001

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To the Company:

 

 

 

BIOTEL INC.

 

1285 Corporate Center Drive, Suite 150

 

Eagan, Minnesota 55121

 

Attn: Steve Springrose, Chief Executive Officer

 

Phone: (651) 286-8623

 

Facsimile: (651) 286-8630

 

 

 

With copies to:

 

 

 

GRAY PLANT & MOOTY

 

500 IDS Center

 

80 South Eighth Street

 

Minneapolis, MN 55402

 

Attn: Lindley S. Branson, Esq.

 

Phone: (612) 632-3024

 

Facsimile: (612) 632-4024

or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed. Any party to this Agreement
may notify any other party of any changes to the address or any of the other
details specified in this paragraph. Rejection or other refusal to accept or the
inability to deliver because of changed address of which no notice was given
shall be deemed to be receipt of the notice as of the date of such rejection,
refusal or inability to deliver.

          Section 8.8     Assignment; Binding Effect. Neither this Agreement nor
any of the rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and assigns.

          Section 8.9     Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable. Upon any determination that a
term or other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner, to the end that the transactions contemplated hereby are
fulfilled to the extent possible.

          Section 8.10     Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the exhibits and schedules hereto), the Settlement
Agreement and the Nondisclosure Agreement constitute the entire agreement, and
supersede all other prior agreements and understandings, both written and oral,
between the parties, or any of them, with respect to the subject matter hereof
and thereof and, except for the provisions of Section 2.1(a), is not intended

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to and shall not confer upon any person other than the parties hereto any rights
or remedies hereunder.

          Section 8.11     Amendments; Waivers. At any time prior to the
Effective Date, any provision of this Agreement may be amended or waived if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Parent and Merger Sub, or in the case of a waiver, by
the party against whom the waiver is to be effective; provided, however, that
after receipt of Company Shareholder Approval, if any such amendment or waiver
shall by applicable Law require further approval of the shareholders of the
Company, the effectiveness of such amendment or waiver shall be subject to the
approval of the shareholders of the Company. Notwithstanding the foregoing, no
failure or delay by the Company or Parent in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise of any other right hereunder.

          Section 8.12     Headings. Headings of the Articles and Sections of
this Agreement are for convenience of the parties only and shall be given no
substantive or interpretive effect whatsoever. The table of contents to this
Agreement is for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.

          Section 8.13     Interpretation. When a reference is made in this
Agreement to an Article or Section, such reference shall be to an Article or
Section of this Agreement unless otherwise indicated. Whenever the words
“include,” “includes” or “including” are used in this Agreement, they shall be
deemed to be followed by the words “without limitation.” The words “hereof,”
“herein” and “hereunder” and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant thereto unless otherwise defined therein. The definitions contained in
this Agreement are applicable to the singular as well as the plural forms of
such terms and to the masculine as well as to the feminine and neuter genders of
such term. Any agreement, instrument or statute defined or referred to herein or
in any agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein. Each
of the parties has participated in the drafting and negotiation of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement must be construed as if it is drafted by all the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any of the provisions of this Agreement.

          Section 8.14     Definitions.

                    (a)         References in this Agreement to “Subsidiaries”
of any party shall mean any corporation, partnership, association, trust or
other form of legal entity of which (i) more than 50% of the outstanding voting
securities are on the date hereof directly or indirectly owned by such party, or
(ii) such party or any Subsidiary of such party is a general partner (excluding

