Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

OMRON MANAGEMENT CENTER OF AMERICA, INC.

SCIENTIFIC TECHNOLOGY INCORPORATED

AND

SCIENTIFIC TECHNOLOGIES INCORPORATED

Dated as of April 24, 2006

TABLE OF CONTENTS

  Page

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Article I THE MERGER 2      1.1 The Merger 2      1.2 Effective Time; Closing 2
     1.3 Effect of the Merger 2      1.4 Articles of Incorporation and Bylaws 2
     1.5 Directors and Officers 3      1.6 Effect on Capital Stock 3      1.7
Dissenting Shares. 7      1.8 Surrender of Certificates 7      1.9 No Further
Ownership Rights in Company Common Stock or Options 9      1.10 Lost, Stolen or
Destroyed Certificates or Options 9      1.11 Further Action 9 Article II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 10      2.1 Organization; Standing
and Power; Charter Documents; Subsidiaries 10      2.2 Capital Structure 11     
2.3 Authority; No Conflict; Necessary Consents 12      2.4 SEC Filings;
Financial Statements; Internal Controls 14      2.5 Absence of Certain Changes
or Events 15      2.6 Taxes. 16      2.7 Title to Properties; Customer
Information. 17      2.8 Intellectual Property 18      2.9 Governmental
Authorizations 23      2.10 Litigation 23      2.11 Compliance with Laws 23     
2.12 Environmental Matters 24      2.13 Brokers' and Finders' Fees; Fees and
Expenses 25      2.14 Transactions with Affiliates 25      2.15 Employee Benefit
Plans and Compensation 26      2.16 Contracts 31      2.17 Insurance 33     
2.18 Export Control Laws 33      2.19 Foreign Corrupt Practices Act 33      2.20
Information Supplied 34      2.21 Board Approval 34      2.22 Fairness Opinion
34      2.23 Books and Records 34      2.24 Relationship with Key Customers and
Suppliers 34      2.25 Absence of Debt 35      2.26 No Material Misstatements 35
Article III REPRESENTATIONS AND WARRANTIES OF PARENT 35      3.1 Organization 35
     3.2 Authority; Necessary Consents 35      3.3 Capital Resources 36      3.4
Proceedings Challenging Transactions 36      3.5 Information Supplied 36 Article
IV CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME 37      4.1 Conduct of
Business by the Company. 37      4.2 Procedures for Requesting Parent Consent 40
Article V ADDITIONAL AGREEMENTS 40      5.1 Proxy Statement 40      5.2 Meeting
of Company Shareholders; Board Recommendation 41      5.3 Acquisition Proposals
42      5.4 Confidentiality; Access to Information; No Modification of
Representations, Warranties or Covenants 45      5.5 Public Disclosure 46     
5.6 Regulatory Filings; Reasonable Efforts 46      5.7 Notification of Certain
Matters 48      5.8 Third-Party Consents 48      5.9 Equity Awards and Employee
Matters 48      5.10 Indemnification. 50      5.11 Section&nbsp;16 Matters 51
     5.12 FIRPTA Compliance 51      5.13 Insurance Approval 51      5.14
Estimated Expenses 52 Article VI CONDITIONS TO THE MERGER 52      6.1 Conditions
to the Obligations of Each Party to Effect the Merger 52      6.2 Additional
Conditions to the Obligations of Parent 53      6.3 Additional Conditions to the
Obligations of the Company 54 Article VII TERMINATION, AMENDMENT AND WAIVER 55
     7.1 Termination 55      7.2 Notice of Termination; Effect of Termination 56
     7.3 Fees and Expenses 57      7.4 Amendment 58      7.5 Extension; Waiver
58 Article VIII GENERAL PROVISIONS 58      8.1 Non-Survival of Representations
and Warranties 58      8.2 Notices 58      8.3 Interpretation; Knowledge 59     
8.4 Counterparts 61      8.5 Entire Agreement; Third-Party Beneficiaries 61     
8.6 Severability 61      8.7 Other Remedies 61      8.8 Governing Law 61     
8.9 Rules of Construction 62      8.10 Assignment 62

Exhibit A HoldCo Stock Purchase Agreement

Exhibit B AP Purchase Agreement

Exhibit C Third Party Consents

Exhibit D Contract Modifications

INDEX OF DEFINED TERMS

401(k) Plans 5.9(c) Acquisition Proposal 5.3(g)(i) Acquisition 7.3(b)(iii)
Action of Divestiture 5.6(e) Agreement of Merger 1.2 Agreement Preamble Business
Day 1.2 Oregon Law Recitals Certificates 1.8(c) Change of Recommendation Notice
5.3(d)(iii) Change of Recommendation 5.3(d) Closing 1.2 Closing Date 1.2 COBRA
2.15(a) Code 1.8(d) Company Balance Sheet 2.4(b) Company Board Approval 2.21
Company Charter Documents 2.1(b) Company Common Stock 1.6(c)(i) Company
Disclosure Letter Article II Preamble Company Employee Plan 2.15(a) Company
Environmental Permits 2.12(d) Company Financials 2.4(b) Company Intellectual
Property 2.8(a) Company Material Contract 2.16(a) Company Options 2.2(b) Company
Preferred Stock 2.2(a) Company Products 2.8(a) Company Purchase Plans 1.6(g)
Company Registered Intellectual Property 2.8(a) Company Rights Agreement 2.2(a)
Company Rights 2.2(a) Company SEC Reports 2.4(a) Company Stock Option Plans
2.2(b) Company Warrants 1.6(d) Company Preamble Confidentiality Agreement 5.4(a)
Contract 2.2(d) Customary Severance Practices 2.15(h) Dissenting Shares 1.7(a)
DOJ 2.3(c) DOL 2.15(a) Effect 8.3(c) Effective Time 1.2 Employee Agreement
2.15(a) Employee 2.15(a) End Date 7.1(b) ERISA Affiliate 2.15(a) ERISA 2.15(a)
Exchange Act 2.3(c) Exchange Agent 1.8(a) Exchange Fund 1.8(b) Export Approvals
2.18(a) Fairness Opinion 2.22 FCPA 2.19 FTC 2.3(c) GAAP 2.4(b) Governmental
Authorizations 2.9 Governmental Entity 2.3(c) Hazardous Material 2.12(b)
Hazardous Materials Activities 2.12(b) HSR Act 2.3(c) Include, Includes,
Including 8.3(a) Indemnified Parties 5.10(a) Intellectual Property Rights 2.8(a)
Intellectual Property 2.8(a) International Employee Plan 2.15(a) IRS 2.15(a)
Knowledge 8.3(b) Lease Documents 2.7(b) Leased Real Property 2.7(a) Legal
Requirements 2.2(d) Liens 2.1(c) Material Adverse Effect 8.3(c) Merger
Consideration 1.6(c)(i) Merger Sub Common Stock 1.6(f) Merger Sub Preamble
Merger 1.1 Necessary Consents 2.3(c) Open Source 2.8(p) Option Ratio 5.9(a)
Parent Common Stock 5.1 Parent Preamble PBGC 2.15(a) Pension Plan 2.15(a) Person
8.3(d) Proxy Statement 2.20 PTO 2.8(b) Registered Intellectual Property 2.8(a)
Returns 2.6(b)(i) Securities Acts 2.4(a) Shareholders' Meeting 0 Shrink-Wrapped
Code 2.8(a) Source Code 2.8(a) Subsidiary Charter Documents 2.1(b) Subsidiary
2.1(a) Superior Offer 5.3(g)(ii) Surviving Corporation 1.1 Tax 2.6(a) Taxes
2.6(a) Termination Fee 7.3(b)(i) the business of 8.3(a) Trade Secrets 2.8(a)
Triggering Event 7.1 Voting Debt 2.2(c) WARN 2.15(a)

AGREEMENT AND PLAN OF MERGER

This AGREEMENT AND PLAN OF MERGER (this "Agreement") is made and entered into as
of April 24 2006, by and among Omron Management Center of America, Inc., a
Delaware corporation ("Parent"), Scientific Technology Incorporated, a
California corporation ("Holdco"), and Scientific Technologies Incorporated, an
Oregon corporation (the "Company").

RECITALS

A. The respective Boards of Directors of Parent, Holdco and the Company have
deemed it advisable and in the best interests of their respective corporations
and shareholders that Parent and the Company consummate the business combination
and other transactions provided for herein.

B. The business combination is intended to comprise, in addition to the other
transactions provided for herein, three mutually conditioned transactions,
including the following: (1) the purchase by Parent of all of the outstanding
shares of capital stock of Holdco (which holds approximately 86% of the
outstanding common stock of the Company) (the "Stock Purchase"), pursuant to the
terms of the Stock Purchase Agreement between Parent and the holders of all of
the outstanding capital stock of Holdco, dated as of the date hereof, in the
form attached hereto as Exhibit A (the "Stock Purchase Agreement"); (2) the sale
and transfer to Automation Products Group, LLC ("AP Company") (1) the stock of
Lundahl Industries, PSI-Tronix and Applied Electro Technologies Inc., and (2),
to the extent not covered by (1), the assets and liabilities of Holdco and the
Company unrelated to the Safety Products Group segment of Company's business
("SPG") (collectively, the "AP Purchase"), pursuant to that certain Purchase
Agreement dated as of April 24, 2006 (the "AP Purchase Agreement") by the
Company to Automation Products Group, LLC (the "AP Company"), in the form
attached hereto as Exhibit B; and (3) the Merger (as defined in Section 1.1)
provided for herein. The AP Purchase would include, among other things, the
assets and liabilities of HoldCo and the Company solely related to Automation
Products Group segment of Company's business ("APG").

C. The respective Boards of Directors of Holdco and the Company have approved,
in accordance with the Chapter 60 of the Oregon Revised Statutes ("Oregon Law")
and the California Corporations Code ("California Law"), this Agreement and the
transactions contemplated hereby, including the Merger. The Board of Directors
of Parent has approved this Agreement and the transactions contemplated hereby,
including the Merger.

D. The Board of Directors of the Company has resolved to recommend to its
shareholders approval and adoption of this Agreement and approval of the Merger.

E. The shareholders of Holdco have approved and adopted this Agreement and
approved the Merger.

F. Parent and the Company desire to make certain representations, warranties and
agreements in connection with the Merger and also to prescribe certain
conditions to the Merger.

NOW, THEREFORE

, in consideration of the covenants, promises and representations set forth
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

ARTICLE I
THE MERGER

1.1   The Merger .  At the Effective Time and subject to and upon the terms and
conditions of this Agreement and the applicable provisions of Oregon Law and
California Law, Holdco shall be merged with and into the Company (the "Merger"),
the separate corporate existence of HoldCo shall cease and the Company shall
continue as the surviving corporation and as a wholly owned subsidiary of
Parent. The surviving corporation after the Merger is hereinafter sometimes
referred to as the "Surviving Corporation."

1.2   Effective Time; Closing .  Subject to the provisions of this Agreement,
the parties hereto shall cause the Merger to be consummated by filing a Plan of
Merger consistent with this Agreement and in form and substance satisfactory to
the parties hereto together with accompanying officers' certificates with the
Secretary of State of the State of Oregon in accordance with the relevant
provisions of Oregon Law (the "Plan of Merger") and filing an Agreement of
Merger consistent with this Agreement and in form and substance satisfactory to
the parties hereto together with accompanying officers' certificates with the
Secretary of State of the State of California in accordance with the relevant
provisions of California Law (the "Agreement of Merger") (the time of such
filings with the Secretary of State of the State of Oregon and the Secretary of
State of the State of California (or such later time as may be agreed in writing
by the Company and Parent and specified in the Plan of Merger and the Agreement
of Merger) being the "Effective Time") as soon as practicable on or after the
Closing Date. The closing of the Merger (the "Closing") shall take place at the
offices of Wilson Sonsini Goodrich & Rosati, Professional Corporation, located
at 650 Page Mill Road, Palo Alto, California, at a time and date to be specified
by the parties, which shall be no later than the second Business Day after the
satisfaction or waiver of the conditions set forth in Article VI (other than
those that by their terms are to be satisfied or waived at the Closing), or at
such other time, date and location as the parties hereto agree in writing. The
date on which the Closing occurs is referred to herein as the "Closing Date."
"Business Day" shall mean each day that is not a Saturday, Sunday or other day
on which banking institutions located in San Francisco, CA, are authorized or
obligated by law or executive order to close.

1.3   Effect of the Merger .  At the Effective Time, the effect of the Merger
shall be as provided in this Agreement and the applicable provisions of Oregon
Law and California Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of Company and Holdco shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Company and Holdco shall
become the debts, liabilities and duties of the Surviving Corporation.

1.4   Articles of Incorporation and Bylaws .  Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time, the Articles of
Incorporation of the Company shall be amended and restated in their entirety to
be as set forth in the Plan of Merger, until thereafter amended in accordance
with Oregon Law and as provided in such Articles of Incorporation; provided,
however, that at the Effective Time, the Articles of Incorporation shall be
amended so as to comply with Section 5.10(a). Unless otherwise determined by
Parent prior to the Effective Time, at the Effective Time, the Bylaws of the
Company shall be amended and restated in their entirety to be as set forth in
the Plan of Merger, until thereafter amended in accordance with Oregon Law and
as provided in such Bylaws; provided, however, that at the Effective Time, the
Bylaws shall be amended so as to comply with Section 5.10(a).

1.5   Directors and Officers .  Unless otherwise determined by Parent prior to
the Effective Time, the initial directors of the Surviving Corporation shall be
as set forth in the Plan of Merger, until their respective successors are duly
elected or appointed and qualified. Unless otherwise determined by Parent prior
to the Effective Time, the initial officers of the Surviving Corporation shall
be as set forth in the Plan of Merger, until their respective successors are
duly appointed. In addition, unless otherwise determined by Parent prior to the
Effective Time, Parent, and the Company shall cause the directors and officers
of the Surviving Corporation immediately following the Effective Time to be the
directors and officers, respectively of each of the Company's Subsidiaries
immediately after the Effective Time, each to hold office as a director of each
such Subsidiary in accordance with the provisions of the laws of the respective
jurisdiction of organization and the respective bylaws or equivalent
organizational documents of each such Subsidiary.

1.6   Effect on Capital Stock . 

    Definitions
    .
     1.  "Adjustment Balance Sheet" shall mean the estimated unaudited
         consolidated balance sheet of the Company delivered to Parent at least
         five (5) Business Days prior to the mailing of the Proxy Statement to
         the Company's shareholders as provided in Section 5.1 and certified as
         a true and correct estimate by the Company's Chief Financial Officer as
         of the Adjustment Date, that has been prepared in accordance with GAAP
         (except that the Adjustment Balance Sheet may omit footnotes and other
         presentation items that may be required by GAAP) consistently applied
         on a basis consistent with the Company Financials and that fairly
         presents an estimate by the Company in good faith based on reasonable
         assumptions of the balance sheet of the Company as of the Adjustment
         Date.
     2.  "Adjustment Date" shall mean the last day of the last calendar month
         ending at least fifteen (15) Business Days prior to the date of mailing
         of the Proxy Statement to the Company's shareholders as provided in
         Section 5.1.
     3.  "Adjustment Date Cash" shall mean the amount of cash held by the
         Company as of the Adjustment Date, as reflected on the Adjustment
         Balance Sheet, less the amount of any Net APG Cash that has been
         received in connection with the AP Purchase prior to the Adjustment
         Date.
     4.  "Adjustment Date Options" shall mean the Company Options which are
         outstanding as of the Adjustment Date.
     5.  "Adjusted Working Capital" shall mean, as of a particular date, the
         adjusted working capital of the Company, assuming for this purpose only
         that the Automation Products Group business is not included in the
         Company's financial position and operating results, all as determined
         in accordance with GAAP and on the same basis as, and by applying the
         same accounting principles, policies, and practices that were used in
         preparing the Company Balance Sheet as defined in Section 2.4 (b),
         calculated consistently with the computation of non-cash working
         capital set forth on Schedule 1.6(a)(4).
     6.  "Aggregate Exercise Price" shall mean the aggregate Exercise Price, on
         the basis of a full cash exercise by holder of all Adjustment Date
         Options which have an exercise price per share of Company Common Stock
         which may be purchased pursuant thereto which is less than the Per
         Share Amount; provided that the exercise price of any Company Option
         which is exercised at such a time that the payment of the Exercise
         Price therefor is reflected in the Adjustment Balance Sheet shall not
         be included in the Aggregate Exercise Price.
     7.  "Balance Sheet Adjustment Amount" shall mean (A) the Company's Adjusted
         Working Capital as of the Adjustment Date, minus (B) the Company's
         Adjusted Working Capital as of December 31, 2005.
     8.  "Business Day[s]" shall mean each day that is not a Saturday, Sunday or
         other day on which Parent is closed for business or banking
         institutions located in San Francisco, California are authorized or
         obligated by law or executive order to close.
     9.  "Company Rights" shall mean Company Options and any other rights to
         purchase Company Common Stock (whether by exercise, conversion or
         exchange), other than pursuant to the Company Purchase Plan.
     10. "Estimated Transaction Costs" shall have the meaning set forth in
         Section 5.14.
     11. "Exercise Price" shall mean, with respect to a Company Right, the
         consideration that the holder thereof must pay in order to exercise,
         convert or exchange such Company Right and acquire the shares of
         Company Common Stock that may be acquired pursuant thereto.
     12. "In-the-Money Rights" shall mean all Company Rights the Exercise Price
         per share of which is less than or equal to the Per Share Amount.
     13. "Net APG Cash" shall mean the amount of cash purchase price paid (or to
         be paid) to the Company pursuant to the AP Purchase Agreement in
         connection with the transactions contemplated therein, less the amount
         of tax owed by the Company in connection with the consummation of the
         transactions contemplated in the AP Purchase Agreement, with such tax
         calculated in accordance with the principles set forth in Schedule
         1.6(a)(12).
     14. "Per Share Amount" shall mean the quotient of the Total Consideration
         divided by the Total Outstanding Shares, rounded up to the nearest
         whole penny.
     15. "Total Consideration" shall mean an amount equal to the sum of (a) USD
         $94,000,000, plus (b) Adjustment Date Cash, plus (c) Net APG Cash, plus
         (d) income tax receivable (if any) as of the Adjustment Date, plus (e)
         Aggregate Exercise Price, minus (f) Estimated Transaction Costs, plus
         (g) the Balance Sheet Adjustment Amount (which for the avoidance of
         doubt may be positive or negative).
     16. "Total Outstanding Shares" shall mean, the sum of (a) as of the
         Adjustment Date, the aggregate number of shares of Company Common Stock
         issued and outstanding, plus (b) the maximum aggregate number of shares
         issuable upon a full cash exercise by holder, exchange or conversion of
         all In-the-Money Rights which are outstanding as of the Adjustment Date
         and that are at that time or will be at or prior to the Effective Time
         vested and convertible into, exercisable for or exchangeable for,
         shares of Company Capital Stock, on an as converted to, exercised for
         and exchanged for Company Common Stock basis; provided that for
         purposes of determining the number of shares of Company Common Stock
         issuable under the Company Purchase Plans as of the Adjustment Date for
         purposes of this definition, it shall be assumed that employee payroll
         deductions under the Company Purchase Plans shall continue, at the
         levels in affect as of the date hereof, through June 30, 2006 (even
         though that date may be before or after the Adjustment Date).
     17. "Transaction Costs" shall mean the third party costs and expenses
         incurred by the Company or HoldCo with respect to the transactions
         contemplated herein (including, without limitation, attorney's fees,
         auditor's fees and the TSG Fee, including estimated transaction costs)
         all as reflected on the Statement of Expenses delivered pursuant to
         Section 5.14; provided that Transaction Costs shall not include
         expenses incurred under Section 5.10.
     18. "TSG Fee" shall mean the fee owed to The Spartan Group by the Company
         in connection with the transactions contemplated herein.

    Adjustment Balance Sheet
    . The Company shall prepare and deliver the Closing Date Balance Sheet not
    less than five (5) Business Days prior to the mailing of the Proxy Statement
    to the Company's shareholders as provided in
    Section 5.1
    and shall cause the Closing Date Balance Sheet to be certified as true and
    correct in all material respects in form acceptable to Parent by the
    Company's Chief Financial Officer as of the Adjustment Date.
    Company Common Stock
    . Subject to the terms and conditions of this Agreement, at the Effective
    Time, by virtue of the Merger and without any action on the part of Parent,
    Holdco, the Company or the holders of any shares of capital stock of the
    Company, the following shall occur:
     i. Each share of the Common Stock, no par value, of the Company ("Company
        Common Stock") issued and outstanding immediately prior to the Effective
        Time, other than any shares of Company Common Stock to be canceled
        pursuant to Section 1.6(e) or Dissenting Shares as provided in
        Section 1.7, will be canceled and extinguished and automatically
        converted into the right to receive an amount of cash equal to the Per
        Share Amount, without interest (such amount of cash hereinafter referred
        to as the "Merger Consideration") upon surrender of the certificate
        representing such share of Company Common Stock in the manner provided
        in Section 1.8 (or in the case of a lost, stolen or destroyed
        certificate, upon delivery of an affidavit (and bond, if required) in
        the manner provided in Section 1.10).

 a. Company Options. At the Effective Time, all Company Options outstanding
    under each Company Stock Option Plan shall not be assumed by Parent, and
    shall have their vesting accelerated by the Company. At the Effective Time,
    each Company Option held by any person that is unexpired, unexercised and
    outstanding immediately prior to the Effective Time shall, on the terms and
    subject to the conditions set forth in this Agreement, terminate in its
    entirety at the Effective Time, and the holder of each Company Option shall
    be entitled to receive therefor an amount of cash (rounded down to the
    nearest whole cent) equal to the product of (i) the number of shares of
    Company Common Stock as to which such Company Option was vested and
    exercisable immediately prior to the Effective Time (giving effect to any
    acceleration of vesting resulting from the Merger), and (ii) the Per Share
    Amount minus the per share exercise price of such Company Option immediately
    prior to the Effective Time (the "Option Cash-Out Amount"); provided,
    however, that if the Per Share Amount does not exceed the exercise price of
    such Option immediately prior to the Effective Time, the Option Cash-Out
    Amount for such Option shall be zero; provided further, that nothing in this
    Section 1.6(d) shall prohibit the holder of an Option from exercising such
    Option prior to the Effective Time in accordance with its terms. Prior to
    the Effective Time, the Company shall timely deliver any notices to holders
    of Company Options as may be required by the terms of the Stock Option
    Plans. Any materials to be submitted to the holders of such Options shall be
    subject to review and approval by Parent.
 b. Cancellation of Treasury and Parent Owned Stock. Each share of Company
    Common Stock held by Company or Parent or any direct or indirect
    wholly-owned Subsidiary of the Company or of Parent immediately prior to the
    Effective Time shall be canceled and extinguished without any conversion
    thereof.
 c. Capital Stock of Holdco. Each share of common stock, no par value, of Holdco
    (the "Holdco Common Stock") issued and outstanding immediately prior to the
    Effective Time shall be converted into one validly issued, fully paid and
    nonassessable share of common stock, no par value, of the Surviving
    Corporation. Each certificate evidencing ownership of shares of Holdco
    Common Stock shall evidence ownership of such shares of capital stock of the
    Surviving Corporation.
 d. Employee Stock Purchase Plans. Rights outstanding under the Company's 1997
    Employee Stock Purchase Plan and any other employee stock purchase plan of
    the Company (collectively, the "Company Purchase Plans") shall be treated as
    set forth in Section 5.9(b).
    Adjustments to Merger Consideration
    . The Merger Consideration shall be adjusted to reflect fully the
    appropriate effect of any stock split, reverse stock split, stock dividend
    (including any dividend or distribution of securities convertible into
    Company Common Stock), reorganization, recapitalization, reclassification or
    other like change with respect to Company Common Stock having a record date
    on or after the date hereof and prior to the Effective Time.

