Document:

EX-10.1

Exhibit 10.1

MERGER AGREEMENT

by and among

VUTEK, INC.

ELECTRONICS FOR IMAGING, INC.

and

EFI MERGER SUB, INC.

Dated as of April 14, 2005

1

TABLE OF CONTENTS

PAGE

	 	 	 
	ARTICLE I THE MERGER

1.1

1.2

1.3

1.4

	 	

The Merger

Effective Time

Closing

Effects of the Merger

	 	1.5	 	Certificate of Incorporation, Bylaws and Officers and Directors of the Surviving
Corporation	 

1.6 Further Assurances

	 	 	 
	ARTICLE II PURCHASE PRICE AND CONVERSION OF SHARES

	 
	 	 
	2.1

2.2

2.3

2.4

2.5

2.6

	 	Conversion of Capital Stock

Payments

Settlement of Options and Warrants

Payment and Surrender of Certificates

Pre-Closing Purchase Price Adjustment

Post-Closing Purchase Price Adjustment.

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY

3.1 Organization of the Company; Authority; No Restrictions on Business Combinations

	 	 	 
	3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

3.10

3.11

3.12

3.13

3.14

3.15

3.16

3.17

3.18

3.19

3.20

3.21

3.22

3.23

3.24

3.25

3.26

	 	Capitalization

Subsidiaries

No Violation; Consents and Approvals

Financial Statements

Absence of Certain Changes or Events

Personal Property

Real Property

Intellectual Property

Litigation

Employee Benefit Plans

Taxes

Contracts and Commitments

Compliance with Laws

Labor Matters

Environmental Matters

Material Suppliers and Customers

No Material Adverse Effect

Brokers

Insurance

Vote Required

Foreign Corrupt Practices Act

Product Liability

Bank Accounts

No Other Agreements to Sell the Company

Exclusivity of Representations

	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT

	 
	 	 
	4.1

4.2

4.3

4.4

4.5

4.6

	 	Organization; Authority

No Violation; Consents and Approvals

Litigation

Funding

Solvency

Brokers

	 	 	 
	ARTICLE V COVENANTS OF THE PARTIES

	 
	 	 
	5.1

5.2

5.3

5.4

5.5

5.6

5.7

5.8

5.9

5.10

5.11

5.12

5.13

	 	Conduct of the Company’s Business

Access to Information Prior to the Closing; Confidentiality

Reasonable Best Efforts

Consents

Public Announcements

Filings and Authorizations; Consummation

Notice of Events

Officer and Director Indemnification and Insurance

Tax Covenants

Company’s Auditors

No Solicitation of Transactions

401(k) Plan Termination

Submission to Stockholders

	 	 	 
	ARTICLE VI CONDITIONS TO CLOSING

	 
	 	 
	6.1

6.2

	 	Conditions to the Company’s Obligations

Conditions to Parent’s and Merger Sub’s Obligations

	 	 	 
	ARTICLE VII REMEDIES

7.1

7.2

7.3

7.4

7.5

7.6

7.7

7.8

	 	

Survival

Indemnification of Buyer Indemnitees

Indemnification of Seller Indemnitees

Time Limitations

Limitation on Amount of Indemnification of Buyer Indemnities

Limitation on Amount — Parent and Surviving Corporation

Procedures

Adjustment to Merger Consideration

	 	 	 
	ARTICLE VIII TERMINATION

	 
	 	 
	8.1

8.2

	 	Termination

Procedure and Effect of Termination

	 	 	 
	ARTICLE IX MISCELLANEOUS

	 
	 	 
	9.1

9.2

9.3

9.4

9.5

9.6

9.7

9.8

9.9

9.10

9.11

9.12

9.13

9.14

9.15

9.16

	 	Further Assurances

Stockholder Representative

Notices

Exhibits and Schedules

Amendment, Modification and Waiver

Entire Agreement

Severability

Binding Effect; Assignment

No Third-Party Beneficiaries

Fees and Expenses Transfer Taxes

Counterparts

Interpretation

Enforcement of Agreement

Forum; Service of Process

Governing Law

WAIVER OF JURY TRIAL

ARTICLE X DEFINITIONS

2

MERGER AGREEMENT

THIS MERGER AGREEMENT, dated as of April 14, 2005 (this “Agreement”), by and among Electronics
For Imaging, Inc., a Delaware corporation (“Parent”), EFI Merger Sub, Inc., a Delaware corporation
and wholly owned subsidiary of Parent (“Merger Sub”), and VUTEk, Inc. a Delaware corporation (the
“Company”).

RECITALS

A. Parent, Merger Sub and the Company intend to effect a merger (the “Merger”) of Merger Sub
with and into the Company in accordance with this Agreement and the Delaware General Corporation
Law (the “DGCL”). Upon consummation of the Merger, Merger Sub will cease to exist and the Company
will become a wholly-owned subsidiary of Parent.

B. This Agreement and the Merger have been approved by the respective board of directors of
Parent, Merger Sub and the Company.

C. The Stockholders holding a majority of the Company Common Stock intend to adopt this
Agreement pursuant to Section 251(c) of the DGCL by written consent in accordance with Section 228
of the DGCL immediately after (and on the same day as) the execution and delivery of this
Agreement.

NOW, THEREFORE, in consideration of the foregoing and the respective representations,
warranties, covenants and agreements set forth herein, and subject to the terms and conditions set
forth herein, the parties hereby agree as follows:

ARTICLE I

THE MERGER

1.1 The Merger. At the Effective Time, upon the terms and subject to the conditions of
this Agreement, Merger Sub will be merged with and into the Company and the separate corporate
existence of Merger Sub will cease and the Company will be the surviving corporation in the Merger
(the “Surviving Corporation”). As a result of the Merger, all of the respective outstanding shares
of capital stock of the Company and Merger Sub will be converted or cancelled in the manner
provided in Article II.

1.2 Effective Time. At the Closing, a certificate of merger (the “Certificate of Merger”)
will be duly prepared and executed by the Surviving Corporation and thereafter delivered to the
Secretary of State of the State of Delaware (the “Secretary of State”) for filing, as provided in
Section 103 of the DGCL, on the Closing Date. The Merger will become effective at the time of the
filing of the Certificate of Merger with the Secretary of State, or at such later time as may be
agreed by Parent and the Company and stated in the Certificate of Merger (the date and time of such
filing (or stated later time, if any) being referred to herein as the “Effective Time”).

1.3 Closing. The closing of the Merger (the “Closing”) will take place at the offices of
Kaye Scholer LLP, 425 Park Avenue, New York, New York on the Business Day following the
satisfaction or waiver of each of the conditions set forth in Article VI (other than those
conditions that are to be satisfied at the Closing), or on such other date or at such other time
and place as the parties mutually agree in writing (the “Closing Date”).

1.4 Effects of the Merger. At the Effective Time, the effects of the Merger will be as
provided in the applicable provisions of the DGCL.

1.5 Certificate of Incorporation, Bylaws and Officers and Directors of the Surviving
Corporation. (a) The certificate of incorporation and bylaws of the Company, as in effect
immediately prior to the Effective Time, will be the certificate of incorporation and bylaws of the
Surviving Corporation until thereafter amended as provided by the DGCL, the certificate of
incorporation and/or the bylaws.

(b) From and after the Effective Time, the directors of the Surviving Corporation will be the
directors of Merger Sub immediately prior to the Effective Time, and the officers of the Surviving
Corporation will be the officers of Merger Sub immediately prior to the Effective Time, until their
respective successors are duly elected and qualified or until their earlier death, resignation or
removal in accordance with the Surviving Corporation’s certificate of incorporation and bylaws.

1.6 Further Assurances. Each party hereto shall execute such further documents and
instruments and take such further actions as may reasonably be requested by one or more of the
others to consummate the Merger, to vest the Surviving Corporation with full title or interest in,
to or under any of the rights, privileges, powers, franchises, properties or assets of Merger Sub
or the Company, as applicable, or to otherwise effect the purposes of this Agreement.

ARTICLE II

PURCHASE PRICE AND CONVERSION OF SHARES

2.1 Conversion of Capital Stock. At the Effective Time, by virtue of the Merger and
without any further action on the part of Parent, Merger Sub, the Company or the Stockholders:

(a) Capital Stock of Merger Sub. Each share of the common stock, par value
$0.0001 per share, of Merger Sub issued and outstanding immediately prior to the Effective
Time (“Merger Sub Common Stock”) will be converted into and become one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation (“Surviving
Corporation Common Stock”). Each certificate representing outstanding shares of Merger Sub
Common Stock will at the Effective Time represent an equal number of shares of Surviving
Corporation Common Stock.

(b) Treasury Stock; Stock Owned by Parent. All shares of capital stock of the
Company that are owned by the Company as treasury stock or owned by Parent will be
cancelled and will cease to exist and no consideration will be delivered in exchange
therefor.

(c) Conversion of Company Common Stock. Each share of Company Common Stock
issued and outstanding immediately prior to the Effective Time (other than shares to be
cancelled in accordance with Section 2.1(b) and other than shares that are
Dissenting Shares) (each, a “Common Share”) will be converted into the right to receive an
amount per Common Share in cash equal to the Aggregate Per Share Consideration (as defined
below). At the Effective Time, all such Common Shares will no longer be outstanding and
will be cancelled automatically and will cease to exist, and each holder of a Certificate
representing a Common Share will cease to have any rights with respect thereto, except the
right to receive in cash (i) the Per Share Amount upon the surrender of such Certificate
(or other evidence of ownership reasonably acceptable to Parent) in accordance with
Section 2.4 and (ii) payment of such holder’s Per Share Portion of the Adjustment
Escrow Amount (or any remaining portion thereof) and Upward Adjustment Amount, if any,
pursuant to Section 2.6 and such holder’s Per Share Portion of the Indemnity Escrow
Amount (or any remaining portion thereof), if any, pursuant to Article VII
(collectively, the “Aggregate Per Share Consideration”).

(d) Dissenting Shares. Notwithstanding any provision of this Agreement to the
contrary, each outstanding share of Company Common Stock the holder of which has not voted
in favor of the Merger or consented thereto in writing and who has demanded appraisal for
such shares of Company Common Stock in accordance with the DGCL (in each case, a
“Dissenting Share”), will not be converted into a right to receive the Aggregate Per Share
Consideration unless such holder fails to perfect or withdraws or otherwise loses his or
her right to appraisal. If after the Effective Time such holder fails to perfect or
withdraws or otherwise loses his right to appraisal, such shares of Company Common Stock
will be treated as if they had been converted as of the Effective Time into a right to
receive the Aggregate Per Share Consideration pursuant to Section 2.1(c). The
Company shall give Parent prompt notice of any written demands received by the Company for
appraisal, and Parent shall conduct all negotiations and proceedings with respect to such
demands. The Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisal or settle or offer
to settle any such demands.

2.2 Payments. At the Effective Time, Parent, on behalf of the Company, shall (a) cause the
Company Debt outstanding immediately prior to the Effective Time to be repaid to the lender or
lenders entitled thereto pursuant to the Payoff Letters (the “Payoff Letters”) and (b) pay the
Seller Expenses to the Persons entitled thereto in accordance with a certificate (the “Payment
Certificate”) to be delivered by the Company to Parent. In addition, at the Effective Time, Parent
shall deposit, or cause to be deposited, with (x) the Stockholder Representative, an amount in cash
equal to the product obtained by multiplying (i) the Per Share Amount and (ii) the number of Common
Shares issued and outstanding at the Effective Time, as reflected in the Payment Certificate by
means of a wire transfer of immediately available funds to an account designated in writing by the
Stockholder Representative at least two Business Days prior to the Effective Time and (y) the
Escrow Agent, the Adjustment Escrow Amount and the Indemnity Escrow Amount to be held in an escrow
account pursuant to the terms of the Escrow Agreement. Parent’s deposit of such amounts with the
Stockholder Representative and the Escrow Agent shall satisfy in full Parent’s obligation to pay
such amounts to the Equityholders, and none of Parent, Merger Sub or the Surviving Corporation
shall be liable to any Equityholder for cash delivered to the Stockholder Representative and/or the
Escrow Agent in accordance with the provisions of this Agreement. As promptly as possible prior to
the Effective Time, the Company shall deliver the Payoff Letters and the Payment Certificate to
Parent.

2.3 Settlement of Options and Warrants. (a) Prior to the Effective Time, the Company
shall notify the Optionholders, in writing, of the transactions contemplated hereby in accordance
with the applicable Option Plan. As of the Effective Time, each outstanding Option shall be
cancelled and retired by virtue of the Merger and each Optionholder shall cease to have any rights
with respect thereto, other than the right to receive for each such Option (other than the Tranche
B Options) an amount per Option (without interest and subject to applicable withholding tax as
provided in Section 2.4(d)) in cash equal to (i) the Per Share Amount minus the exercise
price for such Option (the “Per Option Amount”) and (ii) a Per Share Portion of the Adjustment
Escrow Amount (or any remaining portion thereof) and Upward Adjustment Amount, if any, pursuant to
Section 2.6 and the Indemnity Escrow Amount (or any remaining portion thereof) pursuant to
Article VII (clauses (i) and (ii) together, the “Aggregate Per Option Amount” and the sum
of all Aggregate Per Option Amounts to be received by all Optionholders entitled thereto is
referred to as the “Option Consideration”). Payment of the Per Option Amount to each of the
Optionholders entitled thereto shall be made by the Surviving Corporation, subject to the terms and
conditions of this Agreement, as soon as practicable after the Effective Time and receipt by the
Surviving Corporation of the surrendered option agreements representing the Options (other than the
Tranche B Options) and a written instrument, reasonably satisfactory to Parent, duly executed by
such Optionholder setting forth (i) a representation by such Optionholder that he or she is the
owner of all Options represented by such Option and (ii) a confirmation of, and consent to, the
cancellation of all of his or her Options. The Company shall take all actions required under each
Option Plan to cause such Option Plan to terminate at the Effective Time, other than any Option
Plan set forth in a written notice delivered to the Company by Parent no later than ten Business
Days prior to the Closing instructing the Company not to terminate such Option Plan pursuant to
this Section 2.3(a). Payment of the remaining portion of the Aggregate Per Option Amount
to each Optionholder entitled thereto shall be made by the Stockholder Representative as, if and
when such amounts are released or paid to the Stockholder Representative pursuant to the terms of
this Agreement and the Escrow Agreement.

(b) As of the Effective Time, each outstanding Warrant shall be cancelled and retired by
virtue of the Merger and each Warrantholder shall cease to have any rights with respect thereto,
other than the right to receive for each such Warrant an amount per Warrant (without interest and
subject to applicable withholding tax as provided in Section 2.4(d)) in cash equal to (i)
the Per Share Amount minus the exercise price for such Warrant (the “Per Warrant Amount”) and (ii)
a Per Share Portion of the Adjustment Escrow Amount (or any remaining portion thereof) and Upward
Adjustment Amount, if any, pursuant to Section 2.6 and the Indemnity Escrow Amount (or any
remaining portion thereof) pursuant to Article VII (clauses (i) and (ii) together, the
“Aggregate Per Warrant Amount” and the sum of all Aggregate Per Warrant Amounts to be received by
all Warrantholders is referred to as the “Warrant Consideration”). Payment of the Per Warrant
Amount to each of the Warrantholders shall be made by the Surviving Corporation, subject to the
terms and conditions of this Agreement, as soon as practicable after the Effective Time and receipt
by the Surviving Corporation of the surrendered warrant agreements representing the Warrants and a
written instrument, reasonably satisfactory to Parent, duly executed by such Warrantholder setting
forth (i) a representation by such Warrantholder that he, she or it is the owner of all Warrants
represented by such warrant agreement and (ii) a confirmation of, and consent to, the cancellation
of all of his, her or its Warrants. Payment of the remaining portion of the Aggregate Per Warrant
Amount to each Warrantholder shall be made by the Stockholder Representative as, if and when such
amounts are released or paid to the Stockholder Representative pursuant to the terms of this
Agreement and the Escrow Agreement.

(c) Unless terminated pursuant to Section 2.3(a), Parent shall assume the Company’s
Nonqualified Stock Option Plan and to the extent permitted under Applicable Law, the shares of
Company Common Stock that remain available for issuance under the Nonqualified Stock Option Plan as
of the Effective Time (the “Reserved Shares”) shall be available for issuance pursuant to awards
issued by Parent following the Effective Time under the Nonqualified Stock Option Plan; provided
that such Reserved Shares shall be converted into shares of common stock of Parent.

2.4 Payment and Surrender of Certificates.

(a) Payment Procedures. As soon as reasonably practicable after the date hereof, the
Company shall mail to each holder of record of a certificate or certificates representing Common
Shares (“Certificates”): (i) a letter of transmittal, in a form reasonably satisfactory to Parent
and the Company (the “Letter of Transmittal”), and (ii) instructions for use in surrendering the
Certificates in exchange for the Per Share Amount. After the Effective Time and upon surrender by
the holder thereof to the Surviving Corporation of (i) Certificates and (ii) a duly executed Letter
of Transmittal, the Stockholder Representative shall pay to the holder of such Certificates in
exchange therefor (without interest) cash in an amount equal to the product obtained by multiplying
(A) the number of Common Shares represented by such Certificate and (B) the Per Share Amount, and
the Certificate so surrendered will forthwith be canceled. No interest will be paid or accrued on
the Per Share Amount payable upon the surrender of any Certificate.

(b) Stock Transfer Books. At the Effective Time, the stock transfer books of the
Company will be closed and thereafter there will be no further registration of transfers on the
stock transfer books of the Surviving Corporation of Common Shares. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they will be canceled and
exchanged as provided in this Article II, except as otherwise provided by Applicable Law.
Until surrendered as contemplated by this Section 2.1(c), each Certificate (other than
Certificates representing shares cancelled pursuant to Section 2.1(c)) will be deemed at
any time after the Effective Time to represent only the right to receive upon surrender the
Aggregate Per Share Consideration that the holder thereof has the right to receive in respect of
such Certificate pursuant to the provisions of this Agreement.

(c) Lost Certificates. If any Certificate has been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen
or destroyed and subject to such other reasonable conditions as Parent may impose, and, if required
by the Stockholder Representative, the posting by such Person of a bond in such reasonable amount
as the Stockholder Representative may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Stockholder Representative shall, in exchange for
such lost, stolen or destroyed Certificate, pay to the Person entitled thereto the Per Share Amount
due to such Person pursuant to the provisions of this Article II.

(d) Withholding Rights. Parent or the Surviving Corporation will be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any
Equityholder such amounts as Parent or the Surviving Corporation is required to deduct and withhold
with respect to the making of such payment under the Code, or any provision of state, local or
foreign tax law. To the extent that amounts are so withheld and paid over to the appropriate
taxing authority by Parent or the Surviving Corporation, such withheld amounts will be treated for
all purposes of this Agreement as having been paid to the Equityholders in respect of which such
deduction and withholding was made by Parent or the Surviving Corporation.

2.5 Pre-Closing Purchase Price Adjustment. At least five days prior to the Closing Date,
the Company shall deliver to Parent a good faith estimate prepared by the Company’s Chief Financial
Officer (the “Working Capital Estimate”) of the Net Working Capital as of the Effective Time
(including an estimate of all Seller Expenses) without giving effect to any of the transactions
contemplated hereby or the tax benefits or consequences thereof and determined in accordance with
Applicable Accounting Principles, together with related supporting schedules, calculations and
documentation and, if any, the resulting estimate of Working Capital Overage or Working Capital
Underage, which Working Capital Estimate shall be reasonably acceptable to Parent. A “Working
Capital Overage” shall exist when (and shall be equal to the amount by which) the Working Capital
Estimate exceeds the Target Working Capital, which amount shall be added to the Merger
Consideration as contemplated in the definition thereof contained in Article IX. A
“Working Capital Underage” shall exist when (and shall be equal to the amount by which) the Target
Working Capital exceeds the Working Capital Estimate, which amount shall be subtracted from the
Merger Consideration as contemplated in the definition thereof contained in Article IX.

2.6 Post-Closing Purchase Price Adjustment.

(a) Working Capital Statement. As soon as practicable but in no event later than 60
days after the Effective Time, Parent shall deliver to the Stockholder Representative a statement
(the “Working Capital Statement”) of the Net Working Capital as of the Effective Time (including an
estimate of all Seller Expenses) without giving effect to any of the transactions contemplated
hereby or the tax benefits or consequences thereof and determined in accordance with the Applicable
Accounting Principles (the “Final Working Capital”).

(b) Dispute. Within 30 days following receipt by the Stockholder Representative of
the Working Capital Statement, the Stockholder Representative shall deliver written notice (the
“Notice of Disagreement”) to Parent of any dispute the Stockholder Representative has with respect
to the preparation or content of the Working Capital Statement or the Final Working Capital
reflected therein. The Notice of Disagreement must describe in reasonable detail the items
contained in the Working Capital Statement that the Stockholder Representative disputes and the
basis for any such disputes. If the Stockholder Representative does not notify Parent of a dispute
with respect to the Working Capital Statement within such 30-day period, such Working Capital
Statement and the Final Working Capital reflected therein will be final, conclusive and binding on
the parties. In the event a Notice of Disagreement is delivered to Parent, Parent and the
Stockholder Representative shall negotiate in good faith to resolve such dispute. If Parent and
the Stockholder Representative, notwithstanding such good faith effort, fail to resolve such
dispute within 14 days after the Stockholder Representative delivers the Notice of Disagreement,
then Parent and the Stockholder Representative jointly shall engage the Arbitration Firm to resolve
such dispute in accordance with the standards set forth in this Section 2.6(b). The
Stockholder Representative and Parent shall use reasonable best efforts to cause the Arbitration
Firm to render a written decision resolving the matters submitted to the Arbitration Firm within 30
days of the making of such submission. The Arbitration Firm shall address only those items in
dispute. The Arbitration Firm shall determine, on such basis, whether and to what extent, the
Working Capital Statement and the Final Working Capital reflected therein require adjustment, which
determination shall be consistent with either the position of Parent or the position of the
Stockholder Representative or between the positions of Parent and the Stockholder Representative.
Judgment may be entered upon the determination of the Arbitration Firm in any court having
jurisdiction over the party against which such determination is to be enforced. Parent and the
Stockholder Representative shall share equally the fees and expenses of the Arbitration Firm. All
determinations made by the Arbitration Firm will be final, conclusive and binding on the parties.

(c) Access. For purposes of complying with the terms set forth in this Section
2.6, each party shall cooperate with and make available to the other parties and their
respective representatives all information, records, data and working papers, and shall permit
reasonable access to its facilities and personnel, as may be reasonably required in connection with
the preparation and analysis of the Working Capital Statement and the Final Working Capital
reflected therein and the resolution of any disputes in connection therewith.

(d) Downward Adjustment. If the Final Working Capital (as finally determined pursuant
to Section 2.6(a)) is less than the Working Capital Estimate, then the Merger Consideration
will be adjusted downward by the amount of such shortfall (the “Downward Adjustment Amount”), and
Parent and the Stockholder Representative shall deliver a joint written authorization to the Escrow
Agent within two Business Days from the date on which the Final Working Capital is finally
determined instructing the Escrow Agent (i) to pay to Parent an amount equal to the Downward
Adjustment Amount (together with any interest earned on such amount), first, out of the Adjustment
Escrow Amount and, second, out of the Indemnity Escrow Amount to the extent (and only to the
extent) the Adjustment Escrow Amount is insufficient to cover the entire Downward Adjustment Amount
and (ii) to pay, after payment of the Downward Adjustment Amount to Parent pursuant to clause (i),
the remaining portion of the Adjustment Escrow Amount, if any, (together with any interest earned
on such amount), to the Stockholder Representative, on behalf of the Equityholders.