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partnerships in which such party or any Subsidiary of such party does not have a
majority of the voting interests in such partnership). References in this
Agreement (except as specifically otherwise defined) to “affiliates” shall mean,
as to any person, any other person which, directly or indirectly, controls, or
is controlled by, or is under common control with, such person. As used in this
definition, “control” (including, with its correlative meanings, “controlled by”
and “under common control with”) shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management or
policies of a person, whether through the ownership of securities or partnership
or other ownership interests, by contract or otherwise. References in this
Agreement (except as specifically otherwise defined) to “person” shall mean an
individual, a corporation, a partnership, a limited liability company, an
association, a trust or any other entity, group (as such term is used in Section
13 of the Exchange Act) or organization, including, without limitation, a
Governmental Entity, and any permitted successors and assigns of such person. As
used in this Agreement, “knowledge” means (i) with respect to Parent, the actual
knowledge of the individuals listed on Section 8.14(a) of the Parent Disclosure
Schedule after conducting reasonable inquiry about the accuracy of any
representation or warranty of Parent or Merger Sub contained in this Agreement
and (ii) with respect to the Company, the actual knowledge of the individuals
listed on Section 8.14(a) of the Company Disclosure Schedule after conducting
reasonable inquiry about the accuracy of the Company or its Subsidiaries
contained in this Agreement. As used in this Agreement “fiscal year” shall mean
the Company’s fiscal year ending June 30. As used in this Agreement, “business
day” shall mean any day other than a Saturday, Sunday or a day on which the
banks in New York are authorized by law or executive order to be closed.
References in this Agreement to specific laws or to specific provisions of laws
shall include all rules and regulations promulgated thereunder. Any statute
defined or referred to herein or in any agreement or instrument referred to
herein shall mean such statute as from time to time amended, modified or
supplemented, including by succession of comparable successor statutes.

                    (b)         Each of the following terms is defined on the
pages set forth opposite such term:

 

 

 

 

Term

 

Section

 

affiliates

8.14(a)

Agreement

Preamble

Alternative Proposal

5.3(f)

Bankruptcy and Equity Exception

3.3(a)

business day

8.14(a)

Articles of Merger

1.3

Certificates

2.2(a)

Change of Recommendation

5.3(d)

Closing

1.2

Closing Date

1.2

Code

2.2(g)

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Term

 

Section

 

Company

Preamble

Company Acquisition Agreement

5.3(d)

Company Approvals

3.3(b)

Company Benefit Plans

3.9(a)

Company Common Stock

2.1(a)

Company Disclosure Schedule

ARTICLE III

Company Intellectual Property

3.16(a)

Company Material Adverse Effect

3.1(a)

Company Material Contracts

3.19(a)

Company Meeting

5.4(b)

Company Permits

3.7(b)

Company Permitted Lien

3.3(c)

Company Preferred Stock

3.2(a)

Company Representative

5.3(a)

Company SEC Documents

3.4(a)

Company Shareholder Approval

3.18

Company Stock Options

5.11(a)

Company Stock Plan

3.2(a)(iii)

control

8.14(a)

Dissenting Shares

2.1(c)

Effective Date

1.3

End Date

7.1(b)

Environmental Claims

3.8(a)

Environmental Law

3.8(b)

ERISA

3.9(a)

ERISA Affiliate

3.9(c)

Exchange Act

3.3(b)

Exchange Fund

2.2(a)

FDA

3.13(a)

fiscal year

8.14(a)

GAAP

3.4(c)

Governmental Entity

3.3(b)

Hazardous Substance

3.8(c)

IRS

3.9(b)

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Term

 

Section

 

knowledge

8.14(a)

Law

3.7(a)

Laws

3.7(a)

Leased Real Property

3.21(d)

Lien

3.3(c)(iii)

MBCA

1.1

Merger

Recitals

Merger Consideration

2.1(a)

Merger Sub

Preamble

New Company SEC Documents

3.4(a)

Nondisclosure Agreement

5.2(b)

Option Consideration

5.11(a)(ii)

Owned Real Property

3.21(c)

Parent

Preamble

Parent Approvals

4.2(b)

Parent Disclosure Schedule

ARTICLE IV

Parent Material Adverse Effect

4.1

Parent Permitted Lien

4.2(c)

Parent Representatives

5.2(a)

Parent SEC Documents

ARTICLE IV

Paying Agent

2.2(a)

person

8.14(a)

Policies

3.20

Prior Agreement

Preamble

Proxy Statement

3.12

Real Property Lease

3.21(d)