1.7   Dissenting Shares.
 a. Notwithstanding any other provisions of this Agreement to the contrary, any
    shares of Company Common Stock held by a holder who has not effectively
    withdrawn or lost such holder's dissenters' rights under Chapter 13 of the
    California Corporations Code (such code, "California Law") or of Oregon Law
    (collectively, the "Dissenting Shares"), shall not be converted into or
    represent a right to receive the applicable consideration for Company Common
    Stock set forth in Section 1.6, but the holder thereof shall only be
    entitled to such rights as are provided by Oregon Law and California Law.

Notwithstanding the provisions of Section 1.7(a), if any holder of Dissenting
Shares shall effectively withdraw or lose (through failure to perfect or
otherwise) such holder's dissenters' rights under Oregon Law and California Law,
then, as of the later of the Effective Time and the occurrence of such event,
such holder's shares shall automatically be converted into and represent only
the right to receive the consideration for Company Common Stock, as applicable,
set forth in Section 1.6, without interest thereon, upon surrender of the
certificate representing such shares. The Company shall give Parent (i) prompt
notice of any written demand for appraisal received by the Company pursuant to
the applicable provisions of Oregon Law or California Law, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
such demands. The Company shall not, except with the prior written consent of
Parent, make any payment with respect to any such demands or offer to settle or
settle any such demands. Any written communication to be made by the Company to
any holder of Company Common Stock with respect to such demands shall be
submitted to Parent in advance and shall not be presented to any holder of
Company Common Stock prior to the Company receiving Parent's consent (which
consent shall not be unreasonably withheld).

1.8   Surrender of Certificates . 

 a. Exchange Agent. Prior to the Effective Time, Parent shall select an
    institution reasonably acceptable to the Company to act as the exchange
    agent (the "Exchange Agent") for the Merger.
 b. Parent to Provide Cash. Prior to the Effective Time, Parent shall enter into
    an agreement with the Exchange Agent that shall provide that Parent shall,
    within five Business Days following the Effective Time, make available to
    the Exchange Agent for exchange in accordance with this Article I, the
    Merger Consideration payable pursuant to Section 1.6(c)(i) and Section
    1.6(d) in exchange for outstanding shares of Company Common Stock and
    Company Options. Any cash deposited with the Exchange Agent shall
    hereinafter be referred to as the "Exchange Fund."
 c. Exchange Procedures. As soon as practicable following the Effective Time
    (but in no event later than five (5) business days following the Effective
    Time), Parent shall cause the Exchange Agent to mail to each holder of
    record (as of the Effective Time) of a certificate or certificates (the
    "Certificates") which immediately prior to the Effective Time represented
    outstanding shares of Company Common Stock whose shares were converted into
    the right to receive the Merger Consideration pursuant to Section 1.6(c)(i)
    or Company Options whose Options were converted into the right to receive
    cash as provided in Section 1.6(d): (i) a letter of transmittal (which shall
    specify that delivery shall be effected, and risk of loss and title to the
    Certificates or Options shall pass, only upon delivery of the Certificates
    or Options to the Exchange Agent and shall be in such form and have such
    other provisions as Parent may reasonably specify) and (ii) instructions for
    use in effecting the surrender of the Certificates or Options in exchange
    for cash constituting the Merger Consideration. Upon surrender of
    Certificates or Options for cancellation to the Exchange Agent or to such
    other agent or agents as may be appointed by Parent, 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 Exchange Agent, the holder of record of such Certificates or
    Options shall be entitled to receive in exchange therefor the cash as
    provided in Section 1.6, and the Certificates or Options so surrendered
    shall forthwith be canceled. Subject to the terms and conditions of this
    Article I, Parent shall cause the Exchange Agent to pay the Merger
    Consideration as provided in Section 1.6. Parent shall not take any action
    that would prevent the Exchange Agent from making payment of the Merger
    Consideration in accordance with its customary procedures. In the event of a
    transfer of ownership of Company Common Stock that is not registered in the
    stock transfer books of the Company, payment of the Merger Consideration in
    exchange therefore may be made to a person other than the person in whose
    name the Certificate so surrendered is registered if such Certificate shall
    be properly endorsed or otherwise be in proper form for transfer, and the
    person requesting such payment shall pay any transfer or other taxes
    required by reason of the payment to a person other than the registered
    holder of such Certificate or establish to the reasonable satisfaction of
    the Surviving Corporation that such tax has been paid or is not applicable.
    Until so surrendered, outstanding Certificates or Options will be deemed
    from and after the Effective Time, for all corporate purposes, to evidence
    the ownership of the cash as provided in Section 1.6 into which such shares
    of Company Common Stock or Options shall have been so converted.
 d. Required Withholding. Each of the Exchange Agent and the Surviving
    Corporation shall be entitled to deduct and withhold from any consideration
    payable or otherwise deliverable pursuant to this Agreement to any holder or
    former holder of Company Common Stock or Company Options such amounts as are
    required to be deducted or withheld therefrom under the Internal Revenue
    Code of 1986, as amended (the "Code") or under any provision of state, local
    or foreign Tax law or under any other applicable Legal Requirement. To the
    extent such amounts are so deducted or withheld, the amount of such
    consideration shall be timely deposited with the appropriate taxing
    authority and shall be treated for all purposes under this Agreement as
    having been paid to the Person to whom such consideration would otherwise
    have been paid.
    No Liability
    . Notwithstanding anything to the contrary in this
    Section 1.8
    , neither the Exchange Agent, the Surviving Corporation nor any party hereto
    shall be liable to a holder of shares of Company Common Stock or Company
    Options for any amount paid to a public official pursuant to any applicable
    abandoned property, escheat or similar law.
    Expenses; Investment of Exchange Fund
    . The expenses of the Exchange Agent shall not be paid from the Exchange
    Fund but shall be paid directly by the Surviving Corporation or Parent. If
    the amount of cash in the Exchange Fund is insufficient to pay all of the
    amounts required to be paid pursuant to
    Section 1.6
    , Parent, from time to time after the Effective Time, shall deposit
    additional cash with the Exchange Agent sufficient to make all such
    payments. The Exchange Fund shall not be used for any purpose that is not
    provided herein. The Exchange Agent may invest, if so directed by Parent or
    the Surviving Corporation, the Exchange Fund in obligations of the United
    States Government or any agency or instrumentality therefore, or in
    obligations that are guaranteed or insured by the United States government
    or any agency or instrumentality thereof. No such investment or loss thereon
    shall affect the amounts payable to Company security holders pursuant to
    this
    Article I
    . Any interest and other income resulting from such investment shall become
    a part of the Exchange Fund, and any amounts in excess of the amounts
    payable to Company security holders pursuant to this
    Article I
    shall promptly be paid to Parent.
    Termination of Exchange Fund
    . Any portion of the Exchange Fund which remains undistributed to the
    holders of Certificates or
    
    Options one year after the Effective Time shall, at the request of the
    Surviving Corporation, be delivered to the Surviving Corporation or
    otherwise according to the instruction of the Surviving Corporation, and any
    holders of the Certificates or
    
    Options who have not surrendered such Certificates or
    
    Options in compliance with this
    Section 1.8
    shall after such delivery to Surviving Corporation look only to the
    Surviving Corporation solely as general creditors for the cash into which
    such Certificates or
    
    Options have been converted (which shall not accrue interest) pursuant to
    Section 1.6(c)(i)
    or
    Section 1.6(d)
    with respect to the shares of Company Common Stock or
    
    Options formerly represented thereby.

1.9   No Further Ownership Rights in Company Common Stock or Options .  All
consideration paid pursuant hereto upon the surrender for exchange of shares of
Company Common Stock or Options in accordance with the terms hereof shall be
deemed to have been paid in full satisfaction of all rights pertaining to such
shares of Company Common Stock or Options, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Company Common Stock or Options which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates or Options are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article I.

1.10   Lost, Stolen or Destroyed Certificates or Options .  In the event any
Certificates or Options shall have been lost, stolen or destroyed, the Exchange
Agent shall issue in exchange for such lost, stolen or destroyed Certificates or
Options, upon the making of an affidavit of that fact by the holder thereof,
such cash payable pursuant to Section 1.6; provided, however, that Parent may,
in its discretion and as a condition precedent to the issuance thereof, require
the owner of such lost, stolen or destroyed Certificates or Options to deliver a
bond in such sum as it may reasonably direct as indemnity against any claim that
may be made against Parent, the Company or the Exchange Agent with respect to
the Certificates or Options alleged to have been lost, stolen or destroyed.

1.11   Further Action .  At and after the Effective Time, the officers and
directors of Parent and the Surviving Corporation will be authorized to execute
and deliver, in the name and on behalf of the Company and Holdco, any deeds,
bills of sale, assignments or assurances and to take and do, in the name and on
behalf of Company and Holdco, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets
acquired or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger.

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Parent, subject to the exceptions
specifically disclosed in writing in the disclosure letter (referencing the
appropriate section, subsection, paragraph and subparagraph numbers; provided,
that disclosure in any section of such letter shall be deemed to be disclosed
with respect to any other section of Article II of this Agreement to the extent
that it is reasonably apparent from the face of such disclosure that such
disclosure is applicable to such other section) supplied by Company to Parent
dated as of the date hereof and certified by the chief executive officer of
Company (the "Company Disclosure Letter"), as follows:

2.1   Organization; Standing and Power; Charter Documents; Subsidiaries . 

 a. Organization; Standing and Power. The Company and each of its Subsidiaries
    (as defined below) (i) is a corporation or other organization duly
    organized, validly existing and is in good standing under the laws of the
    jurisdiction of its incorporation or organization (except, in the case of
    good standing, for entities organized under the laws of any jurisdiction
    that does not recognize such concept), (ii) has the requisite power and
    authority to own, lease and operate its properties and to carry on its
    business as currently conducted, and (iii) is duly qualified or licensed to
    do business and in good standing as a foreign corporation in each
    jurisdiction in which the character or location of its assets or properties
    (whether owned, leased or licensed) or the nature of its business makes such
    qualification or licensing necessary, except for such failures to be so
    qualified, licensed or in good standing individually or in the aggregate, as
    have not had and are not reasonably likely to have a Material Adverse
    Effect. For purposes of this Agreement, "Subsidiary," when used with respect
    to any party, shall mean any corporation, association, business entity,
    partnership, limited liability company or other Person of which such party,
    either alone or together with one or more Subsidiaries or by one or more
    Subsidiaries directly or indirectly owns or controls securities or other
    interests representing more than 50% of the voting power of such Person.
 b. Charter Documents. The Company has delivered or made available to Parent (or
    its representatives) (i) a true and correct copy of the articles of
    incorporation and bylaws of the Company, each as amended to date
    (collectively, the "Company Charter Documents") and (ii) the certificate of
    incorporation and bylaws, or like organizational documents (collectively,
    "Subsidiary Charter Documents"), of each of its Subsidiaries, and each such
    instrument is in full force and effect. The Company is not in violation of
    any of the provisions of the Company Charter Documents and each Subsidiary
    is not in violation of its respective Subsidiary Charter Documents.
 c. Subsidiaries. Section 2.1(c) of the Company Disclosure Letter sets forth
    each Subsidiary of the Company. The Company is the owner of all the
    outstanding shares of capital stock of, or other equity or voting interests
    in, each such Subsidiary and all such shares have been duly authorized,
    validly issued and are fully paid and nonassessable, free and clear of all
    pledges, claims, liens, charges, encumbrances, options and security
    interests of any kind or nature whatsoever (collectively, "Liens"),
    including any restriction on the right to vote, sell or otherwise dispose of
    such capital stock or other ownership interests, except for restrictions
    imposed by applicable securities laws. Other than the Subsidiaries of the
    Company, neither the Company nor any of its Subsidiaries owns any capital
    stock of, or other equity or voting interests of any nature in, or any
    interest convertible, exchangeable or exercisable for, capital stock of, or
    other equity or voting interests of any nature in, any other Person, except
    for passive investments of less than 1% in the equity interests of public
    companies as part of the Company's cash management program.

2.2   Capital Structure . 

 a. Capital Stock. The authorized capital stock of Company consists of:
     100,000,000 shares of Company Common Stock, $0.001 par value per share. At
    the close of business on April 24, 2006: 9,800,253 shares of Company Common
    Stock were issued and outstanding, excluding shares of Company Common Stock
    held by the Company in its treasury, and (ii) no shares of Company Common
    Stock were issued and held by the Company in its treasury. No shares of
    Company Common Stock are owned or held by any Subsidiary of the Company. All
    outstanding shares of Company Common Stock are duly authorized, validly
    issued, fully paid and non-assessable and are not subject to preemptive
    rights created by statute, the Company Charter Documents, or any agreement
    to which the Company is a party or by which it is bound.
 b. Company Options. As of the close of business on April 24, 2006: (i) 553,816
    shares of Company Common Stock are issuable upon the exercise of outstanding
    options to purchase Company Common Stock under the Company's 1997 Stock
    Option Plan (the "Company Stock Option Plan") (equity or other equity-based
    awards, whether payable in cash, shares or otherwise granted under or
    pursuant to the Company Stock Option Plan are referred to in this Agreement
    as "Company Options"); (ii) as of April 24, 2006, 252,483 shares of Company
    Common Stock were available for future grant under the Company Stock Option
    Plan; (iii) 548,200 shares of Company Common Stock are issuable under the
    Company Purchase Plans; and (iv) no shares of Company Common Stock are
    issuable pursuant to outstanding options to purchase Company Common Stock
    (A) which are issued other than pursuant to the Company Stock Option Plan
    and (B) other than shares reserved for issuance under the Company Purchase
    Plans. Section 2.2(b) of the Company Disclosure Letter sets forth a list of
    each outstanding Company Option: (a) the particular Company Stock Option
    Plan (if any) pursuant to which any such Company Option was granted, (b) the
    name of the holder of such Company Option, (c) the number of shares of
    Company Common Stock subject to such Company Option, (d) the exercise price
    of such Company Option, and (e) in the case of Company Options, whether such
    Company Option is an incentive stock option as defined in Section 422 of the
    Code and/or is subject to Section 409 of the Code. All shares of Company
    Common Stock subject to issuance under the Company Stock Option Plans and
    the Company Purchase Plans, upon issuance on the terms and conditions
    specified in the instruments pursuant to which they are issuable, would be
    duly authorized, validly issued, fully paid and nonassessable. Except for
    the Stock Option and Stock Purchase Plans, there are no commitments or
    agreements of any character to which the Company is bound obligating the
    Company to accelerate the vesting of any Company Option as a result of the
    Merger (whether alone or upon the occurrence of any additional or subsequent
    events). As of the end of the most recent bi-weekly payroll period ending
    prior to the date hereof, the aggregate amount credited to the accounts of
    participants in the Company Purchase Plans was $26,970.15. There are no
    outstanding or authorized stock appreciation, phantom stock, profit
    participation or other similar rights with respect to the Company.
 c. Voting Debt. No bonds, debentures, notes or other indebtedness of the
    Company or any of its Subsidiaries (i) having the right to vote on any
    matters on which shareholders may vote (or which is convertible into, or
    exchangeable for, securities having such right) or (ii) the value of which
    is any way based upon or derived from capital or voting stock of the
    Company, are issued or outstanding as of the date hereof (collectively,
    "Voting Debt").
 d. Other Securities. As of the date hereof, there are no securities, options,
    warrants, calls, rights, contracts, commitments, agreements, instruments,
    arrangements, understandings, obligations or undertakings of any kind to
    which the Company or any of its Subsidiaries is a party or by which any of
    them is bound obligating the Company or any of its Subsidiaries to
    (including on a deferred basis) issue, deliver or sell, or cause to be
    issued, delivered or sold, additional shares of capital stock, Voting Debt
    or other voting securities of the Company or any of its Subsidiaries, or
    obligating the Company or any of its Subsidiaries to issue, grant, extend or
    enter into any such security, option, warrant, call, right, commitment,
    agreement, instrument, arrangement, understanding, obligation or
    undertaking. All outstanding shares of Company Common Stock, Company Options
    and all outstanding shares of capital stock of each Subsidiary of the
    Company have been issued, granted or repurchased in compliance with (i) all
    applicable securities laws and all other applicable Legal Requirements and
    (ii) all requirements set forth in applicable Contracts. There are no
    outstanding Contracts of the Company or any of its Subsidiaries to
    (i) repurchase, redeem or otherwise acquire any shares of capital stock of,
    or other equity or voting interests in, the Company or any of its
    Subsidiaries or (ii) dispose of any shares of the capital stock of, or other
    equity or voting interests in, any of its Subsidiaries. The Company is not a
    party to any voting agreement with respect to shares of the capital stock
    of, or other equity or voting interests in, the Company or any of its
    Subsidiaries, and, to the Knowledge of the Company, there are no irrevocable
    proxies and no voting agreements or voting trusts with respect to any shares
    of the capital stock of, or other equity or voting interests in, the Company
    or any of its Subsidiaries. There are no rights plans, anti-takeover plans
    or registration rights agreements with respect to any shares of capital
    stock of, or other equity or voting interests in, the Company or any of its
    Subsidiaries. For purposes of this Agreement, "Legal Requirements" shall
    mean any federal, state, local, municipal, foreign or other law, statute,
    constitution, principle of common law, resolution, ordinance, code, order,
    edict, decree, rule, regulation, ruling or requirement issued, enacted,
    adopted, promulgated, implemented or otherwise put into effect by or under
    the authority of any Governmental Entity. For purposes of this Agreement,
    "Contract" shall mean any written, oral or other agreement, contract,
    subcontract, settlement agreement, lease, binding understanding, instrument,
    note, option, warranty, purchase order, license, sublicense, insurance
    policy, benefit plan or legally binding commitment or undertaking of any
    nature, as in effect as of the date hereof or as may hereinafter be in
    effect.

2.3   Authority; No Conflict; Necessary Consents . 

    Authority
    . The Company has all requisite power and authority to enter into this
    Agreement and to consummate the transactions contemplated hereby, subject,
    in the case of consummation of the Merger, to obtaining the approval and
    adoption of this Agreement and the approval of the Merger by the Company's
    shareholders as contemplated in
    Section 5.2
    . The execution and delivery of this Agreement and the consummation of the
    transactions contemplated hereby have been duly authorized by all necessary
    corporate action on the part of the Company and no further action is
    required on the part of the Company to authorize the execution and delivery
    of this Agreement
    
    or to consummate the Merger and the other transactions contemplated hereby,
    subject only to the approval and adoption of this Agreement and the approval
    of the Merger by the Company's shareholders and the filing of the Agreement
    of Merger pursuant to Oregon Law. The affirmative vote of the holders of a
    majority of the outstanding shares of Company Common Stock is the only vote
    of the holders of any class or Series of Company capital stock necessary to
    approve and adopt this Agreement, approve the Merger and consummate the
    Merger and the other transactions contemplated hereby. This Agreement and
    the Merger have been approved by the Board of Directors of the Company. This
    Agreement has been duly executed and delivered by the Company and assuming
    due authorization, execution and delivery by Parent constitute the valid and
    binding obligations of the Company, enforceable against the Company in
    accordance with its terms except as the enforceability thereof may be
    limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
    moratorium or similar laws relating to the enforcement of creditors' rights
    generally and by general principles of equity.
 a. No Conflict. The execution and delivery by the Company of this Agreement and
    the consummation of the transactions contemplated hereby, will not
    (i) conflict with or violate any provision of the Company Charter Documents
    or any Subsidiary Charter Documents of any Subsidiary of the Company,
    (ii) subject to obtaining the approval and adoption of this Agreement and
    the approval of the Merger by the Company's shareholders as contemplated in
    Section 5.2 and compliance with the requirements set forth in
    Section 2.3(c), conflict with or violate any Legal Requirement applicable to
    the Company or any of its Subsidiaries or by which the Company or any of its
    Subsidiaries or any of their respective properties or assets (whether
    tangible or intangible) is bound or affected, or (iii) result in any breach
    of or constitute a default (or an event that with notice or lapse of time or
    both would become a default) under, or impair the Company's rights or alter
    the rights or obligations of any third party under, or give to others any
    rights of termination, amendment, acceleration or cancellation of, or result
    in the creation of a Lien on any of the properties or assets of the Company
    or any of its Subsidiaries pursuant to, any Company Material Contract,
    except in the case of clause (ii) or (iii) of this Section  2.3(b) for any
    such conflicts, violations, breaches, defaults, terminations, cancellations,
    accelerations or losses which are not individually or in the aggregate
    material. Section 2.3(b) of the Company Disclosure Letter also lists any
    additional consents, waivers and approvals under any of the Company's or any
    of its Subsidiary's Contracts required to be obtained in connection with the
    consummation of the transactions contemplated hereby, which, if individually
    or in the aggregate not obtained, would result in a material loss of
    benefits to the Company, Parent or the Surviving Corporation as a result of
    the Merger (such consents, waiver and approvals, together with any consents
    required to avoid a breach or default described in (b)(ii) above, the
    "Required Contract Consents").
 b. Necessary Consents. No consent, waiver, approval, order or authorization of,
    or registration, declaration or filing with any supranational, national,
    state, municipal, local or foreign government, any instrumentality,
    subdivision, court, administrative agency or commission or other
    governmental authority or instrumentality, or any quasi-governmental or
    private body legitimately exercising any regulatory, taxing, importing or
    other governmental or quasi-governmental authority (a "Governmental Entity")
    is required to be obtained or made by the Company in connection with the
    execution and delivery of this Agreement or the consummation of the Merger
    and other transactions contemplated hereby and thereby, except for (i) the
    filing of the Plan of Merger with the Secretary of State of the State of
    Oregon and of the State of California and appropriate documents with the
    relevant authorities of other states in which the Company is qualified to do
    business, (ii) the filing of the Proxy Statement with the SEC in accordance
    with the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
    (iii) the filing of any Notification and Report Forms with the United States
    Federal Trade Commission ("FTC") and the Antitrust Division of the United
    States Department of Justice ("DOJ") if required by the Hart-Scott-Rodino
    Antitrust Improvements Act of 1976, as amended ("HSR Act") and the
    expiration or termination of the applicable waiting period, if any, under
    the HSR Act and such consents, waivers, approvals, orders, authorizations,
    registrations, declarations and filings as may be required under the foreign
    merger control regulations identified in Section 2.3(c) of the Company
    Disclosure Letter, and (iv) such other consents, notices, waivers,
    approvals, orders, authorizations, registrations, declarations and filings
    which if not obtained or made would have a Material Adverse Effect on
    HoldCo, the Company or Parent, or materially adversely affect the ability of
    the parties hereto to consummate the Merger and the other transactions
    contemplated hereby within the time frame in which the Merger and such other
    transactions would otherwise be consummated in the absence of the need for
    such consent, notice, waiver, approval, order, authorization, registration,
    declaration or filing. The consents, approvals, orders, authorizations,
    registrations, declarations and filings set forth in (i) through (iv) are
    referred to herein as the "Necessary Consents."