(e) Upward Adjustment. If the Final Working Capital (as finally determined pursuant
to Section 2.6(a)) is greater than the Working Capital Estimate, then the Merger
Consideration will be adjusted upward by the amount of such excess (the “Upward Adjustment
Amount”), and (i) Parent and the Stockholder Representative shall deliver a joint written
authorization to the Escrow Agent within two Business Days from the date on which the Final Working
Capital is finally determined instructing the Escrow Agent to pay to the Stockholder
Representative, on behalf of the Equityholders, the entire Adjustment Escrow Amount (together with
any interest earned on such amount) and (ii) Parent shall cause the Surviving Corporation to pay to
the Stockholder Representative, on behalf of the Equityholders, by bank wire transfer of
immediately available funds, to an account designated in writing by the Stockholder Representative
an amount in cash equal to the Upward Adjustment Amount together with interest on such amount at
the 90-day LIBOR rate as published in the Wall Street Journal on the Business Day immediately
preceding the date of such payment. The Upward Adjustment Amount (including interest) shall be
made to the Stockholder Representative within five Business Days from the date on which the Final
Working Capital is finally determined pursuant to Section 2.6(b).

(f) No Adjustment. If the Final Working Capital (as finally determined pursuant to
Section 2.6(b)) is equal to the Working Capital Estimate, there shall be no adjustment to
the Merger Consideration pursuant to this Section 2.6 and Parent and the Stockholder
Representative shall deliver joint written authorization to the Escrow Agent within two Business
Days from the date on which the Final Working Capital is finally determined instructing the Escrow
Agent to pay the entire Adjustment Escrow Amount (together with any interest earned on such amount)
to the Stockholder Representative, on behalf of the Equityholders.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth on the disclosure schedule delivered by the Company to Parent
simultaneously with the execution of this Agreement (the “Disclosure Schedule”), the Company
represents and warrants to Parent and Merger Sub as follows:

3.1 Organization of the Company; Authority; No Restrictions on Business Combinations. (a)
The Company is a corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, and has all requisite power and authority to enter into this Agreement,
the Escrow Agreement and the other Ancillary Agreements to which it is a party and to consummate
the transactions contemplated hereby and thereby, to own, lease and operate its properties and to
conduct its business. The Company is duly qualified or licensed to do business as a foreign
corporation and is in good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such qualification necessary,
except where the failure to obtain such qualification or license would not, individually or in the
aggregate, have a Material Adverse Effect.

(b) The execution, delivery and performance by the Company of this Agreement and the other
Ancillary Agreements to which it is a party, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and constitutes a
valid and binding obligation of the Company, enforceable against the Company in accordance with its
terms. Each Ancillary Agreement to which it is a party will be duly executed and delivered by the
Company and, assuming that such Ancillary Agreement constitutes a valid and binding obligation of
the other parties thereto, will constitute a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms. The Company is not in violation of
any of the provisions of its certificate of incorporation or bylaws.

3.2 Capitalization. (a) Section 3.2 of the Disclosure Schedule sets forth the authorized,
issued and outstanding capital stock of the Company and a true and complete list of the holders of
such capital stock. Section 3.2 of the Disclosure Schedule sets forth a true and complete list of
all outstanding Options, Optionholders and exercise prices therefor. Section 3.2 of the Disclosure
Schedule sets forth a true and complete list of all outstanding Warrants, Warrantholders and the
exercise prices thereof. Except as set forth in Section 3.2 of the Disclosure Schedule, there are
no shares of Company Common Stock or other equity securities of the Company issued, reserved for
issuance or outstanding and no outstanding options, warrants, convertible or exchangeable
securities, subscriptions, rights (including any preemptive rights), stock appreciation rights,
calls or commitments of any character whatsoever to which the Company is a party or may be bound
requiring the issuance or sale of shares of any capital stock of the Company.

(b) All of the issued and outstanding shares of capital stock of the Company are duly
authorized, validly issued, fully paid and non-assessable and free of any preemptive rights in
respect thereto.

3.3 Subsidiaries. Section 3.3 of the Disclosure Schedule lists each of the Company’s
subsidiaries (the “Subsidiaries”), their respective jurisdictions of incorporation or organization
and the authorized, issued and outstanding capital stock of each Subsidiary. Except as set forth
in Section 3.3 of the Disclosure Schedule, none of the Company or any Subsidiary holds an Equity
Interest in any other Person. Each of the Subsidiaries is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation or organization, and has all
requisite power and authority to consummate the transactions contemplated hereby, to own, lease and
operate its properties and to conduct its business. Each of the Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes such qualification
necessary, except where the failure to obtain such qualification or license would not, individually
or in the aggregate, have a Material Adverse Effect. Except as set forth in Section 3.3 of the
Disclosure Schedule, the outstanding shares of capital stock of each Subsidiary are duly
authorized, validly issued, fully paid and non-assessable and, are owned by the Company, directly
or through one or more Subsidiaries, free and clear of any Liens other than such Liens as set forth
on Section 3.3 of the Disclosure Schedule. Except as set forth in Section 3.3 of the Disclosure
Schedule, there are no shares of capital stock or other equity securities of any Subsidiary issued,
reserved for issuance or outstanding and no outstanding options, warrants, convertible or
exchangeable securities, subscriptions, rights (including any preemptive rights), stock
appreciation rights, calls or commitments of any character whatsoever to which the Subsidiaries are
a party or may be bound requiring the issuance or sale of shares of any capital stock of the
Subsidiaries. There are no outstanding contractual obligations of the Company or any Subsidiary to
provide funds to or make any investment (in the form of a loan, capital contribution or otherwise)
in any Subsidiary or any other Person. None of the Subsidiaries is in violation of any of the
provisions of their respective organizational documents.

3.4 No Violation; Consents and Approvals. Except as set forth in Section 3.4 of the
Disclosure Schedule, the execution and delivery by the Company of this Agreement and the Ancillary
Agreements to which it is a party do not, and the consummation of the transactions contemplated
hereby and thereby and compliance with the terms hereof and thereof will not, conflict with, or
result in any violation of or default (or an event which, with notice or lapse of time or both,
would constitute a default) under, (a) any provision of the organizational documents of the Company
or any Subsidiary, (b) any material order or Applicable Law applicable to the Company or any
Subsidiary or the property or assets of the Company or any Subsidiary, or (c) give rise to any
right of termination, cancellation or acceleration under, or result in the creation of any Lien
upon any of the properties of the Company or any Subsidiary under, any Material Contract. Except
as set forth in Section 3.4 of the Disclosure Schedule, no Governmental Approval is required to be
obtained or made by or with respect to the Company or any Subsidiary in connection with the
execution and delivery of this Agreement and the Ancillary Agreements to which it is a party or the
consummation of the transactions contemplated hereby or thereby.

3.5 Financial Statements. (a) The Company has heretofore (i) delivered to Parent copies
of the audited consolidated balance sheet of the Company and the Subsidiaries as of December 31,
2003 and the related audited consolidated statements of operations, changes in stockholders equity
and cash flows for the fiscal year then ended and (ii) delivered as Exhibit 3.5 hereto, the
unaudited consolidated balance sheet of the Company and the Subsidiaries as of December 31, 2004
(the “Balance Sheet”) and the related unaudited consolidated statements of operations, changes in
stockholders equity and cash flows for the fiscal year then ended (collectively, the “Financial
Statements”). The Financial Statements (1) have been prepared from the books and records of the
Company and the Subsidiaries, (2) fairly present in all material respects the consolidated
financial condition and the results of operations and cash flows of the Company and the
Subsidiaries as of the dates and for the periods indicated and (3) have been prepared in accordance
with generally accepted accounting principles in the United States (“GAAP”) applied consistently
throughout and among the periods covered thereby; provided, however, that the
unaudited financial statements are subject to year-end adjustments and do not contain all footnotes
required under GAAP.

(b) Except as set forth in Section 3.5(b) of the Disclosure Schedule, neither the Company nor
any of the Subsidiaries has any liabilities or obligations of the type required to be reflected or
disclosed in the financial statements prepared in accordance with GAAP, except for liabilities or
obligations (i) disclosed or provided for in the Financial Statements, (ii) incurred since December
31, 2004 in the ordinary course of business or (iii) which, individually or in the aggregate, are
not material to the Company and the Subsidiaries on a consolidated basis. To the Company’s
Knowledge, neither the Company nor any of the Subsidiaries has any other liabilities or obligations
(whether or not required to be disclosed in the financial statements prepared in accordance with
GAAP), except for liabilities or obligations (1) set forth in the Disclosure Schedule or (2) which,
together with any related liabilities and obligations, do not exceed $250,000.

(c) The Company maintains a system of internal accounting controls sufficient, in all material
respects, to provide reasonable assurance that (i) transactions are executed with management’s
authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in accordance with GAAP and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s authorization and (iv) the recorded
accountability for assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

(d) The accounting books and records of the Company, in reasonable detail, accurately and
fairly reflect the activities of the Company in connection with its business. The Company has not
engaged in any material transaction, maintained any bank account or used any material amount of
corporate funds, except for transactions, bank accounts or funds which have been and are reflected
in the normally maintained accounting books and records. The Company’s and the Subsidiaries’ stock
records and minute books have been made available to Parent and accurately and fairly reflect all
minutes of meetings, resolutions and other material actions and proceedings of its and their
stockholders and board of directors and all committees thereof since April 14, 2000 and, to the
Company’s Knowledge, all issuances, transfers and redemptions of capital stock of the Company.

(e) As of the date of this Agreement, the Company and the Subsidiaries have no Indebtedness
other than the amounts outstanding under the Credit Agreement and as set forth in Section 2.2 of
the Disclosure Schedule and, upon repayment of the Company Debt at the Closing in accordance with
Section 2.2, will have no Indebtedness as of the Closing Date.

3.6 Absence of Certain Changes or Events. Except as set forth in Section 3.6 of the
Disclosure Schedule or as otherwise contemplated by this Agreement, since the date of the Balance
Sheet, (i) the Company and the Subsidiaries have operated their businesses in the ordinary course
of business consistent with past practices and (ii) the Company and the Subsidiaries have not
engaged in any of the activities prohibited by Section 5.1(a) through (v).

3.7 Personal Property. (a) Except as set forth in Section 3.7(a) of the Disclosure
Schedule, the Company and the Subsidiaries have good and valid title to all material items of
personal property, whether tangible or intangible, owned by them, and a valid and enforceable right
to use all material tangible items of personal property leased by or licensed to them
(collectively, the “Personal Property”), in each case, free and clear of all Liens, other than
Permitted Liens.

(b) The Personal Property (i) constitutes, in the aggregate, all personal property necessary
for the operation or conduct of the businesses of the Company and the Subsidiaries as conducted on
the date hereof and (ii) is, in the aggregate, in such operating condition and repair, normal wear
and tear excepted, adequate for the operation of the business of the Company and the Subsidiaries
as conducted on the date hereof.

3.8 Real Property. (a) As used in this Agreement, the term “Real Property” shall mean all
real property and interests in real property owned or leased by the Company or any of the
Subsidiaries. Section 3.8(a) of the Disclosure Schedule lists all Real Property, and all leases,
subleases and other occupancy agreements relative to any Real Property to which the Company or any
of the Subsidiaries are a party (each, a “Real Property Lease”). Except as set forth in Section
3.8(a) of the Disclosure Schedule, the Real Property constitutes all parcels of real property and
interests in real property used in, and necessary for, the conduct of the businesses of the Company
and the Subsidiaries as conducted on the date hereof.

(b) With respect to each parcel of Real Property owned by the Company or any Subsidiary,
except as set forth in Section 3.8(b) of the Disclosure Schedule, (i) the Company or such
Subsidiary has good and marketable fee simple title to such parcel of real property, free and clear
of any and all Encumbrances other than Real Estate Permitted Liens, (ii) there are no leases,
subleases, licenses, options, rights, concessions or other agreements, granting to any Person the
right of use or occupancy of any portion of such parcel of real property, except for those which
constitute a Real Estate Permitted Lien, (iii) there are no outstanding options or rights of first
refusal in favor of any other Person to purchase any such parcel of Real Property or any portion
thereof or interest therein and (iv) there are no Persons (other than the Company or any
Subsidiary) in possession of or using any such parcel of Real Property, except in connection with a
Real Estate Permitted Lien.

(c) Except as set forth in Section 3.8(c) of the Disclosure Schedule, the Company and the
Subsidiaries have valid leasehold interests in and enjoy peaceful and undisturbed possession of,
the Real Property leased by them under each Real Property Lease, in each case, free and clear of
all Encumbrances other than for Real Estate Permitted Liens none of which would permit the
termination of the applicable Real Property Lease. With respect to each Real Property Lease, (i)
there has been no material default under any such Real Property Lease by the Company or any
Subsidiary or, to the Company’s Knowledge, by any other party thereto, (ii) the execution, delivery
and performance of this Agreement and the Ancillary Agreements to which it is a party and the
consummation of the transactions contemplated hereby and thereby will not cause a default under any
such Real Property Lease, (iii) to the Company’s Knowledge, such Real Property Lease is a valid and
binding obligation of the lessor, is in full force and effect with respect to and is enforceable
against the lessor in accordance with its terms, (iv) no action has been taken by the Company or
any Subsidiary, and, to the Company’s Knowledge, no event has occurred, which with notice or lapse
of time or both would permit termination, modification or acceleration by a party thereto (other
than the Company or a Subsidiary) without the consent of the Company under any such Real Property
Lease, (v) no party has repudiated in writing to the Company or any Subsidiary any term thereof or
threatened in writing to the Company or any Subsidiary to terminate, cancel or not renew any such
Real Property Lease and (vi) neither the Company nor any Subsidiary has assigned, transferred,
conveyed, mortgaged or encumbered any such Real Property Lease other than with respect to the Real
Estate Permitted Liens.

(d) Except as set forth in Section 3.8(d) of the Disclosure Schedule, there are no pending
condemnation proceedings or eminent domain proceedings of any kind against, or any pending claims
or actions relating to, the Real Property owned by the Company or, to the Company’s Knowledge, the
Real Property leased by the Company and, to the Company’s Knowledge, none are threatened against
such Real Property. The Company has not received notice of, and, to the Company’s Knowledge, no
special assessment relating to any Real Property is pending or threatened.

(e) Except as set forth in Section 3.8(e) of the Disclosure Schedule, (i) all of the Real
Property owned by the Company and, to the Company’s Knowledge, all Real Property leased by the
Company has received all required Governmental Approvals (including, without limitation, a valid
and current certificate of occupancy or similar permit), (ii) since April 14, 2000, all of the Real
Property has been operated and maintained in all material respects in accordance with Applicable
Law and (iii) to the Company’s Knowledge, there are no existing facts which would prevent any Real
Property from being used after the Closing Date in a manner comparable to the present use prior to
the Closing Date.

(f) Except as set forth in Section 3.8(f) of the Disclosure Schedule, all improvements on the
Real Property are structurally sound in all material respects and in reasonably good maintenance
and repair, normal wear and tear excepted.

(g) All of the Real Property is supplied with utilities (including, without limitation, water,
sewage, disposal, electricity, gas and telephone) and other services necessary for the operation of
the Real Property as currently operated, and, to the Company’s Knowledge, there is no condition
which would reasonably be expected to result in the termination of the present access from the Real
Property to such utility service.

3.9 Intellectual Property.

(a) General. Section 3.9(a) of the Disclosure Schedule sets forth with respect to
Proprietary Rights of the Company: (i) for each patent, the patent number for each jurisdiction in
which filed and the date issued; (ii) for each patent application, the patent application serial
number for each jurisdiction in which filed, the date filed and the present status thereof; (iii)
for each trademark, tradename or service mark material to the Company’s business, whether or not
registered, the application serial number or registration number (if any) for each jurisdiction in
which filed and the class or nature of the goods or services covered thereby; (iv) for any domain
name, the registration date, any renewal date and the name of registry; (v) for each registered
copyrighted work, the number and date of registration for each jurisdiction in which each such
copyright has been registered; (vi) a list of all Software incorporated in, provided with or
otherwise necessary to use, directly support and directly maintain, the Company’s products,
including all Software that the Company provides or makes available to its customers but excluding
(A) any third party internet web sites or browsers (including any content, hyperlinks, graphical
user interfaces, menus, images, icons and forms incorporated or embedded therein) to the extent
that they are not otherwise provided to customers in connection with the Company’s products or
services, and (B) Software excluded pursuant to the parenthetical in clause (vii) of this
Section 3.9(a); (vii) all Proprietary Rights licenses from third parties for components or
Software incorporated in the Company’s products (excluding “shrink-wrap” and “click-wrap” licenses
and the related Software for generally available, commercial, off-the-shelf software that has not
been modified) (“Licenses In”); and (viii) for each mask work currently used or contemplated to be
used in the production of the Company’s products (if any), whether or not registered, the date of
first commercial exploitation and if registered, the registration number and date of registration
for each jurisdiction in which filed. Section 3.9(a) of the Disclosure Schedule also sets forth
all firmware and Software that is incorporated in or provided by the Company with Company’s
products, or that is otherwise materially necessary for the manufacture of the Company’s products.

(b) Adequacy. The Proprietary Rights owned solely by the Company or licensed by the
Company pursuant to Licenses In listed in Section 3.9(a) of the Disclosure Schedule, together with
the Licenses In that, pursuant to the parenthetical in clause (vii) of Section 3.9(a), are
not required to be so listed, as well as any other third party components purchased by the Company
and incorporated in the Company’s products, constitute all Proprietary Rights necessary for the
conduct of the Company’s business as presently conducted, including the design, manufacture,
license and sale of all products either under development and expected to be in production within
the 12 months immediately following the date of this Agreement or currently in production, and all
such Proprietary Rights are free and clear of Encumbrances, other than Permitted Encumbrances and
the Encumbrances listed in Section 3.9(b) of the Disclosure Schedule.

(c) Royalties and Licenses. Except pursuant to Licenses In, which are set forth in
Section 3.9(a) of the Disclosure Schedule or are permitted to be excluded from such Schedule by the
parenthetical in clause (vii) of Section 3.9(a), and except for compensation paid to
consultants in the ordinary course of business for development work performed solely for the
benefit of the Company, the Company has no obligation to compensate or account to any Person for
the use of any of the Company’s Proprietary Rights.

(d) Ownership. The Company owns all right, title and interest in the Proprietary
Rights, or has a valid and enforceable right to use the Software and technology and to exercise its
rights under the Proprietary Rights, and such Proprietary Rights will not cease to be valid and
enforceable rights of the Company by reason of the execution, delivery and performance of this
Agreement or the consummation of the transactions contemplated hereby. Without limiting the
foregoing, the technology that the Company owns or purports to own was: (i) developed by employees
of the Company within the scope of their employment; (ii) developed by independent contractors who
have assigned their rights to the Company pursuant to enforceable written agreements; or (iii)
otherwise acquired by the Company from third parties that assigned all Proprietary Rights in each
such technology to the Company.

(e) Absence of Claims. The Company has not received any written notice alleging, nor
otherwise has any knowledge as to, (i) the invalidity with respect to any of the Proprietary Rights
owned or used by the Company, or (ii) any infringement, misappropriation or breach of any
Proprietary Rights of a third party by the Company or the Company’s Proprietary Rights. Neither
the Company’s past nor present use of Proprietary Rights infringes upon or misappropriates,
breaches or otherwise conflicts with the rights of any other Person anywhere in the world. No
Person (x) has notified the Company in writing that it is claiming any ownership of or right to use
any Proprietary Rights which the Company purports to own or (y) to the Company’s Knowledge, is
infringing upon or misappropriating any such Proprietary Rights in any way. The Software
incorporated in the Company’s products currently performs in all material respects free of any
bugs, viruses, worms, trojan horses, or programming errors affecting its functionality. None of
the Software currently used or contemplated to be used in the Company’s products is, in whole or in
part, subject to the provisions of any open source or quasi-open source license agreement in such a
way that would obligate the Company to make its source code available to third parties or publish
its source code, including without limitation, any of the following: (1) GNU’s General Public
License (“GPL”) or Lesser/Library GPL, (2) The Artistic License (e.g., PERL), (3) the Mozilla
Public License, (4) the Netscape Public License, (5) the Berkeley software design (“BSD”) license
including Free BSD or BSD-style license, (6) the Sun Community Source License, (7) an Open Source
Foundation License (e.g., CDE and Motif UNIX user interfaces), (8) the Apache Server license, or
(9) any other agreement obligating the Company to make source code available to third parties or
publish source code. The Company has made no submission or suggestion and is not subject to any
agreement with standards bodies or other entities that would obligate the Company to grant licenses
to or otherwise impair its control of its Proprietary Rights.

(f) Protection of Proprietary Rights. All of the pending applications for the
Company’s owned Proprietary Rights have been duly filed, prosecution for such applications has been
attended to and all maintenance and related fees have been paid. The Company has taken reasonable
steps necessary or appropriate (including entering into necessary and appropriate confidentiality
and nondisclosure agreement with officers, employees, subcontractors, licencees and customers in
connection with the Company’s business) to safeguard and maintain the secrecy and confidentiality
of Trade Secrets that are material to the Company’s business. Each officer and employee of the
Company has executed the Company’s form confidentiality and non-competition agreement and each
technical employee and consultant of the Company has executed the Company’s form confidentiality
and intellectual property assignment agreement. To the Company’s Knowledge: (i) there has been no
misappropriation of any Trade Secrets or other confidential Proprietary Rights used in connection
with and material to the Company’s business by any person; (ii) no employee, independent contractor
or agent of the Company has misappropriated any Trade Secrets of any other person in the course of
performance as an employee, independent contractor or agent of the Company’s business; and (iii) no
employee, independent contractor or agent of the Company is in default or breach of any material
term of any employment agreement, nondisclosure agreement, assignment of invention agreement or
similar agreement or contract relating in any way to the protection, ownership, development, use or
transfer of the Proprietary Rights.

(g) Export Control. The Company has obtained all approvals necessary for exporting
the Company’s products, including Software, outside the United States in accordance with all
applicable United States export control regulations, and importing the products and Software into
any country in which the products and Software are now sold or licensed for use, and all such
export and import approvals in the United States and throughout the world are valid, current,
outstanding and in full force and effect.

3.10 Litigation. Except as set forth in Section 3.10 of the Disclosure Schedule, there are
no Actions pending, or, to the Company’s Knowledge, threatened (a) against, relating to or
affecting the Company, any Subsidiary or their respective assets or employees that, if adversely
determined, could reasonably be expected to result in a loss to the Company, individually or in the
aggregate, in excess of $250,000, (b) seeking to enjoin or obtain damages in respect of the
transactions contemplated by this Agreement, (c) that would prevent the Company or any Subsidiary
from consummating the transactions contemplated by this Agreement or (d) that involve any potential
criminal liability. None of such Actions (i) purport to be brought in a class or similar
representative capacity or (ii) if adversely determined, could reasonably be expected to result in
a Material Adverse Effect. Except as set forth in Section 3.10 of the Disclosure Schedule, there
are presently no outstanding Orders against or affecting the Company, the Subsidiaries or any of
their respective assets.