Recommendation

3.3(a)(iii)

Regulatory Law

5.5(d)

Sarbanes-Oxley Act

3.4(b)

SEC

3.4(a)

Settlement Agreement

Preamble

Share

2.1(a)

Subsidiaries

8.14(a)

Superior Proposal

5.3(g)

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Term

 

Section

 

Superior Proposal Termination Notice

5.3(d)

Surviving Corporation

1.1

Tax Return

3.14(c)(ii)

Taxes

3.14(c)(i)

Termination Date

5.1(a)

Termination Fee

7.2(a)

Voting Agreements

3.23

 

 

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          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.

 

 

 

 

 

CARDIONET, INC.

 

 

 

 

By:

/s/ Heather Getz

 

 

Name:  Heather Getz

 

Title:  SVP & CFO

 

 

 

 

GARDEN MERGER SUB, INC.

 

 

 

 

By:

/s/ Heather Getz

 

 

Name:  Heather Getz

 

Title:  SVP & CFO

 

 

 

 

BIOTEL INC.

 

 

 

 

By:

/s/ B. Steven Springrose

 

 

Name:  B. Steven Springrose

 

Title:  President & CEO

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Exhibit A

PLAN OF MERGER

FOR THE MERGER

OF

GARDEN MERGER SUB, INC.

INTO

BIOTEL INC.

          PLAN OF MERGER (hereinafter referred to as the “Plan”), dated
__________ __, 20__, for the merger of Garden Merger Sub, Inc., a Minnesota
corporation (the “Merged Corporation”), into Biotel Inc., a Minnesota
corporation (the “Surviving Corporation”). (The Merged and Surviving
Corporations may be collectively referred to as “Constituent Corporations”).

RECITALS

          A.          The Constituent Corporations are corporations duly
organized and existing under the laws of the State of Minnesota.

          B.          The Constituent Corporations are parties to a Merger
Agreement, dated as of November 5, 2010, and the merger effected pursuant to
this Plan of Merger is being consummated pursuant to such Merger Agreement.

          NOW, THEREFORE, the Constituent Corporations shall be merged into a
single corporation, Biotel Inc. a Minnesota corporation, and one of the
Constituent Corporations, which shall continue its corporate existence and be
the corporation surviving the merger. The terms and conditions of this merger
(the “Merger”) and the manner of carrying the same into effect, are as follows:

ARTICLE I
Effective Date of the Merger

          The Effective Date shall be the close of business on __________ __,
20__. At the Effective Date of the Merger, the separate corporate existence of
Constituent Corporations will cease and the Constituent Corporations shall be
merged in the Surviving Corporation, Biotel Inc., a Minnesota corporation.

ARTICLE II
Governing Laws; Articles of
Incorporation; Authorized Shares

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          The Articles of Incorporation of the Merged Corporation shall be the
Articles of Incorporation of the Surviving Corporation as of the Effective Date
of the Merger; provided, however, that ARTICLE 1 of the Merged Corporation’s
Articles of Incorporation shall be amended to read as follows: “The name of this
corporation is Biotel Inc.”

ARTICLE III
Bylaws; Registered Office

          The Bylaws of the Merged Corporation shall be the Bylaws of the
Surviving Corporation as of the Effective Date of the Merger. The registered
office of the Surviving Corporation after the Merger shall be at
___________________________.

ARTICLE IV
Directors and Officers

          The directors of the Merged Corporation as of the Effective Date shall
be the initial directors of the Surviving Corporation and shall hold office
until their respective successors are duly elected and qualified, or their
earlier death, resignation or removal. The officers of the Merged Corporation as
of the Effective Date shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal. The directors and
officers of the Surviving Corporation holding office on the Effective Date shall
be deemed to have resigned effective as of the Effective Date.

