AGREEMENT AND PLAN OF MERGER by and among: COMVEST INVESTMENT PARTNERS II LLC, a Delaware limited liability company, CAT ACQUISITION CORP., a Delaware corporation, and CATALYST INTERNATIONAL, INC., a Delaware corporation. ___________________________ Dated as of June 28, 2004 ___________________________ Table of Contents

The Company represents and warrants to, and for the benefit of, Parent and Merger Sub that, except as set forth in the Company Disclosure Schedule delivered by the Company to Parent at or prior to the execution and delivery of this Agreement (the “Company Disclosure Schedule”), the following are true:

2.1

Due Organization; Subsidiaries; Etc.

(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 necessary power and authority to own, lease  and operate its properties and conduct its business in the manner in which its business is currently being conducted.

(b)

The Company is properly qualified, authorized, registered or licensed to do business as a foreign corporation in Wisconsin and in any other jurisdiction where it is required to do so except where the failure to do so would not have a Material Adverse Effect on the Company.  

(c)

The Company owns all of the issued and outstanding capital stock of Catalyst WMS International Limited, a company incorporated and operated under the laws of the United Kingdom (the “UK Subsidiary”).  The UK Subsidiary is duly organized, validly existing and in active status under the laws of the United Kingdom.  All of the outstanding shares of capital stock of the UK Subsidiary have been validly issued and are fully paid and non-assessable.  There are no outstanding (i) securities of the UK Subsidiary convertible or exchangeable into shares of the Company, (ii) warrants, options, calls or any other rights of any character affecting the capital stock of the UK Subsidiary, or (iii) any other agreements or obligations relating to the equity interests in the UK Subsidiary.  The Company also owns all of the capital stock of a co rporation organized under the laws of the country of Brazil (the “Brazilian Subsidiary”; and together with the UK Subsidiary, the “Company Subsidiaries”).  The Brazilian Subsidiary is in the process of being liquidated, owns no assets, has no current business operations, and has no liabilities, contingent or otherwise, except for obligations not to exceed $25,000 in connection with its liquidation.  Except for the Company Subsidiaries, the Company does not own any debt or equity securities in any other Person.

2.2

Articles of Incorporation and Bylaws; Records.  The Company has made available to Parent accurate and complete copies of (1) the Company’s and the Company Subsidiaries’ certificate or articles of incorporation or organization and bylaws, including all amendments thereto (and such certificate or articles of incorporation or organization and bylaws are in full force and effect); (2) the stock records of the Company and the Company Subsidiaries; and (3) the minutes and other records of the meetings and other proceedings (including any actions taken by written consent or otherwise without a meeting) of the shareholders of the Company and the Company Subsidiaries, the board of directors of the Company and the Company Subsidiaries and all committees of the board of directors of the Company and the Company Subsidiarie s (the items described in (1), (2) and (3) above, collectively, the “Company Constituent Documents”).  There has not been any material violation of the Company Constituent Documents, and neither the Company nor the Company Subsidiaries has taken any action that is inconsistent in any material respect with the Company Constituent Documents.  The Company Constituent Documents are accurate, up-to-date and complete in all material respects, and have been properly maintained in all material respects.

2.3

Capitalization, Etc.

(a)

The authorized capital stock of the Company consists of (i) 25,000,000 shares of Common Stock, $0.10 par value per share, of which 7,872,087 shares have been issued and are outstanding as of the date hereof and of which 1,420,275 shares are held in the treasury of the Company; and (ii) 2,000,000 shares of Preferred Stock, $0.01 par value per share, none of which are issued and outstanding (“Company Preferred Stock” and together with Company Common Stock, “Company Capital Stock”).  All of the outstanding shares of Company Common Stock have been duly authorized and validly issued, and are fully paid and non-assessable, subject to the provisions of Section 180.0622(2)(b) of the Wisconsin Statutes as judicially interpreted.  All outstanding shares of Company Capital Stock, all outstanding Company Options and all outstandin g Warrants have been issued and granted in compliance, in all material respects, with (i) all applicable securities laws and other applicable Legal Requirements, and (ii) all requirements set forth in any material contract of the Company.  All outstanding shares of stock of the Company Subsidiaries are owned by the Company and have been validly issued, are fully paid, and are nonassessable.  The Company has not adopted any shareholders’ rights plan or comparable arrangement.