2.4   SEC Filings; Financial Statements; Internal Controls . 

 a. SEC Filings. The Company has filed all required registration statements,
    prospectuses, reports, schedules, forms, statements and other documents
    (including all information incorporated by reference) required to be filed
    by it with the SEC since January 1, 2003. All such required registration
    statements, prospectuses, reports, schedules, forms, statements and other
    documents (including those that the Company may file subsequent to the date
    hereof) are referred to herein as the "Company SEC Reports." As of their
    respective dates, the Company SEC Reports (i)  complied in all material
    respects with the requirements of the Securities Act of 1933, as amended
    (the "Securities Act"), or the Exchange Act, as the case may be, and the
    rules and regulations of the SEC thereunder applicable to such Company SEC
    Reports and (ii) did not at the time they were filed (or if amended or
    superseded by a filing prior to the date of this Agreement then on the date
    of such filing) contain any untrue statement of a material fact or omit to
    state a material fact required to be stated therein or necessary in order to
    make the statements therein, in the light of the circumstances under which
    they were made, not misleading.
 b. Financial Statements. Each of the consolidated financial statements
    (including, in each case, any related notes thereto) contained in the
    Company SEC Reports (the "Company Financials"), including each Company SEC
    Report filed after the date hereof until the Closing: (i) complied as to
    form in all material respects with the published rules and regulations of
    the SEC with respect thereto, (ii) was prepared in accordance with United
    States generally accepted accounting principles ("GAAP") applied on a
    consistent basis throughout the periods involved (except as may be indicated
    in the notes thereto or, in the case of unaudited interim financial
    statements, as may be permitted by the SEC on Form 10-Q, 8-K or any
    successor form under the Exchange Act), and (iii) fairly and accurately
    presented 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 the Company's operations and cash
    flows for the periods indicated (except that the unaudited interim financial
    statements were or are subject to normal and recurring year end adjustments,
    none of which, when taken alone or together, are expected to be material).
    The Company does not intend to correct or restate, nor, to the Company's
    Knowledge, is there any basis for any correction or restatement of, any
    aspect of the Company Financials. The balance sheet of the Company contained
    in the Company SEC Reports as of December 31, 2005 is hereinafter referred
    to as the "Company Balance Sheet." Except as incurred since the date of the
    Company Balance Sheet and prior to the date hereof in the ordinary course of
    business consistent with past practice or in connection with the
    transactions contemplated by this Agreement or incurred after the date
    hereof in accordance with the terms of this Agreement and except as
    disclosed in the Company Financials, neither the Company nor any of its
    Subsidiaries has any material liabilities (absolute, accrued, contingent or
    otherwise) of a nature required to be disclosed on a consolidated balance
    sheet or in the related notes to the consolidated financial statement
    prepared in accordance with GAAP.
 c. The Company and each of its Subsidiaries has established and maintains,
    adheres to and enforces a system of internal accounting controls which are
    effective in providing reasonable assurance regarding the reliability of
    financial reporting and the preparation of financial statements in
    accordance with GAAP (including the Company Financials). Neither the Company
    nor any of its Subsidiaries nor, to the Company's Knowledge, the Company's
    independent auditors, has identified or been made aware of (i) any
    significant deficiency or material weakness in the system of internal
    accounting controls utilized by the Company and its Subsidiaries, (ii) any
    fraud, whether or not material, that involves the Company's management or
    other Employees who have a role in the preparation of financial statements
    or the internal accounting controls utilized by the Company and its
    Subsidiaries or (iii) any claim or allegation regarding any of the
    foregoing.

2.5   Absence of Certain Changes or Events .  Since the date of the Company
Balance Sheet until the date hereof, there has not been, accrued or arisen:

 a. entry by the Company or any of its Subsidiaries into any new line of
    business;
 b. any event or condition of any character that has had or is reasonably likely
    to have a Material Adverse Effect on the Company;
 c. any declaration, setting aside or payment of any dividend on, or other
    distribution (whether in cash, stock or property) in respect of, any of the
    Company's or any of its Subsidiaries' capital stock, or any purchase,
    redemption or other acquisition by the Company or any of its Subsidiaries of
    any of the Company's capital stock or any other securities of the Company or
    its Subsidiaries or any options, warrants, calls or rights to acquire any
    such shares or other securities except for repurchases from Employees
    following their termination pursuant to the terms of their pre-existing
    stock option or purchase agreements;
 d. any split, combination or reclassification of any of the Company's or any of
    its Subsidiaries' capital stock;
 e. any change by the Company in its accounting methods, principles or
    practices, except as required by concurrent changes in GAAP;
 f. any debt, capital lease or other debt or equity financing transaction by the
    Company or any of its Subsidiaries or entry into any agreement by the
    Company or any of its Subsidiaries in connection with any such transaction;
 g. any termination of any material Contract to which the Company or any of its
    Subsidiaries was a party or by which it was bound;
 h. any adoption of or change in any election in respect of Taxes, adoption or
    change in any accounting method in respect of Taxes, agreement or settlement
    of any material claim or assessment in respect of Taxes, or extension or
    waiver of the limitation period applicable to any claim or assessment in
    respect of Taxes; or
 i. any material revaluation by the Company of any of its assets, including,
    without limitation, writing down the value of capitalized inventory or
    writing off notes or accounts receivable other than in the ordinary course
    of business consistent with past practice.

2.6   Taxes.

 a. Definition of Taxes. For the purposes of this Agreement, "Tax" or "Taxes"
    shall mean any and all federal, state, local and foreign taxes, assessments
    and other governmental charges, duties, impositions and liabilities relating
    to taxes, including taxes based upon or measured by gross receipts, income,
    profits, sales, use and occupation, and value added, ad valorem, transfer,
    franchise, withholding, payroll, recapture, employment, excise and property
    taxes as well as public imposts, fees and social security charges (including
    health, unemployment, workers' compensation and pension insurance), together
    with all interest, penalties and additions imposed with respect to such
    amounts and any obligations under any agreements or arrangements with any
    other person with respect to such amounts and including any liability for
    taxes of a predecessor entity.
    Tax Returns and Audits
    .
     i.    The Company and each of its Subsidiaries have timely filed or will
           file all material federal, state, local and foreign returns,
           estimates, information statements and reports and all other filings
           ("Returns") relating to Taxes required to be filed by the Company or
           any of its Subsidiaries with any Tax authority, including any
           combined, consolidated or unitary returns of which the Company or any
           Subsidiary is a member. Such Returns are true and correct in all
           material respects and have been completed in accordance with
           applicable Legal Requirements and the Company and each of its
           Subsidiaries have timely paid or withheld and paid to the appropriate
           Governmental Entity all Taxes due on such Returns.
     ii.   Neither the Company nor any of its Subsidiaries has been delinquent
           in the payment of any material Tax, nor is there any Tax deficiency
           outstanding, assessed or proposed in writing against the Company or
           any of its Subsidiaries, nor has the Company or any of its
           Subsidiaries executed any waiver of any statute of limitations on or
           extending the period for the assessment or collection of any Tax.
     iii.  No audit or other examination of any Return of the Company or any of
           its Subsidiaries is presently in progress, nor has the Company or any
           of its Subsidiaries been notified of any request for such an audit or
           other examination.
     iv.   Neither the Company nor any of its Subsidiaries has any material
           liabilities for unpaid Taxes which have not been accrued or reserved
           on the Company Balance Sheet, whether asserted or unasserted,
           contingent or otherwise, and neither the Company nor any of its
           Subsidiaries has incurred any liability for Taxes since the date of
           the Company Balance Sheet other than in the ordinary course of
           business.
     v.    Neither the Company nor any of its Subsidiaries has (a) ever been a
           member of an affiliated group (within the meaning of Code 1504(a))
           filing a consolidated federal income Tax Return (other than a group
           the common parent of which was Company or HoldCo), (b) ever been a
           party to any Tax sharing, indemnification or allocation agreement,
           (c) any liability for the Taxes of any person (other than Company or
           any of its Subsidiaries), under Treasury Regulation  1.1502-6 (or any
           similar provision of state, local or foreign law including any
           arrangement for group or consortium Tax relief or similar
           arrangement), as a transferee or successor, by contract or agreement,
           or otherwise and (d) to the Company's Knowledge, ever been a party to
           any joint venture, partnership or other arrangement that could be
           treated as a partnership for Tax purposes.
     vi.   No adjustment relating to any Return filed by the Company or any of
           its Subsidiaries has been proposed orally or in writing by any Tax
           authority to the Company or any of its Subsidiaries or any
           representative thereof.
     vii.  Neither the Company nor any of its Subsidiaries has constituted
           either a "distributing corporation" or a "controlled corporation" in
           a distribution of stock intended to qualify for tax-free treatment
           under Section 355 of the Code.
     viii. None of the Company or any of its Subsidiaries has engaged in a
           transaction that the Internal Revenue Service has determined to be a
           Tax avoidance transaction and identified by notice, regulation, or
           other form of published guidance as a listed transaction, as set
           forth in Treasury Regulation Section 1.6011-4(b)(2).
     ix.   The Company is not a U.S. Real Property Holding Company.

    Executive Compensation Tax
    . There is no contract, agreement, plan or arrangement to which the Company
    or any of its Subsidiaries is a party, including the provisions of this
    Agreement, covering any Employee of the Company or any of its Subsidiaries,
    which, individually or collectively, could give rise to the payment of any
    amount that would not be deductible pursuant to Sections 280G, 404 or 162(m)
    of the Code.

2.7   Title to Properties; Customer Information.
 a. Properties. Neither the Company nor any of its Subsidiaries owns any real
    property, nor has the Company or any of its Subsidiaries ever owned any real
    property. Section 2.7 of the Company Disclosure Letter sets forth a list of
    all real property leased, licensed or subleased by the Company or any of its
    Subsidiaries or otherwise used or occupied by the Company or any of its
    Subsidiaries for the operation of their business as of the date hereof (the
    "Leased Real Property"). All such leases are in full force and effect, are
    valid and effective in accordance with their respective terms (except as
    such enforceability may be subject to laws of general application relating
    to bankruptcy, insolvency, and the relief of debtors and rules of law
    governing specific performance, injunctive relief, or other equitable
    remedies), and there is not with respect to the Company or any of its
    Subsidiaries or to the Knowledge of the Company with respect to any other
    contracting party, under any of such leases, any existing default or event
    of default (or event which with notice or lapse of time, or both, would
    constitute a default). To the Knowledge of the Company, neither the Company
    nor any of its Subsidiaries will be required to incur any material cost or
    expense for any restoration or surrender obligations upon the expiration or
    earlier termination of any leases or other occupancy agreements for the
    Leased Real Property.
 b. Documents. The Company has provided or made available to Parent accurately
    reproduced and complete copies of all leases, lease guaranties, agreements
    for the leasing, use or occupancy of, or otherwise granting a right in or
    relating to the Leased Real Property, including all amendments, terminations
    and modifications thereof ("Lease Documents"); and there are no other Lease
    Documents affecting the Leased Real Property or to which the Company or any
    of its Subsidiaries is bound, other than those provided or made available to
    Parent as required by this Section 2.7(b).
    Valid Title
    . The Company and each of its Subsidiaries has good and valid title to, or,
    in the case of leased properties and assets, valid leasehold interests in,
    all of its tangible and intangible properties and assets, real, personal and
    mixed, used or held for use in its business, free and clear of any Liens
    except (i) for such properties and tangible assets as are no longer used or
    usable in the conduct of the business of the Company or its Subsidiaries or
    have been disposed of in the ordinary course of business, (ii) Liens for
    Taxes not yet due and payable and statutory Liens securing payments not yet
    due or which are being contested in good faith by any appropriate
    proceedings for which adequate reserves have been established, and (iv) such
    liens, encumbrances or imperfections of title, if any, as do not materially
    impair the use of the property subject thereto, or the operations of the
    Acquired Company or any of their Subsidiaries.

2.8   Intellectual Property

.

 a. Definitions. For all purposes of this Agreement, the following terms shall
    have the following respective meanings:

    "Company Intellectual Property" means any and all Intellectual Property and
    Intellectual Property Rights used or that has been developed for use
    exclusively in the SPG that are owned by the Company or its Subsidiaries.

    "Company Products" means all SPG products and technologies that have been
    distributed, sold or licensed by or on behalf of the Company or any of its
    Subsidiaries. Company Products specifically excludes those products, if any,
    identified on Schedule 2.8(a).

    "Company Registered Intellectual Property" means all of the Registered
    Intellectual Property used or that has been developed for use in the SPG
    that is owned by, or filed in the name of, the Company or any of its
    Subsidiaries.

    "Intellectual Property" means any or all of the following (i) works of
    authorship including computer programs, source code, and executable code,
    whether embodied in software, firmware or otherwise, architecture,
    documentation, designs, files, records, and data, (ii) inventions (whether
    or not patentable), discoveries, improvements, and technology,
    (iii) proprietary and confidential information, trade secrets and know how,
    (iv) databases, data compilations and collections and technical data,
    (v) logos, trade names, trade dress, trademarks and service marks,
    (vi) domain names, web addresses and sites, (vii) tools, methods and
    processes, (viii) devices, prototypes, schematics, breadboards, net lists,
    mask works, test methodologies, verilog files, emulation and simulation
    reports, test vectors and hardware development tools, and (ix) any and all
    instantiations of the foregoing in any form and embodied in any media.

    "Intellectual Property Rights" means worldwide common law and statutory
    rights associated with (i) patents, patent applications and inventors'
    certificates, (ii) copyrights, copyright registrations and copyright
    applications, "moral" rights and mask work rights, (iii) the protection of
    trade and industrial secrets and confidential information ("Trade Secrets"),
    (iv) other proprietary rights relating to Intellectual Property,
    (v) trademarks, trade names and service marks, (vi) divisions,
    continuations, renewals, reissuances and extensions of the foregoing (as
    applicable) and (vii) analogous rights to those set forth above, including
    the right to enforce and recover remedies for any of the foregoing.

    "Open Source Materials" means computer software code that is subject to a
    license requiring, as a condition to use, modification or use of the
    software code, that the software code or other software code combined or
    distributed with it be (1) disclosed or distributed in Source Code form, (2)
    licensed for the purpose of making derivative works or (3) redistributable
    at no charge.

    "Registered Intellectual Property" means applications, registrations and
    filings for Intellectual Property Rights that have been registered, filed,
    certified or otherwise perfected or recorded with or by any state,
    government or other public or quasi-public legal authority.

    "Shrink-Wrapped Code" means generally commercially available object code
    where available for a cost of not more than U.S. $25,000 for a perpetual
    license for a single user or work station (or $75,000 in the aggregate for
    all users and work stations).

    "Source Code" means computer software and code, in form other than object
    code form, including related programmer comments and annotations, help text,
    data and data structures, instructions and procedural, object-oriented and
    other code, which may be printed out or displayed in human readable form.

 b. Registered Intellectual Property; Proceedings. Section 2.8(b) of the Company
    Disclosure Letter (i) lists all Company Registered Intellectual Property and
    (ii) lists any proceedings or actions before any court or tribunal
    (including the United States Patent and Trademark Office (the "PTO") or
    equivalent authority anywhere in the world) in which any of the Company
    Registered Intellectual Property is involved.
 c. Registration. All necessary registration, maintenance and renewal fees in
    connection with such Company Registered Intellectual Property have been paid
    and all necessary documents and certificates in connection with such Company
    Registered Intellectual Property have been filed with the relevant patent,
    copyright, trademark or other authorities in the United States or foreign
    jurisdictions, as the case may be, for the purposes of prosecuting and
    maintaining such Company Registered Intellectual Property.
    Further Actions
    . There are no actions that must be taken by the Company or any of its
    Subsidiaries before
    July 31, 2006
    , including the 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 Company Registered
    Intellectual Property.
 d. Absence of Liens. Each item of Company Intellectual Property (including all
    Company Registered Intellectual Property), is free and clear of any Liens
    other than those set forth on Section 2.8(e) of the Company Disclosure
    Letter. The Company is the exclusive owner of all Company Intellectual
    Property.
    Intellectual Property Development
    . To the extent that any Intellectual Property used or that has been
    developed for use in the SPG has been developed or created independently or
    jointly by any Person other than the Company or any of its Subsidiaries for
    which the Company or any of its Subsidiaries has, directly or indirectly,
    provided
    consideration for such development or creation, the Company or such
    Subsidiary, as the case may be, has obtained ownership of, and is the
    exclusive owner by operation of law or by valid assignment of, all such
    Intellectual Property that is material to the SPG.
 e. Licenses-In. Other than (i) Shrink-Wrapped Code, (ii) Open Source Materials
    as set forth in Section 2.8(p) of the Company Disclosure Letter and (iii)
    non-disclosure or confidentiality agreements, Section 2.8(g) of the Company
    Disclosure Letter lists all Contracts to which the Company or any of its
    Subsidiaries is a party and under which the Company or any of its
    Subsidiaries has been granted or provided any Intellectual Property or
    Intellectual Property Rights used or that has been developed for use
    exclusively in the SPG by a third party.
 f. Licenses-Out. Other than (i)  non-disclosure agreements and
    (ii) non-exclusive licenses, and related agreements (including software and
    maintenance and support agreements), of current Company Products to
    end-users (in each case, pursuant to written agreements that have been
    entered into in the ordinary course of business), Section 2.8(h)(ii) of the
    Company Disclosure Letter lists all contracts, licenses and agreements
    related to the SPG to which the Company or any of its Subsidiaries is a
    party and under which the Company or any of its Subsidiaries has either
    generated more than $500,000 in revenue in a fiscal year in any of the last
    three fiscal years or has granted or provided any material Company
    Intellectual Property or current Company Products to third parties.
 g. No Default/No Conflict. All Contracts relating to either (i) material
    Company Intellectual Property, or (ii) Intellectual Property or Intellectual
    Property Rights of a third Person licensed to the Company or any of its
    Subsidiaries that is material to the SPG business of the Company and its
    Subsidiaries, are in full force and effect and enforceable in accordance
    with their terms. The consummation of the transactions contemplated by this
    Agreement will neither violate nor by their terms result in the breach,
    modification, cancellation, termination, suspension of, or acceleration of
    any payments with respect to, any such Contracts that are individually or in
    the aggregate material. Each of the Company and its Subsidiaries is in
    material compliance with, and has not materially breached any term of any
    such Contracts and, to the Knowledge of the Company, all other parties to
    such Contracts are in compliance with, and have not materially breached any
    term of, such Contracts. Following the Closing Date, the Surviving
    Corporation will be permitted to exercise all of the Company's and its
    Subsidiaries' rights under such Contracts to the same extent the Company and
    its Subsidiaries would have been able to had the transactions contemplated
    by this Agreement not occurred without the payment of any additional amounts
    or consideration other than ongoing fees, royalties or payments which the
    Company or any of its Subsidiaries would otherwise be required to pay.
 h. No Infringement. Other than the actions listed in the Company Disclosure
    Letter, the operation of the SPG business of the Company and its
    Subsidiaries as it is currently conducted by the Company and its
    Subsidiaries, including the design, development, use, import, branding,
    advertising, promotion, marketing, manufacture and sale of any Company
    Product does not infringe or misappropriate and will not infringe or
    misappropriate when conducted by Parent and/or Surviving Corporation in
    substantially the same manner following the Closing, any Intellectual
    Property Rights of any Person, violate any material right of any Person
    (including any right to privacy or publicity), or constitute unfair
    competition or trade practices under the laws of any jurisdiction. No third
    party that has licensed Intellectual Property to the Company or any of its
    Subsidiaries has ownership rights or license rights to improvements or
    derivative works made by the Company or any of its Subsidiaries in such
    Intellectual Property that has been licensed to the Company or any of its
    Subsidiaries.
    Notice
    . Neither the Company nor any of its Subsidiaries has received written
    notice from any Person claiming that any Company Product or Company
    Intellectual Property infringes or misappropriates any Intellectual Property
    Rights of any Person or constitutes unfair competition or trade practices
    under the laws of any jurisdiction (nor does the Company have Knowledge of
    any basis therefor).
    No Third Party Infringement
    . To the Knowledge of the Company, no person has or is infringing or
    misappropriating any Company Intellectual Property.
 i. Transaction. Except pursuant to the terms of the AP Purchase Agreement or
    the Contracts listed in Section 2.8(m) of the Company Disclosure Letter,
    neither this Agreement nor the transactions contemplated by this Agreement,
    including any assignment to Parent by operation of law as a result of the
    Merger of any contracts or agreements to which the Company or any of its
    Subsidiaries is a party, will result in: (i) Parent, any of its subsidiaries
    or the Surviving Corporation granting to any third party any right to or
    with respect to any Intellectual Property Rights owned by, or licensed to,
    any of them, (ii) Parent, any of its subsidiaries or the Surviving
    Corporation, being bound by, or subject to, any non-compete or other
    material restriction on the operation or scope of their respective
    businesses, or (iii) Parent, any of its subsidiaries or the Surviving
    Corporation being obligated to pay any royalties or other material amounts,
    or offer any discounts, to any third party in excess of those payable by, or
    required to be offered by, any of them, respectively, in the absence of this
    Agreement or the transactions contemplated hereby.
    Confidentiality and Security
    . Each of the Company and its Subsidiaries has taken reasonable steps to
    protect confidentiality of the confidential information of the Company and
    any of its Subsidiaries or provided by any other Person to the Company or
    any of its Subsidiaries.
 j. No Order. No Company Intellectual Property or Company Product is subject to
    any proceeding or outstanding decree, order, judgment, settlement agreement,
    forbearance to sue, consent, stipulation or similar obligation that
    restricts in any manner the use, transfer or licensing thereof by the
    Company or any of its Subsidiaries or may affect the validity, use or
    enforceability of such Company Intellectual Property or Company Product.
 k. Open Source Materials. Section 2.8(p) of the Company Disclosure Letter sets
    forth a list of all Open Source Materials that are included in, or provided
    or distributed with any current Company Product.
 l. Source Code. Neither the Company, any of its Subsidiaries, nor any other
    Person acting on any of their behalf has disclosed, delivered or licensed to
    any Person, agreed to disclose, deliver or license to any Person, or
    permitted the disclosure or delivery to any escrow agent or other Person of,
    any Source Code that is Company Intellectual Property. No event has
    occurred, and no circumstance or condition exists, that (with or without
    notice or lapse of time, or both) will, or would reasonably be expected to,
    result in the disclosure or delivery by the Company, any of its Subsidiaries
    or any Person acting on their behalf to any Person of any Source Code that
    is Company Intellectual Property. Section 2.8(q) of the Company Disclosure
    Letter identifies each Contract pursuant to which the Company has deposited,
    or is or may be required to deposit, with an escrow agent or any other
    Person, any Source Code that is Company Intellectual Property.
    Government Funding
    . No government funding, facilities or resources of a university, college,
    other educational institution or research center or funding from third
    parties was used in the development of the Company Intellectual Property.
    Indemnification
    . Neither the Company nor any of its Subsidiaries is party to or bound by
    any agreement of indemnification or any guaranty (other than any agreement
    unrelated to the SPG or agreement of indemnification that has been entered
    into in the ordinary course of business in connection with the sale,
    distribution or licensing of the Company Products).
    Limitations
    . Neither the Company nor any of its Subsidiaries is party to or bound by
    any Contract containing any covenant (a) limiting in any respect the right
    of the Company or any of its Subsidiaries to engage in any line of business,
    to make use of any material Intellectual Property or material Intellectual
    Property Rights (other than pursuant to the terms of Contracts set forth in
    Section 2.8(g)
    of the Company Disclosure Letter) or compete with any Person in any material
    line of business or to compete with any person, (b) granting any exclusive
    distribution rights, or (c) providing "most favored nation" or other
    preferential pricing terms for current Company Products.
    Employee Agreements
    . All employees who have contributed to or participated in the conception
    and development of the Company Products (including software) on behalf of
    Company or any Subsidiaries either (1) have been party to an arrangement or
    agreement with Company or the appropriate Subsidiary that has accorded
    Company or the appropriate Subsidiary ownership of all tangible and
    intangible property thereby arising to the extent permitted by applicable
    law, or (2) have assigned to the Company or the appropriate Subsidiary
    ownership of all tangible and intangible property thereby arising to the
    extent permitted by applicable law.