ARTICLE V
Conversion of Shares in the Merger

          The manner of carrying the Merger into effect, and the manner and
basis of converting the shares of the Constituent Corporations into shares of
the Surviving Corporation are as follows:

 

 

•

Conversion of Surviving Corporation Common Stock. At the Effective Date, each
share of common stock, par value $.01 per share, of the Surviving Corporation
(such shares, collectively, “Surviving Corporation Common Stock,” and each, a
“Share”) outstanding immediately prior to the Effective Date other than
Dissenting Shares (as hereinafter defined), shall be converted automatically
into, and shall thereafter represent the right to receive, $____ in cash (the
“Merger Consideration”). All outstanding Shares that have been converted into
the right to receive the Merger Consideration as provided in this section shall
be automatically cancelled and shall cease to exist, and the holders of
certificates which immediately prior to the Effective Date represented such
Shares shall cease to have any rights with respect to such Shares other than the
right to receive the Merger Consideration.

- 2 -

--------------------------------------------------------------------------------

 

 

•

Conversion of Merged Corporation Common Stock. Each share of common stock, par
value $.01 per share, of the Merged Corporation issued and outstanding
immediately prior to the Effective Date shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock, par value
$.01 per share, of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only outstanding
shares of capital stock of the Surviving Corporation. From and after the
Effective Date, all certificates representing the common stock of Merger Sub
shall be deemed for all purposes to represent the number of shares of common
stock of the Surviving Corporation into which they were converted in accordance
with the immediately preceding sentence.

 

 

•

Dissenters’ Rights. If required by the MBCA (but only to the extent required
thereby), Shares that are issued and outstanding immediately prior to the
Effective Date and that are held by holders of such Shares who have not voted in
favor of the approval and adoption of this Plan of Merger or consented thereto
in writing and who have properly exercised appraisal rights with respect thereto
in accordance with, and who have complied with, Section 302A.473 of the MBCA
(the “Dissenting Shares”) will not be converted into the right to receive the
Merger Consideration, and holders of such Dissenting Shares will be entitled to
receive payment of the fair value of such Dissenting Shares in accordance with
the provisions of such Section 302A.473 unless and until any such holder fails
to perfect or effectively waives, withdraws or loses his, her or its rights to
appraisal and payment under the MBCA. If, after the Effective Date, any such
holder fails to perfect or effectively waives, withdraws or loses such right,
such Dissenting Shares will thereupon be treated as if they had been converted
into and have become exchangeable for, at the Effective Date, the right to
receive the Merger Consideration, without any interest thereon, and the
Surviving Corporation shall remain liable for payment of the Merger
Consideration for such Shares. At the Effective Date, any holder of Dissenting
Shares shall cease to have any rights with respect to the Surviving Corporation,
except the rights provided in Section 302A.473 of the MBCA and as provided in
the previous sentence.

ARTICLE VI
Effect of the Merger

          At the Effective Date of the Merger, the Surviving Corporation shall
succeed to and shall possess and enjoy all the rights, privileges, immunities,
powers and franchises, both of a public and private nature, of the Constituent
Corporations, and all property, real, personal, and mixed, including patents,
trademarks, tradenames, and all debts due to either of the Constituent
Corporations on whatever account, for stock subscriptions as well as for all
other things in action or all other rights belonging to either of said
corporations; and all said property, rights, privileges, immunities, powers and
franchises, and all and every other interest shall be thereafter the property of
the Surviving Corporation as effectively as they were of the respective
Constituent Corporations, and the title of any real estate vested by deed or
otherwise in either of said Constituent Corporations shall not revert or be in
any way impaired by reason of the Merger; provided, however, that all rights of
creditors and all liens upon any property of either of

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said Constituent Corporations shall be preserved unimpaired, limited in lien to
the property affected by such liens prior to the Effective Date of the Merger,
and all debts, liabilities, and duties of said Constituent Corporations,
respectively, shall thenceforth attach to the Surviving Corporation and may be
enforced against it to the same extent as if said debts, liabilities, and duties
had been incurred or contracted in the first instance by the Surviving
Corporation.