(b)

As of the date hereof, the Company has reserved 4,563,226 shares of Company Common Stock for issuance under the Company Stock Option Plans, the Company’s outstanding warrants, and under other agreements entered into by the Company granting options to purchase shares of Company Common Stock.  As of the date hereof, options or warrants to purchase 3,146,710 shares Company Common Stock were outstanding.  Part 2.3(b) of the Company Disclosure Schedule accurately sets forth, with respect to each Company Option:  (i) the name of the holder of such Company Option; (ii) the total number of shares of Company Common Stock that are subject to such Company Option and the number of shares of Company Common Stock with respect to which such Company Option is immediately exercisable; (iii) the date on which such Company Option was granted and the term of such C ompany Option; (iv) the vesting schedule for such Company Option; (v)  the exercise price per share of Company Common Stock purchasable under such Company Option; and (vi) whether such Company Option has been designated an “incentive stock option” as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  Part 2.3(b) of the Company Disclosure Schedule also sets forth such details with respect to warrants to acquire an aggregate of 748,239 shares of Company Common Stock that were issued in connection with debt issued by the Company and an outstanding warrant for the purchase of 10,000 shares of Company Common Stock (collectively, the “Warrants”).  The Company has made available to Parent all Company Option Plans, Warrants and any other agreement or instruments pursuant to which the Company may be obligated to issue options, warrants, or any other right to acquire any shares of Company Capital Stock.  Excep t for the Warrants and the Company Options described in Part 2.3(b) of the Company Disclosure Schedule, there are no (i) outstanding subscriptions, options, calls, warrants or rights (whether or not currently exercisable) to acquire any shares of Company Capital Stock or other debt or equity securities of the Company; (ii) outstanding securities, instruments or obligations that are or may become convertible into or exchangeable for any shares of Company Capital Stock or other securities of the Company; (iii) contracts under which the Company is or may become obligated to sell or otherwise issue any shares of Company Capital Stock or any other securities of the Company; or (iv) condition or circumstance that may give rise to or provide a basis for the assertion of a claim by any Person to the effect that such Person is entitled to acquire or receive any shares of Company Capital Stock or other securities of the Company.  The aggregate amount of cash consideration that the Surviving Corporation will be re quired to pay in connection with the consummation of the Merger in order to pay to the holders of Vested Options the amounts due them under the second sentence of Section 1.5, above, and to pay to the holders of Warrants the amounts due them under the first sentence of Section 1.7(b), above, shall not exceed $1,650,000.

2.4

Company Reports and Financial Statements.

(a)

The Company has filed all forms, reports, schedules, statements, certifications and other documents required to be filed by it with the Securities and Exchange Commission (the “SEC”) since January 1, 2001, through the date of this Agreement (collectively, including all exhibits and information incorporated by reference therein, the “Company SEC Reports”).  All of the Company SEC Reports since May 1996 have been filed using the SEC’s Electronic Data Gathering and Retrieval System.  The Company Subsidiaries are not required to file any form, report or other document with the SEC.  The Company SEC Reports (i) were prepared in accordance with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations promulgated thereunder, and (ii) did not, at the time they were filed, or, if amended, as of the date of such amendment, contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

(b)

The Company has delivered to Parent the following financial statements and notes (collectively, the “Company Financial Statements”):

(i)

The audited consolidated balance sheets of the Company as of December 31, 2003 (the “2003 Balance Sheet”), and the related audited consolidated income statements, statements of stockholders’ equity and statements of cash flows of the Company for the periods then ended together with the notes thereto (the “Audited Company Financial Statements”); and

(ii)

The unaudited consolidated balance sheets of the Company as of March 31, 2004, and the related unaudited consolidated income statement of the Company for the three months then ended (the “Unaudited Interim Company Financial Statements”).

(c)

The Company Financial Statements and each of the consolidated financial statements (including, in each case, any notes thereto) included in the Company SEC Reports present fairly the consolidated financial position of the Company as of the dates thereof and the results of operations and cash flows of the Company) for the periods covered thereby.  The Company Financial Statements and each of the consolidated financial statements (including, in each case, any notes thereto) included in the Company SEC Reports have been prepared in accordance with United States GAAP applied on a consistent basis throughout the periods covered.

(d)

The Company has heretofore furnished to Parent complete and correct copies of all amendments and modifications that have not been filed by the Company with the SEC to all agreements, documents and other instruments that previously had been filed by the Company with the SEC and are currently in effect.

(e)

The Company has made available to Parent all comment letters received by the Company from the SEC or the staff thereof since January 1, 2001 and all responses to such comment letters filed by or on behalf of the Company.  

(f)

To the Company’s knowledge, each director and executive officer of the Company has filed with the SEC on a timely basis all statements required by Section 16(a) of the Exchange Act and the rules and regulations thereunder since January 1, 2001.  