3.11 Employee Benefit Plans. (a) Section 3.11(a) of the Disclosure Schedule sets forth a
complete list of all plans, contracts, agreements, practices, policies or arrangements, oral or
written, providing for employment or for any bonuses, current or deferred compensation, excess
benefits, pensions, retirement benefits, profit sharing, stock bonuses, stock options, stock
purchases, life, accident and health insurance, hospitalization, vacation, severance pay, change of
control payments or benefits, sick pay, leave, disability, tuition refund or other employee
benefits, including, without limitation, any such plan, contract, agreement, practice, policy or
arrangement which is an “employee benefit plan” as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder
(collectively, “ERISA”), including any “employee welfare benefit plan” as defined in Section 3(l)
of ERISA (“Welfare Plan”) and any employee pension benefit plan as defined in Section 3(2) of ERISA
(“Pension Plan”) providing employee benefits or compensation to current or former employees (or
their dependents or beneficiaries) of the Company or any ERISA Affiliate maintained or contributed
to by the Company or any ERISA Affiliate or to which the Company or any ERISA Affiliate is a party
or under which the Company or any ERISA Affiliate could have any liability(each of the preceding
hereinafter is referred to individually as a “Plan” and collectively as the “Plans”). Section
3.11(a) of the Disclosure Schedule further discloses whether each Plan that is an employee welfare
benefit plan is (i) unfunded or self-insured, (ii) funded through a “welfare benefit fund,” as such
term is defined in Section 419(e) of the Code or other funding mechanism or (iii) insured. Each
Plan may be amended or terminated (including with respect to benefits provided to retirees and
other former employees) without material liability (other than benefits then payable under such
Plan without regard to such amendment or termination) to the Company or any ERISA Affiliate at any
time after the Effective Time.

(b) With respect to each Plan, the Company has delivered or made available to Parent a
current, accurate and complete copy thereof and, to the extent applicable: (i) all documents which
comprise the most current version of each such Plan and any related trust agreement or other
funding instrument; (ii) the most recent summary plan description for each such Plan; (iii) for the
three most recent years (A) the Form 5500 and attached schedules, (B) audited financial statements
and (C) actuarial reports; and (iv) the most recent Internal Revenue Service (the “IRS”)
determination for each Plan that is intended to be qualified within the meaning of Section 401(a)
of the Code. No Plan is in violation of its requirements to timely file a Form 5500 in respect of
the most recent year.

(c) Neither the Company nor the Subsidiaries is currently contributing to, or has in the past
three years contributed to, nor had any liability in respect of, any plan subject to Title IV of
ERISA or Section 412 of the Code or any multiemployer plan within the meaning of Section 4001(a)(3)
of ERISA.

(d) Except as set forth in Section 3.11(d) of the Disclosure Schedule, (i) for each Plan that
is intended to be qualified under Code Section 401(a), the Company has obtained a favorable
determination letter from the IRS to such effect, and, to the Company’s Knowledge, nothing has
occurred, whether by action or inaction, that could reasonably be expected to cause the loss of
such qualification, (ii) no Pension Plan has any “accumulated funding deficiency” within the
meaning of Section 302(a) of ERISA and Section 412 of the Code, (iii) no “reportable event” within
the meaning of Section 4043 of ERISA (other than reportable events for which the notice period has
been waived) or “prohibited transaction” within the meaning of Section 406 of ERISA has occurred
with respect to any Plan and no material tax has been imposed pursuant to Section 4975 or Section
4976 of the Code in respect thereof, and (iv) neither the Company nor the Subsidiaries has incurred
any material liability to the Pension Benefit Guaranty Corporation with respect to any Plan.

(e) Except as set forth in Section 3.11(e) of the Disclosure Schedule, there are no claims,
suits or actions pending or, to the Company’s Knowledge, threatened by or on behalf of any of the
Plans, by any employee or beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).

(f) Each Plan listed on Section 3.11(f) of the Disclosure Schedule is by its terms in material
compliance, and has been operated in material compliance, with the provisions of ERISA, the Code,
its governing documents and all other Applicable Law, including, without limitation, all notice and
other requirements of the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”).

(g) The Company and the Subsidiaries are in material compliance with the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended (“COBRA”), and all other Applicable Laws which
require the continuation of benefit coverage upon the happening of certain events, such as the
termination of employment or change in beneficiary or dependent status. Neither the Company nor
the Subsidiaries has any obligation to provide health or other non-pension benefits to retired or
other former employees, except as specifically required by COBRA.

(h) There are no unpaid contributions due prior to the date hereof with respect to any Plan
that are required to have been made.

(i) With respect to any Plan: (i) no filing, application or other matter is pending with the
Internal Revenue Service, the Pension Benefit Guaranty Corporation (“PBGC”), the United States
Department of Labor or any other governmental body, and (ii) there are no outstanding material
liabilities for Taxes, penalties or fees.

(j) Neither the Company nor any ERISA Affiliate has incurred any liability or taken any action
and none of them has any knowledge of any action or event that could cause any one of them to incur
any liability under Section 412 of the Code or Title IV of ERISA. Except as set forth in Section
3.11(k) of the Disclosure Schedule, neither the execution and delivery of this Agreement nor the
consummation of any or all of the transactions contemplated by this Agreement will: (i) entitle
any current or former employee of the Company or its ERISA Affiliates to severance or unemployment
compensation or any similar payment, (ii) accelerate the time of payment or vesting or increase the
amount of any compensation due to any such employee or former employee, or (iii) directly or
indirectly result in any payment made or to be made to or on behalf of any person constituting a
“parachute payment” within the meaning of Section 280G of the Code.

(k) Neither the Company nor its ERISA Affiliates has filed a notice of intent to terminate any
Plan or adopted any amendment to treat any such Plan as terminated. The PBGC has not instituted
proceedings to terminate any such Plan; and, to the Company’s Knowledge, no other event or
condition has occurred which might constitute ground under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any such Plan.

(l) Neither the Company nor any of its Subsidiaries has any material liability or obligations,
including under or on account of a Plan, arising out of the hiring of persons to provide services
to the Company or any of its Subsidiaries and treating such persons as consultants or independent
contractors and not as employees of the Company or any of its Subsidiaries.

(m) All Plans required to have been approved by or registered with any foreign governmental
entity have been so approved, no such approval has been revoked (nor has revocation been
threatened) and no event has occurred since the date of the most recent approval or application
therefore relating to any such Plan that would reasonably be expected to adversely affect any such
approval relating thereto or materially increase the costs relating thereto.

(n) None of the issued and outstanding Options are “incentive stock options” under Section 422
of the Code.

3.12 Taxes. Except as set forth in Section 3.12 of the Disclosure Schedule:

(a) the Company and its Subsidiaries have timely filed (after giving effect to
applicable extensions) with the appropriate taxing authorities all Tax Returns (as
hereinafter defined) required to be filed by or with respect to the Company and/or the
Subsidiaries, either separately or as part of an affiliated group of corporations, pursuant
to the laws of any Governmental Authority with taxing power over the Company, its
Subsidiaries or their assets or businesses, on or prior to the Closing Date, and such Tax
Returns were true, correct and complete. No written claim has ever been made by an
authority in a jurisdiction where any of the Company and its Subsidiaries does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction;

(b) the Company and the Subsidiaries have timely paid all Taxes (as hereinafter
defined) due and owing by the Company and the Subsidiaries on or before the Closing Date
(whether or not shown to be due on any Tax Returns);

(c) the unpaid Taxes of the Company and its Subsidiaries did not, as of the date of
the Balance Sheet, exceed the reserves for such Taxes as reflected in Section 3.12(c) of
the Disclosure Schedule. Since the date of the Balance Sheet, neither the Company nor any
of its Subsidiaries has incurred any liability for Taxes outside the ordinary course of
business or otherwise inconsistent with past custom and practice;

(d) no deficiencies for Taxes against any of the Company and its Subsidiaries have
been claimed, proposed or assessed in writing by any taxing or other Governmental
Authority. There are no pending or, to the Company’s Knowledge, threatened audits,
assessments or other actions for or relating to any liability in respect of Taxes of any of
the Company and its Subsidiaries, and, to the Company’s Knowledge, there are no matters
under discussion with any Governmental Authorities with respect to Taxes that are likely to
result in an additional liability for Taxes with respect to any of the Company and its
Subsidiaries. The Company has delivered or made available to Parent complete and accurate
copies of federal, state and local income Tax Returns of each of the Company and its
Subsidiaries and their predecessors for the years ended December 31, 2001, 2002 and 2003,
and complete and accurate copies of all examination reports and statements of deficiencies
assessed against or agreed to by any of the Company and its Subsidiaries or any
predecessors since December 31, 2000 relating to such income Tax Returns. Neither the
Company nor any of its Subsidiaries nor any predecessor has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency;

(e) there are no Liens for Taxes other than Permitted Liens on any assets of any of
the Company and its Subsidiaries;

(f) neither the Company nor any of its Subsidiaries (i) has consented at any time
under former Section 341(f)(1) of the Code to have the provisions of former Section
341(f)(2) of the Code apply to any disposition of the assets of any of the Company and its
Subsidiaries; (ii) has agreed, or is required, to make any adjustment under Section 481(a)
of the Code by reason of a change in accounting method or otherwise; (iii) has made an
election, or is required, to treat any of its assets as owned by another Person pursuant to
the provisions of Section 168(f) of the Internal Revenue Code of 1954 or as tax-exempt bond
financed property or tax-exempt use property within the meaning of Section 168 of the Code;
(iv) has acquired or owns any assets that directly or indirectly secure any debt the
interest on which is tax exempt under Section 103(a) of the Code; (v) has made or will make
a consent dividend election under Section 565 of the Code; (vi) has elected at any time to
be treated as an S corporation within the meaning of Section 1361 or 1362 of the Code; or
(vii) made any of the foregoing elections or is required to apply any of the foregoing
rules under any comparable state or local Tax provision;

(g) there are no Tax-sharing agreements or similar arrangements (including indemnity
arrangements) with respect to or involving any of the Company and its Subsidiaries, and,
after the Closing Date, none of the Company and its Subsidiaries shall be bound by any such
Tax-sharing agreements or similar arrangements or have any liability thereunder for amounts
due in respect of periods prior to the Closing Date;

(h) none of the Company and its Subsidiaries has been a member of an affiliated group
filing a consolidated federal income Tax Return (other than a group the common parent of
which is the Company). None of the Company and its Subsidiaries has any liability for the
Taxes of any Person (other than Taxes of the Company and its Subsidiaries) (i) under
Treasury regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), (ii) as a transferee or successor, (iii) by contract, or (iv) otherwise;

(i) each of the Company and its Subsidiaries has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third party. The transaction
contemplated herein is not subject to the tax withholding provisions of Section 3406 of the
Code, or of Subchapter A of Chapter 3 of the Code or of any other provision of law;

(j) none of the Company and its Subsidiaries has been a United State real property
holding corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code;

(k) neither the Company nor any of its Subsidiaries (i) is a partner for Tax purposes
with respect to any joint venture, partnership, or other arrangement or contract which is
treated as a partnership for Tax purposes, (ii) owns a single member limited liability
company which is treated as a disregarded entity, (iii) is a shareholder of a “controlled
foreign corporation” as defined in Section 957 of the Code (or any similar provision of
state, local or foreign law) or (iv) is a “personal holding company” as defined in Section
542 of the Code (or any similar provision of state, local or foreign law);

(l) neither the Company nor any of its Subsidiaries has or has had a permanent
establishment in any foreign country, as defined in any applicable Tax treaty or convention
between the United States of America and such foreign country;

(m) none of the outstanding indebtedness of any of the Company and its Subsidiaries
constitutes indebtedness with respect to which any interest deductions may be disallowed
under Sections 163(i), 163(l) or 279 of the Code or under any other provision of applicable
law;

(n) neither the Company nor any of its Subsidiaries has distributed the stock of any
corporation in a transaction satisfying the requirements of Section 355 of the Code since
April 16, 1997, and neither the stock of the Company nor the stock of any of its
Subsidiaries has been distributed in a transaction satisfying the requirements of Section
355 of the Code since April 16, 1997; and

(o) neither the Company nor any of its Subsidiaries has entered into any transaction
identified as a “listed transaction” for purposes of Treasury regulations Sections
1.6011-4(b)(2) or 301.6111-2(b)(2). If either the Company or any of its Subsidiaries has
entered into any transaction such that, if the treatment claimed by it were to be
disallowed, the transaction would constitute a substantial understatement of federal income
tax within the meaning of Section 6662 of the Code, then it believes that it has either (i)
substantial authority for the tax treatment of such transaction or (ii) disclosed on its
Tax Return the relevant facts affecting the tax treatment of such transaction.

3.13 Contracts and Commitments. Section 3.13 of the Disclosure Schedule sets forth a list
of all of the following agreements, contracts and commitments to which the Company or any of the
Subsidiaries is a party or by which the Company, any of the Subsidiaries or their respective assets
are bound (except for purchase orders for inventory by the Company or any of the Subsidiaries in
the ordinary course of business) (each such contract of the type described in this Section
3.13, whether or not set forth in Section 3.13 of the Disclosure Schedule, a “Material
Contract”):

(a) employment agreements or severance agreements or employee termination arrangements
or consulting agreements, in any such case, with respect to employees or consultants
earning in excess of $50,000 per year;

(b) any change of control agreements with employees or consultants of the Company or
the Subsidiaries earning in excess of $100,000 per year;

(c) agreements, contracts, commitments or arrangements containing any covenant
limiting the ability of the Company or the Subsidiaries to engage in any line of business
or to compete with any business or person;

(d) agreements or contracts (including loans or similar arrangements) with the Company
or any affiliate of the Company (other than the Company and the Subsidiaries) or any past
or present officer, director or employee of the Company or any of such affiliates (other
than employment, severance and change of control agreements covered by clause (a) or (b)
above);

(e) agreements or contracts under which the Company or the Subsidiaries has borrowed
or loaned money, or any note, bond, indenture, mortgage, installment obligation or other
evidence of indebtedness for borrowed or loaned money or any guarantee of such
indebtedness, in each case, relating to amounts in excess of $100,000;

(f) joint venture agreements or other agreements involving the sharing of profits;

(g) leases pursuant to which (i) material personal property or (ii) real property is
leased to or from the Company or the Subsidiaries;

(h) powers of attorney from the Company or any Subsidiaries;

(i) guaranties, suretyships or other contingent agreements of the Company or the
Subsidiaries involving underlying obligations of not less than $100,000;

(j) any agreement, contract, commitment or arrangement relating to capital
expenditures with respect to the Company or the Subsidiaries and involving future payments
which exceed $100,000 in any 12-month period;

(k) any agreement, contract, commitment or arrangement relating to the acquisition of
assets (other than in the ordinary course of business consistent with past practice) or any
capital stock of any business enterprise;

(l) license or royalty agreements involving any form of Intellectual Property, whether
the Company is the licensor or licensee thereunder (excluding licenses that are commonly
available on standard commercial terms, such as software “shrink-wrap” license);

(m) confidentiality and non-disclosure agreements (whether the Company is the
beneficiary or the obligated party thereunder), other than those related to (i) commercial
transactions in the ordinary course of business that are not individually material and (ii)
the sale or disposition of the Company that do not adversely affect the transactions
contemplated by this Agreement or any Ancillary Agreement or the operation of the Company
by Parent after the Effective Time assuming that Parent operates the Surviving Corporation
in a manner substantially similar to the manner in which the Company has been operated
prior to the Effective Time;

(n) contracts or commitments relating to commission arrangements that are material to
the Company or its business;

(o) indemnification agreements, other than in connection with commercial transactions
in the ordinary course of business;

(p) any contract with any Governmental Authority;

(q) any other contract under which the consequences of a default or termination would
reasonably be expected to have a Material Adverse Effect;

(r) contracts (other than those covered by clause (a) through (q) above) pursuant to
which the Company and the Subsidiaries will receive or pay in excess of $100,000 over the
life of the contract; and

(s) any other material agreements, contracts and commitments not entered into in the
ordinary course of business.

Complete and accurate copies of all Material Contracts, including all amendments and supplements
thereto, have been delivered to Parent. Each Company Material Contract is valid and binding on the
Company and each Subsidiary party thereto and, to the Company’s Knowledge, each other party
thereto, and in full force and effect. With respect to the Material Contracts, neither the
Company, the Subsidiaries nor, to the Company’s Knowledge, any other party to any such contract has
failed to perform any material obligation thereunder or is in material breach thereof or default
thereunder, and, to the Company’s Knowledge, no event has occurred which, with the giving of notice
or the lapse of time, would constitute such a material breach or default.

3.14 Compliance with Laws. Except as set forth in Section 3.14 of the Disclosure Schedule
and except with respect to the matters described in Sections 3.11, 3.12,
3.15 and 3.16, the Company and the Subsidiaries are, and, to the Company’s
Knowledge, at all times since April 14, 2000 have been, in compliance, in all material respects,
with all Applicable Laws and all Orders of, and agreements with, any Governmental Authority
applicable to the Company or the Subsidiaries or any of their respective assets or properties.
Except as set forth in Section 3.14 of the Disclosure Schedule, the Company and the Subsidiaries
have all material permits, certificates, licenses, approvals and other authorizations
(collectively, “Permits”) required under Applicable Laws or necessary in connection with the
ownership, lease and operation of their assets and properties and the conduct of their businesses,
and all such Permits are in full force and effect.

3.15 Labor Matters. (a) Except as set forth in Section 3.15(a) of the Disclosure
Schedule, (i) the Company and the Subsidiaries are, and at all times since April 14, 2000, have
been in compliance in all material respects with all Applicable Laws regarding labor, employment,
employment practices, employee classification, fair employment practices, terms and conditions of
employment, independent contractors, child labor, work permits, workers’ compensation, occupational
safety and wages and hours, (ii) there is no unfair labor practice charge or complaint against the
Company nor the Subsidiaries pending before the National Labor Relations Board, (iii) there is no
labor strike, slowdown, work stoppage or lockout in effect, or, to the Company’s Knowledge,
threatened against the Company or the Subsidiaries, and the Company and the Subsidiaries have not
experienced any such labor controversy since January 1, 2003, (iv) there is no material charge or
complaint pending against the Company or the Subsidiaries before the Equal Employment Opportunity
Commission, the Office of Federal Contract Compliance Programs or any similar state, local or
foreign agency responsible for the prevention of unlawful employment practices, (v) neither the
Company nor the Subsidiaries is a party to, or otherwise bound by, any consent decree with, or
material citation by, any Governmental Authority relating to employees or employment practices;
(vi) the Company and the Subsidiaries will not have any material liability under any benefit or
severance policy, practice, agreement, plan, or program which exists or arise, or may be deemed to
exist or arise, under any Applicable Law or otherwise, as a result of the transactions contemplated
hereunder; (vii) no employees of the Company or any Subsidiary are represented by a labor union,
and neither the Company nor the Subsidiaries is a party to any collective bargaining agreement;
(viii) the Company and the Subsidiaries are in compliance with its obligations pursuant to the
Worker, Adjustment and Retraining Notification Act of 1988 (“WARN Act”); and (ix) none of the
Company or any Subsidiary is liable for any payment to any trust or other fund or to 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 ordinary
course of business consistent with past practice and in compliance with Applicable Law). Neither
the Company nor the Subsidiaries has received written notice of the intent of any Governmental
Authority responsible for the enforcement of employment laws to conduct an investigation of or
relating to the Company or the Subsidiaries and, to the Company’s Knowledge, no such investigation
is in progress.

(b) Except as set forth in Section 3.15(b) of the Disclosure Schedule, none of the execution
and delivery of this Agreement or the consummation of the transactions contemplated hereby will
(either alone or as a precondition together with any other event, such as termination of
employment) (i) result in any payment (including, without limitation, severance, unemployment
compensation, parachute or otherwise) becoming due from the Company or any Subsidiary or any of
their respective Affiliates to any director, officer or employee of the Company or any Subsidiary,
(ii) significantly increase any benefits otherwise payable or (iii) result in any acceleration of
the time of payment or vesting of any material benefits (other than with respect to any Options).
Except as set forth in Section 3.13 of the Disclosure Schedule, no individual who is a party to an
employment agreement or any agreement incorporating a change in control provision with the Company
or any Subsidiary has terminated employment or been terminated, and no notice of termination has
been given by the Company or any Subsidiary to any such individual under circumstances that have
given, or could give, rise to a severance obligation on the part of the Company under such
agreement nor does any condition exist under which any such individual could terminate his or her
employment with the Company or any Subsidiary and give rise to a severance obligation on the part
of the Company under such agreement.

3.16 Environmental Matters. Except as set forth in Section 3.16 of the Disclosure
Schedule, (a) neither the Company nor the Subsidiaries has received any notice alleging any
violation of, or any liability or responsibility under, any Environmental Law, and, to the
Company’s Knowledge, no such notice is threatened, (b) the Company and the Subsidiaries are and
have been since April 14, 2000 in compliance with all applicable Environmental Laws, (c) the
Company and the Subsidiaries have obtained, and are and have been since April 14, 2000 in
compliance with, all governmental environmental permits, registrations and authorizations required
under Environmental Laws for the operation of the businesses of the Company and the Subsidiaries,
and all of such permits, registrations and authorizations are in full force and effect, (d) no
Hazardous Materials have been transported, stored, treated or disposed of by the Company or the
Subsidiaries on the real estate owned, leased, operated or otherwise used by the Company or the
Subsidiaries, except for such transportation, storage, treatment, disposal which are in compliance
with and would not result in material liability under all Environmental Laws, (e) neither the
Company nor the Subsidiaries has entered into, agreed to, or is subject to any Order of any
Governmental Authority under any Environmental Laws for the investigation, sampling, monitoring,
treatment, remediation, removal or cleanup of Hazardous Materials and, to the Company’s Knowledge,
no investigation, litigation or other proceeding is pending with respect thereto, (f) neither the
Company nor any Subsidiary is an indemnitor in connection with any claim by any third party
indemnitee under any Environmental Law or relating to any Hazardous Materials, and (g) the Company
has provided to Parent true and complete copies of all material documents in its possession or
control which relate to the Company’s compliance with or liability under the Environmental Laws.
None of the Real Property is listed or, to the Company’s Knowledge, proposed for listing on the
“National Priorities List” under CERCLA, as amended and supplemented, or any similar state or
foreign list of sites requiring investigation or cleanup.

3.17 Material Suppliers and Customers. Section 3.17 of the Disclosure Schedule sets forth
the names of the ten suppliers and ten customers to whom the Company and the Subsidiaries paid or
received the greatest sum of money in respect of services, products or materials provided to or
from the Company and the Subsidiaries during the year ended December 31, 2004. Since December 31,
2004, none of the suppliers or customers listed in Section 3.17 of the Disclosure Schedule has
notified the Company or any Subsidiaries in writing that it is canceling, reducing or otherwise
terminating or that it intends to cancel, reduce or otherwise terminate its relationship with the
Company.