ARTICLE VII
Filing of Plan of Merger

          Upon adoption and approval of the Plan of Merger by the Boards of
Directors and shareholders of the Constituent of Corporations in accordance with
Section 302A.613 of the Minnesota Business Corporation Act, Articles of Merger
in accordance with Section 302A.615 of the Minnesota Business Corporation Act
shall be executed and delivered to the Secretary of State of the State of
Minnesota for filing as provided by the Minnesota Business Corporation Act. The
Constituent Corporations shall also cause to be performed all necessary acts
within the State of Minnesota and elsewhere to effectuate the Merger.

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Exhibit B

 

VOTING AGREEMENT

                VOTING AGREEMENT, dated as of November 5, 2010 (this
“Agreement”), by and among CARDIONET, INC., a Delaware corporation (“Parent”),
and ____________________________ (“Shareholder”), a shareholder of BIOTEL INC.,
a Minnesota corporation (the “Company”). 

                WHEREAS, concurrently herewith, Parent, GARDEN MERGER SUB.,
INC., a Minnesota corporation and wholly-owned subsidiary of Parent (“Merger
Sub”), and the Company are entering into an Agreement and Plan of Merger (the
“Merger Agreement”), pursuant to which (and subject to the terms and conditions
set forth therein) Merger Sub will merge with and into the Company, with the
Company continuing as the surviving corporation and a wholly-owned subsidiary of
Parent (the “Merger”); and

                WHEREAS, in order to induce Parent and Merger Sub to enter into
the Merger Agreement and to proceed with the transactions contemplated thereby,
including the Merger, Parent and Shareholder are entering into this Agreement;
and

                WHEREAS, Shareholder acknowledges that Parent and Merger Sub are
entering into the Merger Agreement in reliance on the representations,
warranties, covenants and other agreements of Shareholder set forth in this
Agreement and would not enter into the Merger Agreement if Shareholder did not
enter into this Agreement. 

                NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent and Shareholder hereby represent,
warrant, covenant and agree as follows:  

                1.  Shareholder represents and warrants that:  

                                a.  Shareholder owns of record and beneficially
good and valid title to all of the shares of the capital stock of the Company,
and options to acquire shares of capital stock of the Company, shown on Exhibit
A attached hereto, free and clear of any and all mortgages, liens, encumbrances,
charges, claims, restrictions, pledges, security interests, voting trusts or
agreements, or impositions, except as otherwise disclosed on Exhibit A, and such
shares represent all of the shares, or rights to acquire shares, of capital
stock of the Company owned by Shareholder.  For purposes hereof, the capital
stock of the Company and the options to acquire capital stock of the Company set
forth on Exhibit A attached hereto shall be referred to herein as the “Stock”. 

                                b.  The execution and delivery of this Agreement
by Shareholder does not, and the performance by Shareholder of its obligations
hereunder will not, constitute a violation of, conflict with, result in a
default (or an event which, with notice or lapse of time or both, would result
in default) under, or result in the creation of any lien on any such Stock
under, (i) any contract, commitment or agreement, to which Shareholder is a
party or by which Shareholder is bound, (ii) any judgment, order or ruling
applicable to Shareholder, or (iii) the organizational documents of Shareholder,
if applicable. 

                                c.  Shareholder has full power and authority to
execute, deliver and perform this Agreement, to vote the Stock as required
herein and to consummate the transactions contemplated hereby.  The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and no
other actions on the part of the Shareholder are required in order to consummate
the transaction contemplated hereby.  This Agreement has been duly and validly
executed and delivered by Shareholder and constitutes a valid and binding
agreement of Shareholder, enforceable against Shareholder in accordance with its
terms.