2.9   Governmental Authorizations

. Each consent, license, permit, grant or other authorization (i) pursuant to
which the Company or any of its Subsidiaries currently operates or holds any
interest in any of their respective properties, or (ii) which is required for
the operation of the Company's or any of its Subsidiaries' business as currently
conducted or currently proposed to be conducted or the holding of any such
interest or the use or proposed use of their assets or properties (collectively,
"Governmental Authorizations") has been issued or granted to the Company or any
of its Subsidiaries, as the case may be, except for such consents, licenses,
permits, grants or other authorizations which are not, in the aggregate,
material to the Company. The Governmental Authorizations are in full force and
effect. As of the date hereof, no suspension or cancellation of any of the
Governmental Authorizations is pending or, to the Knowledge of the Company,
threatened. The Company and its Subsidiaries are in compliance in all material
respects with the terms of the Governmental Authorizations.

2.10   Litigation .  Except as described in the Company's SEC Reports or as set
forth in Section 2.10 of the Company Disclosure Letter, there is no action,
suit, claim or proceeding of any nature pending or, to the Knowledge of the
Company, threatened against the Company or any of its Subsidiaries, any of their
respective properties (tangible or intangible) or any of their officers or
directors in their capacities as such. There is no investigation or other
proceeding pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries, any of their respective properties (tangible
or intangible) or any of their officers or directors in their capacities as such
by or before any Governmental Entity. There has not been since January 1, 2002,
nor are there currently any internal investigations or inquiries being conducted
by the Company, the Company's Board of Directors (or any committee thereof) or
any third party at the request of any of the foregoing concerning any financial,
accounting, tax, conflict of interest, illegal activity, fraudulent or deceptive
conduct or other misfeasance or malfeasance issues.

2.11   Compliance with Laws .  Neither the Company nor any of its Subsidiaries
is in violation or default in any respect of any Legal Requirements (including
Environmental Laws and regulations) applicable to the Company or any of its
Subsidiaries or by which the Company or any of its Subsidiaries or any of their
respective properties is bound or affected except for such violations or
defaults as are not in the aggregate material to the Company. There is no
agreement, judgment, injunction, order or decree of any Governmental Entity
binding upon the Company or any of its Subsidiaries to which the Company or any
Subsidiary is a party or by which any of their property is bound.

2.12   Environmental Matters . 

 a. The Company and its Subsidiaries are in compliance with all applicable
    Environmental Laws; and no material expenditures are or will be required in
    order to come into compliance with any Environmental Laws. "Environmental
    Laws" for purposes of this Agreement shall mean (a) any and all Federal,
    state, local, and foreign statutes, laws, regulations, ordinances, codes,
    common laws, rules, judgments, orders, decrees, permits, concessions,
    grants, franchises, licenses, agreements or governmental restrictions
    relating to pollution and the protection of the environment or the release
    of any Hazardous Materials into the environment; (b) laws relating to the
    control of any pollutant or the protection or restoration of the environment
    (including air, water and land) or natural resources; or (c) the generation,
    manufacture, processing, use, handling, treatment, storage, disposal,
    release, distribution and transportation of Hazardous Materials, including
    but not limited to the Clean Air Act, 42 U.S.C. 7401 et seq., the Resource
    Conservation and Recovery Act, 42 U.S.C. 6901 et seq., the Federal Water
    Pollution Control Act, as amended by the Clean Water Act, 33 U.S.C. 1251 et
    seq., the Comprehensive Environmental Response, Compensation, and Liability
    Act, as amended by the Superfund Amendments and Reauthorization Act, 42
    U.S.C. 9601 et seq., the Toxic Substances Control Act, 15 U.S.C. 2601 et
    seq., the Oil Pollution Act of 1990, 33 U.S.C. 2701 et. seq., the Emergency
    Planning and Community Right to Know Act, 42 U.S.C. 1101 et seq., the
    Hazardous Materials Transportation Act, 49 U.S.C. 1501 et seq., the
    Occupational Safety and Health Act, as amended, and their respective state
    counterparts, and the Safe Drinking Water and Toxic Enforcement Act
    (Proposition 65), Cal. Health & Safety Code 25249.5 et seq.
 b. The Company and its Subsidiaries have not transported, stored, used,
    manufactured, disposed of, released, removed or exposed its Employees or
    others to material quantities of Hazardous Materials or manufactured any
    product containing a Hazardous Material (collectively "Hazardous Materials
    Activities") in violation of any Environmental Law or in a manner which has
    caused or may reasonably be expected to cause damage, or liability to the
    Company or any of its Subsidiaries for response costs under any
    Environmental Law, or any adverse health effect to any person. "Hazardous
    Materials" for purposes of this Agreement shall mean any substance that has
    been designated by any Governmental Entity or by applicable federal, state
    or local law to be radioactive, toxic, hazardous or otherwise a danger to
    health or the environment, including, without limitation, means any
    pollutant, contaminant, hazardous or toxic substance, or waste and any other
    substance or material classified as hazardous or toxic by reason of
    deleterious properties such as ignitability, corrosivity, reactivity,
    carcinogenicity, reproductive toxicity and including, without limitation,
    asbestos and asbestos containing material, oil, petroleum, petroleum derived
    products, additives to petroleum or petroleum products, natural gas, natural
    gas liquids, synthetic gas, drilling fluids, produced waters, radioactive
    material, but excluding office and janitorial supplies properly and safely
    maintained.
 c. Neither the Company nor its Subsidiaries have: (i) operated any underground
    storage tanks at any property that the Company or any of its Subsidiaries
    has at any time owned, operated, occupied or leased, or (ii) released any
    material quantity of any Hazardous Material on, to, from or in the vicinity
    of any real property, including but not limited to real property currently
    or previously owned or used by the Company, its Subsidiaries or any
    predecessor entity in the case of either (i) or (ii) in violation of any
    Environmental Law or in a manner which has caused or may reasonably be
    expected to cause damage or liability to the Company or any of its
    Subsidiaries.
 d. The Company and its Subsidiaries currently hold all material Permits (the
    "Company Environmental Permits") necessary for the conduct of their
    Hazardous Material Activities and other businesses of each of the Company
    and each of its Subsidiaries as such activities and businesses are currently
    being conducted.
 e. No action, proceeding, revocation proceeding, amendment procedure, writ,
    injunction, order, penalty assessment, notice of violation, judgment or
    claim is pending, or to the Company's Knowledge threatened, against the
    Company or any of its Subsidiaries concerning any Company Environmental
    Permit, Hazardous Material or any Hazardous Materials Activity of the
    Company or any of its Subsidiaries (collectively "Environmental Claims").
 f. The Company and its Subsidiaries have obtained all instruments of financial
    responsibility under Environmental Laws which are required in connection
    with the business and the operations of the Company and its Subsidiaries.
 g. The Company and its Subsidiaries have made available copies of all material
    documents, reports, or analyses in the possession or control of the Company
    or any of its Subsidiaries relating to the presence or absence of Hazardous
    Materials on, at, under or migrating from or onto any real property
    currently or previously owned or used by Company and its Subsidiaries in
    connection with the operations of the Company and its Subsidiaries.
 h. The Company and its Subsidiaries have not generated, arranged for disposal,
    transported or disposed of any Hazardous Material to any facility where
    there has been a Release or threatened Release of Hazardous Materials or any
    other condition which has caused or may reasonably be expected to cause
    damage, liability, response costs or expenses to be assigned to the Company
    or its Subsidiaries, including but not limited to damage or liability under
    any Environmental Law.
 i. The Company and its Subsidiaries have not sold, placed into commerce or
    otherwise produced any product, good, material, supply or substance that is
    in violation of any Environmental Law in a manner that may reasonably be
    likely to result in material liability to the Company or any of its
    Subsidiaries.

2.13   Brokers' and Finders' Fees; Fees and Expenses .  Except for fees payable
to The Spartan Group LLC, pursuant to an engagement letter dated August 29,
2005, a copy of which has been provided to Parent, neither the Company nor any
of its Subsidiaries has incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions, fees related to
investment banking or similar advisory services or any similar charges in
connection with this Agreement or any transaction contemplated hereby.

2.14   Transactions with Affiliates .  Except as set forth in the Company SEC
Reports, since the date of the Company's last annual proxy statement filed with
the SEC, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC.

2.15   Employee Benefit Plans and Compensation .

 a. Definitions. For all purposes of this Agreement, the following terms shall
    have the following respective meanings:

    "Company Employee Plan" shall mean any plan, program, policy, practice,
    contract, agreement or other arrangement providing for compensation,
    severance, termination pay, deferred compensation, performance awards, stock
    or stock-related awards, welfare benefits, retirement benefits, fringe
    benefits or other employee benefits or remuneration of any kind, whether
    written or unwritten, funded or unfunded (including each "employee benefit
    plan," within the meaning of Section 3(3) of ERISA), which is or, within the
    six years prior to the Effective Time, has been maintained, contributed to,
    or required to be contributed to, by the Company, any of its Subsidiaries or
    any ERISA Affiliate for the benefit of any Employee, or with respect to
    which the Company, any of its Subsidiaries or any ERISA Affiliate has or may
    have any liability or obligation and any International Employee Plan.

    "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act of
    1985, as amended.

    "DOL" shall mean the United States Department of Labor.

    "Employee" shall mean any current or former employee, consultant,
    independent contractor or director of the Company, any of its Subsidiaries
    or any ERISA Affiliate, excluding consultants and independent contractors
    who are not individuals.

    "Employee Agreement" shall mean each management, employment, severance,
    separation, settlement, consulting, contractor, relocation, repatriation,
    expatriation, loan, visa, work permit or other agreement, or contract
    (including, any offer letter or any agreement providing for acceleration of
    Company Options or any other agreement providing for compensation or
    benefits) between the Company, any of its Subsidiaries or any ERISA
    Affiliate and any Employee and with respect to which the Company has or may
    have any current or future liabilities or obligations.

    "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
    amended.

    "ERISA Affiliate" shall mean any other Person under common control with the
    Company or any of its Subsidiaries within the meaning of Section 414(b),
    (c), (m) or (o) of the Code, and the regulations issued thereunder.

    "International Employee Plan" shall mean each Company Employee Plan that,
    within six years prior to the Effective Time, has been adopted or maintained
    by the Company, any of its Subsidiaries or any ERISA Affiliate, whether
    formally or informally, or with respect to which the Company, any of its
    Subsidiaries or any ERISA Affiliate will or may have any liability, for the
    benefit of Employees who perform services outside the United States.

    "IRS" shall mean the United States Internal Revenue Service.

    "PBGC" shall mean the United States Pension Benefit Guaranty Corporation.

    "Pension Plan" shall mean each Company Employee Plan that is an "employee
    pension benefit plan," within the meaning of Section 3(2) of ERISA.

    "WARN" shall mean the Worker Adjustment and Retraining Notification Act.

 b. Schedule. Section 2.15(b)(i) of the Company Disclosure Letter contains an
    accurate and complete list of each Company Employee Plan and each Employee
    Agreement. To the Knowledge of the Company, no employee of the Company
    intends to terminate his or her employment for any reason.
    Section 2.15(b)(iii) of the Company Disclosure Letter contains an accurate
    and complete list of all Employees (other than accountants, attorneys and
    investment bankers) that have a consulting or advisory relationship with the
    Company or any of its Subsidiaries that is currently in effect or which is
    or may be subject to ongoing obligations.
    Documents
    . The Company and each of its Subsidiaries has provided or made available to
    Parent (i) correct and complete copies of all documents embodying each
    Company Employee Plan and each Employee Agreement including all amendments
    thereto and all related trust, insurance or other funding documents,
    (ii) the three most recent annual reports (Form Series 5500 and all
    schedules and financial statements attached thereto), if any, required under
    ERISA or the Code in connection with each Company Employee Plan, (iii) if
    the Company Employee Plan is funded, the most recent annual and periodic
    accounting of Company Employee Plan assets, (iv) the most recent summary
    plan description together with the summary(ies) of material modifications
    thereto, if any, required under ERISA with respect to each Company Employee
    Plan, (v) all material written agreements, elections, directions and
    contracts relating to each Company Employee Plan, including administrative
    forms, service agreements and group insurance contracts, (vi) all
    substantive communications to any Employee or Employees relating to any
    Company Employee Plan or any proposed Company Employee Plan, in each case
    relating to any material amendments, terminations, establishments, increases
    or decreases in benefits, acceleration of payments or vesting schedules, or
    enrollments, elections, or events which would result in any material
    liability to the Company or any of its Subsidiaries, (vii) all
    correspondence to or from any governmental agency relating to any Company
    Employee Plan other than correspondence that is not reasonably likely to
    result in a material liability to the Company or any of its Subsidiaries,
    (viii) all policies pertaining to fiduciary liability insurance covering the
    fiduciaries, and all fidelity bonds required under ERISA, for each Company
    Employee Plan, (ix) all discrimination tests performed to demonstrate
    compliance with requirements of the Code for each Company Employee Plan for
    the three most recent plan years, (x) all prospectuses prepared in
    connection with each Company Employee Plan and (xi) the most recent IRS
    determination or opinion letter issued with respect to each Company Employee
    Plan.
    
    Employee Plan Compliance
    .
     i.   The Company and each of its Subsidiaries has performed all material
          obligations required to be performed by them under, is not in default
          or violation in any material respect of, and the Company and each of
          its Subsidiaries has no Knowledge of any material default or violation
          by any other party to, or service provider for, any Company Employee
          Plan, and each Company Employee Plan has been established,
          administered and maintained in all material respects in accordance
          with its terms and in material compliance with all applicable laws,
          statutes, orders, rules and regulations, including ERISA, the Code and
          other federal, state and local law. Any Company Employee Plan intended
          to be qualified under Section 401(a) of the Code has obtained a
          favorable determination letter (or opinion letter, if applicable) as
          to its current qualified status under the Code or is maintained
          pursuant to a prototype or volume submitter plan document. No
          "prohibited transaction," within the meaning of Section 4975 of the
          Code or Sections 406 and 407 of ERISA, and not otherwise exempt under
          Section 408 of ERISA, has occurred with respect to any Company
          Employee Plan.
     ii.  There are no actions, suits, claims, or voluntary correction program
          applications pending or, to the Knowledge of the Company, threatened
          or reasonably anticipated (other than routine claims for benefits)
          against or with respect to any Company Employee Plan or against the
          assets of any Company Employee Plan. Each Company Employee Plan can be
          amended, terminated or otherwise discontinued after the Effective Time
          in accordance with its terms, without material liability to Parent,
          the Company, any of its Subsidiaries or any ERISA Affiliate (other
          than ordinary administration expenses or liabilities that are set
          forth on the Company Balance Sheet).
     iii. There are no audits, inquiries or proceedings pending or to the
          Knowledge of the Company, threatened by the IRS, DOL, or any other
          Governmental Entity with respect to any Company Employee Plan. Neither
          the Company, any of its Subsidiaries or ERISA Affiliates, nor any
          Company Employee Plan fiduciary is subject to any material liability,
          penalty or Tax with respect to any Company Employee Plan under
          Section 502(i) of ERISA, part 4 of Title I of ERISA, or Sections 4975
          through 4980G of the Code.
     iv.  For the three years preceding the date of this Agreement, the Company
          and each of its Subsidiaries have timely made all contributions
          (including employee payroll deduction contributions) and other
          payments required by and due under the terms of each Company Employee
          Plan.