3.18 No Material Adverse Effect. Since December 31, 2003, there has been no change in the
Company or the Subsidiaries, taken as a whole, which has had a Material Adverse Effect.

3.19 Brokers. Except as set forth in Section 3.19 of the Disclosure Schedule, no broker,
finder or financial advisor or other person is entitled to any brokerage fees, commissions,
finders’ fees or financial advisory fees in connection with the transactions contemplated hereby by
reason of any action taken by the Company or any of their respective directors, officers,
employees, representatives or agents.

3.20 Insurance. Section 3.20 of the Disclosure Schedule sets forth a true and correct list
of all insurance policies (a) to which the Company or any Subsidiary is a party or under which the
Company or any Subsidiary is covered and (b) to which the Company may seek coverage with respect to
the Garcia Litigation or the DuPont Litigation for events occurring or circumstances existing since
January 1, 1995; provided, however, that no representation or warranty is made herein with respect
to whether any claim made by the Company in connection with the Garcia Litigation or the DuPont
Litigation will be accepted or paid under such insurance policies. To the Company’s Knowledge, the
Company maintains insurance coverage with reputable insurers, or maintains self-insurance
practices, in such amounts and covering such risks as are in accordance with normal industry
practices for companies engaged in businesses similar to that of the Company (taking into account
the cost and availability of such insurance).

3.21 Vote Required. The affirmative vote of the holders of a majority of the Company
Common Stock is the only vote of the holders of any class or series of capital stock or other
Equity Interests of the Company necessary to approve the Merger, which stockholder vote shall be
received by the Company and delivered to the Parent immediately following the execution and
delivery by the Company of a counterpart signature page to this Agreement.

3.22 Foreign Corrupt Practices Act. Neither the Company nor any Subsidiary nor, to the
Company’s Knowledge, any agent, employee or other Person associated with or acting on behalf of the
Company has, directly or indirectly, used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, made any unlawful payment
to foreign or domestic government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds, violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other
similar unlawful payment.

3.23 Product Liability. There is no Action pending or, to the Company’s Knowledge,
threatened by or before any Governmental Authority against or involving the Company or any
Subsidiary nor, to the Company’s Knowledge, has there been any occurrence relating to any product
of the Company which could result in Product Liability on the part of the Company or any Subsidiary
in excess of $250,000 in the aggregate.

3.24 Bank Accounts. Section 3.24 of the Disclosure Schedule contains a list of all of the
Company’s bank accounts, safe deposit boxes and Persons authorized to draw thereon or have access
thereto.

3.25 No Other Agreements to Sell the Company. Neither the Company nor any Subsidiary nor,
to the Company’s Knowledge, any Stockholder has any legal obligation, absolute or contingent, to
any other Person to sell the Company, its business, assets or any portion thereof or to sell any
capital stock of the Company or to effect any merger, consolidation or other reorganization of the
Company or to enter into any agreement with respect thereto, except pursuant to this Agreement.

3.26 Exclusivity of Representations. The representations and warranties made by the
Company in this Agreement (including the Disclosure Schedule) and in any certificates required to
be delivered by the Company hereunder are the exclusive representations and warranties made by the
Company. The Company hereby disclaims any other express or implied representations or warranties,
including without limitation, regarding the pro forma financial information, financial projections
or other forward-looking statements of the Company or the Subsidiaries.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PARENT

Parent and Merger Sub hereby (jointly and severally) represent and warrant to the Company as
follows:

4.1 Organization; Authority. Each of Parent and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware, and has
all requisite power and authority to enter into this Agreement, the Escrow Agreement and the other
Ancillary Agreements to which it is a party, and to consummate the transactions contemplated hereby
and thereby. The execution, delivery and performance by Parent and Merger Sub of this Agreement
and the Ancillary Agreements to which it is a party, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary action on the part of
Parent and Merger Sub. This Agreement has been duly executed and delivered by Parent and Merger
Sub and constitutes a valid and binding obligation of Parent and Merger Sub, enforceable against
Parent and Merger Sub in accordance with its terms. Each Ancillary Agreement to which it is a
party will be duly executed and delivered by Parent and Merger Sub and, assuming that such
Ancillary Agreement constitutes a valid and binding obligation of the other parties thereto, will
constitute a valid and binding obligation of Parent and Merger Sub, enforceable against Parent and
Merger Sub in accordance with its terms.

4.2 No Violation; Consents and Approvals. The execution and delivery by Parent and Merger
Sub of this Agreement and the Ancillary Agreements to which it is a party do not, and the
consummation of the transactions contemplated hereby or thereby and compliance with the terms
hereof and thereof will not, conflict with, or result in any violation of or default (or an event
which, with notice or lapse of time or both, would constitute a default) under, (a) any provision
of the certificate of incorporation or bylaws of Parent or Merger Sub, (b) any material Order or
Applicable Laws applicable to Parent or Merger Sub or the property or assets of Parent or Merger
Sub or (c) any material contract to which Parent or Merger Sub is a party or by which Parent or
Merger Sub or their respective assets may be bound. Except as set forth in Section 4.2 of the
Disclosure Schedule, no material Governmental Approval is required to be obtained or made by or
with respect to Parent or Merger Sub or its affiliates in connection with the execution and
delivery of this Agreement or any Ancillary Agreement to which it is a party , or the consummation
by Parent of the transactions contemplated hereby or thereby.

4.3 Litigation. There are no claims, actions, suits, investigations or proceedings pending
or, to the knowledge of Parent and Merger Sub, threatened against or affecting Parent and Merger
Sub or each of its assets, at law or in equity, by or before any Governmental Authority, or by or
on behalf of any third party, which, if adversely determined, would materially impair Parent and
Merger Sub’s ability to consummate the transactions contemplated hereby, and there are no
outstanding Orders of any Governmental Authority, affecting Parent and Merger Sub or their
respective assets, at law or in equity, which would materially impair Parent’s and Merger Sub’s
ability to consummate the transactions contemplated hereby.

4.4 Funding. Parent and Merger Sub have the necessary funding to meet all of its
obligations under this Agreement and the Buyer Agreements, including, without limitation, the
Merger Consideration, any adjustments thereto and all of its fees and expenses in order to
consummate the transactions contemplated by this Agreement.

4.5 Solvency. After giving effect to the consummation of the transactions contemplated
hereby, the Surviving Corporation: (a) will be solvent (in that both the fair value of its assets
will not be less than the sum of its debts and that the present fair saleable value of its assets
will not be less than the amount required to pay its probable liability on its debts as they become
absolute and matured), (b) will have adequate capital with which to engage in its business; and (c)
will not have incurred and will not plan to incur debts beyond its ability to pay as they become
absolute and matured.

4.6 Brokers. No broker, finder or financial advisor or other person is entitled to any
brokerage fees, commissions, finders’ fees or financial advisory fees in connection with the
transactions contemplated hereby by reason of any action taken by Parent and Merger Sub or any of
its partners, officers, employees, representatives or agents.

ARTICLE V

COVENANTS OF THE PARTIES

5.1 Conduct of the Company’s Business. Except as contemplated by this Agreement and as set
forth in Section 5.1 of the Disclosure Schedule, during the period from the date hereof to the
Closing Date, the Company will, and will cause the Subsidiaries to, conduct its business and
operations solely in the ordinary course of business consistent with past practice and to use
reasonable best efforts to keep available the services of the current officers, key employees and
consultants of the Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other Persons with which the Company or
any Subsidiary has significant business relations to preserve substantially intact its business
organization. Without limiting the generality of the foregoing, except as expressly provided by
this Agreement and as set forth in Section 5.1 of the Disclosure Schedule, during the period from
the date of this Agreement to the Closing Date, without the prior written consent of Parent and
Merger Sub, neither the Company nor the Subsidiaries will:

(a) create, incur, assume or guarantee any indebtedness for borrowed money (including,
without limitation, obligations in respect of capital leases) in excess of $100,000;

(b) issue, sell, deliver, pledge, transfer, otherwise dispose of, or reclassify,
combine, split, or redeem, purchase, otherwise acquire or enter into any agreement with
respect to the voting of any of its equity securities, or grant or enter into any options,
warrants, rights, agreements or commitments with respect to the issuance of its equity
securities, or amend any terms of any such equity securities or agreements, in each case
except for issuances of Company Common Stock upon the exercise of outstanding Options and
Warrants and redemptions or purchases pursuant to the terms of existing agreements with
employees disclosed to Parent and Merger Sub in Section 3.13 of the Disclosure Schedule;

(c) (i) increase the rate of compensation or benefits of, or pay or agree to pay any
benefit to (including, but not limited to, severance or termination pay), present or former
managers, directors, officers or employees, (ii) enter into any collective bargaining
agreement, (iii) make any bonus or similar payments, or (iv) take any affirmative action to
amend or waive any performance or vesting criteria or accelerate vesting, exercisability or
funding under any Company Benefit Plan, in each case except as may be required by any
existing Plan, agreement or arrangement disclosed to Parent and Merger Sub in Section 3.13
of the Disclosure Schedule or by the bonus plan for fiscal year ending December 31, 2005
which may be adopted, subject to Parent’s approval (which shall not be unreasonably
withheld), prior to the Closing Date, or to employees who are not officers in accordance
with the Company’s ordinary course of business consistent with past practice;

(d) enter into, adopt, terminate or amend any Plan, employment or severance agreement
or any plan, agreement, program, policy, trust, fund or other arrangement that would be a
Plan if it were in existence as of the date of this Agreement, except as required by law;

(e) sell, lease, license, transfer, pledge or otherwise dispose of any assets or
properties, whether real or personal, other than the sale of inventory in the ordinary
course of business consistent with past practice, which have an aggregate book value in
excess of $100,000 or mortgage or encumber any assets or properties, whether real or
personal, which have an aggregate book value in excess of $100,000;

(f) acquire or agree to acquire by merging or consolidating with, or by purchasing the
stock or a substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or division
thereof or otherwise acquire or agree to acquire any assets for aggregate consideration in
excess of $100,000;

(g) enter into, modify, amend in any material respect or terminate any Material
Contract, including any Real Property Lease (except modifications or amendments in
connection with renewals of leases and other matters in the ordinary course of business
consistent with past practice);

(h) waive or release any rights of material value, or cancel, compromise, release or
assign any indebtedness in excess of $100,000 owed to it;

(i) cancel or terminate any material insurance policy naming it as a beneficiary or a
loss payable payee without obtaining comparable substitute insurance coverage;

(j) effectuate a “plant closing” or “mass layoff” (as those terms are defined under
the WARN Act) affecting in whole or in part any site of employment, facility, operating
unit or employees of the Company or the Subsidiaries;

(k) amend or otherwise change its operating agreement, partnership agreement,
certificate of incorporation or by-laws;

(l) except as set forth in Section 5.1(l) of the Disclosure Schedule, change any of
its accounting principles, procedures, methods or practices, except as required by GAAP;

(m) change in a material respect its fiscal year end inventory, shipping operations or
cut-off procedures;

(n) declare, set aside, make or pay any dividend or other distribution (whether
payable in cash, stock, property or a combination thereof) with respect to any of its
capital stock (other than dividends paid by a wholly owned Subsidiary to the Company or to
any other wholly owned Subsidiary);

(o) make or authorize any capital expenditure in excess of the Company’s budget as
disclosed to Parent prior to the date hereof;

(p) (i) pre-pay any long-term debt, (ii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, contingent or otherwise), except in the
ordinary course of business consistent with past practice and in accordance with their
terms, (iii) accelerate or delay collection of notes or accounts receivable in advance of
or beyond their regular due dates or the dates when the same would have been collected in
the ordinary course of business consistent with past practice, (iv) delay or accelerate
payment of any account payable in advance of its due date or the date such liability would
have been paid in the ordinary course of business consistent with past practice, or (v)
vary the Company’s inventory practices in any material respect from the Company’s past
practices;

(q) waive, release, assign, settle or compromise any claims in excess of $500,000, or
any material litigation or arbitration;

(r) (i) make or change any material Tax election, Tax accounting method or annual Tax
accounting period, (ii) settle or compromise any material liability for Taxes, (iii) enter
into any Tax sharing, Tax indemnity or closing agreement, (iv) consent to any extension or
waiver of the limitation period applicable to any claim or assessment in respect of any Tax
with any taxing authority, or (v) file any amended material Tax Returns;

(s) modify, amend or terminate, or waive, release or assign any material rights or
claims with respect to any confidentiality or standstill agreement to which the Company is
a party;

(t) write up, write down or write off the book value of any assets, except for
depreciation and amortization in accordance with GAAP consistently applied;

(u) take any action that is intended or would reasonably be expected to result in any
of the conditions to Closing set forth in Article VI not being satisfied; or

(v) agree, whether in writing or otherwise, to do any of the foregoing.

5.2 Access to Information Prior to the Closing; Confidentiality. (a) During the period
from the date of this Agreement through the Closing Date, the Company shall give Parent and Merger
Sub and its agents and authorized representatives (including prospective lenders and environmental
consultants) full and complete access (excluding for purposes of conducting environmental sampling
and testing) to all offices, facilities, books and records, officers, employees and advisors
(including audit and tax working papers prepared by its independent accountants, provided that
Parent and Merger Sub will execute releases reasonably requested by the independent accountants if
requested to do so) of the Company and the Subsidiaries as Parent and Merger Sub may reasonably
request during normal business hours. No investigation conducted pursuant to this Section
5.2 shall affect or be deemed to modify or limit any representation or warranty made in this
Agreement.

(b) Any information provided to or obtained by Parent and Merger Sub pursuant to paragraph (a)
above shall be “Information” as defined in the Confidentiality Agreement dated January 26, 2005
between the Company and Parent (the “Confidentiality Agreement”), and shall be held by Parent and
Merger Sub in accordance with and be subject to the terms of the Confidentiality Agreement.
Notwithstanding anything to the contrary herein, the terms and provisions of the Confidentiality
Agreement shall survive the termination of this Agreement in accordance with the terms therein. In
the event of the termination of this Agreement for any reason, Parent and Merger Sub shall comply
with the terms and provisions of the Confidentiality Agreement, including returning or destroying
all Information and the non-soliciting of employees of the Company or the Subsidiaries.

5.3 Reasonable Best Efforts. Subject to the terms and conditions of this Agreement, each
of the parties hereto will use its reasonable best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, all things necessary, proper or advisable under applicable
laws and regulations to consummate the transactions contemplated by this Agreement at the earliest
practicable date.

5.4 Consents. Without limiting the generality of Sections 5.3 and 5.6,
each of the parties hereto will use its reasonable best efforts to obtain all licenses, permits,
authorizations, consents and approvals of all third parties and Governmental Authorities necessary
in connection with the consummation of the transactions contemplated by this Agreement prior to the
Closing. Each of the parties hereto will make or cause to be made all filings and submissions
under laws and regulations applicable to it as may be required for the consummation of the
transactions contemplated by this Agreement. The parties hereto will coordinate and cooperate with
each other in exchanging such information and assistance as any of the parties hereto may
reasonably request in connection with the foregoing.

5.5 Public Announcements. The parties hereto shall not issue any report, statement or
press release or otherwise make any public statement with respect to this Agreement and the
transactions contemplated hereby without prior consultation with and approval of the other parties,
except as may be required by Applicable Law or Nasdaq rule, in which case such party shall advise
the other parties and discuss the contents of the disclosure before issuing any such report,
statement or press release.

5.6 Filings and Authorizations; Consummation. Parent and the Company shall, as promptly as
practicable, but in no event later than five Business Days following the execution and delivery of
this Agreement, submit all filings required by the HSR Act (the “HSR Filing”) to the United States
Department of Justice, as appropriate and thereafter provide any supplemental information requested
in connection therewith pursuant to the HSR Act and make any similar filing within, to the extent
reasonably practicable, a similar time frame with any other Governmental Authority for which such
filing is required. Any such notification and report form and supplemental information will be in
substantial compliance with the requirements of the HSR Act or other applicable antitrust
regulation. Parent and the Company shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its preparation of any filing or
submission that is necessary under the HSR Act or other applicable antitrust regulation. Parent
and the Company shall request early termination of the applicable waiting period under the HSR Act
and any other applicable antitrust regulation. Parent and the Company shall promptly inform the
other party of any material communication received by such party from any Governmental Authority in
respect to the HSR Filing. Each of Parent and the Company shall (a) use its respective reasonable
best efforts to comply as expeditiously as possible with all requests of any Governmental Authority
for additional information and documents, including, without limitation, information or documents
requested under the HSR Act or other applicable antitrust regulation; (b) not (i) extend any
waiting period under the HSR Act or any applicable antitrust regulation; or (ii) enter into any
agreement with any Governmental Authority not to consummate the transactions contemplated by this
Agreement, except, in each case, with the prior consent of the other parties; and (c) cooperate
with the other parties and use reasonable best efforts to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted, reversed or overturned
any Order (whether temporary, preliminary or permanent) that restricts, prevents or prohibits the
consummation of the transactions contemplated by this Agreement. Parent and the Company shall each
pay one-half of the filing fees under the HSR Act.

5.7 Notice of Events. (a) During the period from the date hereof to the Closing Date or
the earlier termination of this Agreement, Parent shall promptly notify the Company in writing if
Parent becomes aware of (i) the occurrence or non-occurrence of any event or the existence of any
fact or condition that would cause or constitute a breach of any of its representations or
warranties contained herein had such representation or warranty been made as of the time of
Parent’s discovery of such event, fact or condition and (ii) any material failure on its part to
comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it
hereunder.

(b) During the period commencing on the date hereof and ending on the Closing Date or the
earlier termination of this Agreement (the “Updating Period”), the Company shall promptly notify
Parent in writing if the Company becomes aware of (i) the occurrence or non-occurrence of any event
occurring or not occurring, as the case may be, during the Updating Period or the existence of any
fact or condition arising during the Updating Period that would cause or constitute a breach of any
of its representations or warranties contained herein had such representation or warranty been made
as of the time of the Company’s discovery of such event, fact or condition and (ii) any material
failure on its or the Stockholder Representative’s part to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied during the Updating Period by it or the
Stockholder Representative hereunder. Should any such event, fact or condition require any change
to the Disclosure Schedule, the Company shall promptly deliver to Parent a supplement to the
Disclosure Schedule specifying such change.

(c) In the event that the Company delivers one or more supplements to the Disclosure Schedule
pursuant to Section 5.7(b) that reflect any events, facts or conditions which would,
individually or in the aggregate, cause the conditions set forth in Sections 6.2(a) or
6.2(b) not to be satisfied and Parent does not exercise its right to terminate this
Agreement on the basis of such supplemented Disclosure Schedule, within ten Business Days of
Parent’s receipt of any such supplement to the Disclosure Schedule, Parent will be deemed to have
accepted such supplemented Disclosure Schedule, the delivery of any such supplement will be deemed
to have cured any misrepresentation or breach of warranty or covenant that otherwise might have
existed hereunder by reason of such events, fact or condition and, from and after the Effective
Time and no Buyer Indemnitee will have any claim for indemnification pursuant to Article
VII for any such events, facts or conditions.

5.8 Officer and Director Indemnification and Insurance. (a) Parent and Merger Sub agree
that all rights to indemnification and exculpation from liability for acts or omissions occurring
on or prior to the Closing Date now existing in favor of the current or former directors, officers
or employees of the Company and the Subsidiaries, as provided in the respective certificates of
incorporation or by-laws or in indemnification agreements, shall survive the Closing Date and shall
continue in full force and effect in accordance with their respective terms for a period of not
less than six years after the Closing Date.

(b) On the Closing Date, Parent shall cause the Surviving Corporation to obtain, at the
expense of Parent or the Surviving Corporation expense, a non-cancellable run-off insurance policy,
for a period of six years after the Closing Date, to provide insurance coverage for events, acts or
omissions occurring on or prior to the Closing Date for all persons who were directors or officers
of the Company or any Subsidiary on or prior to the Closing Date.

5.9 Tax Covenants. (a) The Surviving Corporation shall prepare or cause to be prepared
and file or cause to be filed all Tax Returns for each of the Company and its Subsidiaries for all
periods ending on or prior to the Effective Time which are required to be filed after the Effective
Time. Such Tax Returns shall be prepared in a manner consistent with the past practice of the
Company in preparing its Tax Returns to the extent such past practice conforms with applicable Tax
laws. The Surviving Corporation shall submit such Tax Returns to the Stockholder Representative no
later than 30 Business Days prior to the due date for filing thereof and shall permit the
Stockholder Representative to review and comment on each such Tax Return described in the second
preceding sentence prior to filing and shall make such revisions to such Tax Returns as are
reasonably requested by the Stockholder Representative. The Stockholder Representative and Parent
shall consult with each other and attempt in good faith to resolve any issues arising as a result
of such Tax Returns and, if they are unable to do so, the disputed items shall be resolved (within
a reasonable time, taking into account the deadline for filing such Tax Return) by the Arbitration
Firm. Upon resolution of all such items, the relevant Tax Returns shall be timely filed on that
basis. Notwithstanding the foregoing, if the timing for reviewing and/or commenting on any Tax
Return by the Stockholder Representative or resolving any disputed item is not practicable because
of the filing deadline for such Tax Return, the Surviving Corporation shall file such Tax Return
and provide the Stockholder Representative with copies of such Tax Return, and the Stockholder
Representative shall have the right to review and comment on such Tax Return, and refer any
disputed item to the Arbitration Firm for resolution, and where appropriate, request the Surviving
Corporation to file amended Tax Returns. Subject to the limitations of Section 7.5(c)(ii),
the Surviving Corporation shall be reimbursed out of the Indemnity Escrow Amount and pursuant to
the terms of the Escrow Agreement, within 15 days after the date on which Taxes are paid with
respect to such Tax Returns as initially filed, an amount equal to such Taxes of each of the
Company and its Subsidiaries with respect to such Tax Returns as initially filed, except to the
extent that such Taxes are reflected as a liability in the calculation of Final Working Capital and
not offset by a corresponding Tax asset reflected in such calculation.