(g)

The Chief Executive Officer and the Chief Financial Officer of the Company have signed, and the Company has timely filed and made available to Parent, all certifications and statements required by (x) Rule 13a-14 or Rule 15d-14 under the Exchange Act or (y) 18 U.S.C. Section 1350 (Section 906 of the Sarbanes-Oxley Act of 2002) with respect to any Company SEC Report, such certifications contain no qualifications or exceptions to the matters certified therein and have not been modified or withdrawn, and neither the Company nor any of its officers has received notice from any Governmental Body questioning or challenging the accuracy, completeness, form or manner of filing or submission of such certifications.  The Company maintains disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under the Exchange Act; such controls and procedures are effective to ensure that all material information concerning the Company and its subsidiaries is made known on a timely basis to the individuals responsible for the preparation of the Company’s SEC filings and other public disclosure documents.  Part 2.4(g) of the Company Disclosure Schedule lists, and the Company has made available to Parent, complete and correct copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such disclosure controls and procedures.  As used in this Section 2.4, the term “file” shall be broadly construed to include any manner in which a document or information is furnished, supplied or otherwise made available to the SEC.

(h)

The Company maintains and will continue to maintain a standard system of accounting established and administered in accordance with United States GAAP.  The Company and its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with United States GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.  Part 2.4(h) of the Comp any Disclosure Schedule lists, and the Company has made available to Parent, complete and correct copies of, all written descriptions of, and all policies, manuals and other documents promulgating, such internal accounting controls.

(i)

Since January 1, 2001, neither the Company nor the Company Subsidiaries nor, to the Company’s knowledge, any director, officer, employee, auditor, accountant or representative of the Company or the Company Subsidiaries, has received or otherwise had or obtained knowledge of any complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or the Company Subsidiaries or their respective internal accounting controls, including any complaint, allegation, assertion or claim that the Company or the Company Subsidiaries has engaged in questionable accounting or auditing practices.  To the Company’s knowledge, no attorney representing the Company or the Company Subsidiaries, whether or not employed by the Company or the Company Subsidiaries, has repo rted evidence of a material violation of securities laws, breach of fiduciary duty or similar violation by the Company or any of its officers, directors, employees or agents to the Board of Directors of the Company or any committee thereof or to any director or officer of the Company.  Since January 1, 2001, there have been no internal investigations regarding accounting or revenue recognition discussed with, reviewed by or initiated at the direction of the chief executive officer, chief financial officer, general counsel, the Board of Directors of the Company or any committee thereof.

(j)

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

2.5

Absence of Material Adverse Change.  Since March 31, 2004, (a) the Company and the UK Subsidiary have conducted their business only in the ordinary course and in a manner consistent with past practices, (b) neither the Company nor the UK Subsidiary has suffered a Material Adverse Effect and no event has occurred that will, or would reasonably be expected to, have a Material Adverse Effect on the Company and the UK Subsidiary, (c) except as set forth in part 2.5(c) of the Company Disclosure Letter, neither the Company nor the UK Subsidiary has taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Section 4.2, and (d) the only activity engaged in by the Brazilian Subsidiary has been in connection with its liquidation.  The Company has not declared any dividen d since such date.

2.6

Real Property; Title to Assets.

(a)

Except as set forth in Part 2.6(a) of the Company Disclosure Schedule, neither the Company nor any of the Company Subsidiaries owns, or has ever owned, any real property.

(b)

Part 2.6(b) of the Company Disclosure Schedule lists each parcel of real property currently leased or subleased by the Company or the Company Subsidiaries, with the name of the lessor and the date of the lease, sublease, assignment of the lease, any guaranty given or leasing commissions payable by the Company or the Company Subsidiaries in connection therewith and each amendment to any of the foregoing (collectively, the “Lease Documents”).  True, correct and complete copies of all Lease Documents have been delivered to Parent.  All such current leases and subleases are in full force and effect, are valid and effective in accordance with their respective terms against the Company or the Company Subsidiaries, and to the knowledge of the Company, against the lessor, and there is not, under any of such leases, any existing material defaul t or event of default (or event which, with notice or lapse of time, or both, would constitute a default) by the Company or the Company Subsidiaries or, to the Company’s knowledge, by the other party to such lease or sublease, or person in the chain of title to such leased premises.