 c. No Pension Plan. Neither the Company, any of its Subsidiaries nor any
    current or former ERISA Affiliate has ever maintained, established,
    sponsored, participated in, or contributed to, nor assumed any liability
    for, any Pension Plan subject to Part 3 of Subtitle B of Title I of ERISA,
    Title IV of ERISA or Section 412 of the Code.
    No Self-Insured Plan
    . Neither the Company, any of its Subsidiaries nor any ERISA Affiliate has
    ever maintained, established, sponsored, participated in or contributed to
    any self-insured welfare plan or related trust fund that provides benefits
    to Employees (including any such plan pursuant to which a stop-loss policy
    or contract applies).
    Collectively Bargained, Multiemployer and Multiple-Employer Plan
    . At no time has the Company, any of its Subsidiaries or any ERISA Affiliate
    contributed to or been obligated to contribute to any multiemployer plan (as
    defined in Section 3(37) of ERISA), nor is the Company, any of its
    Subsidiaries or any ERISA Affiliate subject to any multiemployer pension
    withdrawal liability (on a single, joint or contingent basis) that has not
    been fully paid. Neither the Company, any of its Subsidiaries nor any ERISA
    Affiliate has at any time ever maintained, established, sponsored,
    participated in or contributed to any multiple employer plan or any plan
    described in Section 413 of the Code.
 d. No Post-Employment Obligations. No Company Employee Plan or Employee
    Agreement provides, or reflects or represents any liability to provide,
    post-termination or retiree life insurance, health or other employee welfare
    benefits to any person for any reason, except as may be required by COBRA or
    other applicable statute, and neither the Company nor any of its
    Subsidiaries has ever represented, promised or contracted (whether in oral
    or written form) to any Employee (either individually or to Employees as a
    group) or any other person that such Employee(s) or other person would be
    provided with post-termination or retiree life insurance, health or other
    employee welfare benefits, except to the extent required by statute or where
    the Company and its Subsidiaries have no outstanding or continuing
    liability.
    COBRA
    . All Company Employee Plans which are subject to COBRA have, prior to the
    Effective Time, materially complied with COBRA and any similar provisions of
    state law applicable to any such Company Employee Plans. No Company Employee
    Plan has any material unsatisfied obligations to any Employees or qualified
    beneficiaries pursuant to COBRA or any similar state law.
 e. Effect of Transaction. Neither the execution and delivery of this Agreement
    nor the consummation of the transactions contemplated hereby or any
    termination of employment or service in connection therewith will (i) result
    in any payment (including severance, golden parachute, bonus or otherwise),
    becoming due to any Employee, (ii) result in any forgiveness of
    indebtedness, (iii) materially increase any benefits otherwise payable by
    the Company or any Subsidiary or (iv) result in the acceleration of the time
    of payment or vesting of any such benefits except as required under
    Section 411(d)(3) of the Code. No provision of any Company Employee Plan or
    Employee Agreement contains any provision or is subject to any law that
    would prohibit the transactions contemplated by this Agreement.
 f. Parachute Payments; 409A. There is no agreement, plan, arrangement or other
    contract covering any Employee that, considered individually or considered
    collectively with any other such agreements, plans, arrangements or other
    contracts, will, or could reasonably be expected to, give rise directly or
    indirectly to the payment of any amount that would be characterized as a
    "parachute payment" within the meaning of Section 280G(b)(2) of the Code.
    There is no agreement, plan, arrangement or other contract by which the
    Company or any of its Subsidiaries is bound to compensate any Employee for
    excise taxes paid pursuant to Section 4999 of the Code. The Company is not
    party to any contract, agreement or arrangement that is a "nonqualified
    deferred compensation plan" subject to Section 409A of the Code.
 g. Employment Matters. The Company and each of its Subsidiaries is in
    compliance in all material respects with all applicable Legal Requirements
    relating to employment, equal opportunity, classification,
    nondiscrimination, immigration employee safety and health and wages and
    hours, and in each case, with respect to Employees, does not have any
    material liability (i) for any arrears of wages, severance pay or any Taxes
    or any penalty for failure to comply with any of the foregoing, or (ii) 
    payment to any trust or other fund governed by or maintained by or on behalf
    of any governmental authority, with respect to unemployment compensation
    benefits, social security or other benefits or obligations for Employees
    (other than routine payments to be made in the normal course of business and
    consistent with past practice). There are no actions, suits, claims (other
    than routine claims for benefits) or administrative matters pending, or to
    the Knowledge of the Company, threatened or reasonably anticipated against
    the Company or any of its Subsidiaries relating to any Employee or Employee
    Agreement that individually or in the aggregate could result in a material
    adverse effect to the Company. There are no pending claims or actions
    against Company, any of its Subsidiaries, any Company trustee or any trustee
    of any Subsidiary under any worker's compensation policy or long-term
    disability policy. The services provided by each of the Company's and each
    Subsidiary's Employees are terminable at the will of the Company and its
    ERISA Affiliates. Except as set forth in Section 2.15(l) of the Company
    Disclosure Schedule, neither the Company nor any of its Subsidiaries is a
    party to any contract or agreement (whether written or unwritten) with any
    Employee of the Company or any of its Subsidiaries that (i) restricts the
    right of the Company or any of its Subsidiaries to terminate the employment
    of any Employee without cause or (ii) obligates the Company or any of its
    Subsidiaries to pay severance or other benefits (other than as required by
    COBRA) to any Employee upon termination of such Employee's employment or
    provision of services with the Company or any of its Subsidiaries, a change
    of control of the Company (including entry into an agreement in connection
    with a potential change of control), or a combination thereof.
    Labor
    . No work stoppage or labor strike against the Company or any of its
    Subsidiaries is pending, or to the Knowledge of the Company threatened. The
    Company has no Knowledge of any activities or proceedings of any labor union
    to organize any Employees. There are no actions, suits, claims, labor
    disputes or grievances pending or, to the Knowledge of the Company,
    threatened or reasonably anticipated relating to any labor matters involving
    any Employee, including charges of unfair labor practices, which, if
    adversely determined, would, individually or in the aggregate, result in any
    material liability to the Company. Neither the Company nor any of its
    Subsidiaries has engaged in any material unfair labor practices within the
    meaning of the National Labor Relations Act. Except as set forth in
    Section 2.15(m) of the Company Disclosure Schedule, neither the Company nor
    any of its Subsidiaries is presently, nor has it been in the past, a party
    to, or bound by, any collective bargaining agreement or union contract with
    respect to Employees and no collective bargaining agreement is being
    negotiated by the Company or any of its Subsidiaries. Within the past three
    years, neither the Company nor any of its Subsidiaries has incurred any
    liability or obligation under WARN or any similar state or local law that
    remains unsatisfied, and no terminations prior to the Closing Date shall
    result in unsatisfied liability or obligation under WARN or any similar
    state or local law.
    International Employee Plan
    . With respect to each International Employee Plan, and the books and
    records thereof, (i) such plan is established, administered and maintained
    in material compliance with its terms and all applicable laws of each
    applicable jurisdiction; (ii) all material liabilities with respect to such
    plan are set forth on the Company Balance Sheet or in the notes thereto in
    accordance with GAAP; and (iii) no such plan is or within the last two
    calendar years has been the subject of, or has received notice that it is
    the subject of, an examination by a government agency or a participant in a
    government sponsored amnesty, voluntary compliance or similar program that
    has given rise to or is reasonably expected to give rise to any material
    liability.

2.16   Contracts . 

 a. Material Contracts. For purposes of this Agreement, "Company Material
    Contract" shall mean any of the following to which the Company or any of its
    Subsidiaries is a party or by which it or its assets are bound:
     i.    any "material contract" (as such term is defined in Item 601(b)(10)
           of Regulation S-K of the SEC) with respect to the Company and its
           Subsidiaries;
     ii.   any employment, contractor or consulting Contract with any executive
           officer or other employee, contractor or consultant of the Company
           earning annual compensation in excess of $125,000 or member of the
           Company's Board of Directors, other than those that are terminable by
           the Company or any of its Subsidiaries on no more than 30 days notice
           without liability or financial obligation to the Company;
     iii.  any Contract or plan, including, without limitation, any stock option
           plan, stock appreciation rights plan or stock purchase plan, any of
           the benefits of which will be increased, or the vesting of benefits
           of which will be accelerated, by the occurrence of any of the
           transactions contemplated by this Agreement (either alone or upon the
           occurrence of additional or subsequent events) or the value of any of
           the benefits of which will be calculated on the basis of any of the
           transactions contemplated by this Agreement (either alone or upon the
           occurrence of additional or subsequent events);
     iv.   any Contract relating to the disposition or acquisition by the
           Company or any of its Subsidiaries of assets or any interest in any
           other Person or business enterprise other than the Company's
           Subsidiaries not in the ordinary course of business that was (or is)
           required to be disclosed in a periodic report on Form 8-K filed (or
           required to be filed) with the SEC;
     v.    any dealer or distributor Contract pursuant to which the Company has
           recognized at least $500,000 in revenue during the last four fiscal
           quarters ending March 31, 2006 of the Company;
     vi.   any Contract required to be disclosed in Section 2.8(h)(ii) or
           Section 2.8(g) of the Company Disclosure Letter or any subsection
           thereof;
     vii.  any independent sales representative, private or brand-label
           agreements, manufacturing agreements, or joint marketing or
           development agreements;
     viii. any contracts that contain restrictive covenants binding on Company
           or any of its Subsidiaries which (A) restrict the ability of the
           Company to operate its business in any geographic area, or (B)
           contain "most favored nation" or exclusivity, non-competition or
           non-solicitation provisions;
     ix.   any Contract containing any material support, maintenance or service
           obligation on the part of the Company or any of its Subsidiaries,
           other than (i) those obligations that are terminable by the Company
           or any of its Subsidiaries on no more than 30 days notice without
           liability or financial obligation to the Company or its Subsidiaries,
           (ii) Contracts that do not differ in substance from the Company's
           standard forms included in Section 2.8(h)(ii) of the Company
           Disclosure Letter or (iii) product warranty obligations handled in
           the ordinary course of business and adequately reserved for in
           accordance with GAAP;
     x.    any other Contract not disclosed elsewhere in this Section 2.16 that
           has an aggregate value of $500,000 or more in any individual case or
           any Contract which relates to one of the Company's customers or
           affiliates listed on Section 2.16(a)(x) of the Company Disclosure
           Letter which sets forth a list of the Company's top 25 customers by
           related revenue for the four fiscal quarters ended December 31, 2005
           (provided that such list excludes purchase orders other than blanket
           purchase orders covering deliveries over periods of 90 days or more);
           or
     xi.   any Contract, or group of Contracts with a Person (or group of
           affiliated Persons), the termination or breach of which could
           reasonably be expected to have a Material Adverse Effect on the
           Company.

 b. Schedule. Section 2.16(b) of the Company Disclosure Letter sets forth a list
    of all Company Material Contracts to which the Company or any of its
    Subsidiaries is a party or is bound by as of the date hereof which are
    described in Sections 2.16(a)(i) through 2.16(a)(xi) hereof, setting forth
    for each such Company Material Contract, the subsections of Section 2.16(a)
    applicable to such Company Material Contract; provided, that any such
    Company Material Agreements that relate solely to the Company's Automation
    Products Group are not so listed, but will be provided to Parent as soon as
    practicable following the execution of this Agreement in the form of a
    revised Section 2.16(b) of the Company Disclosure Letter.
    No Breach
    . Assuming due execution by the counterparty thereto, all Company Material
    Contracts are valid and in full force and effect except to the extent they
    have previously expired in accordance with their terms or if the failure to
    be in full force and effect,
    individually or in the aggregate, could not reasonably be expected to be
    material to the Company
    . Neither the Company nor any of its Subsidiaries has violated any provision
    of, or committed or failed to perform any act which, with or without notice,
    lapse of time or both would constitute a default under the provisions of,
    any Company Material Contract, except for such violations, commissions, or
    failures to perform which in the aggregate could not reasonably be expected
    to be material to the Company. Consents. Except as set forth in Section
    2.16(d) of the Disclosure Letter, the Company is not party to, subject to,
    or bound by any Contract that (i) requires the Company to give any notice to
    any third party regarding the transaction contemplated by this Agreement or
    (ii) that would give any third party any option, right of first refusal or
    offer, right of negotiation or similar right with respect to the acquisition
    of the Company, any Subsidiary or any of their respective assets, or the
    licensing of any Company Intellectual Property.

2.17   Insurance .  The Company has provided or made available to Parent true,
correct and accurate summaries of all insurance policies and fidelity bonds
related to the business of the Company and its Subsidiaries. There is no claim
by the Company or any of its Subsidiaries pending under any of the insurance
policies and fidelity bonds covering the assets, business, equipment,
properties, operations, employees, officers and directors of the Company and its
Subsidiaries as to which coverage has been questioned, denied or disputed by the
underwriters of such policies or bonds.

2.18   Export Control Laws

. The Company and each of its Subsidiaries has at all times conducted its export
transactions materially in accordance with (i) all applicable U.S. export and
re-export controls, including the United States Export Administration Act and
Regulations and Foreign Assets Control Regulations and (ii) all other applicable
import/export controls in other countries in which the Company conducts
business. Without limiting the foregoing:

 a. The Company and each of its Subsidiaries has obtained all export licenses,
    license exceptions and other consents, notices, waivers, approvals, orders,
    authorizations, registrations, declarations, classifications and filings
    with any Governmental Entity required for (i) the export and re-export of
    products, services, software and technologies and (ii) releases of
    technologies and software to foreign nationals located in the United States
    and abroad ("Export Approvals");
 b. The Company and each of its Subsidiaries is in material compliance with the
    terms of all applicable Export Approvals;
 c. There are no pending or, to the Company's Knowledge, threatened claims
    against the Company or any Subsidiary with respect to such Export Approvals;
 d. To the Company's Knowledge, there are no actions, conditions or
    circumstances pertaining to the Company's or any Subsidiary's export
    transactions that may give rise to any future claims; and
 e. No Export Approvals for the transfer of export licenses to Parent or the
    Surviving Corporation are required, or such Export Approvals can be obtained
    expeditiously without material cost.

2.19   Foreign Corrupt Practices Act

. Neither the Company nor any of its Subsidiaries (including any of their
officers or directors) nor, to the Knowledge of the Company, any of their
respective agents, distributors, employees or other Person associated with or
acting on their behalf) has, directly or indirectly, taken any action which
would cause it to be in violation of the Foreign Corrupt Practices Act of 1977,
as amended, or any rules or regulations thereunder or any similar
anti-corruption or anti-bribery Legal Requirements applicable to the Company or
any of its Subsidiaries in any jurisdiction other than the United Sates
(collectively, the "FCPA"), used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political activity,
made, offered or authorized any unlawful payment to foreign or domestic
government officials or employees, whether directly or indirectly, or made,
offered or authorized any bribe, rebate, payoff, influence payment, kickback or
other similar unlawful payment, whether directly or indirectly.

The Company has established sufficient internal controls and procedures to
reasonably ensure compliance with the FCPA and has made available to Parent all
such documentation.

2.20   Information Supplied .  The information supplied or to be supplied by or
on behalf of the Company for inclusion or incorporation by reference in the
preliminary and definitive proxy statements to be filed by the Company with the
SEC in connection with the Merger (collectively, the "Proxy Statement") will
not, on each relevant filing date, on the date of mailing to the Company's
shareholders and at the time of the Shareholders' 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 the
light of the circumstances under which they are made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act and the rules and regulations promulgated by the SEC
thereunder. If at any time prior to the Effective Time any event relating to the
Company or any of its Affiliates, officers or directors should be discovered by
the Company which is required to be set forth in a supplement to the Proxy
Statement, the Company shall promptly inform Parent. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent for inclusion or incorporation by reference in
the Proxy Statement.

2.21   Board Approval .  The Board of Directors of the Company has, by
resolution adopted by vote at a meeting of all Directors duly called and held
and not subsequently rescinded or modified in any way (the "Company Board
Approval"), duly (i) determined that the Merger is fair to, and in the best
interest of, the Company and its shareholders and declared the Merger to be
advisable, (ii) approved this Agreement and the transactions contemplated
thereby, including the Merger, and (iii) recommended that the shareholders of
the Company approve and adopt this Agreement and approve the Merger and directed
that such matter be submitted to the Company's shareholders at the Company
Shareholders' Meeting.

2.22   Fairness Opinion .  The Company's Board of Directors has received a
written opinion from The Spartan Group LLC, dated as of April 24, 2006 that, as
of such date, the Merger Consideration and the consideration received under the
AP Purchase Agreement are fair to the Company's shareholders from a financial
point of view (the "Fairness Opinion").

2.23   Books and Records. The books of account, minute books, stock record
books, and other records of the Company, all of which have been made available
to Parent, are complete and correct in all material respects and have been
maintained in all material respects in accordance with sound business practices
and, except as set forth in Section 2.23 of the Company Disclosure Letter, the
requirements of Section 13(b)(2) of the Securities Exchange Act of 1934, as
amended, including the maintenance of an adequate system of internal controls.
The minute books of the Company contain accurate and complete records in all
material respects of all meetings held of, and corporate action taken by, the
stockholders, the Board of Directors, and committees of the Board of Directors
of the Company, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Company.

2.24   Relationship with Key Customers and Suppliers .   As of the date hereof,
the Company has no knowledge of any intention or indication by a "Significant
Customer" (as herein defined) that such Significant Customer intends to
terminate its business relationship with the Company or to limit or alter its
business relationship with the Company in any material respect. As of the date
hereof, the Company has no knowledge of any intention or indication of intention
by a "Significant Supplier" (as herein defined) to terminate its business
relationship with the Company or to limit or alter its business relationship
with the Company in any material respect. As used herein, (x) "Significant
Customer" means any of the 25 largest customers of the Company, measured in
terms of sales volume in dollars for the 12-month period ended December 31,
2005, and (y) "Significant Supplier" means any supplier of the Company from whom
Company has purchased $500,000 or more of goods during the year ended December
31, 2005 for use in the Company's business.

2.25   Absence of Debt . The Company and its Subsidiaries have no outstanding
debt, capital lease or other debt financing obligations, and there are no Liens
on the Company or its Subsidiaries' assets or properties securing any debt,
capital lease or other debt financing.

2.26   No Material Misstatements

. None of the representations or warranties made by Company (as modified by the
Disclosure Letter), nor any statement made in the Disclosure Letter or in any
certificate furnished by Company pursuant to this Agreement contains or will
contain at the Closing, any untrue statement of a material fact or omits or will
omit at the Closing to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT

Parent represents and warrants to the Company as follows:

3.1   Organization .  Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Parent has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as currently conducted and is duly qualified or licensed
to do business and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its assets or properties
(whether owned, leased or licensed) or the nature of its business makes such
qualification or licensing necessary except for such failures to be in good
standing, individually or in the aggregate, as have not had and are not
reasonably likely to have a Material Adverse Effect on Parent.

3.2   Authority; Necessary Consents . 

Authority
. Parent has all requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery by Parent of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and no other action is required on the
part of Parent to authorize the execution and delivery of this Agreement or to
consummate the Merger and the other transactions contemplated hereby, subject
only to the filing of the Agreement of Merger pursuant to Oregon Law, the HSR
filing and other matters specified in
Section 2.3(c)
. This Agreement has been duly executed and delivered by Parent and, assuming
due execution and delivery of this Agreement by the Company and HoldCo,
constitute the valid and binding obligations of Parent, enforceable against
Parent in accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or similar laws relating to the enforcement of creditors' rights
generally and by general principles of equity.
Necessary Consents
.  No consent, notice, approval, order, authorization, registration, declaration
or filing with any Governmental Entity, or any third party, is required to be
made or obtained by Parent in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for (i) the Necessary Consents; and (ii) such consents, notices, waivers,
approvals, orders, authorizations, registrations, declarations and filings
which, if not obtained or made, would not materially adversely affect the
ability of the parties hereto to consummate the Merger or the other transactions
contemplated hereby within the time frame in which the Merger and such other
transactions would otherwise be consummated in the absence of the need for such
consent, approval, order, authorization, registration, declaration or filing.
No Conflict
. The execution and delivery by Parent of this Agreement and the consummation of
the transactions contemplated hereby, will not (i) conflict with or violate any
provision of the Certificate of Incorporation, Articles of Incorporation or
bylaws of Parent, (ii) subject to obtaining the Necessary Consents, conflict
with or violate any material Legal Requirement applicable to Parent or by which
Parent or any of its properties or assets (whether tangible or intangible) is
bound or affected, or (iii) result in any breach of or constitute a default (or
an event that with notice or lapse of time or both would become a default) under
any contract of Parent, except, in each case under the preceding clauses (i),
(ii) and (iii), for any conflicts, violations, breaches or defaults which would
not materially adversely affect the ability of the parties hereto to consummate
the Merger within the time frame in which the Merger would otherwise be
consummated.

3.3   Capital Resources

 a. .  Parent has, and will have available to it upon the consummation of the
    Merger, sufficient capital resources to pay the Merger Consideration.

3.4   Proceedings Challenging Transactions .  As of the date hereof, (a) there
is no proceeding before any Governmental Entity pending against Parent
challenging the Merger or the other transactions contemplated hereby, and (b) no
such proceeding has been threatened against Parent.

3.5   Information Supplied .  The information supplied or to be supplied by or
on behalf of Parent for inclusion or incorporation by reference in the Proxy
Statement, will not contain, on the date of the mailing to the Company's
shareholders and at the time of the Shareholders' Meeting, 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 the light of
the circumstances under which they are made, not misleading. If at any time
prior to the Effective Time, any event relating to Parent or any of its
Affiliates, officers or directors should be discovered by Parent which is
required to be set forth in a supplement to the Proxy Statement, Parent shall
promptly inform the Company. Notwithstanding the foregoing, Parent makes no
representation or warranty with respect to any information supplied by HoldCo or
the Company which is contained in the Proxy Statement.