(b) The Surviving Corporation shall prepare or cause to be prepared and file or cause to be
filed any Tax Returns of any of the Company and its Subsidiaries for Tax periods which begin before
the Effective Time and end after the Effective Time (a “Straddle Period”). Such Tax Returns shall
be prepared in a manner consistent with the past practice of the Company in preparing its Tax
Returns to the extent such past practice conforms with applicable Tax laws. The Surviving
Corporation shall submit such Tax Returns to the Stockholder Representative no later than 30
Business Days prior to the due date for filing thereof and shall permit the Stockholder
Representative to review and comment on each such Tax Return described in the second preceding
sentence prior to filing and shall make revisions to such Tax Returns as are reasonably requested
by the Stockholder Representative. The Stockholder Representative and Parent shall consult with
each other and attempt in good faith to resolve any issues arising as a result of such Tax Returns
and, if they are unable to do so, the disputed items shall be resolved (within a reasonable time,
taking into account the deadline for filing such Tax Return) by the Arbitration Firm. Upon
resolution of all such items, the relevant Tax Returns shall be timely filed on that basis.
Notwithstanding the foregoing, if the timing for reviewing and/or commenting on any Tax Return by
the Stockholder Representative or resolving any disputed item is not practicable because of the
filing deadline for such Tax Return, the Surviving Corporation shall file such Tax Return and
provide the Stockholder Representative with copies of such Tax Return, and the Stockholder
Representative shall have the right to review and comment on such Tax Return, and refer any
disputed item to the Arbitration Firm for resolution, and where appropriate, request the Surviving
Corporation to file amended Tax Returns. Subject to the limitations of Section 7.5(c)(ii),
the Surviving Corporation shall be reimbursed out of the Indemnity Escrow Amount and pursuant to
the terms of the Escrow Agreement, within 15 days after the date on which Taxes are paid with
respect to such Tax Returns as initially filed, an amount equal to the portion of such Taxes which
relates to the portion of such Taxable period ending on the Effective Time, except to the extent
that such Taxes are reflected as a liability in the calculation of Final Working Capital and not
offset by a corresponding Tax asset reflected in such calculation. For purposes of the preceding
sentence, in the case of any Taxes that are imposed on a periodic basis and are payable for a
Straddle Period, the portion of such Tax that relates to the portion of such Straddle Period ending
on the Effective Time shall (i) in the case of any Taxes other than Taxes based upon or related to
income or receipts, be deemed to be the amount of such Tax for the entire Straddle Period
multiplied by a fraction the numerator of which is the number of days in the Straddle Period ending
on the Effective Time and the denominator of which is the number of days in the entire Tax period
and (ii) in the case of any Tax based upon or related to income or receipts, be deemed equal to the
amount which would be payable if the relevant Tax period ended on the Effective Time.

(c) Parent, the Surviving Corporation, the Stockholders, the Stockholders’ Representative, the
Company and its Subsidiaries shall cooperate fully, as and to the extent reasonably requested by
the other party, in connection with the filing of Tax Returns pursuant to this Agreement and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation shall include the
retention and (upon the other Party’s request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making employees
available on a mutually convenient basis to provide additional information and explanation of any
material provided hereunder. Parent and the Stockholders further agree, upon request, to use their
reasonable best efforts to obtain any certificate or other document from any Governmental Authority
or any other Person as may be necessary to mitigate, reduce or eliminate any Tax that could be
imposed (including with respect to the transactions contemplated hereby).

(d) To the extent permitted by Applicable Law, the parties hereto agree to cause state and
local Tax periods of the Company and its Subsidiaries to be closed at the close of business on the
Closing Date. Parent agrees that, as of the day following the Closing Date, the Surviving
Corporation shall become a member of the “affiliated group” of corporations of which Parent is a
member, as defined in Code Section 1504(a), and shall be included in a federal consolidated income
Tax Return that will be filed by such affiliated group for a taxable period that will include the
day following the Closing Date.

(e) The Surviving Corporation and Parent agree not to cause the Company or any of its
Subsidiaries to engage in any transaction on the Closing Date after the Effective Time that is
outside of the ordinary course of business, except for the transactions contemplated by this
Agreement.

(f) Neither Parent nor any of its Affiliates shall make an election under Code Section 338
with respect to Company or any stock that is held, directly or indirectly, by Company without
Stockholder Representative’s prior written consent.

(g) The Company shall have delivered to Parent a form of notice to the IRS in accordance with
the requirements of Treasury regulation Section 1.897-2(h)(2) and in form and substance reasonably
acceptable to Parent along with written authorization for Parent to deliver such notice form to the
IRS on behalf of the Company upon the Closing of the Merger.

5.10 Company’s Auditors. (a) The Company shall use its reasonable best efforts to cause
its management and independent auditors to facilitate on a timely basis (i) the preparation of
financial statements (including pro forma financial statements if required) as required by Parent
to comply with applicable Securities and Exchange Commission regulations and (ii) the review of any
Company or predecessor audit work papers, including, as applicable, the review of selected interim
financial statements and data.

(b) The Company shall use its reasonable best efforts to have the audit of the consolidated
balance sheet of the Company and the Subsidiaries for the year ended December 31, 2004 and the
related audited consolidated statements of operations, changes in stockholders equity and cash
flows for the fiscal year then ended, including the notes thereto (the “Audited Financial
Statements”), completed as promptly as practicable, which Audited Financial Statements will (i) be
prepared from the books and records of the Company and the Subsidiaries, (ii) fairly present, in
all material respects, the consolidated financial condition and the results of operations and cash
flows of the Company and the Subsidiaries as of the dates and for the periods indicated and (iii)
be prepared in accordance with GAAP applied consistently throughout the period covered thereby.
The Company shall provide Parent with a preliminary draft of the Audited Financial Statements as
soon as they are available. The Company shall provide Parent with a reasonable opportunity to make
inquiries regarding, or provide comments to, the draft of the Audited Financial Statements and
shall respond as promptly as practicable to such inquires and shall take into reasonable
consideration such comments before completing the Audited Financial Statements.

5.11 No Solicitation of Transactions. None of the Company or any Subsidiary shall,
directly or indirectly, take (and the Company shall not authorize or permit its directors,
officers, employees, accountants, consultants, legal counsel, advisors, agents and other
representatives or, to the extent within the Company’s control, other Affiliates to take) any
action to (a) encourage (including by way of furnishing non-public information), solicit, initiate
or facilitate any Acquisition Proposal, (b) enter into any agreement with respect to any
Acquisition Proposal or enter into any agreement, arrangement or understanding requiring it to
abandon, terminate or fail to consummate the Merger or any other transaction contemplated by this
Agreement or (c) participate in any way in discussions or negotiations with, or furnish any
information to, any Person in connection with, or take any other action to facilitate any inquiries
or the making of any proposal that constitutes, or could reasonably be expected to lead to, any
Acquisition Proposal. Upon execution of this Agreement, the Company shall cease immediately and
cause to be terminated any and all existing discussions or negotiations with any Persons conducted
heretofore with respect to an Acquisition Proposal and promptly request that all confidential
information with respect thereto furnished on behalf of the Company be returned.

5.12 401(k) Plan Termination. Unless Parent notifies Company otherwise in writing prior to
the Effective Time, the Company’s board of directors shall adopt resolutions terminating, effective
at least two days prior to the Effective Time, any Plan which is intended to meet the requirements
of Section 401(k) of the Code (each such Plan, a “401(k) Plan”). Prior to the Closing, the Company
shall provide Parent (a) executed resolutions of the Company’s board of directors authorizing such
termination, (b) an executed amendment to each such 401(k) Plan intended to assure compliance with
all applicable requirements of the Code and regulations thereunder and (c) an executed amendment to
each such 401(k) Plan eliminating any form of distribution of benefits thereunder other than single
lump sums. Prior to the Closing Date, the Company shall provide any and all notice of such 401(k)
Plan termination as may be required by the terms of such 401(k) Plan or obtain waivers of such
notice.

5.13 Submission to Stockholders. Immediately after (and on the same day as) the execution
and delivery of this Agreement, the Company shall submit this Agreement to the Stockholders for
adoption pursuant to Section 251(c) of the DGCL by written consent in accordance with Section 228
of the DGCL. The Company’s board of directors shall recommend that the adoption of this Agreement
by the Stockholders is advisable and that the Company’s board of directors has determined that the
Merger is fair and in the best interests of the Stockholders.

ARTICLE VI

CONDITIONS TO CLOSING

6.1 Conditions to the Company’s Obligations. The obligations of the Company to consummate
the transactions contemplated by this Agreement are subject to the fulfillment at or prior to the
Closing of each of the following conditions (any or all of which may be waived in whole or in part
by the Company).

(a) Representations and Warranties. The representations and warranties of Parent and
Merger Sub in this Agreement which are qualified as to materiality shall be true and correct in all
respects when made and on and as of the Closing Date, as though such representations and warranties
were made at and as of the Closing Date, and all other representations and warranties of Parent and
Merger Sub in this Agreement shall be true and correct in all material respects when made and on
and as of the Closing Date as though such representations and warranties were made on and as of the
Closing Date.

(b) Performance. Parent and Merger Sub shall have, in all material respects,
performed and complied with all agreements, obligations, covenants and conditions required by this
Agreement to be so performed or complied with by Parent and Merger Sub at or prior to the Effective
Time.

(c) Officer’s Certificate. Each of Parent and Merger Sub shall have delivered to the
Company a certificate, dated as of the Closing Date, executed on its behalf by an executive
officer, certifying the fulfillment of the conditions specified in Sections 6.1(a) and
6.1(b).

(d) Legal Opinion. The Company shall have received a legal opinion of Latham &
Watkins LLP, counsel to Parent and Merger Sub, in a form reasonably satisfactory to the Company
covering the matters set forth on Exhibit 6.1(d).

(e) HSR Act. All applicable waiting periods under the HSR Act shall have expired or
been terminated.

(f) No Order. No Governmental Authority, nor any federal or state court of competent
jurisdiction or arbitrator shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, judgment, injunction or arbitration award or
finding or other order (whether temporary, preliminary or permanent), in any case which is in
effect and which prevents or prohibits consummation of the Merger or any other transactions
contemplated in this Agreement or any Ancillary Agreement.

(g) Escrow Agreement. The Escrow Agreement shall have been executed and delivered by
Parent and the Escrow Agent.

6.2 Conditions to Parent’s and Merger Sub’s Obligations. The obligations of Parent and
Merger Sub to consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or prior to the Closing of each of the following conditions (any or all of which may
be waived in whole or in part by Parent and Merger Sub):

(a) Representations and Warranties. The respective representations and warranties of
each of the Company and the Stockholder Representative in this Agreement which are qualified as to
materiality or “Material Adverse Effect” shall be true and correct in all respects when made and on
and as of the Closing Date, as though such representations and warranties were made at and as of
the Closing Date (except for representations and warranties expressly stated to relate to a
specific date, in which case such representation and warranties shall be true and correct as of
such earlier date) and all other representations and warranties of the Company and the Stockholder
Representative in this Agreement shall be true and correct in all material respects when made and
on and as of the Closing Date as though such representations and warranties were made at and as of
the Closing Date (except for representations and warranties expressly stated to related to a
specific date, in which case such representations and warranties shall be true and correct in all
material respects as of such earlier date); provided that this condition shall be deemed to
be satisfied unless any failure of any such representation or warranty to be true and correct has a
Material Adverse Effect, either alone or when taken in the aggregate with other breaches of any
such representations and warranties.

(b) Performance. The Company and the Stockholder Representative shall have, in all
material respects, performed and complied with all agreements, obligations, covenants and
conditions required by this Agreement to be so performed or complied with by the Company and the
Stockholder Representative at or prior to the Closing.

(c) Officer’s Certificate. Each of the Company and the Stockholder Representative
shall have delivered to Parent and Merger Sub a certificate, dated as of the Closing Date, executed
on its behalf by an executive officer, certifying the fulfillment of the conditions specified in
Sections 6.2(a) and 6.2(b) applicable to it.

(d) Legal Opinion. Parent and Merger Sub shall have received a legal opinion of Kaye
Scholer LLP, counsel to the Company, in a form reasonably satisfactory to Parent covering the
matters set forth on Exhibit 6.2(d).

(e) HSR Act. All applicable waiting periods under the HSR Act shall have expired or
been terminated.

(f) No Order. No Governmental Authority, nor any federal or state court of competent
jurisdiction or arbitrator shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, executive order, decree, judgment, injunction or arbitration award or
finding or other order (whether temporary, preliminary or permanent), in any case which is in
effect and which prevents or prohibits consummation of the Merger or any other transactions
contemplated in this Agreement or any Ancillary Agreement.

(g) Material Adverse Effect. Since the date of this Agreement, there shall not have
occurred any Material Adverse Effect.

(h) Consents and Approvals. All consents, approvals and authorizations of any Person
or Governmental Authority required to be set forth in Section 3.4 of the Disclosure Schedule shall
have been obtained, in each case without (i) the imposition of any material condition, (ii) the
requirement of divestiture of assets or property or (iii) the requirement of expenditure of money
by Parent to a third party in exchange for any such consent.

(i) Court Proceedings. No Action shall be pending before any court or quasi-judicial
or administrative agency of any federal, state, local or foreign jurisdiction or before any
arbitrator or threatened in writing by any Governmental Authority wherein an unfavorable Order
would (i) prevent consummation of any of the transactions contemplated by this Agreement or any
Ancillary Agreement, (ii) cause any of the transactions contemplated by this Agreement or any
Ancillary Agreement to be rescinded following consummation thereof or (iii) affect adversely, in
any material respect, the right or powers of Parent to own, operate or control the Company, and no
such Order shall be in effect.

(j) Audited Financial Statements. The Company shall have delivered to Parent the
Audited Financial Statements and an unqualified audit report thereon of an independent public
accounting firm mutually acceptable to Parent and the Company.

(k) Ancillary Agreements. Each of the Ancillary Agreements to which the Company or
the Stockholder Representative is a party shall have been executed and delivered by the Company and
the Stockholder Representative and other party thereto (other than Parent or Merger Sub).

ARTICLE VII

REMEDIES

7.1 Survival. The representations, warranties, agreements, obligations and covenants
contained in this Agreement and the certificates delivered pursuant to this Agreement shall survive
the Effective Time, subject to the applicable time limitations with respect to notices of claims
set forth in Section 7.4. The parties agree that, from and after the Effective Time, the
exclusive remedies of the parties for any Damages arising out of or based upon the matters set
forth in this Agreement are the reimbursement and indemnification obligations of the parties set
forth in this Article VII. The provisions of this Section 7.1 shall not, however,
prevent or limit a cause of action under Section 9.13 to obtain an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof. Subject to Section 5.7(c), the right to indemnification, payment of
Damages or other remedy hereunder will not be affected by any investigation conducted with respect
to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after
the Effective Time, with respect to the accuracy or inaccuracy of or compliance with, any
representation, warranty, covenant or agreement.

7.2 Indemnification of Buyer Indemnitees. Subject to Sections 7.4, 7.5 and
7.7 hereof, from and after the Effective Time:

(a) The Equityholders will jointly indemnify and hold harmless Parent, the Surviving
Corporation and the Subsidiaries (the Surviving Corporation and the Subsidiaries are hereinafter
collectively referred to as the “Companies”) and their respective successors and permitted assigns,
and the officers, employees, directors and stockholders of Parent and the Companies and their
respective heirs and personal representatives (collectively, the “Buyer Indemnitees”), solely out
of the Indemnity Escrow Amount and subject to the terms of the Escrow Agreement, for the amount of
any, Damages actually incurred by a Buyer Indemnitee arising out of (i) any breach of any
representation or warranty of the Company or the Stockholder Representative contained in this
Agreement or in any certificate delivered pursuant to this Agreement (other than the
representations and warranties contained in Sections 3.1, 3.2, 3.3 and
3.4 and without giving effect to any supplement to the Disclosure Schedule other than as
permitted by Section 5.7(c)), (ii) any breach by the Company or the Stockholder
Representative of any of its respective covenants or agreements contained in this Agreement or any
certificate delivered pursuant to this Agreement that survive the Effective Time or the Escrow
Agreement, (iii) the Garcia Litigation but only to the extent that actual Damages are incurred by a
Buyer Indemnitee with respect to the Garcia Litigation pursuant to a final settlement or final,
non-appealable judgment from a court of competent jurisdiction prior to the 18-month anniversary of
the Closing Date or (iv) any “excess parachute payments” (within the meaning of Section 280G of the
Code) made to any employee of the Company on or prior to the Effective Time.

(b) The Equityholders who are signatories to this Agreement for purposes of this Article
VII severally (based on each such Equityholder’s Proportionate Percentage) and not jointly will
indemnify and hold harmless the Buyer Indemnitees for, and will pay to the Buyer Indemnitees the
amount of any, Damages actually incurred by a Buyer Indemnitee arising out of (i) any breach of any
representation or warranty of the Company contained in Sections 3.1, 3.2,
3.3 or 3.4 or in any certificate delivered pursuant to this Agreement relating to
such representations and warranties (without giving effect to any supplement to the Disclosure
Schedule other than as permitted by Section 5.7(c)), (ii) the DuPont Litigation or (iii)
the exercise of appraisal or dissenter’s rights pursuant to the DGCL by any Stockholder in
connection with the transactions contemplated by this Agreement.

7.3 Indemnification of Seller Indemnitees. Subject to Sections 7.4, 7.6
and 7.7, from and after the Effective Time, Parent and the Surviving Corporation will
indemnify and hold harmless the Stockholder Representative and its respective successors and
permitted assigns, and the officers, employees, directors and stockholders of the Stockholder
Representative, Stockholders, Optionholders and Warrantholders and their respective heirs and
personal representatives (collectively, the “Seller Indemnitees”) for, and will pay to the Seller
Indemnitees the amount of any, Damages actually incurred by a Seller Indemnitee arising out of (a)
any breach of any representation or warranty of Parent or the Merger Sub contained in this
Agreement or any certificate delivered pursuant to this Agreement, or (b) any breach by Parent or
Merger Sub of any of their covenants or agreements contained in this Agreement or any certificate
delivered pursuant to this Agreement that survive the Effective Time or the Escrow Agreement.

7.4 Time Limitations. (a) Following the Effective Time, the Buyer Indemnitees shall not
be entitled to indemnification pursuant to Section 7.2(a) unless on or before the 18-month
anniversary of the Closing Date, Parent notifies the Stockholder Representative of a claim for
Damages in accordance with Section 7.7.

(b) Following the Effective Time, the Seller Indemnitees shall not be entitled to
indemnification pursuant to Section 7.3 unless on or before the 18-month anniversary of the
Closing Date, the Stockholder Representative notifies Parent of a claim for Damages in accordance
with Section 7.7; provided, however, that the foregoing limitations shall
not apply to the obligations of Parent and/or Merger Sub to make payments under Article II.

7.5 Limitation on Amount of Indemnification of Buyer Indemnities. (a) The Buyer
Indemnitees will not be entitled to indemnification with respect to the matters described in
Section 7.2(a)(i) (other than in connection with a breach of the representations and
warranties contained in Section 3.12) or Section 7.2(b)(i) unless and until the
total of all such Damages suffered by the Buyer Indemnitees under such Sections exceeds the sum of
$1,000,000 (the “Basket”), in which event the Equityholders will be liable for all Damages
(including the initial $1,000,000 thereof). Notwithstanding the foregoing, no claim for
indemnification with respect to the matters described in Section 7.2(a)(i) (other than in
connection with a breach of the representations and warranties contained in Section 3.12)
or Section 7.2(b)(i) may be made, pursuant to this Article VII, unless the amount
of such claim shall exceed $10,000, and if such claim does not exceed such amount, the amount of
such claim shall not be taken into account in determining whether or not or to the extent to which
the Basket has been exceeded. Subject to the limitations set forth in this Section 7.5, in
no event shall (i) the Equityholders be liable for Damages pursuant to Section 7.2(a) which
exceed, in the aggregate, the Indemnity Escrow Amount and (ii) any Equityholder be liable for
Damages under this Article VII in excess of such Equityholder’s Proportionate Percentage of
the Merger Consideration.

(b) All claims for Damages made by any Buyer Indemnitee pursuant to Section 7.2(a)
shall be satisfied solely out of the Indemnity Escrow Amount, subject to the terms of the Escrow
Agreement. Claims for Damages made by any Buyer Indemnitee pursuant to Section 7.2(b) may
(but need not) be satisfied out of the Indemnity Escrow Amount, subject to the terms of the Escrow
Agreement; provided, however, that notwithstanding anything to the contrary contained herein, any
Damages disbursed to a Buyer Indemnitee from the Indemnity Escrow Amount in connection with a claim
made pursuant to Section 7.2(b) shall reduce (by the amount of such Damages) the maximum
liability of the Equityholders for indemnification claims made by the Buyer Indemnitees pursuant to
Section 7.2(a) (other than with respect to Section 7.2(a)(i) in connection with a
breach of the representations and warranties contained in Section 3.12 or Section
7.2(a)(ii) in connection with a breach of the covenants in Section 5.9).

(c) The Buyer Indemnitees’ right to indemnification pursuant to Section 7.2 on account
of any Damages shall (i) be reduced by all insurance or other third party indemnification proceeds
actually received by the Buyer Indemnitees net of any Taxes payable by the Buyer Indemnitees with
respect to such proceeds and (ii) in the case of Damages arising from any breach of the
representations and warranties set forth in Section 3.12 or the covenants set forth in
Section 5.9, (1) be reduced by the reserve for Taxes set forth in Section 7.5(c) of the
Disclosure Schedule and (2) be reduced by any Taxes reflected as a liability in the calculation of
Final Working Capital and not offset by a corresponding Tax asset reflected in such calculation.
Parent and the Companies shall use their commercially reasonable efforts to claim and recover any
Damages suffered by the Buyer Indemnitees under any such insurance policies or other third party
indemnities.

7.6 Limitation on Amount — Parent and Surviving Corporation. (a) Parent and the Surviving
Corporation will have no liability (for indemnification or otherwise) with respect to the matters
described in Section 7.3 unless and until the total of all such Damages suffered by the
Seller Indemnitees under such Section exceeds the sum of $1,000,000 (the “Buyer Basket”), in which
event Parent and the Surviving Corporation will be liable for all Damages (including the initial
$1,000,000 thereof) up to a maximum of $15,000,000; provided, however, that, no
claim for indemnification with respect to the matters described in Section 7.3 may be made,
pursuant to this Article VII, unless the amount of such claim shall exceed $10,000, and if
such claim does not exceed such amount, the amount of such claim shall not be taken into account in
determining whether or not or to the extent which the Buyer Basket has been exceeded;
provided further, however, that neither the Buyer Basket nor the foregoing
limitations shall apply to the obligations of Parent and/or Merger Sub to make payments under
Article II.

(b) The Seller Indemnitees’ right to indemnification pursuant to Section 7.3 on
account of any Damages shall be reduced by all insurance or other third party indemnification
proceeds actually received by the Seller Indemnitees net of any Taxes payable by the Seller
Indemnitees with respect to such proceeds. The Seller Indemnitees shall use their commercially
reasonable efforts to claim and recover any Damages suffered by the Seller Indemnitees under any
such insurance policies or other third party indemnities.

7.7 Procedures.

(a) Notice of Damages by Seller Indemnitee. As soon as is reasonably practicable
after a Seller Indemnitee obtains knowledge of any Damages for which any Seller Indemnitee is
entitled to indemnification pursuant to Section 7.3, the Stockholder Representative shall
give written notice of such Damages (a “Seller Claims Notice”) to Parent describing the Damages in
reasonable detail, and indicate the amount (estimated, if necessary and to the extent feasible) of
the Damages that has been or may be suffered by the applicable Seller Indemnitee. No delay in or
failure to give a Seller Claims Notice by the Stockholder Representative to Parent pursuant to this
Section 7.7(a) will adversely affect any of the other rights or remedies that the
Stockholder Representative has under this Agreement, or alter or relieve Parent or the Surviving
Corporation of their obligation to indemnify the applicable Seller Indemnitee except to the extent
that they are materially prejudiced thereby.

(b) Notice of Damages by Buyer Indemnitee.