(c)

Except as set forth in Part 2.6(c) of the Company Disclosure Schedule, the Company and the UK Subsidiary own, and have good and valid and marketable title to, or a valid leasehold interest in, all assets owned or used by them, and own all of such assets (including, without limitation, Proprietary Assets) free and clear of any Encumbrances, except for (x) any lien for current Taxes not yet due and payable, and (y) liens that have arisen in the ordinary course of business and that do not (individually or in the aggregate) materially detract from the value of such assets subject thereto or materially impair the operations of the Company or the Company Subsidiaries.

2.7

Proprietary Assets.

(a)

Part 2.7(a) of the Company Disclosure Schedule sets forth a description of each Proprietary Asset (whether or not registered) owned by the Company and the Company Subsidiaries which is material to the operations of the Company and the Company Subsidiaries (collectively, the “Material Owned Proprietary Assets”).  With respect to each Proprietary Asset which is registered (the “Registered Proprietary Assets”), Part 2.7(a) of the Company Disclosure Schedule sets forth (i) the name and a description of such Registered Proprietary Assets, and (ii) the jurisdiction(s) where each is registered and any registration and/or application serial numbers.  Part 2.7(a) of the Company Disclosure Schedule also identifies (i) all material licenses, sublicenses and other material agreements not otherwise listed in Schedule 2.8(a) and pur suant to which the Company or any sublicensee of the Company or the Company Subsidiaries has granted to any Person other than a customer of the Company in the ordinary course of business the right to use any of the Material Owned Proprietary Assets, (ii) all material consents, indemnifications, forbearances to sue,  and settlement agreements to which the Company or the Company Subsidiaries is a party relating to Proprietary Assets, (iii) except for generally commercially available software, each Proprietary Asset that is licensed or otherwise made available to the Company or the Company Subsidiaries by any Person, and any ongoing royalty or other payment obligations with respect to such Proprietary Assets (the “Licensed Proprietary Assets”) and (iv) all agreements pursuant to which the Company or the Company Subsidiaries has escrowed any Material Owned Proprietary Asset or provided copies of source code to any person other than pursuant to such agreements.  Except as set forth in P art 2.7(a) of the Company Disclosure Schedule or as it pertains to generally commercially available software, the Company is not under any obligation to pay royalties or other payments in connection with any license, sublicense or other agreement, nor restricted from assigning its rights under any sublicense or agreement respecting Proprietary Assets, nor will the Company otherwise be, as a result of the execution and delivery of this Agreement or the performance of its obligations under this Agreement, in breach of any license, sublicense or other agreement relating to Proprietary Assets.  The Company and/or the Company Subsidiaries have a valid right to use, license and otherwise exploit all Licensed Proprietary Assets and any rights thereunder will not be affected by the Company entering into this Agreement and the agreements and transactions contemplated hereby.  

(b)

Except as set forth in Part 2.7(b) of the Company Disclosure Schedule, to the Company’s knowledge (i) none of the Registered Proprietary Assets or Licensed Proprietary Assets or any other Proprietary Asset owned by the Company (together, the “Company Proprietary Assets”) infringes, misappropriates or conflicts with any Proprietary Asset owned or used by any other Person, (ii) none of the products that are or have been designed, created, developed, assembled, manufactured or sold by the Company or the Company Subsidiaries is infringing, misappropriating, or making any unlawful or unauthorized use of any Proprietary Asset owned or used by any other Person, and the Company or the Company Subsidiaries has all rights and licenses  necessary in order to make, have made, use or sell such products,  (iii) no other Person is infringing, mi sappropriating or making any unlawful or unauthorized use of, and no Proprietary Asset owned or used by any other Person infringes or conflicts with, any Company Proprietary Asset, and (iv) there is no claim, suit, action or proceeding pending or threatened or asserted against the Company or the Company Subsidiaries (A) alleging any conflict or infringement by the Company or the Company Subsidiaries of any third party's intellectual property or proprietary rights or  (B) challenging the Company's or the Company Subsidiaries’ ownership or use of, or the validity or enforceability of, any of the Company Proprietary Assets.  

(c)

To the Company’s knowledge, the Company's and the Company Subsidiaries’ rights in all of the Company Proprietary Assets are valid, subsisting, and enforceable.  None of the Company Proprietary Assets or any registrations therefor have been canceled or adjudicated invalid or unenforceable, or is subject to any outstanding order, judgment or decree restricting its use or adversely affecting or reflecting the Company's or the Company Subsidiaries’ rights thereto.