ARTICLE IV
CONDUCT BY THE COMPANY PRIOR TO THE EFFECTIVE TIME

4.1   Conduct of Business by the Company.

 a. Ordinary Course. During the period from the date hereof and continuing until
    the earlier of the termination of this Agreement pursuant to its terms or
    the Effective Time, the Company and each of its Subsidiaries shall, except
    as otherwise expressly contemplated by this Agreement or disclosed in
    Section 4.1 of the Company Disclosure Letter or as required by any Legal
    Requirement or to the extent that Parent shall otherwise consent in writing
    (which consent shall not be unreasonably withheld, conditioned or delayed),
    (i) exercise commercially reasonable efforts to carry on its business in the
    usual, regular and ordinary course, in substantially the same manner as
    heretofore conducted and in material compliance with all applicable laws and
    regulations, (ii) pay its debts and Taxes when due (except to the extent
    disputed in good faith), pay or perform other material obligations when due,
    and (iii) exercise commercially reasonable efforts consistent with past
    practices and policies to (x) preserve intact its present business
    organization, (y) keep available the services of its present executive
    officers and Employees, and (z) preserve its relationships with material
    customers, suppliers, licensors, licensees, and others with which it has
    business dealings.
 b. Required Consent. Without limiting the generality of Section 4.1(a), except
    as otherwise expressly contemplated by this Agreement, and except as
    provided in Section 4.1 of the Company Disclosure Letter or as required
    pursuant to any Legal Requirement, without the prior written consent of
    Parent (which consent shall not be unreasonably withheld, conditioned or
    delayed), during the period from the date hereof and continuing until the
    earlier of the termination of this Agreement pursuant to its terms or the
    Effective Time, the Company shall not do any of the following, and shall not
    permit any of its Subsidiaries to do any of the following:
     i.     Enter into any new line of business;
     ii.    Declare, set aside or pay any dividends on or make any other
            distributions (whether in cash, stock, equity securities or
            property) in respect of any capital stock (except for dividends by a
            direct or indirect wholly owned Subsidiary of the Company to its
            parent) or split, combine or reclassify any capital stock or issue
            or authorize the issuance of any other securities in respect of, in
            lieu of or in substitution for any capital stock, other than any
            such transaction by a wholly-owned Subsidiary of it that remains a
            wholly-owned Subsidiary of it after consummation of such
            transaction, in the ordinary course of business consistent with past
            practice;
     iii.   Purchase, redeem or otherwise acquire, directly or indirectly, any
            shares of its capital stock or the capital stock of its
            Subsidiaries, except repurchases of unvested Common Stock of the
            Company in connection with the termination of the employment
            relationship with any employee pursuant to stock option or purchase
            agreements in effect on the date hereof;
     iv.    Issue, deliver, sell, authorize, pledge or otherwise encumber any
            shares of capital stock, Voting Debt or any securities convertible
            into shares of capital stock or Voting Debt, or subscriptions,
            rights, warrants or options to acquire any shares of capital stock
            or Voting Debt or any securities convertible into shares of capital
            stock or Voting Debt, or enter into other agreements or commitments
            of any character obligating it to issue any such securities or
            rights, other than: (A) issuances of Company Common Stock upon the
            exercise of Company Options existing on the date hereof in
            accordance with their present terms, (B) issuance of shares of
            Company Common Stock to participants in the Company Purchase Plan
            pursuant to the terms thereof, and (C) the issuance of Company
            Options to newly hired employees in the ordinary course of business
            consistent with past practices;
     v.     Cause, permit or propose any amendments to the Company Charter
            Documents or any of the Subsidiary Charter Documents of the
            Company's Subsidiaries;
     vi.    Acquire or agree to acquire by merging or consolidating with, or by
            purchasing any equity or voting interest in or a portion of the
            assets of, or by any other manner, any business or any Person or
            division thereof, or otherwise acquire or agree to acquire any
            assets out of the ordinary course of business;
     vii.   Enter into any binding agreement, agreement in principle, letter of
            intent, memorandum of understanding or similar agreement with
            respect to any joint venture, strategic partnership or alliance;
     viii.  Sell, lease, license, encumber or otherwise dispose of any material
            properties or assets except (A) the sale of Company Products to
            customers in the ordinary course of business, (B) the sale, lease or
            disposition (other than through licensing) of property or assets
            which are not material, individually or in the aggregate, to the
            business of Company and its subsidiaries or the licenses of current
            Company Products, in each case, in the ordinary course of business
            and in a manner consistent with past practice and (C) except for (1)
            Liens for taxes not yet due and payable, (2) statutory Liens
            securing payments not yet due and (3) Liens that do not materially
            detract from the value or interfere with the present use of the
            property subject thereto or affected thereby;
     ix.    Make any loans, advances or capital contributions to, or investments
            in, any other Person, other than: (a) loans or investments by it or
            a wholly-owned Subsidiary of it to or in it or any wholly-owned
            Subsidiary of it, or (b) employee loans or advances for travel and
            entertainment expenses made in the ordinary course of business
            consistent with past practices;
     x.     Except as required by GAAP or the SEC as concurred in by its
            independent auditors, make any change in its methods or principles
            of accounting;
     xi.    Make or change any election in respect of Taxes, adopt or change any
            accounting method in respect of Taxes, enter into any agreement,
            settle any claim or assessment in respect of Taxes, consent to any
            extension or waiver of the limitation period applicable to any claim
            or assessment in respect of Taxes or amend any Return;
     xii.   Except in the ordinary course of business consistent with past
            practices, enter into any licensing, distribution, sponsorship,
            advertising, merchant program, or other similar contracts,
            agreements, or obligations which may not be canceled without penalty
            by the Company or its Subsidiaries upon notice of 30 days or less or
            which provide for express payments by or to the Company or its
            Subsidiaries in an amount in excess of $250,000 in any one year or
            which involve any exclusive terms of any kind which are binding on
            the Company;
     xiii.  Cancel or terminate without reasonable substitute policy therefor
            any material insurance policy naming the Company as a beneficiary or
            a loss payee without notice to Parent;
     xiv.   Revalue any of its assets or make any change in accounting methods,
            principles or practices other than as required by Legal Requirements
            promulgated or first effective after the date of this Agreement;
     xv.    Commence or settle any lawsuit, threat of any lawsuit or proceeding
            or other investigation by or against the Company or any Subsidiary
            or relating to any of their businesses, properties or assets, which
            lawsuit, proceeding or settlement is seeking damages of $50,000 or
            more;
     xvi.   Waive the benefits of, agree to modify in any manner, terminate,
            release any person from or knowingly fail to enforce any
            confidentiality, standstill or similar agreement to which Company or
            any of its subsidiaries is a party or of which Company or any of its
            subsidiaries is a beneficiary;
     xvii.  Except as required by Legal Requirements or Contracts currently
            binding on the Company or its Subsidiaries, (1) increase in any
            material manner the amount of compensation or fringe benefits of,
            pay or grant any bonus, change of control, severance or termination
            pay to any Employee or director of the Company or any Subsidiary of
            the Company (other than regular compensation increases for employees
            in the ordinary course of business consistent with past practices),
            (2) adopt or amend (except to the extent necessary to maintain the
            tax-qualified status of such Company Benefit Plan) any Company
            Benefit Plan or make any contribution, other than regularly
            scheduled contributions, to any Company Benefit Plan, (3) waive any
            stock repurchase rights, accelerate, amend or change the period of
            exercisability of Company Options (other than accelerations as a
            result of the accelerated vesting of the Company Options
            contemplated by this Agreement), or reprice any Company Options or
            authorize cash payments in exchange for any Company Options, or
            (4) enter into any Employee Agreement or indemnification agreement
            with any Employee (other than offer letters and letter agreements
            entered into in the ordinary course of business consistent with past
            practice with employees who are terminable "at will" and other than
            option agreements in the Company's standard form pursuant to option
            grants to newly hired employees in the ordinary course of business
            consistent with past practices) or enter into any collectively
            bargained agreement;
     xviii. Grant any exclusive rights with respect to any Company Intellectual
            Property;
     xix.   Enter into or renew any Contracts containing, or otherwise subject
            the Surviving Corporation or Parent to, any non-competition,
            non-solicitation, exclusivity, "most favored nations" or other
            preferential pricing or other material restrictions on the Company
            or the Surviving Corporation or Parent, or any of their respective
            businesses, following the Closing;
     xx.    Hire employees other than in the ordinary course of business
            consistent with past practice or hire officers or directors;
     xxi.   Incur any indebtedness for borrowed money or guarantee any such
            indebtedness of another Person, issue or sell any debt securities or
            options, warrants, calls or other rights to acquire any debt
            securities of the Company or any of its Subsidiaries, guarantee any
            debt securities of another Person, enter into any "keep well" or
            other agreement to maintain any financial statement condition of any
            other Person (other than any wholly-owned Subsidiary of it) or enter
            into any arrangement having the economic effect of any of the
            foregoing, other than in connection with the financing of ordinary
            course trade payables consistent with past practice or pursuant to
            existing credit facilities in the ordinary course of business
            consistent with past practice;
     xxii.  Make or commit to make capital expenditures exceeding $100,000
            individually or $250,000 in the aggregate that are not provided for
            in the Company's current operating plan;
     xxiii. Modify or amend in a manner adverse in any material respect to the
            Company, or terminate any Company Material Contract currently in
            effect, or waive, release or assign any material rights or claims
            thereunder, in each case, in a manner adverse to the Company;
     xxiv.  Enter into any Contract requiring the Company or any of its
            Subsidiaries to pay in excess of an aggregate of $250,000; or
     xxv.   Take, commit, or agree in writing or otherwise to take, any of the
            actions described in Sections 4.1(b)(i) through 4.1(b)(xxiv) hereof,
            or any other action that would prevent the Company from performing,
            or cause the Company not to perform in all material respects, its
            covenants or agreements hereunder.

4.2   Procedures for Requesting Parent Consent

. Notwithstanding Section 8.2, if the Company desires to take any action which
would be prohibited pursuant to Section 4.1(b) hereof without the written
consent of Parent, prior to taking such action the Company may request such
written consent by sending an e-mail or facsimile to the individuals identified
on Schedule 4.2 hereof, and may not take such action until such consent in
writing (including by way of reply email) has been received from one of such
individuals.

ARTICLE V
ADDITIONAL AGREEMENTS

5.1   Proxy Statement .  As promptly as reasonably practicable after the
execution of this Agreement, the Company, in consultation with Parent, will
prepare and file with the SEC preliminary proxy materials that will constitute
the Proxy Statement. The Proxy Statement shall include the notice to
shareholders required by Section 60.561 of the Oregon Revised Statutes and
Section 1301 of the California Corporations Code that dissenters' rights will be
available. As promptly as reasonably practicable after any comments are received
from the SEC thereon (or upon notice from the SEC that no such comments will be
made), the Company shall, in consultation with Parent, prepare and file any
required amendments to, and the definitive, Proxy Statement with the SEC. The
Company will notify Parent reasonably promptly upon the receipt of any comments
from the SEC or its staff in connection with the filing of, or amendments or
supplements to, the Proxy Statement. Whenever any event occurs which is required
to be set forth in an amendment or supplement to the Proxy Statement, the
Company will reasonably promptly inform Parent of such occurrence and will, in
consultation with Parent, file with the SEC or its staff, and/or mail to
shareholders of the Company, such amendment or supplement. The Company shall
provide Parent (and its counsel) with a reasonable opportunity to review and
comment on the preliminary Proxy Statement and any amendment or supplement
thereto prior to filing such with the SEC, and will provide Parent with a copy
of all such filings made with the SEC. The Company will exercise commercially
reasonable efforts to cause the Proxy Statement to be mailed to its shareholders
as soon as reasonably practicable after the definitive Proxy Statement is filed
with the SEC.

5.2   Meeting of Company Shareholders; Board Recommendation . 

Meeting of Company Shareholders

. The Company will take all commercially reasonable action necessary in
accordance with Oregon Law and its Articles of Incorporation and Bylaws to call,
hold and convene a meeting of its shareholders, to consider approval of this
Agreement and approval of the Merger (the "Shareholders' Meeting") to be held as
promptly as reasonably practicable after the mailing of the Proxy Statement to
the Company's shareholders. Notwithstanding anything to the contrary contained
in this Agreement, the Company may adjourn or postpone the Shareholders' Meeting
to the extent necessary to ensure that any necessary supplement or amendment to
the Proxy Statement is provided to its shareholders in advance of a vote on the
Merger and this Agreement or, if as of the time for which the Shareholders'
Meeting is originally scheduled (as set forth in the Proxy Statement) there are
insufficient shares of Company Common Stock represented (either in person or by
proxy) to constitute a quorum necessary to conduct the business of such
Shareholders' Meeting. The Company shall cause the Shareholders' Meeting to be
called, noticed, convened, held and conducted, and that all proxies solicited by
it in connection with the Shareholders' Meeting are solicited in compliance with
Oregon Law, its Articles of Incorporation and Bylaws and all other applicable
Legal Requirements.

Board Recommendation
. Except to the extent expressly permitted by
Section 5.3(d)
: (i) the Board of Directors of the Company shall recommend that its
shareholders vote in favor of approval of this Agreement and approval of the
Merger at the Shareholders' Meeting, (ii) the Proxy Statement shall include a
statement to the effect that the Board of Directors of the Company has
recommended that the Company's shareholders vote in favor of approval of this
Agreement and approval of the Merger at the Shareholders' Meeting, and
(iii) neither the Board of Directors of the Company nor any committee thereof
shall withdraw, amend or modify in a manner adverse to Parent, or resolve or
publicly propose to withdraw, amend or modify in a manner adverse to Parent, the
recommendation of its Board of Directors that the Company's shareholders vote in
favor of approval of this Agreement and approval of the Merger.

5.3   Acquisition Proposals . 

 a. No Solicitation. HoldCo and the Company agree that neither they nor any of
    their affiliates or Subsidiaries nor any of their respective officers and
    directors shall, and that they shall use all commercially reasonable efforts
    to cause their and their affiliates and Subsidiaries' Employees, agents and
    representatives (including any investment banker, attorney or accountant
    retained by any of them) not to (and shall not authorize any of them to)
    directly or indirectly: (i) solicit, initiate, or knowingly induce,
    facilitate or encourage any inquiry with respect to, or the making,
    submission or announcement of, any Acquisition Proposal, (ii) subject to
    Section 5.3(c), participate in any discussions or negotiations regarding, or
    furnish to any Person any nonpublic information with respect to any
    Acquisition Proposal, (iii) subject to Section 5.3(c), engage in discussions
    with any Person with respect to any Acquisition Proposal, except to notify
    such Person as to the existence of these provisions, (iv) approve, endorse
    or recommend any Acquisition Proposal (except to the extent specifically
    permitted pursuant to Section 5.3(d)), or (v) enter into any letter of
    intent or similar document or any contract agreement or commitment relating
    to any Acquisition Proposal. The Company and its Subsidiaries will
    immediately cease and cause to be terminated any and all existing
    activities, discussions or negotiations with any third parties with respect
    to any Acquisition Proposal.
    Notification of Unsolicited Acquisition Proposals
    .
     i.   Within 72 hours after receipt of any Acquisition Proposal or any
          request for nonpublic information or inquiry that it reasonably
          believes would lead to an Acquisition Proposal, HoldCo or the Company
          shall provide Parent with oral and written notice of the material
          terms and conditions of such Acquisition Proposal, request or inquiry;
          the identity of the Person or group making any such Acquisition
          Proposal, request or inquiry and a copy of all written materials
          provided by or on behalf of such Person or group in connection with
          such Acquisition Proposal, request or inquiry. Upon receipt of an
          Acquisition Proposal, request or inquiry, the Company shall provide
          Parent within 48 hours oral and written notice setting forth all such
          information as is reasonably necessary to keep Parent informed in all
          material respects of the status and details (including material
          amendments or proposed material amendments) of any such Acquisition
          Proposal, request or inquiry and shall within 72 hours provide Parent
          a copy of the Acquisition Proposal, request or inquiry and all written
          materials subsequently provided by or on behalf of such Person or
          group in connection with such Acquisition Proposal, request or
          inquiry.
     ii.  The Company shall provide Parent with 48 hours prior notice (or such
          lesser prior notice as is provided to the members of its Board of
          Directors) of any meeting of its Board of Directors at which its Board
          of Directors could reasonably be expected to consider any Acquisition
          Proposal.
     iii. Parent shall have five business days from receipt of notice of, and
          all required information regarding, a Superior Offer to match such
          Superior Offer in writing delivered to Company (it being agreed that,
          in a case where the Superior Offer includes stock consideration,
          Parent shall be entitled to match such Offer with the cash equivalent
          of such stock consideration). If Parent elects to match such Superior
          Offer, HoldCo and Company shall immediately suspend further dialogue
          concerning such Superior Offer with the competitive bidder.

 b. Superior Offers.  Notwithstanding anything to the contrary contained in
    Section 5.3(a), in the event that the Company receives an unsolicited, bona
    fide written Acquisition Proposal from an unaffiliated third party that its
    Board of Directors has in good faith concluded (following the receipt of the
    advice of its financial and legal advisors and such other advice and
    information as deemed necessary), is, or is reasonably likely to result in,
    a Superior Offer, the Company may then take the following actions (but only
    if and to the extent that the Board of Directors of the Company concludes in
    good faith, following the receipt of advice of the Company's outside legal
    counsel, that the failure to do so could reasonably be determined to be
    inconsistent with its fiduciary obligations to the shareholders of the
    Company under applicable law:
     i.   Request information from the Person making such Acquisition Proposal
          for the purposes of enabling the Board of Directors of the Company to
          become appropriately informed about the Acquisition Proposal that has
          been made and the Person that made it;
     ii.  Furnish nonpublic information to the third party making such
          Acquisition Proposal, provided that (a) (1) concurrently with
          furnishing any such nonpublic information to such party, the Company
          gives Parent written notice of its intention to furnish such nonpublic
          information and (2) the Company receives from the third party an
          executed confidentiality agreement containing customary limitations on
          the use and disclosure of all nonpublic written and oral information
          furnished to such third party on the Company's behalf, the terms of
          which are at least as restrictive as the terms contained in the
          Confidentiality Agreement and (b) contemporaneously with furnishing
          any such nonpublic information to such third party, the Company
          furnishes such nonpublic information to Parent (to the extent such
          nonpublic information has not been previously so furnished); and
     iii. Engage in discussions and negotiations with the third party with
          respect to the Acquisition Proposal, provided that concurrently with
          entering into discussions or negotiations with such third party, the
          Company gives Parent written notice of the Company's intention to
          enter into negotiations with such third party.

 c. Change of Recommendation. In response to the receipt of a Superior Offer,
    the Board of Directors of the Company may withhold, withdraw, amend or
    modify its recommendation in favor of the Merger, and, in the case of a
    Superior Offer that is a tender or exchange offer made directly to the
    shareholders of the Company, may recommend that the shareholders of the
    Company accept the tender or exchange offer and release the Person making
    the Superior Offer from any "standstill" obligation pursuant to agreements
    between such Person and the Company (any of the foregoing actions, whether
    by the Board of Directors of the Company or a committee thereof, a "Change
    of Recommendation"), if all of the following conditions in clauses
    (i) through (v) are met:
     i.   A Superior Offer with respect to the Company has been made and has not
          been withdrawn or matched by Parent;
     ii.  The Shareholders' Meeting has not occurred;
     iii. The Company shall have (a) delivered to Parent written notice (a
          "Change of Recommendation Notice") at least two Business Days prior to
          publicly effecting such Change of Recommendation which shall state
          expressly (1) that the Company has received a Superior Offer, (2) the
          material terms and conditions of the Superior Offer and the identity
          of the Person or group making the Superior Offer, and (3) that the
          Company may effect a Change of Recommendation and the manner in which
          it may do so, (b) provided to Parent a copy of all written materials
          delivered to the Person or group making the Superior Offer in
          connection with such Superior Offer (to the extent not previously
          provided to Parent), and (c) made available to Parent all materials
          and information made available to the Person or group making the
          Superior Offer in connection with such Superior Offer; and
     iv.  The Board of Directors of the Company has concluded in good faith,
          after receipt of advice of its outside legal counsel, that, in light
          of such Superior Offer, the failure of the Board of Directors to
          effect a Change of Recommendation could reasonably be determined to be
          inconsistent with its fiduciary obligations to the shareholders of the
          Company under applicable law.

    Continuing Obligation to Call, Hold and Convene Shareholders' Meeting; No
    Other Vote
    . Notwithstanding anything to the contrary contained in this Agreement, the
    obligation of the Company to call, give notice of, convene and hold the
    Shareholders' Meeting shall not be limited or otherwise affected by the
    commencement, disclosure, announcement or submission to it of any
    Acquisition Proposal, or by any Change of Recommendation. The Company shall
    not submit to the vote of its shareholders any Acquisition Proposal, or
    publicly propose to do so unless this Agreement has been validly terminated
    in accordance with Article VII hereof.
    Compliance with Tender Offer Rules
    . Nothing contained in this Agreement shall prohibit the Company or its
    Board of Directors from taking and disclosing to the shareholders of the
    Company a position contemplated by Rules 14d-9 and 14e-2(a) promulgated
    under the Exchange Act;
    provided
    that the content of any such disclosure thereunder shall be governed by the
    terms of this Agreement. Without limiting the foregoing proviso, the Company
    shall not effect a Change of Recommendation unless specifically permitted
    pursuant to the terms of
    Section 5.3(d)
    .
 d. Certain Definitions. For purposes of this Agreement, the following terms
    shall have the following meanings:
     i.  "Acquisition Proposal," with respect to HoldCo or the Company, shall
         mean any offer or proposal, relating to any transaction or series of
         related transactions involving: (a) any purchase from such party or
         acquisition by any Person or "group" (as defined under Section 13(d) of
         the Exchange Act and the rules and regulations thereunder) of more than
         a 10% interest in the total outstanding voting securities of HoldCo,
         the Company or any of their Subsidiaries or any tender offer or
         exchange offer that if consummated would result in any Person or group
         beneficially owning 10% or more of the total outstanding voting
         securities of HoldCo, the Company or any of their Subsidiaries, (b) any
         merger, consolidation, business combination or similar transaction
         involving HoldCo, the Company or any of their Subsidiaries, (c) any
         sale, lease (other than in the ordinary course of business), exchange,
         transfer, license (other than in the ordinary course of business),
         acquisition or disposition of more than 10% of the assets of HoldCo,
         the Company (including their Subsidiaries taken as a whole), or (d) any
         liquidation or dissolution of HoldCo or the Company (provided, however,
         the transactions among Parent, HoldCo and the Company contemplated by
         this Agreement shall not be deemed an Acquisition Proposal); and
     ii. "Superior Offer," with respect to the Company, shall mean a bona fide
         written offer made by an unaffiliated third party to acquire, directly
         or indirectly, pursuant to a tender offer, exchange offer, merger,
         consolidation or other business combination, all or substantially all
         of the assets of the Company or a majority of the total outstanding
         voting securities of the Company as a result of which the shareholders
         of the Company immediately preceding such transaction would hold less
         than 50% of the equity interests in the surviving or resulting entity
         of such transaction and any direct or indirect parent or subsidiary
         thereof, on terms that the Board of Directors of the Company has in
         good faith concluded (following the receipt of advice of its financial
         adviser) would be more favorable, from a financial point of view, to
         the Company's shareholders (in their capacities as shareholders) than
         the terms of the Merger and is reasonably likely of being consummated.

    Specific Performance
    . The parties hereto agree that irreparable damage would occur in the event
    that the provisions of this
    Section 5.3
    were not performed in accordance with their specific terms or were otherwise
    breached. It is accordingly agreed by the parties hereto that Parent shall
    be entitled to an immediate injunction or injunctions, without the necessity
    of proving the inadequacy of money damages as a remedy and without the
    necessity of posting any bond or other security, to prevent breaches of the
    provisions of this
    Section 5.3
    and to enforce specifically the terms and provisions hereof in any court of
    the United States or any state having jurisdiction, this being in addition
    to any other remedy to which Parent may be entitled at law or in equity.
    Without limiting the foregoing, it is understood that any violation of the
    restrictions set forth above by any officer, director, agent, representative
    or affiliate of HoldCo or the Company shall be deemed to be a breach of this
    Agreement by HoldCo and the Company.