(i) (1) Claims for Indemnification Against the Indemnity Escrow Amount. Subject to
the limitations set forth in this Article VII, if any Buyer Indemnitee believes in good
faith that it has a claim for indemnification against the Indemnity Escrow Amount pursuant to
Section 7.2(a) or 7.2(b) (an “Escrow Claim”), Parent shall, promptly after it
becomes aware of such Escrow Claim, notify the Stockholder Representative and the Escrow Agent of
such Escrow Claim by means of a written notice (an “Escrow Claims Notice”) specifying the nature,
circumstances and amount of such Escrow Claim accompanied by an affidavit of the Chief Executive
Officer or Chief Financial Officer of the Surviving Corporation setting forth with reasonable
particularity the underlying facts actually known or in good faith believed by the affiant to exist
sufficient to establish, as of the date of such affidavit, the basis for the Escrow Claim and
setting forth Parent’s good faith calculation of the Damages incurred by the applicable Buyer
Indemnitee with respect thereto. The failure by Parent to promptly deliver an Escrow Claim Notice
under this Section 7.7(b)(i)(1) will not adversely affect the applicable Buyer Indemnitee’s
right to indemnification from the Indemnity Escrow Amount except to the extent the Stockholder
Representative is materially prejudiced thereby. If, by 5:00 p.m. New York time on the 30th day
following receipt by the Stockholder Representative of an Escrow Claim Notice (the “Dispute
Period”), Parent and the Escrow Agent have not received from the Stockholder Representative notice
in writing that the Stockholder Representative objects to the Escrow Claim (or the amount of
Damages set forth therein) asserted in such Escrow Claim Notice (a “Dispute Notice”), the Escrow
Agent shall disburse to Parent from the Indemnity Escrow Amount the amount of Damages specified in
the Claim Notice subject to the limitations contained in this Article VII.

(2) Escrow Claim Disputes. If the Stockholder Representative delivers a Dispute
Notice to Parent within the Dispute Period, Parent and the Stockholder Representative shall
promptly meet and use their reasonable efforts to settle the dispute as to whether and to what
extent the Buyer Indemnitees are entitled to indemnification on account of such Escrow Claim. If
Parent and the Stockholder Representative are able to reach agreement within 30 days after Parent
receives such Dispute Notice, Parent and the Stockholder Representative shall deliver a joint
written instruction to the Escrow Agent setting forth such agreement and instructing the Escrow
Agent to release funds from the Indemnity Escrow Amount subject to the limitations contained in
this Article VII. If Parent and the Stockholder Representative are unable to reach
agreement within 30 days after Parent receives such Dispute Notice, then the dispute may be
submitted to a court of competent jurisdiction pursuant to Section 7.7(b) by either Parent
or the Stockholder Representative. For all purposes of this Article VII, Parent and the
Stockholder Representative shall cooperate with and make available to the other party and its
respective representatives all information, records and data, and shall permit reasonable access to
its facilities and personnel, as may be reasonably required in connection with the resolution of
such disputes.

(ii) Claims for Indemnification Against the Equityholders. As soon as is reasonably
practicable after a Buyer Indemnitee obtains knowledge of any Damages for which any Buyer
Indemnitee is entitled to indemnification pursuant to Section 7.2(b) (other than claims
pursuant to Section 7.2(b) for which such Buyer Indemnitee elects to seek indemnification
against the Indemnity Escrow Amount), Parent shall give written notice of such Damages (a “Buyer
Claims Notice”) to the Stockholder Representative describing the Damages in reasonable detail, and
indicate the amount (estimated, if necessary and to the extent feasible) of the Damages that has
been or may be suffered by the applicable Buyer Indemnitee. No delay in or failure to give a Buyer
Claims Notice by Parent to the Stockholder Representative pursuant to this Section
7.7(b)(ii) will adversely affect any of the other rights or remedies that Parent has under this
Agreement, or alter or relieve the Equityholders of their obligation to indemnify the applicable
Buyer Indemnitee except to the extent that they are materially prejudiced thereby.

(c) Opportunity to Defend Third Party Claims. In the event of any claim by a third
party against any Buyer Indemnitee or Seller Indemnitee for which indemnification is available
under this Article VII (whether pursuant to a lawsuit, other legal action or otherwise, a
“Third Party Claim”), the party against whom indemnification may be sought hereunder (the
“Indemnifying Party”) shall be entitled and, if it so elects, shall be obligated at its own cost,
risk and expense, (i) to take control of the defense and investigation of such Third Party Claim
and (ii) to pursue the defense thereof in good faith by appropriate actions or proceedings promptly
taken or instituted and diligently pursued, including, without limitation, to employ and engage
attorneys of its own choice reasonably acceptable to the party seeking indemnification hereunder
(the “Indemnified Party”) to handle and defend such Third Party Claim, and (b) the Indemnifying
Party shall be entitled (but not obligated), if it so elects, to compromise or settle such claim,
which compromise or settlement shall be made only with the written consent of the Indemnified
Party, such consent not to be unreasonably withheld or delayed; provided, however,
that notwithstanding the foregoing, with respect to any Third Party Claim related to Taxes, the
Stockholder Representative, on behalf of the Equityholders, shall be entitled and, if the
Stockholder Representative so elects, shall be obligated at its own cost, risk and expense to
control the conduct and resolution of any Tax Contest solely with respect to any Taxes that would
be subject to indemnification under Article VII, provided, that if any of the
issues raised in such Tax Contest could have a material impact on Taxes of the Surviving
Corporation for a Tax period or portion thereof beginning on or after the Closing Date (a
“Post-Closing Tax Period”), or that are not subject to indemnification under Article VII,
then the Stockholder Representative shall afford the Buyer Indemnitees the opportunity to control
jointly the conduct and resolution of the portion of such Tax Contest which could have a material
impact on Taxes of the Surviving Corporation in any Post-Closing Tax Period or that are not subject
to indemnification under Article VII; provided, further, that, if the
Indemnifying Party controlling the defense of a Third Party claim is the Stockholder
Representative, the consent of the Indemnified Party shall not be necessary in connection with any
compromise or settlement of such Third Party Claim that solely involves the payment of monetary
damages not exceeding an amount equal to the then remaining portion of the Indemnity Escrow Amount
minus the sum of all Damages claimed under then pending (but unresolved) Escrow Claims
Notices and do not impact the Taxes or Tax positions of the Surviving Corporation for any
Post-Closing Tax Period. In the event the Indemnifying Party elects to assume control of the
defense and investigation of such Third Party Claim in accordance with this Section 7.7(c),
the Indemnified Party may, at its own cost and expense, participate in the investigation, trial and
defense of such Third Party Claim, provided that if the named Persons to a lawsuit or other
legal action include both the Indemnifying Party and the Indemnified Party and the Indemnified
Party has been advised by counsel that there may be one or more legal defenses available to such
Indemnified Party that are different from or additional to those available to the Indemnifying
Party, the Indemnified Party shall be entitled, at the Indemnifying Party’s cost, risk and expense,
to retain one firm of separate counsel of its own choosing (along with any required local counsel).
If the Indemnifying Party fails to assume the defense of such Third Party Claim in accordance with
this Section 7.7(c) within 14 days after delivery of the Claim Notice in connection with
such Third Party Claim, the Indemnified Party against which such Third Party Claim has been
asserted shall (upon delivering notice to such effect to the Indemnifying Party) have the right to
undertake the defense, compromise and settlement of such Third Party Claim, and the Indemnifying
Party shall be liable for any resulting settlement of such Third Party Claim and for any final
judgment with respect thereto (subject to any right of appeal), if any, but only to the full extent
otherwise provided in this Agreement. In the event the Indemnifying Party assumes the defense of
the claim, the Indemnifying Party shall keep the Indemnified Party reasonably informed of the
progress of any such defense, compromise or settlement, and in the event the Indemnified Party
assumes the defense of the claim, the Indemnified Party shall keep the Indemnifying Party
reasonably informed of the progress of any such defense, compromise or settlement.

(d) Defense of the Garcia Litigation and DuPont Litigation. Notwithstanding anything
to the contrary contained in Section 7.7(c):

(i) The Stockholder Representative shall control the defense of the DuPont Litigation until
final adjudication or settlement thereof with the respective attorneys handling such defenses as of
the date of this Agreement or such other attorneys of its own choice reasonably acceptable to
Parent. The Stockholder Representative shall keep Parent reasonably informed of the progress of
such defense and any compromise or settlement of the DuPont Litigation. The Stockholder
Representative shall be entitled to compromise or settle the DuPont Litigation only with the
written consent of Parent, such consent not to be unreasonably withheld or delayed;
provided, however, the consent of Parent shall not be necessary in connection with
any compromise or settlement of the DuPont Litigation that solely involves the payment of monetary
damages and includes a full release of the Company, Parent, the Surviving Corporation and their
Subsidiaries.

(ii) Parent shall control the defense of the Garcia Litigation until final adjudication or
settlement thereof with the respective attorneys handling such defenses as of the date of this
Agreement or such other attorneys of its own choice reasonably acceptable to the Stockholder
Representative. Parent shall keep the Stockholder Representative reasonably informed of the
progress of such defense and any compromise or settlement of the Garcia Litigation. Parent shall
be entitled to compromise or settle the Garcia Litigation only with the written consent of the
Stockholder Representative, such consent not to be unreasonably withheld or delayed.

7.8 Adjustment to Merger Consideration. Any payments made pursuant to this Article
VII shall be construed as an adjustment to the Merger Consideration.

ARTICLE VIII

TERMINATION

8.1 Termination. This Agreement may be terminated and the transactions contemplated hereby
may be abandoned:

(a) at any time, by mutual written agreement of the Company and Parent;

(b) at any time after August 31, 2005 (the “Outside Date”), by the Company upon
written notice to Parent, if the Closing shall not have occurred for any reason other than
a breach of this Agreement by the Company or the Stockholder Representative;

(c) at any time after the Outside Date, by Parent upon written notice to the Company,
if the Closing shall not have occurred for any reason other than a breach of this Agreement
by Parent or Merger Sub;

(d) at any time, by the Company, if any of the conditions contained in Section
6.1 shall have become incapable of fulfillment (other than as a result of a breach of
this Agreement by the Company) and remain incapable of fulfillment after 30 days written
notice to Parent describing the circumstances which rendered such condition(s) incapable of
fulfillment;

(e) at any time, by Parent, if any of the conditions contained in Section 6.2
shall have become incapable of fulfillment (other than as a result of a breach of this
Agreement by Parent) and remain incapable of fulfillment after 30 days written notice to
the Stockholder Representative describing the circumstances rendering such condition(s)
incapable of fulfillment; provided, that, if Parent elects to terminate this Agreement as a
result of one or more supplements to the Disclosure Schedule delivered to Parent by the
Company pursuant to Section 5.7(b), Parent shall be required to do so within the
time period specified therefor in Section 5.7(c); or

(f) no later than 5:00 p.m. (New York time) on April 25, 2005, by Parent, if less than
five of the Key Employees have executed and delivered to Parent the form of Employee
Confirmation Agreement set forth opposite such Key Employee’s name in Section 8.1(f) of the
Disclosure Schedule.

8.2 Procedure and Effect of Termination. In the event of the termination of this Agreement
and the abandonment of the transactions contemplated hereby pursuant to Section 7.1, this
Agreement shall become void and there shall be no liability on the part of any party hereto except
(a) the obligations provided for in this Sections 8.2, 5.2(b) and 5.5 and
Article IX shall survive any such termination of this Agreement and (b) nothing herein
shall relieve any party from liability for breach of this Agreement.

ARTICLE IX

MISCELLANEOUS

9.1 Further Assurances. From time to time after the Closing Date, at the request of the
other party hereto and at the expense of the party so requesting, the parties hereto shall execute
and deliver to such requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate the transactions contemplated hereby.

9.2 Stockholder Representative.

(a) Appointment. ASP VUTEK L.L.C. hereby represents and warrants to Parent and Merger
Sub that it has been appointed as agent and attorney in fact for and on behalf of the Equityholders
(the “Stockholder Representative”). Without limiting the generality of the foregoing, the
Stockholder Representative hereby represents and warrants to Parent and Merger Sub that it has full
power and authority, on behalf of each Equityholder and its, his or her successors and assigns, to
(i) interpret the terms and provisions of this Agreement, including, without limitation,
Articles II and VII, and the Escrow Agreement; (ii) execute and deliver all
agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings,
amendments and other documents required or permitted to be given in connection with the
consummation of the transactions contemplated by this Agreement and the Escrow Agreement; (iii)
receive service of process in connection with any claims under this Agreement or the Escrow
Agreement; (iv) agree to, negotiate, enter into settlements and compromises of, and demand
arbitration and comply with orders of courts and awards of arbitrators with respect to such claims,
and to take all actions necessary or appropriate in the sole judgment of the Stockholder
Representative for the accomplishment of the foregoing, including, without limitation, taking all
such actions as may be necessary under Articles II and VIII and the Escrow
Agreement; (v) give and receive notices and communications; (vi) authorize delivery to Parent of
the Adjustment Escrow Amount, the Indemnity Escrow Amount or any portion thereof and any interest
earned thereon in accordance with this Agreement and the Escrow Agreement; (vii) object to such
deliveries; (viii) distribute the proceeds from the consummation of the transactions contemplated
by this Agreement, including, without limitation, the Adjustment Escrow Amount, the Indemnity
Escrow Amount and any interest earned thereon, to the Equityholders in accordance with this
Agreement; (ix) receive funds and give receipt for funds under the Escrow Agreement; (x) authorize
the removal of the Escrow Agent and the appointment of a successor escrow agent in accordance with
the terms of the Escrow Agreement; (xi) receive funds and give receipt for funds under this
Agreement, including in respect of Article II; and (xii) take all actions necessary or
appropriate in the sole judgment of the Stockholder Representative on behalf of the Equityholders
in connection with this Agreement and the Escrow Agreement.

(b) Successors. Such agency may be changed by the holders of a majority in interest
of the Adjustment Escrow Amount and Indemnity Escrow Amount (taken together) (collectively, the
“Majority-in-Interest”) from time to time upon not less than 10 days’ prior written notice to
Parent. The Stockholder Representative, or any successor hereafter appointed, may resign at any
time by written notice to Parent and the Equityholders. A successor Stockholder Representative
will be named by a Majority-in-Interest within five Business Days of such resignation. All power,
authority, rights and privileges conferred herein to the Stockholder Representative will apply to
any successor Stockholder Representative.

(c) Liability. The Stockholder Representative will not be liable for any act done or
omitted under this Agreement or the Escrow Agreement as Stockholder Representative while acting in
good faith, and any act taken or omitted to be taken pursuant to the advice of counsel will be
conclusive evidence of such good faith.

(d) Reliance. From and after the Effective Time, each of Parent, Merger Sub and the
Surviving Corporation is entitled to deal exclusively with the Stockholder Representative on all
matters relating to this Agreement and the Escrow Agreement and each agrees to deal with the
Stockholder Representative on an exclusive basis. A decision, act, consent or instruction of the
Stockholder Representative constitutes a decision of all the Equityholders. Such decision, act,
consent or instruction is final, binding and conclusive upon each Equityholder and the Escrow Agent
and Parent, Merger Sub and the Surviving Corporation may rely upon any decision, act, consent or
instruction of the Stockholder Representative. Notices or communications to or from the
Stockholder Representative will constitute notice to or from each of the Equityholders.

9.3 Notices. All notices, requests, demands, waivers and communications required or
permitted to be given under this Agreement shall be in writing and shall be deemed to have been
duly given if delivered (i) by hand (including by reputable overnight courier), (ii) by mail
(certified or registered mail, return receipt requested) or (iii) by telecopy facsimile
transmission (receipt of which is confirmed):

(a) If to Parent and Merger Sub or, after the Closing, the Surviving Corporation, to:

Electronics For Imaging, Inc.

303 Velocity Way

Foster City, California 94404

Telecopy: (650) 357-3776

Attention: James Etheridge, Esq.

with a copy to:

Latham & Watkins LLP

135 Commonwealth Drive

Menlo Park, California 94025

Telecopy: (650) 463-2600

Attention: Robert A. Koenig, Esq.

(b) If to the Company prior to the Closing, or the Stockholder Representative, to:

c/o ASP VUTEK L.L.C.

666 Third Avenue

New York, New York 10017

Telecopy: (212) 697-5524

Attention: Paul Rossetti and Matthew F. LeBaron

with a copy to:

Kaye Scholer LLP

425 Park Avenue

New York, New York 10022

Telecopy: (212) 836-8689

Attention: Emanuel Cherney, Esq.

or to such other person or address as any party shall specify by notice in writing to the other
party. All such notices, requests, demands, waivers and communications shall be deemed to have
been given (i) on the date on which so hand-delivered, (ii) on the third business day following the
date on which so mailed and (iii) on the date on which telecopied and confirmed, except for a
notice of change of address, which shall be effective only upon receipt thereof.

9.4 Exhibits and Schedules. Any matter, information or item disclosed in the schedules
delivered by the Company or in any of the Exhibits attached hereto, under any specific
representation or warranty or schedule number hereof, shall be deemed to have been disclosed for
all purposes of this Agreement in response to every representation or warranty in this Agreement in
respect of which such disclosure is reasonably apparent. The inclusion of any matter, information
or item in any schedule to this Agreement shall not be deemed to constitute an admission of any
liability by any Company to any third party or otherwise imply, that any such matter, information
or item is material or creates a measure for materiality for the purposes of this Agreement.

9.5 Amendment, Modification and Waiver. This Agreement may be amended, modified or
supplemented at any time by written agreement of the parties hereto. Any failure of the Company to
comply with any term or provision of this Agreement may be waived by Parent and Merger Sub, and any
failure of Parent and Merger Sub to comply with any term or provision of this Agreement may be
waived by Stockholder Representative, at any time by an instrument in writing signed by or on
behalf of such other party, but such waiver shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure to comply.

9.6 Entire Agreement. This Agreement, the Disclosure Schedule, the Ancillary Agreements
and the exhibits, schedules and other documents referred to herein and therein, which form a part
hereof and thereof, contain the entire understanding of the parties hereto with respect to the
subject matter hereof. This Agreement supersedes all prior agreements and understandings, oral and
written, with respect to its subject matter.

9.7 Severability. Should any provision of this Agreement for any reason be declared
invalid or unenforceable, such decision shall not affect the validity or enforceability of any of
the other provisions of this Agreement, which other provisions shall remain in full force and
effect and the application of such invalid or unenforceable provision to persons or circumstances
other than those as to which it is held invalid or unenforceable shall be valid and be enforced to
the fullest extent permitted by law.

9.8 Binding Effect; Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective heirs, executors,
successors and permitted assigns, but except as contemplated herein, neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned, directly or indirectly, by any
party without the prior written consent of the other parties hereto, except that Parent and Merger
Sub may assign all or any portion of its rights hereunder to one or more of its affiliates,
provided that, no such assignment shall relieve Parent and Merger Sub of its obligations
hereunder.

9.9 No Third-Party Beneficiaries. Other than the Stockholders, Optionholders and the
current and former officers, directors and employees of the Company pursuant to Section
5.8, this Agreement is not intended and shall not be deemed to confer upon or give any Person
not a party or a permitted assign of a party to this Agreement.

9.10 Fees and Expenses Transfer Taxes. (a) Subject to Article II and Section
5.6, whether or not the transactions contemplated hereby are consummated pursuant hereto, each
party hereto shall pay all fees and expenses incurred by it or on its behalf in connection with
this Agreement, and the consummation of the transactions contemplated hereby.

(b) The Parent and Merger Sub shall be liable for and shall pay all applicable sales,
transfer, recording, deed, stamp and other similar taxes, including, without limitation, any real
property transfer or gains taxes (if any), resulting from the consummation of the transactions
contemplated by this Agreement.

9.11 Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same instrument.

9.12 Interpretation. The article and section headings contained in this Agreement are
solely for the purpose of reference, are not part of the agreement of the parties and shall not in
any way affect the meaning or interpretation of this Agreement. As used in this Agreement, the
term “Person” shall mean and include an individual, a partnership, a joint venture, a corporation,
a limited liability company, a trust, an unincorporated organization and a government or any
department or agency thereof. As used in this Agreement, the term “Affiliate” shall have the
meaning set forth in Rule 12b-2 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended.

9.13 Enforcement of Agreement. The parties hereto agree that irreparable damage would
occur in the event that any of the provisions of this Agreement was not performed in accordance
with its specific terms or was otherwise breached. It is accordingly agreed that the parties will
be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any other remedy to which
they are entitled at law or in equity.

9.14 Forum; Service of Process. Any legal suit, action or proceeding brought by any party
or any of its affiliates arising out of or based upon this Agreement shall only be instituted in
any federal or state court in New York County, New York, the federal court in the Northern District
of California or any state court located in San Mateo County, California, and each party waives any
objection which it may now or hereafter have to the laying of venue of any such proceeding, and
irrevocably submits to the jurisdiction of such courts in any such suit, action or proceeding.

9.15 Governing Law. This Agreement shall be governed by the laws of the State of New York,
excluding choice of law principles that would require the application of the laws of a jurisdiction
other than the State of New York.

9.16 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE PARTIES HERETO
HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS
TRANSACTION. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES
THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE PARTIES HERETO ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO
ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO
THIS AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS WAIVER WITH ITS OR
HIS, AS THE CASE MAY BE, LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

ARTICLE X

DEFINITIONS

“401(k) Plan” — as defined in Section 5.12.

“Acquisition Proposal” means any offer or proposal concerning any (i) merger, consolidation,
business combination, or similar transaction involving the Company or any Subsidiary, (ii) sale,
lease or other disposition directly or indirectly by merger, consolidation, business combination,
share exchange, joint venture, or otherwise of assets of the Company or any Subsidiary representing
10% or more of the consolidated assets of the Company and the Subsidiaries, (iii) issuance, sale,
or other disposition of (including by way of merger, consolidation, business combination, share
exchange, joint venture, or any similar transaction) securities (or options, rights or warrants to
purchase, or securities convertible into or exchangeable for such securities) representing 10% or
more of the voting power of the Company or (iv) transaction in which any Person shall acquire
beneficial ownership, or the right to acquire beneficial ownership or any group shall have been
formed which beneficially owns or has the right to acquire beneficial ownership of 10% or more of
the outstanding voting capital stock of the Company or (v) any combination of the foregoing (other
than the Merger).

“Action” means any action, order, writ, injunction, judgment or decree outstanding or claim,
suit, litigation, proceeding, investigation or dispute.

“Adjustment Escrow Amount” means $2,500,000.

“Affiliate” — as defined in Section 9.12.

“Aggregate Per Option Amount” — as defined in Section 2.3(a).

“Aggregate Per Share Consideration” — as defined in Section 2.1(c).

“Aggregate Per Warrant Amount” — as defined in Section 2.3(b).

“Agreement” — as defined in the preamble of this Agreement.

“Ancillary Agreements” means the Escrow Agreement and the other agreements contemplated by
this Agreement to be entered into on or prior to the Closing Date, other than the Employee
Confirmation Agreements.

“Applicable Accounting Principles” means GAAP applied in a manner consistent with the
preparation of the Balance Sheet.

“Applicable Law” means any statute, law, ordinance, rule or regulation of a Governmental
Authority applicable to the Company, Parent, Merger Sub or any of their respective assets, as the
case may be.

“Arbitration Firm” means Deloitte & Touche LLP (Chicago office) or, if such firm is unable or
unwilling to act, such other nationally recognized independent public accounting firm as shall be
agreed upon by Parent and the Stockholder Representative in writing.

“Audited Financial Statements” — as defined in Section 5.10(b).