(d)

All Registered Proprietary Assets are valid, subsisting, unexpired, in proper form and all renewal fees and other maintenance fees that have fallen due on or prior to or within ninety (90) days after the Closing Date have been paid.  The Company has timely made all filings and payments with the appropriate foreign and domestic intellectual property offices required to maintain in subsistence all Registered Proprietary Assets.  No due dates for filings or payments concerning such Registered Proprietary Assets (including without limitation office action responses, affidavits of use, affidavits of continuing use, renewals, requests for extension of time, maintenance fees, application fees and foreign convention priority filings) fall due within ninety (90) days of the Closing Date, whether or not such due dates are extendable.  All documentation nece ssary to confirm and effect the Company's or the Company Subsidiaries’ ownership of and rights in any Registered Proprietary Assets acquired by the Company or the Company Subsidiaries from third parties has been filed in the United States Patent and Trademark Office and the United States Copyright Office, and all other relevant intellectual property offices and agencies in other jurisdictions. Except as set forth in Part 2.7(d) of the Company Disclosure Schedule, no Material Owned Proprietary Asset is the subject of any legal or governmental proceeding before any Governmental Body in any jurisdiction, including any office action or other form of preliminary or final refusal of registration.  The consummation of the transactions contemplated hereby will not materially alter or impair any Company Proprietary Assets.  

(e)

To the Company’s knowledge, no Company Proprietary Asset has been used, divulged, disclosed or appropriated to the detriment of the Company or the Company Subsidiaries for the benefit of any third party; and (ii) no employee or agent of the Company or the Company Subsidiaries has misappropriated any trade secrets or other confidential information of any third party in the course of the performance of his or her duties as an employee or agent of the Company or the Company Subsidiaries.

2.8

Contracts.  

(a)

Subsections (i) through (xvi) of Part 2.8(a) of the Company Disclosure Schedule lists the following types of contracts and agreements to which the Company or the Company Subsidiaries is a party (such contracts and agreements as are required to be set forth in Part 2.8(a) of the Company Disclosure Schedule together with the contracts required to be disclosed under Part 2.7(a) or Part 2.13(a) of the Company Disclosure Schedule being the “Material Contracts”):

(i)

each “material contract” (as such term is defined in Item 610(b)(10) of Regulation S-K of the SEC) with respect to the Company and the Company Subsidiaries;

(ii)

each contract and agreement, whether or not made in the ordinary course of business, that contemplates an exchange of consideration with a value of more than $100,000, in the aggregate, over the term of such contract or agreement;

(iii)

all contracts and agreements evidencing indebtedness;

(iv)

all joint venture, partnership, strategic alliance and business acquisition or divestiture agreements (and all letters of intent, term sheets and draft agreements relating to any such pending transactions);

(v)

all agreements relating to issuances of securities of the Company or the Company Subsidiaries (and all letters of intent, term sheets and draft agreements relating to any such pending transactions);

(vi)

all distribution contracts to which the Company or the Company Subsidiaries is a party;

(vii)

all contracts and agreements with any Governmental Authority to which the Company or the Company Subsidiaries is a party;

(viii)

all contracts and agreements that limit, or purport to limit, the ability of the Company or the Company Subsidiaries to compete in any line of business or with any person or entity or in any geographic area or during any period of time; and

(ix)

all agreements related to professional services rendered to the Company or the Company Subsidiaries in connection with the Merger and this Agreement.  

(b)

Other than as set forth in Part 2.8(b) of the Company Disclosure Schedule, and except as would not, individually or in the aggregate, prevent or materially delay consummation of the Merger and would not, individually or in the aggregate, have a Material Adverse Effect, (i) each Material Contract is a legal, valid and binding agreement against the Company and/or the Company Subsidiaries and, to the knowledge of the Company, against the third party thereto; (ii) neither the Company nor any of the Company Subsidiaries has received any claim of default under or cancellation of any Material Contract and neither the Company nor any of the Company Subsidiaries is in breach or violation of, or default under, any Material Contract; (iii) to the Company’s knowledge, no other party is in breach or violation of, or default under, any Material Contract; and (iv) neither the execution of this Agreement nor the consummation of the Merger shall constitute a default under, give rise to cancellation rights under, or otherwise adversely affect any of the material rights of the Company or the Company Subsidiaries under any Material Contract.  The Company has furnished or made available to Parent true and complete copies of all Material Contracts, including any amendments thereto.

2.9

Liabilities; Fees, Costs and Expenses.  