5.4   Confidentiality; Access to Information; No Modification of
Representations, Warranties or Covenants . 

 a. Confidentiality. The parties acknowledge that the Company and Parent have
    previously executed a Confidential Disclosure Agreement dated December 21,
    2005, as amended (the "Confidentiality Agreement"), which Confidentiality
    Agreement will continue in full force and effect in accordance with its
    terms.
 b. Access to Information. Upon reasonable notice and subject to the
    Confidentiality Agreement and the requirements of the HSR Act, the Company
    shall afford Parent and its accountants, counsel and other representatives,
    reasonable access (in a manner that is not disruptive to the Company) during
    normal business hours during the period from the date hereof and prior to
    the Effective Time to (i) all of the properties, books, contracts,
    commitments and records of the Company and its Subsidiaries, including all
    Company Intellectual Property (including access to design processes and
    methodologies and all source code), (ii) all other information concerning
    the business, properties and personnel (subject to restrictions imposed by
    applicable law) of the Company and its Subsidiaries as Parent may reasonably
    request, and (iii) all Employees of the Company and its Subsidiaries as
    identified by Parent. Upon reasonable notice and subject to the
    Confidentiality Agreement and the requirements of the HSR Act, the Company
    agrees to provide to Parent and its accountants, counsel and other
    representatives copies of internal financial statements (including Tax
    Returns and supporting documentation) promptly upon request.
    No Modification of Representations and Warranties or Covenants
    . No information or knowledge obtained in any investigation or notification
    pursuant to this
    Section 5.4
    ,
    Section 5.6
    or
    Section 5.7
    shall affect or be deemed to modify any representation or warranty contained
    herein, the covenants or agreements of the parties hereto or the conditions
    to the obligations of the parties hereto under this Agreement.

5.5   Public Disclosure .  Without limiting any other provision of this
Agreement, Parent and the Company will consult with each other before issuing,
and provide each other the opportunity to review, comment upon and concur with,
and use commercially reasonable efforts to agree on any press release or public
statement with respect to this Agreement and the transactions contemplated
hereby, including the Merger, and any Acquisition Proposal, and will not issue
any such press release or make any such public statement prior to such
consultation and (to the extent practicable) agreement, except as may be
required by law or any listing agreement with the Nasdaq or any other applicable
national or regional securities exchange or market. The parties have agreed to
the text of the joint press release announcing the signing of this Agreement.

5.6   Regulatory Filings; Reasonable Efforts . 

 a. Regulatory Filings. Each of Parent and the Company shall coordinate and
    cooperate with one another and shall each use commercially reasonable
    efforts to comply with, and shall each refrain from taking any action that
    would impede compliance with, all Legal Requirements, and each of Parent and
    the Company shall make all filings, notices, petitions, statements,
    registrations, submissions of information, application or submission of
    other documents required by any Governmental Entity in connection with the
    Merger and the transactions contemplated hereby as promptly as reasonably
    practicable after the date hereof (or as promptly as reasonably practicable
    following the occurrence of any events that cause any such filing, notice,
    petition, statement, registration, submission or application to be
    reasonably likely to be required), including, without limitation:
    (i) Notification and Report Forms with the FTC and the DOJ if required by
    the HSR Act, (ii) pre-merger notifications required by the competition laws
    of other countries, or the European Union, as reasonably determined by
    Parent and the Company, and (iii) any filings required under the Securities
    Act, the Exchange Act, any applicable state or securities or "blue sky" laws
    and the securities laws of any foreign country, or any other Legal
    Requirement relating to the Merger. Each of Parent and the Company will
    cause all documents that it is responsible for filing with any Governmental
    Entity under this Section 5.6(a) to comply in all material respects with all
    applicable Legal Requirements.
    Exchange of Information
    . Parent and the Company each shall promptly supply the other with any
    information that may be required in order to effectuate any filings or
    application pursuant to
    Section 5.6(a)
    . Except where prohibited by applicable Legal Requirements, and subject to
    the Confidentiality Agreement, each of the Company and Parent shall consult
    with the other prior to taking a position with respect to any such filing,
    shall permit the other to review and discuss in advance, and consider in
    good faith the views of the other in connection with any analyses,
    appearances, presentations, memoranda, briefs, white papers, arguments,
    opinions and proposals before making or submitting any of the foregoing to
    any Governmental Entity by or on behalf of any party hereto in connection
    with any investigations or proceedings in connection with this Agreement or
    the transactions contemplated hereby (including under any antitrust or fair
    trade Legal Requirement),
    coordinate with the other in preparing and exchanging such information and
    promptly provide the other (and its counsel) with copies of all filings,
    presentations or submissions (and a summary of any oral presentations) made
    by such party with any Governmental Entity in connection with this Agreement
    or the transactions contemplated hereby,
    provided
    that with respect to any such filing, presentation or submission, each of
    Parent and the Company need not supply the other (or its counsel) with
    copies (or in the case of oral presentations, a summary) to the extent that
    any law, treaty, rule or regulation of any Governmental Entity applicable to
    such party requires such party or its Subsidiaries to restrict or prohibit
    access to any such properties or information.
    Notification
    . Each of Parent and the Company will notify the other promptly upon the
    receipt of: (i) any comments from any officials of any Governmental Entity
    in connection with any filings made pursuant hereto and (ii) any request by
    any officials of any Governmental Entity for amendments or supplements to
    any filings made pursuant to, or information provided to comply with, any
    Legal Requirements. Whenever any event occurs that is required to be set
    forth in an amendment or supplement to any filing made pursuant to
    Section 5.6(a)
    , Parent or the Company, as the case may be, will promptly inform the other
    of such occurrence and cooperate in filing with the applicable Governmental
    Entity such amendment or supplement.
    Reasonable Efforts
    . Subject to the express provisions of
    Section 5.2
    and
    Section 5.3
    hereof and upon the terms and subject to the conditions set forth herein,
    each of the parties agrees to use commercially reasonable efforts to take,
    or cause to be taken, all actions, and to do, or cause to be done, and to
    assist and cooperate with the other parties in doing, all things necessary,
    proper or advisable to consummate and make effective, in the most
    expeditious manner practicable, the Merger and the other transactions
    contemplated by this Agreement, including using commercially reasonable
    efforts to accomplish the following: (i) the taking of commercially
    reasonable acts necessary to cause the conditions precedent set forth in
    Article VI
    to be satisfied, (ii) the obtaining of all necessary actions or non-actions,
    waivers, consents, approvals, orders and authorizations from Governmental
    Entities and the making of all necessary registrations, declarations and
    filings (including registrations, declarations and filings with Governmental
    Entities, if any) and the taking of commercially reasonable steps as may be
    necessary to avoid any suit, claim, action, investigation or proceeding by
    any Governmental Entity, (iii) the defending of any suits, claims, actions,
    investigations or proceedings, whether judicial or administrative,
    challenging this Agreement or the consummation of the transactions
    contemplated hereby and (iv) the execution or delivery of any additional
    instruments necessary to consummate the transactions contemplated by, and to
    fully carry out the purposes of, this Agreement. In connection with and
    without limiting the foregoing, the Company and its Board of Directors
    shall, if any takeover statute or similar Legal Requirement is or becomes
    applicable to the Merger, this Agreement or any of the transactions
    contemplated by this Agreement, use commercially reasonable efforts to
    ensure that the Merger and the other transactions contemplated by this
    Agreement may be consummated as promptly as practicable on the terms
    contemplated by this Agreement and otherwise to minimize the effect of such
    Legal Requirement on the Merger, this Agreement and the transactions
    contemplated hereby. In addition, nothing herein shall require Parent to
    litigate with any Governmental Entity or third party.
 b. Limitation on Divestiture. Notwithstanding anything in this Agreement to the
    contrary, nothing contained in this Agreement shall be deemed to require
    Parent or the Company or any Subsidiary or affiliate thereof to agree to any
    Action of Divestiture. The Company shall not take or agree to take any
    Action of Divestiture without the prior written consent of Parent. For
    purposes of this agreement, an "Action of Divestiture" shall mean (x) any
    license, sale or other disposition or holding separate (through
    establishment of a trust or otherwise) of any shares of capital stock or of
    any business, assets or properties of Parent, its subsidiaries or affiliates
    or of the Company or its Subsidiaries, (y) the imposition of any limitation
    on the ability of Parent, its subsidiaries or affiliates or the Company or
    its Subsidiaries to conduct their respective businesses or own any capital
    stock or assets or to acquire, hold or exercise full rights of ownership of
    their respective businesses and, in the case of Parent, the businesses of
    the Company and its Subsidiaries, or (z) the imposition of any impediment on
    Parent, its subsidiaries or affiliates or the Company or its Subsidiaries
    under any statute, rule, regulation, executive order, decree, order or other
    legal restraint governing competition, monopolies or restrictive trade
    practices. In addition, nothing herein shall require Parent to litigate with
    any Governmental Entity.

5.7   Notification of Certain Matters . 

By the Company
. The Company shall give prompt notice to Parent of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect, or any failure of the Company to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement.
By Parent
. Parent shall give prompt notice to the Company of any representation or
warranty made by it contained in this Agreement becoming untrue or inaccurate in
any material respect, or any failure of Parent to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement.

5.8   Third-Party Consents .  As soon as practicable following the date hereof,
the Company will use commercially reasonable efforts (without any obligation on
the part of the Company or Holdco to incur any material cost or expense or to
incur any additional material obligation or suffer the loss of any material
right or benefit) to give any required notices and to obtain any consents,
waivers and approvals under any of its or its Subsidiaries' respective Contracts
required to be obtained in connection with the consummation of the transactions
contemplated hereby, including all consents, waivers and approvals set forth in
Section 2.3(b) of the Company Disclosure Letter.

5.9   Equity Awards and Employee Matters . 

 a. Employee Stock Options. As soon as practicable following the date hereof and
    consistent with their terms, the Company shall deliver notice to the holders
    of Company Options, which such notice shall be in compliance with the terms
    of such Company Options, that the Company Options will be cancelled or
    terminated prior to the Closing and treated in the manner set forth in
    Section 1.6(d) hereof. Any materials to be submitted to the holders of
    Company Options in connection with the notice required under this
    Section 5.9 shall be subject to review and approval by Parent. The Company
    will grant no new Company Options after the Adjustment Date.
 b. Termination of Company Employee Stock Purchase Plans. The Company shall
    ensure that, after the date of this Agreement, participants in the Company
    Purchase Plans will not be permitted to increase their elections under such
    plans. As of June 15, 2006, each of the Company Purchase Plans shall be
    terminated. The rights of participants in each Company Purchase Plan with
    respect to any offering period then underway under such Company Purchase
    Plan shall be determined by treating the last Business Day prior to, or if
    more administratively advisable, the last payroll date of the Company
    immediately prior to, June 30, 2006, as the last day of such offering period
    and by making such other pro-rata adjustments as may be necessary to reflect
    the shortened offering period but otherwise treating such shortened offering
    period as a fully effective and completed offering period for all purposes
    under such Company Purchase Plan. Outstanding rights to purchase Company
    Common Stock will be exercised in accordance with the Company Purchase
    Plans, and each share of Company Common Stock purchased pursuant to such
    exercise will by virtue of the Merger, and without any action on the part of
    the holder thereof, be converted into the right to receive Merger
    Consideration, without the issuance of certificates representing issued and
    outstanding shares of Company Common Stock to participants under the Company
    Purchase Plans. Prior to the Effective Time, the Company shall take all
    actions (including, if appropriate, amending the terms of such the Company
    Purchase Plan and timely distributing any notices required by the terms of
    the Company Purchase Plans) that are necessary to give effect to the
    transactions contemplated by this Section 5.9(b). Any materials to be
    submitted to participants in the Company Purchase Plan shall be subject to
    review and approval by Parent. The Company will issue no new purchase rights
    under the Company Purchase Plan after June 30, 2006.
 c. Spin-off and Continuation of 401(k) Plans.

    Prior to the Effective Date, the Company shall amend or cause to be amended,
    as needed, any and all Company Employee Plans which include or are intended
    to include a "qualified cash or deferred arrangement" described in Code
    Section 401(k) (each a "401(k) Plan") effective no later than the Effective
    Date in accordance with the following:

     i.  To provide that the AP Purchase effectively creates a distributable
         event (notwithstanding the "same desk rule") under each 401(k) Plan
         with respect to any and all 401(k) Plan participants (and related
         surviving beneficiaries or alternate payees) who (i) upon the AP
         Purchase will be employed by the AP Company or any of its subsidiaries
         or affiliates, or (ii) as of the AP Purchase date were last employed by
         any of the business operations acquired in the AP Purchase
         (collectively, the "AP Participants"); and
     ii. To ensure that Parent shall have the right to amend, merge or terminate
         each such 401(k) Plan thereafter.

    401(k) Plan amendments to accomplish the foregoing actions shall be proposed
    to Parent for its review and approval before being adopted. Copies of the
    approved amendments and corresponding board of directors' resolutions, as
    adopted, shall be provided to Parent in advance of the Closing.

 d. Company Employees. Company Employees shall be eligible to receive benefits
    consistent with Parent's applicable human resources policies. Parent will or
    will cause the Surviving Corporation or appropriate subsidiary of Parent to
    give Company Employees full credit under such policies for prior service at
    the Company for purposes of determination of the level of benefits under
    Parent's benefit plans, programs or policies for prior service at the
    Company; provided that such credit does not result in duplication of
    benefits. Notwithstanding the foregoing, nothing in this Section 5.9(d)
    shall limit or prevent Parent or Company from modifying, amending, or
    terminating any employee benefit plans, programs, or policies at any time in
    their sole discretion.
 e. Change in Control Agreements. Immediately prior to the Effective Time, all
    amounts due for payments, acceleration of vesting of equity awards and
    extension of health benefits which may be due to employees or directors of
    the Company pursuant to an agreement set forth in Section 2.15(j) of the
    Company Disclosure Letter, as a result of the consummation of the Merger or
    the execution of this Agreement, shall be deemed to have been incurred by
    virtue of the consummation of the Merger. The Company shall treat any
    conditions other than the consummation of the Merger or the execution of
    this Agreement (such as actual or constructive termination of employment in
    connection with the Merger) as satisfied. It is acknowledged and agreed
    that, upon consummation of the Merger, all further conditions (such as
    actual or constructive termination of employment in connection with the
    Merger) set forth in any such agreement shall be deemed satisfied and that
    all such payments, vesting of equity awards and extension of health benefits
    shall be made without regard to the occurrence of any subsequent event;
    provided, (i) that cash payments may be made in lieu of health benefits,
    (ii) no such cash payments in lieu of health benefits shall be made to any
    Person who receives health benefits as an employee of Parent following the
    Effective Time and (iii) such payments, vesting acceleration and health
    benefits (or payment in lieu thereof) shall be conditioned upon receipt by
    Parent of a release and waiver of claims and agreement to the foregoing in
    form and substance reasonably satisfactory to Parent. The Company shall use
    commercially reasonable efforts to accomplish the foregoing, including
    obtaining such releases and agreements prior to the Effective Time.

5.10   Indemnification.

 a. Indemnity. From and after the Effective Time, Surviving Corporation will
    assume without further action by any of the parties, fulfill and honor in
    all respects the obligations of the Company pursuant to all rights to
    indemnification and exculpation from liabilities or acts or omissions
    occurring at or prior to the Effective Time (and rights for advancement of
    expenses) now existing in favor of the current or former directors or
    officers of the Company in its Articles of Incorporation or bylaws or any
    indemnification agreements between the Company and its directors and
    officers as of the date hereof (the "Indemnified Parties"), subject to
    applicable law and the releases that the shareholders of HoldCo are
    executing and delivering in connection with the closing of the Stock
    Purchase Agreement. The Articles of Incorporation and Bylaws of the
    Surviving Corporation will contain provisions with respect to exculpation
    and indemnification that are at least as favorable to the Indemnified
    Parties as those contained in the Articles of Incorporation and Bylaws of
    the Company as in effect on the date hereof, which provisions will not be
    amended, repealed or otherwise modified for a period of six years from the
    Effective Time in any manner that would adversely affect the rights
    thereunder of Indemnified Parties, unless such modification is required by
    law.
 b. Insurance. For a period of six years after the Effective Time, Surviving
    Corporation will cause to be maintained directors' and officers' liability
    insurance maintained by the Company covering those persons who are covered
    by the Company's directors' and officers' liability insurance policy as of
    the date hereof for events occurring prior to the Effective Time on terms
    comparable to those applicable to the current directors and officers of the
    Company for a period of six years; provided, however, that in no event will
    the Surviving Corporation be required to expend in excess of 250% of the
    annual premium currently paid by the Company for such coverage (and to the
    extent annual premium would exceed 250% of the annual premium currently paid
    by the Company for such coverage, the Surviving Corporation shall use
    commercially reasonable efforts to cause to be maintained the maximum amount
    of coverage as is available for such 250% of such annual premium) and
    provided further, however, that notwithstanding the foregoing, Surviving
    Corporation may satisfy its obligations under this Section 5.10(b) by
    purchasing a "tail" policy under the Company's existing directors' and
    officers' insurance policy which (i) has an effective term of six years from
    the Effective Time, (ii) covers those persons who are currently covered by
    the Company's directors' and officers' insurance policy in effect as of the
    date hereof for actions and omissions occurring on or prior to the Effective
    Time, and (iii) contains terms and conditions that are comparable to the
    terms and conditions of the Company's directors' and officers' insurance
    policy in effect as of the date hereof.
 c. Third Party Beneficiaries. This Section 5.10 is intended to be for the
    benefit of, and shall be enforceable by the Indemnified Parties and their
    heirs and personal representatives and shall be binding on the Surviving
    Corporation and its respective successors and assigns. In the event the
    Surviving Corporation or its successor or assign (i) consolidates with or
    merges into any other Person and shall not be the continuing or surviving
    corporation or entity in such consolidation or merger or (ii) transfers all
    or substantially all of its properties and assets to any Person (including
    but not limited to a reorganization by Parent), then, and in each case,
    proper provision shall be made so that the successor and assign of the
    Surviving Corporation shall honor the obligations set forth with respect to
    the Surviving Corporation in this Section 5.10(c).

5.11   Section 16 Matters .  Prior to the Effective Time, the Company shall take
all such steps as may be required (to the extent permitted under applicable law)
to cause any dispositions of Company Common Stock (including derivative
securities with respect to Company Common Stock) resulting from the transactions
contemplated by Article I of this Agreement by each individual who is subject to
the reporting requirements of Section 16(a) of the Exchange Act with respect to
the Company to be exempt under Rule 16b-3 promulgated under the Exchange Act.

5.12   FIRPTA Compliance .  On the Closing Date, the Company shall deliver to
Parent a properly executed statement in a form reasonably acceptable to Parent
for purposes of satisfying Parent's obligations under Treasury Regulation
Section 1.1445-2(c)(3).

5.13   Insurance Approval .  The Company shall deliver to Parent at least 15
days prior to the Closing a letter in a form acceptable to Parent validly
executed by an officer of the Company, which authorizes Parent's insurance
broker to act as the Company's insurance broker of record with respect to all
insurance policies held by the Company.

5.14   Estimated Expenses

. At the time of delivery of the Adjustment Balance Sheet, the Company shall
provide Parent with a statement of its and HoldCo's estimated Transaction Costs
showing detail of accrued (both paid and unpaid) Transaction Costs incurred by
the Company and HoldCo as of the Adjustment Date, and a good faith estimation of
Transaction Costs that the Company and HoldCo estimate will be incurred in
completing the transactions contemplated by this Agreement, in form and
substance reasonably satisfactory to Parent (the "Statement of Expenses"), and
the Statement of Expenses shall be certified as true and correct in all material
respects in form acceptable to Parent as of the Adjustment Date by the Company's
and HoldCo's Chief Financial Officers. The accrued unpaid expenses and estimated
expenses reflected in the Statement of Expenses are collectively referred to
herein as the "Estimated Transaction Costs." The Statement of Expenses will
reflect all Transaction Costs accrued and expected to be incurred by the Company
and HoldCo as a result of the negotiation and effectuation of this Agreement and
the transactions contemplated hereby.

ARTICLE VI
CONDITIONS TO THE MERGER

6.1   Conditions to the Obligations of Each Party to Effect the Merger .  The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:

    Company Shareholder Approval
    . This Agreement shall have been approved and adopted, and the Merger shall
    have been duly approved, by the requisite vote under applicable law, by the
    shareholders of the Company.
 a. No Order. No Governmental Entity of competent jurisdiction shall have
    enacted, issued, promulgated, enforced or entered any statute, rule,
    regulation, executive order, decree, injunction or other order (whether
    temporary, preliminary or permanent) which (i) is in effect and (ii) has the
    effect of making the Merger illegal or otherwise prohibiting or preventing
    consummation of the Merger.
 b. HSR Act. All waiting periods (and any extension thereof) under the HSR Act
    relating to the transactions contemplated hereby, if applicable, will have
    expired or terminated early. All other foreign antitrust approvals
    reasonably determined by Parent to be required to be obtained prior to the
    Merger in connection with the transactions contemplated hereby shall have
    been obtained.
    Stock Purchase
    . The Stock Purchase shall close instantaneously prior to the Merger.
    Tail Policy.
    The tail policy for D&O insurance coverage referenced in Section 5.10 shall
    have been bound and coverage shall be in force, as evidenced by a
    certificate from the tail policy insurer.

6.2   Additional Conditions to the Obligations of Parent .  The obligations of
Parent to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Parent:

 a. Representations and Warranties. The representations and warranties of the
    Company contained in this Agreement shall be true and correct on the date
    hereof and as of the Closing Date with the same force and effect as if made
    on the Closing Date (except that those representations and warranties which
    address matters only as of a particular date shall have been true and
    correct only on such date), except, in each case, or in the aggregate, as
    does not constitute a Material Adverse Effect on the Company at the Closing
    Date (it being understood that for all purposes of determining the accuracy
    of such representations and warranties, all references to the term "Material
    Adverse Effect" and materiality qualifications and other qualifications
    based on the word "material" contained in such representations and
    warranties shall be disregarded). Parent shall have received a certificate
    with respect to the foregoing signed on behalf of the Company by the chief
    executive officer of the Company.
 b. Agreements and Covenants. The Company shall have performed or complied in
    all material respects with all agreements and covenants required by this
    Agreement to be performed or complied with by it at or prior to the Closing
    Date, and Parent shall have received a certificate to such effect signed on
    behalf of the Company by the chief executive officer of the Company.
    Sale of AP Business
    . The AP Purchase shall close immediately prior to the Merger and the Stock
    Purchase.
 c. Material Adverse Effect. No Material Adverse Effect on the Company shall
    have occurred since the date hereof and be continuing.
 d. No Governmental Restriction; Litigation. There shall not be any pending or
    threatened suit, action or proceeding asserted by any Governmental Authority
    or third party (i) challenging or seeking to restrain or prohibit the
    consummation of the Merger or any of the other transactions contemplated by
    this Agreement, the Stock Purchase Agreement of the AP Purchase Agreement,
    or (ii) seeking to require Parent or the Company or any Subsidiary or
    affiliate to effect an Action of Divestiture.
 e. Third Party Consents and Modifications. The Company shall have exercised
    commercially reasonable efforts to deliver to Parent all of the consents and
    approvals and contract modifications set forth on Schedule 6.2(f).
    Joint Venture Amendment.
    The Company shall have delivered to Parent the letter agreement amending and
    modifying the joint venture agreement, duly executed by Amplus, the joint
    venture partner, in the form set forth on
    Schedule 6.2(g)
    .