“Balance Sheet” — as defined in Section 3.5.

“Basket” — as defined in Section 7.5(a).

“Business Day” means any day other than a Saturday, Sunday or a day on which banks in New York
are authorized or obligated by Applicable Law or executive order to close.

“Buyer Agreements” — as defined in Section 4.1.

“Buyer Basket” — as defined in Section 7.6(a).

“Buyer Claims Notice” — as defined in Section 7.7(b)(ii).

“Buyer Indemnitees” — as defined in Section 7.2.

“Certificate of Merger” — as defined in Section 1.2.

“Certificates” — as defined in Section 2.3(a).

“Closing” — as defined in Section 1.3.

“Closing Date” — as defined in Section 1.3.

“COBRA” — as defined in Section 3.11(g).

“Code” means the Internal Revenue Code of 1986, as amended.

“Common Share” — as defined in Section 2.1(c).

“Companies” — as defined in Section 7.2.

“Company” — as defined in the preamble of this Agreement.

“Company Common Stock” means the common stock, par value $0.01 per share, of the Company.

“Company Debt” means all amounts outstanding under the Credit Agreement and all other
Indebtedness of the Company .

“Company’s Knowledge” means the actual knowledge after reasonable inquiry of Larry D. Greene,
Arthur L. Cleary, Daniel F. Harrington, Joseph Lahut, Kevin M. Sykes, Gary W. Van Scoter, Raymond
Huizenga and Scott R. Schinlever; provided, however, that, for purposes of Section
3.5(b), “Company’s Knowledge” shall be limited to the actual knowledge of such individuals.

“Confidentiality Agreement” — as defined in Section 5.2(b).

“Credit Agreement” means a Credit and Guaranty Agreement by and among VUTEk, Inc., its
Subsidiaries party thereto from time to time including Inkware LLC as Guarantors, the Lenders party
thereto from time to time, Goldman Sachs Credit Partners L.P. as Lead Arranger, Sole Book Runner
and Syndication Agent and General Capital Corporation as Administrative Agent and as Collateral
Agent, dated June 25, 2004.

“Current Assets” means, as of any date, the consolidated current assets of the Company and the
Subsidiaries, which current assets shall include only the assets which would be classified as
current assets under GAAP.

“Current Liabilities” means, (i) as of any date, the consolidated current liabilities of the
Company and the Subsidiaries, which current liabilities shall include only the liabilities which
would be classified as current liabilities under GAAP and (ii) for purposes of preparing the
Working Capital Statement and calculating Final Working Capital, shall include any Seller Expense
which remains unpaid as of the Closing Date at the time the Seller Expenses are paid under
Section 2.2.

“Damages” means any damage, claim, loss, cost, Tax, diminution or reduction of Tax attributes,
liability or expense, including, without limitation, court costs, expenses of investigation and
reasonable attorneys’ fees and expenses, diminution of value, lost profits, response action,
removal action or remedial action, but shall exclude any punitive damages.

“DGCL” — as defined in the recitals to this Agreement.

“Disclosure Schedule” — as defined in the introductory paragraph to Article III.

“Dissenting Shares” — as defined in Section 2.1(d).

“Dispute Period” — as defined in Section 7.7(b).

“Dispute Notice” — as defined in Section 7.7(b).

“Downward Adjustment Amount” — as defined in Section 2.6(d).

“DuPont Litigation” means the lawsuit entitled E.I. DuPont and NeMours and Co. v. VUTEk, Inc.,
(Case No. 04C- 07-078 MMJ, Superior Court of the State of Delaware in and for New Castle County)
and any other lawsuit or proceeding brought by E.I. DuPont and NeMours and Co. and/or its
Affiliates against Parent, the Company, the Surviving Corporation or any of their Affiliates
alleging the same, or a substantially similar, set of facts as alleged in such case.

“Effective Time” — as defined in Section 1.2.

“Employee Confirmation Agreement” means an employee confirmation agreement in the form
attached hereto as Exhibit 8.1(f)(i) or an employment agreement in the form attached hereto
as Exhibit 8.1(f)(ii).

“Encumbrance” means any claim, lien, pledge, option, charge, easement, unpaid Tax assessment,
security interest, deed of trust, mortgage, right-of-way, encroachment, building or use
restriction, conditional sales agreement, encumbrance or other right of third parties, whether
voluntarily incurred or arising by operation of law, and includes any agreement to give any of the
foregoing in the future, and any contingent sale or other title retention agreement or lease in the
nature thereof.

“Environmental Laws” means any federal, state, local or foreign statute, law, ordinance,
regulation, rule, code or Order and any legally enforceable judicial or administrative
interpretation thereof, including (i) the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), the Emergency Planning and Community Right-To-Know Act, the Solid Waste
Disposal Act, the Resource Conservation and Recovery Act, the Clean Air Act, the Water Pollution
Control Act, the Toxic Substances Control Act, the Hazardous Materials Transportation Act, and the
Occupational Safety and Health Act, each as amended and supplemented, and any regulations
promulgated pursuant to such laws, and any analogous state or local statutes or regulations, and
(ii) any judicial or administrative Order, permit or authorization, in each case having the force
and effect of law, relating to the pollution, protection, investigation or restoration of the
environment, health and safety as affected by the environment or natural resources, including,
without limitation, those relating to the use, handling, presence, transportation, treatment,
storage, disposal, release, threatened release or discharge of Hazardous Materials or noise, odor,
wetlands, pollution or contamination.

“Equity Interest” means any share, capital stock, partnership, member or similar interest in
any entity, and any option, warrant, right or security (including debt securities) convertible,
exchangeable or exercisable therefor.

“Equityholders” means the Stockholders, Optionholders and Warrantholders.

“ERISA” — as defined in Section 3.11(a).

“ERISA Affiliate” means any entity which is (or at any relevant time was) a member of a
“controlled group of corporations” with, under “common control” with, or a member of an “affiliated
service group” with, or otherwise required to be aggregated with, the Company pursuant to Sections
414(b), (c), (m) or (o) of the Code.

“Escrow Agent” means JP Morgan Chase Bank, N.A.

“Escrow Agreement” means an agreement by and among Parent, the Escrow Agent and the
Stockholders Representative substantially in the form of Exhibit 2.2, executed and
delivered at the Closing.

“Escrow Claim” — as defined in Section 7.7(b)(i)(1).

“Escrow Claim Notice” — as defined in Section 7.7(b)(i)(1).

“Final Working Capital” — as defined in Section 2.6(a).

“Financial Statements” — as defined in Section 3.5.

“GAAP” — as defined in Section 3.5.

“Garcia Litigation” means the lawsuit entitled Veda Marie Garcia, et al., v. Allied
Diagnostics Imaging Resources, et al. (Case No. BC310867, Superior Court of the State of California
for the County of Los Angeles) and any other lawsuit or proceedings brought by Veda Marie Garcia or
her heirs, successors or assigns against Parent, the Company, the Surviving Corporation or any of
their Affiliates alleging the same, or a substantially similar set of facts as alleged in such
case.

“Governmental Approval” means any consent, approval, order, or authorization of, or
registration, declaration or filing with any Governmental Authority.

“Governmental Authority” means any government or political subdivision, whether federal,
state, local or foreign, or any agency or instrumentality of any such government or political
subdivision, or any federal, state, local or foreign court or arbitrator.

“Hazardous Materials” means (i) any petroleum, petroleum products, byproducts or breakdown
products, radioactive materials, asbestos-containing materials or polychlorinated biphenyls or (ii)
any chemical, material or other substance defined or regulated as toxic or hazardous or as a
pollutant or contaminant or waste under any applicable Environmental Law.

“Hazardous Substances” — as defined in Section 3.16.

“HIPAA” — as defined in Section 3.11(f).

“HSR Act” means the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder.

“HSR Filing” — as defined in Section 5.6.

“Indebtedness” means, without duplication, all indebtedness of the Company and the
Subsidiaries for borrowed money or in the form of deferred consideration related to the purchase of
any capital asset, including any amount due under any earn-out or contingent payment arrangement,
together with all accrued interest thereon, all liabilities under all capital leases, retroactive
insurance premium obligations, interest rate swap and hedging obligations, if any, and all other
indebtedness under derivatives, swap or exchange agreements, letter of credit reimbursement
agreements and other obligation for any guaranty of the indebtedness of any other Person, together
with all accrued interest thereon, and in each such case all premiums, penalties, breakage costs,
unwind costs, fees, termination costs, redemption costs, expenses and other charges with respect to
any thereof.

“Indemnity Escrow Amount” means $15,000,000.

“Intellectual Property” — as defined in Section 3.9(b).

“IRS” — as defined in Section 3.11(b).

“Key Employees” the individuals set forth in Section 8.1(f) of the Disclosure Schedule.

“Letter of Transmittal” — as defined in Section 2.4(a).

“Licenses-In” — as defined in Section 3.9(a).

“Liens” means, with respect to any specified asset, any and all liens, claims, encumbrances,
options, pledges and security interests thereon except for Permitted Liens and, with respect to
Real Property, Real Estate Permitted Liens.

“Majority-in-Interest” — as defined in Section 9.2(b).

“Material Adverse Effect” means any materially adverse effect on or material adverse change
with respect to (a) the business, operations, assets, liabilities, condition (financial or
otherwise), or results of operations of the Company and the Subsidiaries taken as a whole, other
than effects or changes: (i) resulting from general economic conditions or the financial or
securities markets generally; (ii) occurring generally in the Company’s industry; (iii) resulting
from the transactions contemplated by this Agreement or the announcement to third parties and the
public of the transactions contemplated by this Agreement; (iv) resulting from changes in laws or
GAAP after the date hereof; or (v) resulting from an outbreak or escalation of hostilities
involving any country where the Company does business, the declaration by any country where the
Company does business of a national emergency or war, or the occurrence of any acts of terrorism
and any actions or reactions thereto or (b) the right or ability of the Company to consummate any
of the transactions contemplated by this Agreement without material delay.

“Material Contract” — as defined in Section 3.13.

“Merger” — as defined in the recitals of this Agreement.

“Merger Consideration” means (i) the sum of (a) $281,000,000, (b) the sum of all of the
exercise prices for all of the Options (other than the Tranche B Options) and Warrants and (c) the
Working Capital Overage, if any, minus (ii) the sum of (a) the aggregate amount of Company
Debt outstanding immediately prior to the Effective Time, (b) the Seller Expenses to the extent
unpaid prior to the Closing Date, (c) the Working Capital Underage, if any, (d) the Adjustment
Escrow Amount and (e) the Indemnity Escrow Amount.

“Merger Sub” — as defined in the preamble of this Agreement.

“Merger Sub Common Stock” — as defined in Section 2.1(a).

“Net Working Capital” means, at any date, the excess of (i) all Current Assets as of such
date, over (ii) all Current Liabilities as of such date.

“Nonqualified Stock Option Plan” means the Nonqualified Stock Option Plan of the Company, as
approved by the Company’s board of directors on April 24, 2000.

“Notice of Disagreement” — as defined in Section 2.6(b).

“Option” means each option or other right, issued and outstanding immediately prior to the
Effective Time, to purchase Company Common Stock, granted under any Option Plan.

“Option Consideration” — as defined in Section 2.3(a).

“Option Plan” means any stock option plan or agreement of the Company, including the
Nonqualified Stock Option Plan, the Company’s Tranche A Agreement and Tranche B Agreement, and the
Stock Option Agreements of Arthur Cleary, Gerald O’Neil and Douglas Keslin, each dated April 18,
2000.

“Optionholders” means the holders of the Options.

“Order” means any award, decision, judgment, injunction, order, ruling subpoena, decree or
verdict entered, issued, made or rendered by any Governmental Authority.

“Outside Date” — as defined in Section 7.1(b).

“Parent” — as defined in the preamble of this Agreement.

“Payment Certificate” — as defined in Section 2.2.

“Payoff Letters” means the letter or letters provided by the lender or lenders under the
Company Debt in connection with the repayment thereof at the Effective Time as contemplated by
Section 2.2.

“PBGC” — as defined in Section 3.11(i).

“Pension Plan” — as defined in Section 3.11(a).

“Per Option Amount” — as defined in Section 2.3(a).

“Per Share Amount” means the quotient obtained by dividing (a) the Merger Consideration,
by (b) the aggregate number of shares of Company Common Stock, Options (other than the
Tranche B Options) and Warrants outstanding immediately prior to the Effective Time.

“Per Share Portion” means, for each Common Share, Option (other than the Tranche B Options) or
Warrant, the quotient obtained by dividing (a) one, by (b) the aggregate number of Common
Shares, Options (other than the Tranche B Options) and Warrants outstanding immediately prior to
the Effective Time.

“Per Warrant Amount” as defined in Section 2.3(b).

“Permitted Liens” means (i) mechanics’, carriers’, or workmen’s, repairmen’s or similar Liens
arising or incurred in the ordinary course of business; (ii) Liens for taxes, assessments and any
other governmental charges which are not due and payable or which may hereafter be paid without
penalty or which are being contested in good faith by appropriate proceedings; (iii) other
imperfections of title or encumbrances, if any, which imperfections of title or other encumbrances,
individually or in the aggregate, do not materially impair the use or value of the property to
which they relate; (iv) any other Liens that will be terminated at or prior to Closing in
accordance with this Agreement; and (v) Liens relating to the operating leases of equipment set
forth on Section 3.13(g) of the Disclosure Schedule.

“Person” — as defined in Section 9.12.

“Personal Property” — as defined in Section 3.7(a).

“Plan” and “Plans” — as defined in Section 3.11(a).

“Post-Closing Tax Period” — as defined in Section 7.7(c).

“Product Liability” means any property damage or bodily injury arising as a result of the
intended or any foreseeable use of products manufactured, sold or distributed by the Company.

“Proportionate Percentage” means, for each Equityholder who is a signatory to this Agreement
for purposes of Article VII, the quotient obtained by dividing (a) the aggregate number of
Common Shares, Options (other than the Tranche B Options)and Warrants held by such Equityholder
immediately prior to the consummation of the transactions contemplated hereby, by (b) the
aggregate number of Common Shares, Options (other than the Tranche B Options) and Warrants held by
all Equityholders who are signatories to this Agreement for purposes of Article VII
immediately prior to the consummation of the transactions contemplated hereby.

“Proprietary Rights” means all (i) U.S. and foreign patents and patent applications and
disclosures relating thereto (and any patents that issue as a result of those patent applications),
and any renewals, reissues, reexaminations, extensions, continuations, continuations-in-part,
divisions and substitutions relating to any of the patents and patent applications, as well as all
related foreign patent and patent applications that are counterparts to such patents and patent
applications, (ii) U.S. and foreign trademarks, service marks, trade dress, logos, trade names and
corporate names and the goodwill associated therewith and registrations and applications for
registration thereof, (iii) U.S. and foreign copyrights and rights under copyrights, including
moral rights, and registrations and applications for registration thereof, (iv) U.S. and foreign
mask work rights and registrations and applications for registration thereof, (v) Trade Secrets,
(f) URL and domain name registrations, (vi) inventions (whether or not patentable) and improvements
thereto, (vii) all works of authorship (whether or not copyrightable), (viii) all Software, (ix)
all claims and causes of action arising out of or related to infringement or misappropriation by
any of the foregoing, (x) other proprietary rights, (xi) copies and tangible embodiments thereof
(in whatever form or medium) and (xii) licenses (whether or not labeled as such) from third parties
granting any rights with respect to any of the foregoing.

“Real Estate Permitted Liens” means:

(i) All building codes and zoning ordinances and other laws, ordinances, regulations,
rules, orders or determinations of any federal, state, county, municipal or other
Governmental Authority heretofore, now or hereafter enacted, made or issued by any such
Governmental Authority affecting the Real Property, or any portion thereof, which do not
impair in any material respect the use of the Real Property to which they relate;

(ii) All easements, rights-of-way, servitudes, covenants, conditions, restrictions,
reservations, licenses, agreements, imperfections of title and other similar matters which
do not impair in any material respect the use of the Real Property to which they relate;

(iii) All electric power, telephone, gas, sanitary sewer, storm sewer, water, steam,
compressed air and other utility lines, pipelines, service lines and similar facilities now
located on, over or under the Real Property, and all licenses, easements, flowage rights,
rights-of-way and other similar agreements relating thereto granted in the ordinary course
of business which do not impair in any material respect the use of the Real Property to
which they relate;

(iv) The liens of taxes and assessments not yet due and payable or which may hereafter
be paid without penalty or which are being contested in good faith by appropriate
proceedings;

(v) All existing public and private roads and streets (whether dedicated or
undedicated), and all railroad lines and rights-of-way affecting the Real Property;

(vi) The Real Property Leases;

(vii) Mechanics’, carriers’, or workmen’s repairmen’s or similar Liens arising or
incurred in the ordinary course of business; and

(viii) Any Liens that will be terminated at or prior to Closing in accordance with
this Agreement.

“Real Property” — as defined in Section 3.8(a).

“Real Property Lease” — as defined in Section 3.8(a).

“Reserve Shares” — as defined in Section 2.3(c).

“Secretary of State” — as defined in Section 1.2.

“Seller Agreements” — as defined in Section 3.1.

“Seller Claims Notice” — as defined in Section 7.7(a).

“Seller Indemnitees” — as defined in Section 7.3.

“Seller Expenses” means all costs, fees and expenses incurred by the Company in connection
with the consummation of the transactions contemplated hereby, including, without limitation, any
brokerage fees, commissions, finders’ fees or financial advisory fees and the fees and expenses of
Kaye Scholer LLP and American Securities Capital Partners, L.P.

“Software” means computer software, programs and databases in any form, including Internet web
sites, web content and links, source code, executable code, tools, developers kits, utilities,
graphical user interfaces, menus, images, icons, and forms, and all versions, updates, corrections,
enhancements and modifications thereof, and all related documentation, developer notes, comments
and annotations related thereto.

“Stockholder Representative” — as defined in Section 8.2.

“Stockholders” means the holders of the Company Common Stock.

“Straddle Period” — as defined in Section 5.9(b).

“Subsidiaries” — as defined in Section 3.3.

“Surviving Corporation” — as defined in Section 1.1.

“Surviving Corporation Common Stock” — as defined in Section 2.1(a).

“Target Working Capital” means $25,460,000.

“Tax” (including “Taxes”) means all U.S. federal, state, local, non-U.S. and other net
income, gross income, gross receipts, sales, use ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium, property, windfall
profits, customs, duties or other taxes of any kind whatsoever, together with any interest and any
penalties, additions to tax or additional amounts with respect thereto.

“Tax Return” means any return, declaration, report, claim for refund, statement, information
return or statement or other document required to be filed with respect to Taxes including any
schedule thereto, and including any amendment thereof.

“Third Party Claim” — as defined in Section 7.7(c).

“Trade Secrets” means all trade secrets and confidential business information (including
ideas, formulas, compositions, know-how, research and development information, software, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works, financial,
marketing and business data, pricing and cost information, business and marketing plans marketing
mailing and e-mail lists, and customer and supplier mailing and e-mail lists and information).

“Tranche B Options” means the Options granted to Arthur L. Cleary and Joseph Lahut under the
Company’s Tranche B Option Plan.

“Upward Adjustment Amount” — as defined in Section 2.6(e).

“WARN Act” — as defined in Section 3.15.

“Warrant” means each warranty to purchase Company Common Stock, in each case issued and
outstanding immediately prior to the Effective Time.

“Warrant Consideration” — as defined on Section 2.3(b).

“Warrantholder” means a holder of a Warrant.

“Welfare Plan” — as defined in Section 3.11(a).

“Working Capital Estimate” — as defined in Section 2.5.

“Working Capital Overage” — as defined in Section 2.5.

“Working Capital Statement” — as defined in Section 2.6(a).

“Working Capital Underage” — as defined in Section 2.5.

3

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.

	 	 	 	 	 
	VUTEK, INC.	 	 
	By:	 	/s/ Larry D. Green

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	Name:
	 	Larry D. Green
	 
	 	 	 	 
	
 
	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 
	ELECTRONICS FOR IMAGING, INC.

	 
	 	 	 	 
	By:	 	/s/ Guy Gecht

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	Name:
	 	Guy Gecht
	 
	 	 	 	 
	
 
	 	Title:
	 	Chief Executive Officer
	 
	 	 	 	 
	EFI MERGER SUB, INC.

	 
	 	 	 	 
	By:	 	/s/ Joseph Cutts

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	Name:
	 	Joseph Cutts
	 
	 	 	 	 
	
 
	 	Title:
	 	President / Chief Executive Officer
	 
	 	 	 	 

4

The undersigned hereby agrees to serve as the Stockholder Representative in connection with
the Merger Agreement by and among VUTEk, Inc., Electronics For Imaging, Inc. and EFI Merger Sub,
Inc., dated as of April 14, 2005, and the Escrow Agreement, dated as of the Closing Date, by and
among VUTEk, Inc., Electronics For Imaging, Inc. and JP Morgan Chase Bank, N.A., as escrow agent,
and hereby agrees to act and perform its obligations thereunder.

	 	 	 	 	 
	ASP VUTEK L.L.C.	 	 
	By:	 	/s/ Michael G. Fisch

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	Name:
	 	Michael G. Fisch
	 
	 	 	 	 
	
 
	 	Title:
	 	President of American Securities

Capital Partners GP Corp., the

general partner of American

Securities Capital Partners, L.P.,

the managing member of ASP VUTEK

L.L.C.
	 
	 	 	 	 

5

The undersigned Equityholder hereby agrees to the provisions of Article VII of the
Merger Agreement, dated as of April 14, 2005 (the “Merger Agreement”) by and among VUTEk, Inc.,
Electronics For Imaging, Inc. and EFI Merger Sub, Inc. and hereby agrees to become a party to the
Merger Agreement for purposes of Article VII only.

EQUITYHOLDER,

	 	 	 	 	 
	ASP VUTEK L.L.C.	 	 
	By:	 	/s/ Michael G. Fisch

	 
	 	 	 	 
	 	 	 

	 
	 	 	 	 
	
 
	 	Name:
	 	Michael G. Fisch
	 
	 	 	 	 
	
 
	 	Title:
	 	President of American Securities

Capital Partners GP Corp., the

general partner of American

Securities Capital Partners, L.P.,

the managing member of ASP VUTEK

L.L.C.
	 
	 	 	 	 

6Exhibit 4.1

                              GEORGIA POWER COMPANY

                                       TO

                           JPMORGAN CHASE BANK, N.A.,

                                     TRUSTEE

                       TWENTY-FIFTH SUPPLEMENTAL INDENTURE
                           DATED AS OF APRIL 19, 2005
                           SERIES Y 5.80% SENIOR NOTES
                               DUE APRIL 15, 2035

<PAGE>

TABLE OF CONTENTS1

                                                                    PAGE

ARTICLE 1.............................................................1

Series Y Senior Notes.................................................1
SECTION 101.  Establishment...........................................1
SECTION 102.  Definitions.............................................2
SECTION 103.  Payment of Principal and Interest.......................3
SECTION 104.  Denominations...........................................4
SECTION 105.  Global Securities.......................................4
SECTION 106.  Transfer................................................5
SECTION 107.  Redemption at the Company's Option......................5

ARTICLE 2.............................................................6

Miscellaneous Provisions..............................................6
SECTION 201.  Recitals by Company.....................................6
SECTION 202.  Ratification and Incorporation of Original
         Indenture....................................................6
SECTION 203.  Executed in Counterparts................................6

1This Table of Contents does not constitute part of the Indenture or have any
bearing upon the interpretation of any of its terms and provisions.