(a)

The Company and the Company Subsidiaries have no accrued, contingent or other liabilities of any nature, either matured or unmatured (whether or not required to be reflected in financial statements in accordance with United States GAAP, and whether due or to become due), except for (i) liabilities identified as such in the “liabilities” column of the Unaudited Company Interim Financial Statements; (ii) accounts payable, accrued salaries or other ordinary course liabilities, that have been incurred since the date of the Unaudited Company Interim Financial Statements in the ordinary course of business and consistent with past practices and which do not or would not have a Material Adverse Effect; (iii) liabilities under executory contracts; (iv) the liabilities identified in Part 2.9(a) of the Company Disclosure Schedule; (v) liabilities relating to the 2003 Notes (as defined in Section 1.7(a), above); and (vi) liabilities incurred in the ordinary course of business not exceeding $250,000 in the aggregate and not required to be otherwise disclosed in the Company Disclosure Schedule or not required by United States GAAP to be disclosed in financial statements of the Company.  

(b)

Neither the Company nor any of the Company Subsidiaries has guaranteed or indemnified, nor is either of them obligated to guarantee or indemnify, any obligation of greater than $100,000 of any Person except as disclosed in the Audited Company Financial Statements.

2.10

Compliance with Legal Requirements.  Except for Environmental Laws (as to which Section 2.14 applies), the Company and the Company Subsidiaries are in compliance with all applicable Legal Requirements, except where the failure to comply with such Legal Requirements has not had and would not be reasonably likely to have a Material Adverse Effect on the Company.  During the previous two years, neither the Company nor the Company Subsidiaries has received any written notice or other written communication from any Governmental Body regarding any actual or possible violation of, or failure to comply with, any material Legal Requirement, except where such violation or failure to comply has not had and would not be reasonably likely to have a Material Adverse Effect on the Company.  Neither the Company nor any of t he Company Subsidiaries holds or is required to hold any security clearance issued by a Governmental Body or is required to be a party to any special security arrangement with a Governmental Body to conduct any portion of its business.

2.11

Governmental Authorizations.  The Company and the Company Subsidiaries have all Governmental Authorizations necessary to enable them to own, lease and operate their properties and to conduct their business in the manner in which their business is currently being conducted, and the Company and the Company Subsidiaries are in compliance with the terms and requirements of such Governmental Authorizations, except where the failure to have or comply with such Governmental Authorizations has not had or would not be reasonably likely to have a Material Adverse Effect on the Company.  No suspension or cancellation of any of such Governmental Authorizations is pending or, to the knowledge of the Company threatened.

2.12

Tax Matters.

(a)

Except as set forth in Part 2.12(a) of the Company Disclosure Schedule and except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company, all Tax Returns required to be filed by or on behalf of the Company or the Company Subsidiaries with any Governmental Body with respect to any taxable period ending on or before the Closing Date (the “Company Returns”) (i) have been filed on or before the applicable due date (including any extensions of such due date), and (ii) were accurately and completely prepared in all material respects in compliance with all applicable Legal Requirements.  All amounts shown on the Company Returns to be due on or before the Closing Date have been or will be paid on or before the Closing Date.  The Company has made availabl e to Parent accurate and complete copies of all Company Returns filed which have been requested by Parent.  No extension or waiver of the limitation period applicable to any of the Company Returns has been granted, and no such extension or waiver has been requested from the Company.  No claim has been made by a Governmental Body in a jurisdiction where the Company or the Company Subsidiaries does not file Tax Returns that the Company or the Company Subsidiaries is or may be subject to taxation by that jurisdiction.

(b)

Except as set forth in Part 2.12(b) of the Company Disclosure Schedule and except as, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company, no claim or Legal Proceeding is pending or, to the knowledge of the Company, has been threatened against or with respect to the Company or the Company Subsidiaries in respect of any Tax.  Except as set forth in Part 2.12(b) of the Company Disclosure Schedule, there are no unsatisfied liabilities for Taxes (including liabilities for interest, additions to tax and penalties thereon and related expenses) with respect to any notice of deficiency or similar document received by the Company or the Company Subsidiaries with respect to any Tax.

(c)

Each of the Company and the Company Subsidiaries have withheld and paid all Taxes required to have been withheld and paid in connection with any amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

(d)

No foreign, federal, state, or local Tax audits or administrative or judicial Tax proceedings are pending or being conducted with respect to the Company or the Company Subsidiaries.  Neither the Company nor the Company Subsidiaries has received from any Governmental Body (including jurisdictions where the Company or the Company Subsidiaries have not filed Tax Returns) any (i) notice indicating an intent to open an audit or other review, (ii) request for information related to Tax matters, or (iii) notice of deficiency or proposed adjustment for any amount of Tax proposed, asserted, or assessed by any Governmental Body against the Company or the Company Subsidiaries.