    Lien Release.

    Bank of the West shall have released its lien against HoldCo and shall have
    released HoldCo from all liabilities and obligations, or otherwise
    terminated HoldCo's obligations, under any agreement with Bank of the West
    relating to the credit agreement, letter of credit financings or other debt
    financings to which HoldCo is a party.

    

    Bond Authorities
    .  The bond authorities who financed the Fremont and Logan real estate
    projects shall have released HoldCo from all liabilities and obligations, or
    otherwise terminated all of HoldCo's obligations, under any agreement with
    such authorities to which HoldCo is a party, or Ardenwood LLC ("
    Ardenwood
    ") shall have agreed, on terms and conditions reasonably acceptable to
    Purchaser, (a) to indemnify, defend and hold HoldCo harmless from all
    liability to such bond authorities thereunder, (b) if Ardenwood sells or
    otherwise transfers to an unaffiliated third party either of the Fremont or
    Logan real estate projects, it will at or prior to such sale, (i) cause the
    applicable bond authority to release HoldCo from all liabilities and
    obligations, or otherwise terminate all of HoldCo's obligations, under any
    agreement with such authority or (ii) pay off the bonds as to the applicable
    project and (c) if the Company desires to vacate either of the real estate
    projects or change its use of such projects in a manner, which would violate
    the terms of the applicable bond agreements, but would not violate the
    Company's lease of such project, and the Company has provided Ardenwood with
    not less than six (6) months prior written notice of such intent, Ardenwood
    will, at or prior to the expiration of such notice period, (i) obtain a
    written waiver of such violation from the applicable bond authority, (ii)
    cause the applicable bond authority to release HoldCo from all liabilities
    and obligations, or otherwise terminate all of HoldCo's obligations, under
    any agreement with such authority or (iii) pay off the bonds as to the
    applicable project, all of which obligations will be binding upon any
    successor or assign of Ardenwood or the applicable property, so long as the
    bonds as to such property remain outstanding.  Such agreement will also
    provide that neither HoldCo nor the Company shall intentionally default
    under such agreements (except as provided in subpart (c) above) and (ii)
    nothing in such agreement shall in any way amend or constitute a waiver of
    any of the Company's obligations under its leases of the projects.

6.3   Additional Conditions to the Obligations of the Company .  The obligation
of the Company to consummate and effect the Merger shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by the Company:

 a. Representations and Warranties. The representations and warranties of Parent
    contained in this Agreement shall be true and correct on the date hereof and
    as of the Closing Date with the same force and effect as if made on the
    Closing Date (except that those representations and warranties which address
    matters only as of a particular date shall have been true and correct only
    on such date), except, in each case, or in the aggregate, as does not
    materially impede the ability of Parent to consummate the transactions
    contemplated by this Agreement in accordance with the terms hereof and
    applicable Legal Requirements. The Company shall have received a certificate
    with respect to the foregoing signed on behalf of Parent, with respect to
    the representations and warranties of Parent, by an authorized executive
    officer of Parent.
 b. Agreements and Covenants. Parent shall have performed or complied in all
    material respects with all agreements and covenants required by this
    Agreement to be performed or complied with by it on or prior to the Closing
    Date, and the Company shall have received a certificate with respect to the
    foregoing signed on behalf of Parent, with respect to the covenants of
    Parent, by an authorized executive officer of Parent.

ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER

7.1   Termination .  This Agreement may be terminated at any time prior to the
Effective Time, by action taken by the terminating party or parties, and except
as provided below, whether before or after the requisite approvals of the
shareholders of the Company:

 a. by mutual written consent of Parent and the Company;
 b. by either the Company or Parent if the Merger shall not have been
    consummated by September 30, 2006 or such later date, if any, that Parent
    and the Company may agree upon in writing (the "End Date"); provided, that
    the right to terminate this Agreement under this Section 7.1(b) shall not be
    available to any party whose action or failure to act has been a principal
    cause of or resulted in the failure of the Merger to occur on or before such
    date and such action or failure to act constitutes a breach of this
    Agreement;
 c. by either the Company or Parent if a Governmental Entity shall have issued
    an order, decree or ruling or taken any other action (including the failure
    to have taken an action), in any case having the effect of permanently
    restraining, enjoining or otherwise prohibiting the Merger, which order,
    decree, ruling or other action is final and nonappealable; provided that the
    party seeking to terminate this Agreement shall have used all commercially
    reasonable efforts to challenge such order, decree, ruling or action;
    provided, further, that notwithstanding anything to the contrary, the
    Company may challenge such order, decree, ruling or action until September
    30, 2006 but Parent shall have no obligation to remove such order, decree,
    ruling or action;
 d. by either the Company or Parent if the required approval of the shareholders
    of the Company contemplated by this Agreement shall not have been obtained
    by reason of the failure to obtain the required vote at a meeting of the
    Company shareholders duly convened therefore or at any adjournment thereof;
    provided, however, that the right to terminate this Agreement under this
    Section 7.1(d) shall not be available to the Company where the failure to
    obtain Company shareholder approval shall have been principally and
    proximately caused by the action or failure to act of Company which
    constitutes a breach by the Company of this Agreement;
 e. by Parent (at any time prior to the adoption and approval of this Agreement
    and the Merger by the required vote of the shareholders of the Company) if a
    Triggering Event (as defined below) with respect to the Company or a
    material breach of Section 5.3 of this Agreement shall have occurred;
 f. by the Company, upon a breach of any representation, warranty, covenant or
    agreement on the part of Parent set forth in this Agreement, or if any
    representation or warranty of Parent shall have become untrue, in either
    case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
    would not be satisfied as of the time of such breach or as of the time such
    representation or warranty shall have become untrue, provided that if such
    inaccuracy in Parent's representations and warranties or breach by Parent is
    curable by Parent prior to the End Date through the exercise of commercially
    reasonable efforts, then the Company may not terminate this Agreement under
    this Section 7.1(f) prior to 30 days following the receipt of written notice
    from the Company to Parent of such breach, provided that Parent continues to
    exercise commercially reasonable efforts to cure any such curable breach
    through such 30 day period (it being understood that the Company may not
    terminate this Agreement pursuant to this paragraph (f) if it shall have
    materially breached this Agreement or if such breach by Parent is cured
    within such 30 day period);
 g. by Parent, upon a breach of any representation, warranty, covenant or
    agreement on the part of the Company set forth in this Agreement, or if any
    representation or warranty of the Company shall have become untrue, in
    either case such that the conditions set forth in Section 6.2(a) or
    Section 6.2(b) would not be satisfied as of the time of such breach or as of
    the time such representation or warranty shall have become untrue, provided,
    that if such inaccuracy in the Company's representations and warranties or
    breach by the Company is curable by the Company prior to the End Date
    through the exercise of commercially reasonable efforts, then Parent may not
    terminate this Agreement under this Section 7.1(g) prior to 30 days
    following the receipt of written notice from Parent to the Company of such
    breach, provided that the Company continues to exercise commercially
    reasonable efforts to cure any such curable breach through such 30 day
    period (it being understood that Parent may not terminate this Agreement
    pursuant to this paragraph (g) if it shall have materially breached this
    Agreement or if such breach by the Company is cured within such 30 day
    period); and
 h. by either the Company or Parent if either of the Stock Purchase Agreement or
    the AP Purchase Agreement is terminated.

For the purposes of this Agreement, a "Triggering Event," with respect to the
Company, shall be deemed to have occurred if: (i) its Board of Directors or any
committee thereof shall for any reason have withdrawn or shall have amended or
modified in a manner adverse to Parent its recommendation in favor of, the
adoption and approval of the Agreement or the approval of the Merger, (ii) it
shall have failed to include in the Proxy Statement the recommendation of its
Board of Directors in favor of the adoption and approval of the Agreement and
the approval of the Merger, (iii) its Board of Directors fails to reaffirm
(publicly, if so requested) its recommendation in favor of the adoption and
approval of the Agreement and the approval of the Merger within ten calendar
days after Parent requests in writing that such recommendation be reaffirmed,
(iv) its Board of Directors or any committee thereof shall have approved or
recommended any Acquisition Proposal, (v) the Company shall have entered into
any definitive agreement, contract or commitment providing for the consummation
of any Acquisition Proposal; or (vi) a tender or exchange offer relating to its
securities shall have been commenced by a Person unaffiliated with HoldCo or
Parent and the Company shall not have sent to its security holders pursuant to
Rule 14e-2 promulgated under the Securities Act, within ten business days after
such tender or exchange offer is first published, sent or given, a statement
disclosing that the Board of Directors of the Company recommends rejection of
such tender or exchange offer.

7.2   Notice of Termination; Effect of Termination .  Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of a valid written notice of the terminating party to the other party
hereto. In the event of the termination of this Agreement as provided in
Section 7.1, this Agreement shall be of no further force or effect and there
shall be no further liability on the part of any of the parties, except (i) as
set forth in Section 5.4(a), this Section 7.2, Section 7.3 and Article VIII,
each of which shall survive the termination of this Agreement and (ii) nothing
herein shall relieve any party from liability for any fraud or willful breach of
this Agreement. No termination of this Agreement shall affect the obligations of
the parties contained in the Confidentiality Agreement, all of which obligations
shall survive termination of this Agreement in accordance with their terms.

7.3   Fees and Expenses . 

    General
    . Except as set forth in this
    Section 7.3
    , all fees and expenses incurred in connection with this Agreement and the
    transactions contemplated hereby shall be paid by the party incurring such
    expenses whether or not the Merger is consummated;
    provided
    ,
    however
    , that the fees and expenses incurred by HoldCo or the Company in order to
    consummate the transactions contemplated hereby and by the Stock Purchase
    Agreement and AP Purchase Agreement (including without limitation the fees
    and expenses of The Spartan Group, WSGR, accountants, SEC) shall be paid
    from the Merger Consideration and the Parent shall pay 50% of any filing fee
    for any Notification and Report Forms filed with the FTC and DOJ under the
    HSR Act and financial printer costs.
 a. Company Payment.
     i.  Payment. In the event that this Agreement is terminated by Parent or
         the Company, as applicable, pursuant to Sections 7.1(d) or (e), the
         Company shall promptly, but in no event later than two business days
         after the date of such termination, pay Parent a fee equal to
         $4,000,000 in immediately available funds (the "Termination Fee");
         provided, that in the case of termination under Section 7.1(d):
         (a) such payment shall be made only if following the date hereof and
         prior to the termination of this Agreement, there has been public
         disclosure of an Acquisition Proposal with respect to the Company and
         within 12 months following the termination of this Agreement an
         Acquisition of the Company is consummated or the Company enters into an
         agreement providing for an Acquisition of the Company, and (b) such
         payment shall be made promptly, but in no event later than two business
         days after the consummation of such Acquisition of the Company or the
         entry into such agreement by the Company.
         Interest and Costs; Other Remedies
         . The Company acknowledges that the agreements contained in this
         Section 7.3(b)
         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 to pay in a
         timely manner the amounts due pursuant to this
         Section 7.3(b)
         , and, in order to obtain such payment, Parent makes a claim that
         results in a judgment against the Company for the amounts set forth in
         this
         Section 7.3(b)
         , the Company shall pay to Parent the reasonable costs and expenses of
         Parent (including reasonable attorneys' fees and expenses) in
         connection with such suit, together with interest on the amounts set
         forth in this
         Section 7.3(b)
         at the prime rate of Citibank, N.A. in effect on the date such payment
         was required to be made. Payment of the fees described in this
         Section 7.3(b)
         shall not be in lieu of damages incurred in the event of breach of this
         Agreement.
     ii. Certain Definitions. For the purposes of this Section 7.3(b) only,
         "Acquisition," with respect to a party hereto, shall mean any of the
         following transactions (other than the transactions contemplated by
         this Agreement): (i) a merger, consolidation, business combination,
         recapitalization, liquidation, dissolution or similar transaction
         involving the party pursuant to which the equity interests held in such
         party and retained following such transaction or issued to or otherwise
         received in such transaction by the shareholders of the party
         immediately preceding such transaction constitute less than 50% of the
         aggregate equity interests in the surviving or resulting entity of such
         transaction or any direct or indirect parent thereof, (ii) a sale or
         other disposition by the party of assets representing in excess of 50%
         of the aggregate fair market value of the party's business immediately
         prior to such sale, or (iii) the acquisition by any Person or group
         (including by way of a tender offer or an exchange offer or issuance by
         the party or such Person or group), directly or indirectly, of
         beneficial ownership or a right to acquire beneficial ownership of
         shares representing in excess of 50% of the voting power of the then
         outstanding shares of capital stock of the party.

7.4   Amendment .  Subject to applicable law, this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the Merger by the
shareholders of the Company, provided, after approval of the Merger by the
shareholders of the Company, no amendment shall be made which by law or in
accordance with the rules of any relevant stock exchange or Nasdaq requires
further approval by the shareholders of the Company without such further
shareholder approval. This Agreement may not be amended except by execution of
an instrument in writing signed on behalf of each of Parent and the Company.

7.5   Extension; Waiver .  At any time prior to the Effective Time either party
hereto, by action taken or authorized by their respective Board of Directors,
may, to the extent legally allowed: (i) extend the time for the performance of
any of the obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto, and (iii) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Delay in exercising any right under this Agreement shall
not constitute a waiver of such right.

ARTICLE VIII
GENERAL PROVISIONS

8.1   Non-Survival of Representations and Warranties .  The representations and
warranties of the Company and Parent contained in this Agreement, or any
instrument delivered pursuant to this Agreement, shall terminate at the
Effective Time, and only the covenants that by their terms survive the Effective
Time and this Article VIII shall survive the Effective Time.

8.2   Notices .  All notices and other communications hereunder shall be in
writing and shall be deemed duly given (i) on the date of delivery if delivered
personally or by messenger service, (ii) on the date of confirmation of receipt
(or, the first Business Day following such receipt if the date is not a Business
Day) of transmission by telecopy or telefacsimile, or (iii) on the date of
confirmation of receipt (or, the first Business Day following such receipt if
the date is not a Business Day) if delivered by a nationally recognized courier
service. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:

 a. if to Parent, to:

Omron Management Center of America, Inc.
East Commerce
Schaumburg, Illinois 60045
Attention: President
Telephone No.: (847) 843-7852
Telecopy No.: (847) 884-1866

with copies to:

Enterprise Law Group, LLP
Three First National Plaza

70 West Madison Street, Suite 740

Chicago, Illinois 60602
Attention: Steven K. Sims, Esq.
Telephone No.: (312) 578-0200 x101
Telecopy No.: (312) 578-0202

if to the Company, to:

Scientific Technologies Incorporated
6550 Dumbarton Circle
Fremont, California 94555
Attention: Joseph J. Lazzara, President and Chief Executive Officer
Telephone No.: (510) 608-3400
Telecopy No.: (510) 744-1442

with copies to:

Wilson Sonsini Goodrich & Rosati, P.C.
701 Fifth Avenue, Suite 5100
Seattle, Washington 98104
Attention: Christian E. Montegut, Esq.
Telephone No.: (206) 883-2500
Telecopy No.: (206) 883-2699

8.3   Interpretation; Knowledge . 

 a. When a reference is made in this Agreement to Exhibits, such reference shall
    be to an Exhibit to this Agreement unless otherwise indicated. When a
    reference is made in this Agreement to Sections, such reference shall be to
    a section of this Agreement unless otherwise indicated. For purposes of this
    Agreement, the words "include," "includes" and "including," when used
    herein, shall be deemed in each case to be followed by the words "without
    limitation." The table of contents and headings contained in this Agreement
    are for reference purposes only and shall not affect in any way the meaning
    or interpretation of this Agreement. When reference is made herein to "the
    business of" an entity, such reference shall be deemed to include the
    business of such entity and its Subsidiaries, taken as a whole, unless
    otherwise expressly provided herein. The word "affiliate" when used herein
    shall mean, with respect to any specified person, any other person, that
    directly, or indirectly through one or more intermediaries, controls, is
    controlled by, or is under common control with, such specified person.
 b. For purposes of this Agreement, the term "Knowledge" means, with respect to
    a party hereto, with respect to any matter in question, that any of the
    "officers" (as such term is defined in Rule 16a-1(f) promulgated under the
    Exchange Act) of such party has actual knowledge of such matter, after a
    reasonable inquiry of such advisor(s) or employee(s) of the party who would
    reasonably be expected to have actual knowledge of such matter.
 c. For purposes of this Agreement, the term "Material Adverse Effect," when
    used in connection with an entity, means any change, event, violation,
    inaccuracy, circumstance or effect (any such item, an "Effect"),
    individually or when taken together with all other Effects that have
    occurred prior to the date of determination of the occurrence of the
    Material Adverse Effect, that is or is reasonably likely to (i) be
    materially adverse to the business, operations, assets (including intangible
    assets), capitalization, financial condition or results of operations of
    such entity taken as a whole with its Subsidiaries or, in the case of
    Company and its Subsidiaries, considering only the effect on the business,
    operations, assets (including intangible assets), capitalization, financial
    condition or results of operations of SPG, or (ii) materially impede the
    ability of such entity, or, in any case, Parent, to consummate the
    transactions contemplated by this Agreement in accordance with the terms
    hereof and applicable Legal Requirements; provided, however, that in no
    event shall any of the following, alone, be deemed to constitute a material
    adverse effect on or with respect to the Company: (i) actions or omissions
    of the Company or any of its subsidiaries taken with the prior written
    consent of Parent; (ii) any change in the price or trading volume of the
    Company Common Stock; (iii) any changes affecting the United States economy
    in general or generally affecting the industries in which the Company
    operates, except any such change which as a disproportionate impact on
    Company; (iv) any changes affecting general worldwide economic or capital
    market conditions; (v) any changes that the Company has reasonably
    demonstrated are principally the result of any legally required announcement
    or announcement made with prior approval of Parent or the pendency of the
    Merger and the other transactions contemplated by the Merger Agreement
    thereafter; (vi) any affects resulting from changes after the date of this
    Agreement in U.S. GAAP; or (ix) any affects resulting from any legal
    proceeding against the Company by shareholders of the Company challenging or
    seeking to restrain or prohibit the consummation of the Merger or alleging
    breach of fiduciary duty in connection therewith.
 d. For purposes of this Agreement, the term "Person" shall mean any individual,
    corporation (including any non-profit corporation), general partnership,
    limited partnership, limited liability partnership, joint venture, estate,
    trust, company (including any limited liability company or joint stock
    company), firm or other enterprise, association, organization, entity or
    Governmental Entity.

8.4   Counterparts .  This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.

8.5   Entire Agreement; Third-Party Beneficiaries .  This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Disclosure Letter,
Stock Purchase Agreement and the AP Purchase Agreement (i) constitute the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof, it being understood that
the Confidentiality Agreement shall continue in full force and effect until the
Closing and shall survive any termination of this Agreement and (ii) are not
intended to confer upon any other Person any rights or remedies hereunder,
except as specifically provided, following the Effective Time, in Section 5.10.

8.6   Severability .  In the event that any provision of this Agreement or the
application thereof, becomes or is declared by a court of competent jurisdiction
to be illegal, void or unenforceable, the remainder of this Agreement will
continue in full force and effect and the application of such provision to other
Persons or circumstances will be interpreted so as reasonably to effect the
intent of the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve, to the greatest extent possible, the economic, business and
other purposes of such void or unenforceable provision.

8.7   Other Remedies

 a. .  Except as otherwise provided herein, any and all remedies herein
    expressly conferred upon a party will be deemed cumulative with and not
    exclusive of any other remedy conferred hereby, or by law or equity upon
    such party, and the exercise by a party of any one remedy will not preclude
    the exercise of any other remedy. The parties hereto 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.

8.8   Governing Law .  This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
Each of the parties hereto irrevocably and unconditionally submits to the
exclusive jurisdiction of any Delaware State court, for the purposes of any
suit, action or other proceeding arising out of this Agreement or any
transaction contemplated hereby (and each agrees that no such action, suit or
proceeding relating to this Agreement shall be brought by it or any of its
affiliates except in such courts). Each of the parties hereto further agrees
that, to the fullest extent permitted by applicable law, service of any process,
summons, notice or document by U.S. registered mail to such party's respective
address set forth above shall be effective service of process for any action,
suit or proceeding in Delaware with respect to any matters to which it has
submitted to jurisdiction as set forth above in the immediately preceding
sentence. Each of the parties hereto irrevocably and unconditionally waives (and
agrees not to plead or claim) any objection to the laying of venue of any
action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in any Delaware State court, or that any such action, suit
or proceeding brought in any such court has been brought in an inconvenient
forum.

8.9   Rules of Construction .  The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.

8.10   Assignment .  No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties, except that Parent may assign its rights and delegate its
obligations hereunder to its affiliates as long as Parent remains ultimately
liable for all of Parent's obligations hereunder. Any purported assignment in
violation of this Section 8.10 shall be void. 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 permitted assigns.

*****

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

IN WITNESS WHEREOF, the parties hereto have caused this Agreement and Plan of
Merger to be executed by their duly authorized respective officers as of the
date first written above.

Omron Management Center of America, Inc.

 

By: __________________________

Tatsunosuke Goto

President

 

Scientific Technologies Incorporated

 

By: __________________________

Joseph J. Lazzara

President, Chief Executive Officer and Treasurer

 

Scientific Technology Incorporated

 

By: __________________________

Anthony R. Lazzara

President and Chairman