 

- 1 -

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                2.  When a meeting of the shareholders of the Company is held
for the purpose of considering the Merger Agreement and the Merger (such meeting
referred to herein as the “Meeting”), Shareholder shall (a) appear at the
Meeting or otherwise cause the Stock to be counted as present at the Meeting for
the purpose of establishing a quorum; (b) at the Meeting, vote, or cause to be
voted, all of the Stock, in person or by proxy, for approval of the Merger
Agreement and the transactions contemplated thereby, including the Merger; and
(c) at the Meeting (or any other meeting of shareholders of the Company), vote,
or cause to be voted, all of the Stock, in person or by proxy, against any
action that is intended, or could reasonably be expected, to impede, interfere
with, delay, postpone, or adversely affect the transactions contemplated by the
Merger Agreement, including the Merger, unless and until the Company has
terminated the Merger Agreement in accordance with the terms and conditions of
the Merger Agreement. 

                3.  Shareholder hereby grants an irrevocable proxy appointing
Parent, by its duly authorized officers and representatives, as Shareholder’s
sole and exclusive and true and lawful agent and attorney-in-fact, with full
power of substitution, to vote all Stock that Shareholder is entitled to vote,
express consent or dissent or otherwise to utilize such voting power in such
manner and upon any of the matters referred to in Paragraph 2 above, to the same
extent and with the same effect as Shareholder might or could do under any
applicable laws or regulations governing the rights and powers of shareholders
of the Company.  This proxy shall become effective as of the date hereof and
shall expire upon termination of this Agreement.  Shareholder hereby affirms
that this proxy is coupled with an interest and shall be irrevocable and binding
upon any and all transferees of the Stock so long as it remains in effect
pursuant to the terms hereof. 

                4.  The proxy granted by Shareholder pursuant to Paragraph 3
above and Shareholder’s entrance into this Agreement is in consideration of
Parent’s entrance into the Merger Agreement.  The proxy granted by Shareholder
pursuant to Paragraph 3 above is meant to secure Shareholder’s performance of
this Agreement.  This proxy/power of attorney shall not terminate on disability
of the Shareholder.  Shareholder hereby revokes any proxy previously granted by
Shareholder with respect to the Stock. 

                5.  Shareholder will not, nor will Shareholder permit any entity
under Shareholder’s control to, deposit any of the Stock in a voting trust or
subject any of the Stock to any arrangement with respect to the voting of the
Stock in any manner inconsistent with this Agreement. 

                6.  Shareholder will not sell, transfer, pledge, give,
hypothecate, assign or otherwise alienate or transfer, by proxy or otherwise
(including any transfer by operation of law), the Stock or any of Shareholder’s
voting rights with respect to the Stock, except to a person who is a party to a
voting agreement with Parent in the form of this Agreement. 

                7.  Shareholder expressly agrees and acknowledges that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof, and that
Parent shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity. 

                8.  This Agreement constitutes the entire agreement of
Shareholder with respect to the subject matter hereof and supersedes all other
prior agreements and understandings, both written and oral, of Shareholder with
respect to the subject matter hereof, and shall be binding upon the successors
and assigns (as applicable) of Shareholder.  This Agreement shall terminate
automatically upon the termination of the Merger Agreement. 

                9.  This Agreement will be governed by and construed in
accordance with the laws of the State of Minnesota regardless of the laws that
might otherwise govern under applicable principles of conflicts of laws
thereof. 

                10.  Capitalized terms not otherwise defined herein shall have
the meanings given to them in the Merger Agreement. 

                11.  It is understood and hereby agreed that this Agreement
relates solely to the capacity of Shareholder as a shareholder or beneficial
owner of the Stock and is not in any way intended to affect the exercise of
Shareholder’s responsibilities and fiduciary duties as a director or officer of
the Company or any of its subsidiaries. 

 

- 2 -

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                IN WITNESS WHEREOF, Parent and Shareholder have executed or
caused to be executed this Agreement as of the date first written above. 

 

CARDIONET, INC.:

 

 

 

 

 

 

 

 

 

 

By

 

 

Name:

 

 

Title:

 

 

 

 

 

SHAREHOLDER:

 

 

 

 

 

 

Name:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Voting Agreement]

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Exhibit A

 

Name of Shareholder

 

Number of Shares Owned

 

Number of Shares Subject
to Stock Options

 

 

 

 

 

 

 

- 4 -

 

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