(e)

Neither the Company nor the Company Subsidiaries has filed a consent under Section 341(f) of the Code concerning collapsible corporations.  Neither the Company nor the Company Subsidiaries is a party to any agreement, contract, arrangement or plan that has resulted or could result, separately or in the aggregate, in the payment of (i) any “excess parachute payment” within the meaning of Section 280G of the Code (or any corresponding provision of state, local or foreign Tax law) and (ii) any amount that will not be fully deductible as a result of Section 162(m) of the Code (or any corresponding provision of state, local or foreign Tax law).  Neither the Company nor the Company Subsidiaries has been a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Sec tion  897(c)(1)(A)(ii) of the Code.  Neither the Company nor the Company Subsidiaries is a party to or bound by any Tax allocation or sharing agreement.  Neither the Company nor the Company Subsidiaries (A) has been a member of an affiliated group filing a consolidated federal income Tax Return (other than a group the common parent of which was the Company)  within the meaning of Section 1502 of the Code, or (B) has any liability for the Taxes of any Person (other than the Company or the Company Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign law), as a transferee or successor, by contract, or otherwise.

(f)

Neither the Company nor the Company Subsidiaries will be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of : (i) a change in method of accounting for a taxable period ended or ending on or prior to the Closing Date; (ii) a “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law) executed on or prior to the Closing Date; (iii) an intercompany transaction or excess loss account described in Treasury Regulations under Section 1502 of the Code (or any corresponding or similar provision of state, local or foreign income Tax law); (iv) an installment sale or open transaction disposition made on or prior to the Closing Date; or (v) with respect to any prepaid amount received on or prior to the Closing Date.

(g)

Neither the Company nor the Company Subsidiaries has been a party to a transaction (including a transaction involving the distribution of the stock of the Company or the Company Subsidiaries by another Person) that was purported or intended to be governed in whole or in part by Section 355 or Section 361 of the Code.

(h)

The unpaid Taxes of the Company (A) did not, as of the dates of the Audited Company Financial Statements and Unaudited Company Financial Statements, exceed the reserve for Tax liability (rather than any reserve for deferred Taxes established to reflect timing differences between book and Tax Income) set forth on such statements (rather than in any notes thereto) and (B) do not exceed that reserve as adjusted for the passage of time through the Closing Date in accordance with the past custom and practice of the Company in filing their Tax Returns.  Since the date of the Unaudited Company Financial Statement, the Company has not incurred any liability for Taxes arising from extraordinary gains or losses, as that term is used in United States GAAP, outside the ordinary course of business consistent with past custom and practice.  

2.13

Employee and Labor Matters; Benefit Plans.

(a)

Part 2.13(a) of the Company Disclosure Schedule lists each of the following, if any, which is sponsored, maintained or contributed to by the Company or the Company Subsidiaries for the benefit of the employees or agents of the Company or the Company Subsidiaries, which has been so sponsored, maintained or contributed to at any time by the Company or the Company Subsidiaries, or with respect to which the Company or the Company Subsidiaries has or could reasonably be expected to have any actual or contingent liability:

(i)

each "employee benefit plan," as such term is defined in Section 3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA") (including, but not limited to, employee benefit plans, such as foreign plans, which are not subject to the provisions of ERISA) ("Plan"); and

(ii)

each personnel policy, employee manual or other written statements of rules or policies concerning employment, stock option plan, collective bargaining agreement, bonus plan or arrangement, incentive award plan or arrangement, vacation and sick leave policy, severance pay policy or agreement, deferred compensation agreement or arrangement, consulting agreement, employment contract, change in control arrangement, contracts and commitments of any type whatsoever, and each other employee benefit plan, agreement, arrangement, program, practice or understanding (including any foreign arrangements) which is not described in Part 2.13(a) of the Company Disclosure Schedule, including any compensation arrangement relating to the transactions contemplated hereby ("Benefit Program or Agreement").

Based on the assumption that no employees of the Company will be terminated at the Effective Time, the aggregate amount that would be due to employees and officers of the Company at the Effective Time as a result of a consummation of the Merger as (i) severance or (ii) under any agreement between the Company and any of such employees or officers which relates in whole or in part to a change in control of the Company, will not exceed $160,000.  In addition, the aggregate amount of Deferred Compensation (as defined below) that would be due to employees and officers of the Company at the Effective Time will not exceed $125,000.  As used herein, the term “Deferred Compensation” shall mean an accrual pursuant to an arrangement, contract, or plan that is not qualified under Section 401(a) of the Code or a contribution to an employees’ trust that is not exempt from tax under Section 501(a) of the Code made by the Company or the Company Subsidiaries for services rendered by an employee or independent contractor that will be taxed when received or upon the removal of certain restrictions of receipt and not when earned, but shall not include the value of any Company Options from the Company Option Plans or the value of any Warrants, and shall not include any sales commissions due employees for sales prior to the Closing.