<PAGE>

         .........THIS TWENTY-FIFTH SUPPLEMENTAL INDENTURE is made as of the
19th day of April, 2005, by and between GEORGIA POWER COMPANY, a Georgia
corporation, 241 Ralph McGill Boulevard, N.E., Atlanta, Georgia 30308-3374 (the
"Company"), and JPMORGAN CHASE BANK, N.A., a national banking association, 4 New
York Plaza, New York, New York 10004 (the "Trustee").

                                           W I T N E S S E T H:

         .........WHEREAS, the Company has heretofore entered into a Senior Note
Indenture, dated as of January 1, 1998 (the "Original Indenture"), with JPMorgan
Chase Bank, N.A. (formerly known as The Chase Manhattan Bank), as heretofore
supplemented;

         .........WHEREAS, the Original Indenture is incorporated herein by this
reference and the Original Indenture, as heretofore supplemented and as further
supplemented by this Twenty-Fifth Supplemental Indenture, is herein called the
"Indenture";

         .........WHEREAS, under the Original Indenture, a new series of Senior
Notes may at any time be established by the Board of Directors of the Company in
accordance with the provisions of the Original Indenture and the terms of such
series may be described by a supplemental indenture executed by the Company and
the Trustee;

         .........WHEREAS, the Company proposes to create under the Indenture a
new series of Senior Notes;

         .........WHEREAS, additional Senior Notes of other series hereafter
established, except as may be limited in the Original Indenture as at the time
supplemented and modified, may be issued from time to time pursuant to the
Indenture as at the time supplemented and modified; and

         .........WHEREAS, all conditions necessary to authorize the execution
and delivery of this Twenty-Fifth Supplemental Indenture and to make it a valid
and binding obligation of the Company have been done or performed.

         .........NOW, THEREFORE, in consideration of the agreements and
obligations set forth herein and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:

                                    ARTICLE 1

                              Series Y Senior Notes

         SECTION 101. Establishment. There is hereby established a new series of
Senior Notes to be issued under the Indenture, to be designated as the Company's
Series Y 5.80% Senior Notes due April 15, 2035 (the "Series Y Notes").

         There are to be authenticated and delivered $125,000,000 principal
amount of Series Y Notes, and such principal amount of the Series Y Notes may be
increased from time to time pursuant to Section 301 of the Original Indenture.
All Series Y Notes need not be issued at the same time and such series may be
reopened at any time, without the consent of any Holder, for issuances of
additional Series Y Notes. Any such additional Series Y Notes will have the same
interest rate, maturity and other terms as those initially issued. No Series Y
Notes shall be authenticated and delivered in excess of the principal amount as
so increased except as provided by Sections 203, 303, 304, 907 or 1107 of the
Original Indenture. The Series Y Notes shall be issued in definitive fully
registered form.

         The Series Y Notes shall be issued in the form of one or more Global
Securities in substantially the form set out in Exhibit A hereto. The Depositary
with respect to the Series Y Notes shall be The Depository Trust Company.

         The form of the Trustee's Certificate of Authentication for the Series
Y Notes shall be in substantially the form set forth in Exhibit B hereto.

         Each Series Y Note shall be dated the date of authentication thereof
and shall bear interest from the date of original issuance thereof or from the
most recent Interest Payment Date to which interest has been paid or duly
provided for.

         The Series Y Notes will not have a sinking fund.

         SECTION 102. Definitions. The following defined terms used herein
shall, unless the context otherwise requires, have the meanings specified below.
Capitalized terms used herein for which no definition is provided herein shall
have the meanings set forth in the Original Indenture.

         "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Series Y Notes to the Initial Redemption Date that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the Initial Redemption Date.

         "Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day in New York City preceding such Redemption Date, as set forth in
the daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "H.15(519)" or (ii) if such
release (or any successor release) is not published or does not contain such
prices on such Business Day, the Reference Treasury Dealer Quotation for such
Redemption Date.

         "Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company and reasonably
acceptable to the Trustee.

         "Initial Redemption Date" means April 15, 2015.

         "Interest Payment Dates" means April 15 and October 15 of each year,
commencing October 15, 2005.

         "Original Issue Date" means April 19, 2005.

         "Reference Treasury Dealer" means a primary United States Government
securities dealer in New York City appointed by the Company and reasonably
acceptable to the Trustee.

         "Reference Treasury Dealer Quotation" means, with respect to the
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day in New York City preceding such Redemption Date).

         "Regular Record Date" means, with respect to each Interest Payment
Date, the close of business on the 15th calendar day preceding such Interest
Payment Date (whether or not a Business Day).

         "Stated Maturity" means April 15, 2035.

         "Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.

         SECTION 103. Payment of Principal and Interest. The principal of the
Series Y Notes shall be due at Stated Maturity (unless earlier redeemed). The
unpaid principal amount of the Series Y Notes shall bear interest at the rate of
5.80% per annum until paid or duly provided for. Interest shall be paid
semiannually in arrears on each Interest Payment Date to the Person in whose
name the Series Y Notes are registered on the Regular Record Date for such
Interest Payment Date, provided that interest payable at the Stated Maturity of
principal or on a Redemption Date as provided herein will be paid to the Person
to whom principal is payable. Any such interest that is not so punctually paid
or duly provided for will forthwith cease to be payable to the Holders on such
Regular Record Date and may either be paid to the Person or Persons in whose
name the Series Y Notes are registered at the close of business on a Special
Record Date for the payment of such defaulted interest to be fixed by the
Trustee, notice whereof shall be given to Holders of the Series Y Notes not less
than ten (10) days prior to such Special Record Date, or be paid at any time in
any other lawful manner not inconsistent with the requirements of any securities
exchange, if any, on which the Series Y Notes shall be listed, and upon such
notice as may be required by any such exchange, all as more fully provided in
the Original Indenture.

         Payments of interest on the Series Y Notes will include interest
accrued to but excluding the respective Interest Payment Dates. Interest
payments for the Series Y Notes shall be computed and paid on the basis of a
360-day year of twelve 30-day months. In the event that any date on which
interest is payable on the Series Y Notes is not a Business Day, then payment of
the interest payable on such date will be made on the next succeeding day that
is a Business Day (and without any interest or other payment in respect of any
such delay), with the same force and effect as if made on the date the payment
was originally payable.

         Payment of the principal and interest due at the Stated Maturity or
earlier redemption of the Series Y Notes shall be made upon surrender of the
Series Y Notes at the Corporate Trust Office of the Trustee. The principal of
and interest on the Series Y Notes shall be paid in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts. Payments of interest (including interest on any
Interest Payment Date) will be made, subject to such surrender where applicable,
at the option of the Company, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer or other electronic transfer at such place and to such account
at a banking institution in the United States as may be designated in writing to
the Trustee at least sixteen (16) days prior to the date for payment by the
Person entitled thereto.

         SECTION 104. Denominations. The Series Y Notes may be issued in
denominations of $1,000, or any integral multiple thereof.

         SECTION 105. Global Securities. The Series Y Notes will be issued in
the form of one or more Global Securities registered in the name of the
Depositary (which shall be The Depository Trust Company) or its nominee. Except
under the limited circumstances described below, Series Y Notes represented by
one or more Global Securities will not be exchangeable for, and will not
otherwise be issuable as, Series Y Notes in definitive form. The Global
Securities described above may not be transferred except by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or to a successor Depositary or its nominee.

         Owners of beneficial interests in such a Global Security will not be
considered the Holders thereof for any purpose under the Indenture, and no
Global Security representing a Series Y Note shall be exchangeable, except for
another Global Security of like denomination and tenor to be registered in the
name of the Depositary or its nominee or to a successor Depositary or its
nominee. The rights of Holders of such Global Security shall be exercised only
through the Depositary.

         Subject to the procedures of the Depositary, a Global Security shall be
exchangeable for Series Y Notes registered in the names of persons other than
the Depositary or its nominee only if (i) the Depositary notifies the Company
that it is unwilling or unable to continue as a Depositary for such Global
Security and no successor Depositary shall have been appointed by the Company,
or if at any time the Depositary ceases to be a clearing agency registered under
the Securities Exchange Act of 1934, as amended, at a time when the Depositary
is required to be so registered to act as such Depositary and no successor
Depositary shall have been appointed by the Company, in each case within 90 days
after the Company receives such notice or becomes aware of such cessation, (ii)
the Company in its sole discretion determines that such Global Security shall be
so exchangeable, or (iii) there shall have occurred an Event of Default with
respect to the Series Y Notes. Any Global Security that is exchangeable pursuant
to the preceding sentence shall be exchangeable for Series Y Notes registered in
such names as the Depositary shall direct.

         SECTION 106. Transfer. No service charge will be made for any transfer
or exchange of Series Y Notes, but payment will be required of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
therewith.

         The Company shall not be required (a) to issue, transfer or exchange
any Series Y Notes during a period beginning at the opening of business fifteen
(15) days before the date of the mailing of a notice pursuant to Section 1104 of
the Original Indenture identifying the serial numbers of the Series Y Notes to
be called for redemption, and ending at the close of business on the day of the
mailing, or (b) to issue, transfer or exchange any Series Y Notes theretofore
selected for redemption in whole or in part, except the unredeemed portion of
any Series Y Notes redeemed in part.

            SECTION 107. Redemption at the Company's Option. The Series Y Notes
will be subject to redemption at the option of the Company in whole or in part
at any time and from time to time upon not less than 30 nor more than 60 days'
notice. The Company shall have the right to redeem the Series Y Notes in whole
or in part at a redemption price (the "Redemption Price") equal to:

                  (i) if the Redemption Date is prior to April 15, 2015, the
         greater of (1) 100% of the principal amount of the Series Y Notes to be
         redeemed or (2) the sum of the present values of the remaining
         scheduled payments of principal and interest on the Series Y Notes
         being redeemed to April 15, 2015 (for purposes of this calculation, the
         remaining scheduled payment of principal is deemed payable on the
         Initial Redemption Date and the remaining scheduled payments of
         interest are those interest payments payable on or before the Initial
         Redemption Date) (excluding the portion of any such interest accrued to
         the date of redemption) discounted (for purposes of determining present
         value) to the Redemption Date on a semi-annual basis (assuming a
         360-day year consisting of twelve 30-day months) at a discount rate
         equal to the Treasury Yield plus 20 basis points; or

                  (ii) if the Redemption Date is on or after April 15, 2015 and
         prior to maturity, 100% of the principal amount of the Series Y Notes
         to be redeemed,

plus, in each case, accrued interest thereon to the date of redemption.

         In the event of redemption of the Series Y Notes in part only, a new
Series Y Note or Notes for the unredeemed portion will be issued in the name or
names of the Holders thereof upon the surrender thereof.

         Notice of redemption shall be given as provided in Section 1104 of the
Original Indenture except that any notice of redemption shall not specify the
Redemption Price but only the manner of calculation thereof. The Trustee shall
not be responsible for the calculation of the Redemption Price. The Company
shall calculate the Redemption Price and promptly notify the Trustee thereof.

         Any redemption of less than all of the Series Y Notes shall, with
respect to the principal thereof, be divisible by $1,000.

                                    ARTICLE 2

                            Miscellaneous Provisions

         SECTION 201. Recitals by Company. The recitals in this Twenty-Fifth
Supplemental Indenture are made by the Company only and not by the Trustee, and
all of the provisions contained in the Original Indenture in respect of the
rights, privileges, immunities, powers and duties of the Trustee shall be
applicable in respect of Series Y Notes and of this Twenty-Fifth Supplemental
Indenture as fully and with like effect as if set forth herein in full.

         SECTION 202. Ratification and Incorporation of Original Indenture. As
heretofore supplemented and as supplemented hereby, the Original Indenture is in
all respects ratified and confirmed, and the Original Indenture as heretofore
supplemented and as supplemented by this Twenty-Fifth Supplemental Indenture
shall be read, taken and construed as one and the same instrument.

         SECTION 203. Executed in Counterparts. This Twenty-Fifth Supplemental
Indenture may be simultaneously executed in several counterparts, each of which
shall be deemed to be an original, and such counterparts shall together
constitute but one and the same instrument.

<PAGE>

                  IN WITNESS WHEREOF, each party hereto has caused this
instrument to be signed in its name and behalf by its duly authorized officers,
all as of the day and year first above written.

ATTEST:                                GEORGIA POWER COMPANY

By:/s/ Wayne Boston                    By:/s/ Cliff S. Thrasher
   -----------------------------          --------------------------------------
         Wayne Boston                     Cliff S. Thrasher
         Assistant Secretary              Executive Vice President,
                                          Chief Financial Officer and Treasurer

ATTEST:                                JPMORGAN CHASE BANK, N.A., as Trustee

By:/s/ Rosa Ciaccia                    By:/s/ Carol Ng
   -----------------------------          --------------------------------------
         Rosa Ciaccia                     Carol Ng
         Trust Officer                    Vice President

<PAGE>

EXHIBIT A

                              FORM OF SERIES Y NOTE

<PAGE>

NO. ____                                                  CUSIP NO. 373334 FZ 9

                              GEORGIA POWER COMPANY
                           SERIES Y 5.80% SENIOR NOTE
                               DUE APRIL 15, 2035

       Principal Amount:            $_____________

       Regular Record Date:         15th calendar day prior to Interest Payment
                                    Date (whether or not a Business Day)

       Original Issue Date:         April 19, 2005

       Stated Maturity:             April 15, 2035

       Interest Payment Dates:      April 15 and  October 15

       Interest Rate:               5.80% per annum

       Authorized Denominations:    $1,000 or any integral multiple thereof

         Georgia Power Company, a Georgia corporation (the "Company", which term
includes any successor corporation under the Indenture referred to on the
reverse hereof), for value received, hereby promises to pay to
_____________________, or registered assigns, the principal sum of
___________________________DOLLARS ($___________) on the Stated Maturity shown
above (or upon earlier redemption), and to pay interest thereon from the
Original Issue Date shown above, or from the most recent Interest Payment Date
to which interest has been paid or duly provided for, semiannually in arrears on
each Interest Payment Date as specified above, commencing on October 15, 2005,
and on the Stated Maturity (or upon earlier redemption) at the rate per annum
shown above until the principal hereof is paid or made available for payment and
on any overdue principal and on any overdue installment of interest. The
interest so payable, and punctually paid or duly provided for, on any Interest
Payment Date (other than an Interest Payment Date that is the Stated Maturity or
on a Redemption Date) will, as provided in such Indenture, be paid to the Person
in whose name this Note (the "Note") is registered at the close of business on
the Regular Record Date as specified above next preceding such Interest Payment
Date, provided that any interest payable at the Stated Maturity or on any
Redemption Date will be paid to the Person to whom principal is payable. Except
as otherwise provided in the Indenture, any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
Regular Record Date and may either be paid to the Person in whose name this Note
is registered at the close of business on a Special Record Date for the payment
of such defaulted interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes of this series not less than 10 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange, if any, on which
the Notes of this series shall be listed, and upon such notice as may be
required by any such exchange, all as more fully provided in the Indenture.

         Payments of interest on this Note will include interest accrued to but
excluding the respective Interest Payment Dates. Interest payments for this Note
shall be computed and paid on the basis of a 360-day year of twelve 30-day
months. In the event that any date on which interest is payable on this Note is
not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), with the same force and effect
as if made on the date the payment was originally payable. A "Business Day"
shall mean any day other than a Saturday or a Sunday or a day on which banking
institutions in New York City are authorized or required by law or executive
order to remain closed or a day on which the Corporate Trust Office of the
Trustee is closed for business.

         Payment of the principal of and interest due at the Stated Maturity or
earlier redemption of the Series Y Notes shall be made upon surrender of the
Series Y Notes at the Corporate Trust Office of the Trustee. The principal of
and interest on the Series Y Notes shall be paid in such coin or currency of the
United States of America as at the time of payment is legal tender for payment
of public and private debts. Payment of interest (including interest on an
Interest Payment Date) will be made, subject to such surrender where applicable,
at the option of the Company, (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Security Register or (ii)
by wire transfer or other electronic transfer at such place and to such account
at a banking institution in the United States as may be designated in writing to
the Trustee at least 16 days prior to the date for payment by the Person
entitled thereto.

         REFERENCE IS HEREBY MADE TO THE FURTHER PROVISIONS OF THIS NOTE SET
FORTH ON THE REVERSE HEREOF, WHICH FURTHER PROVISIONS SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS IF SET FORTH AT THIS PLACE.

         Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.

<PAGE>

         IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.

Dated:

                             GEORGIA POWER COMPANY

                             By:
                                --------------------------------------------
                             Name:
                                  ------------------------------------------
                             Title:
                                   -----------------------------------------

Attest:

                  {Seal of GEORGIA POWER COMPANY appears here}

<PAGE>

                          CERTIFICATE OF AUTHENTICATION

         This is one of the Senior Notes referred to in the within-mentioned
Indenture.

                                                     JPMORGAN CHASE BANK, N.A.,
                                                     as Trustee

                                                     By:
                                                        ------------------------
                                                        Authorized Officer

<PAGE>

(Reverse Side of Note)

         This Note is one of a duly authorized issue of Senior Notes of the
Company (the "Notes"), issued and issuable in one or more series under a Senior
Note Indenture, dated as of January 1, 1998, as supplemented (the "Indenture"),
between the Company and JPMorgan Chase Bank, N.A. (formerly known as The Chase
Manhattan Bank), as Trustee (the "Trustee," which term includes any successor
trustee under the Indenture), to which Indenture and all indentures incidental
thereto reference is hereby made for a statement of the respective rights,
limitation of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Notes issued thereunder and of the terms upon
which said Notes are, and are to be, authenticated and delivered. This Note is
one of the series designated on the face hereof as Series Y 5.80% Senior Notes
due April 15, 2035 (the "Series Y Notes") which is unlimited in aggregate
principal amount. Capitalized terms used herein for which no definition is
provided herein shall have the meanings set forth in the Indenture.

                  The Series Y Notes will be subject to redemption at the option
of the Company in whole or in part at any time and from time to time upon not
less than 30 nor more than 60 days' notice. The Company shall have the right to
redeem the Series Y Notes in whole or in part at a redemption price (the
"Redemption Price") equal to:

                  (i) if the Redemption Date is prior to April 15, 2015, the
         greater of (1) 100% of the principal amount of the Series Y Notes to be
         redeemed or (2) the sum of the present values of the remaining
         scheduled payments of principal and interest on the Series Y Notes
         being redeemed to April 15, 2015 (for purposes of this calculation, the
         remaining scheduled payment of principal is deemed payable on April 15,
         2015 (the "Initial Redemption Date") and the remaining scheduled
         payments of interest are those interest payments payable on or before
         the Initial Redemption Date) (excluding the portion of any such
         interest accrued to the date of redemption) discounted (for purposes of
         determining present value) to the Redemption Date on a semi-annual
         basis (assuming a 360-day year consisting of twelve 30-day months) at a
         discount rate equal to the Treasury Yield (as defined below) plus 20
         basis points; or

                  (ii) if the Redemption Date is on or after April 15, 2015 and
         prior to maturity, 100% of the principal amount of the Series Y Notes
         to be redeemed,

plus, in each case, accrued interest thereon to the date of redemption.

         "Treasury Yield" means, with respect to any Redemption Date, the rate
per annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date.

         "Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Series Y Notes to the Initial Redemption Date that
would be utilized, at the time of selection and in accordance with customary
financial practice, in pricing new issues of corporate debt securities of
comparable maturity to the Initial Redemption Date.

         "Comparable Treasury Price" means, with respect to any Redemption Date,
(i) the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
Business Day in New York City preceding such Redemption Date, as set forth in
the daily statistical release (or any successor release) published by the
Federal Reserve Bank of New York and designated "H.15(519)" or (ii) if such
release (or any successor release) is not published or does not contain such
prices on such Business Day, the Reference Treasury Dealer Quotation for such
Redemption Date.

         "Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Company and reasonably
acceptable to the Trustee.

         "Reference Treasury Dealer" means a primary United States Government
securities dealer in New York City appointed by the Company and reasonably
acceptable to the Trustee.

         "Reference Treasury Dealer Quotation" means, with respect to the
Reference Treasury Dealer and any Redemption Date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day in New York City preceding such Redemption Date).

         The Trustee shall not be responsible for the calculation of the
Redemption Price. The Company shall calculate the Redemption Price and promptly
notify the Trustee thereof.

         In the event of redemption of this Note in part only, a new Note or
Notes of this Series for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the surrender hereof.

         The Series Y Notes will not have a sinking fund.

         If an Event of Default with respect to the Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared due and payable in the manner, with the effect and subject to the
conditions provided in the Indenture.

         The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Notes of each series to be affected
under the Indenture at any time by the Company and the Trustee with the consent
of the Holders of not less than a majority in principal amount of the Notes at
the time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Notes of each series at the time Outstanding, on behalf of the Holders of
all Notes of such series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences. Any such consent or waiver by the Holder of this Note shall
be conclusive and binding upon such Holder and upon all future Holders of this
Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not notation of such consent or
waiver is made upon this Note.

         No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place and rate, and in the coin or currency, herein prescribed.

         As provided in the Indenture and subject to certain limitations therein
set forth, the transfer of this Note is registrable in the Security Register,
upon surrender of this Note for registration of transfer at the office or agency
of the Company for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Security
Registrar and duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Notes of this series, of
authorized denominations and of like tenor and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

         Prior to due presentment of this Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.

         The Notes of this series are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Notes of this series are exchangeable for a like aggregate principal amount of
Notes of this series of a different authorized denomination, as requested by the
Holder surrendering the same upon surrender of the Note or Notes to be exchanged
at the office or agency of the Company.

         This Note shall be governed by, and construed in accordance with, the
internal laws of the State of New York.

<PAGE>

1362763_4.DOC

                                  ABBREVIATIONS

The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:

TEN COM- as tenants in         UNIF GIFT MIN ACT- _______ Custodian ________
         common                                   (Cust)            (Minor)
TEN ENT- as tenants by the
         entireties                             under Uniform Gifts to
JT TEN-  as joint tenants                       Minors Act
         with right of
         survivorship and                    ________________________
         not as tenants                              (State)
         in common

Additional abbreviations may also be used though not on the above list.

         FOR VALUE RECEIVED, the undersigned hereby sell(s) and transfer(s) unto

(please insert Social Security or other identifying number of assignee)

PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING POSTAL ZIP CODE OF
ASSIGNEE

the within Note and all rights thereunder, hereby irrevocably constituting and
appointing

agent to transfer said Note on the books of the Company, with full power of
substitution in the premises.

Dated:
       --------------------           ----------------------------------------

NOTICE: The signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular without
alteration or enlargement, or any change whatever.

<PAGE>

                                    EXHIBIT B

                          CERTIFICATE OF AUTHENTICATION

         This is one of the Senior Notes referred to in the within-mentioned
Indenture.

                                 JPMORGAN CHASE BANK, N.A.,
                                 as Trustee

                                 By:
                                    -------------------------------------------
                                          Authorized Officer

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