(b)

True, correct and complete copies of each of the Plans (if any), and related trusts, if applicable, including all amendments thereto, and all documents and contracts related thereto, have been furnished to Parent.  There has also been furnished to Parent, with respect to each Plan required to file such report and description, the three most recent reports on Form 5500, the summary plan description, actuarial report, and Internal Revenue Service determination letter.  True, correct and complete copies or descriptions of all Benefit Programs or Agreements have also been furnished to Parent.

(c)

Except as otherwise set forth in Part 2.13(c) of the Company Disclosure Schedule,

(i)

Neither Company nor the Company Subsidiaries contributes to or has an obligation to contribute to, and neither the Company nor the Company Subsidiaries has at any time contributed to or had an obligation to contribute to, and neither the Company nor the Company Subsidiaries has any actual or contingent liability under a multiemployer plan within the meaning of Section 3(37) of ERISA ("Multiemployer Plan") or a multiple employer plan within the meaning of Section 413(b) and (c) of the Code or any similar arrangement in a foreign jurisdiction;

(ii)

The Company and the Company Subsidiaries have substantially performed all obligations, whether arising by operation of Legal Requirement or by contract, required to be performed by them in connection with the Plans and the Benefit Programs and Agreements, and to the knowledge of the Company, there have been no defaults or violations by any other party to the Plans or Benefit Programs or Agreements;

(iii)

All reports and disclosures relating to the Plans required to be filed with or furnished to governmental agencies, Plan participants or Plan beneficiaries have been filed or furnished in accordance with applicable Legal Requirements in a timely manner, and each Plan and each Benefit Program or Agreement complies with and has been administered in operation in all material respects in accordance with its terms and all applicable Legal Requirements;

(iv)

Each of the Plans intended to be qualified under Section 401 of the Code satisfies the requirements of such section and has received a favorable determination letter from the Internal Revenue Service regarding such qualified status and has not, since receipt of the most recent favorable determination letter, been amended or operated in a way which could adversely affect such qualified status;

(v)

There have been no acts or omissions by the Company or the Company Subsidiaries which have given rise to or may give rise to fines, penalties, taxes or related changes under Section 502 of ERISA or Chapters 43, 47, 68 of 100 of the Code.  None of the payments contemplated by the Benefit Programs or Agreements would, in the aggregate, constitute excess parachute payments (as defined in Section 280G of the Code (without regard to subsection (b)(4) thereof)).  There are no actions, suits or claims pending (other than routine claims for benefits) or, to the knowledge of the Company, threatened against, or with respect to, any of the Plans or Benefit Programs or Agreements or their assets;

(vi)

All contributions required to be made to the Plans pursuant to their terms and provisions and applicable law have been made timely;

(vii)

As to any Plan subject to Title IV of ERISA, there has been no event or condition which presents the material risk of Plan termination, no accumulated funding deficiency, whether or not waived, within the meaning of Section 302 of ERISA or Section 412 of the Code has been incurred, no reportable event within the meaning of Section 4043 of ERISA (for which the disclosure requirements of Regulation Section 2615.3 promulgated by the Pension Benefit Guaranty Corporation ("PBGC") have not been waived) has occurred, no notice of intent to terminate the Plan has been given under Section 4041 of ERISA, no proceeding has been instituted under Section 4042 of ERISA to terminate the Plan, there has been no termination or partial termination of the Plan within the meaning of Section 411(d)(3) of the Code, no liability to the PBGC has been incurred, and the assets of the Plan equal or exceed the aggregate present value of the benefit liabilities (within the meaning of Section 4001(a)(16) of ERISA) under the Plan, computed on a "plan termination basis" based upon reasonable actuarial assumptions and the asset valuation principles established by the PBGC;

(viii)

None of the Plans nor any trust created thereunder or with respect thereto has engaged in any "prohibited transaction" or "party-in-interest transaction" as such terms are defined in Section 4975 of the Code and Section 406 of ERISA which could subject any Plan, the Company, the Company Subsidiaries or any officer, director or employee thereof to a tax or penalty on prohibited transactions or party-in-interest transactions pursuant to Section 4975 of the Code or Section 502(i) of ERISA.  None of the assets of any Benefit Programs are invested in employer securities or employer real property;

(ix)

To the knowledge of the Company, there is no matter pending (other than routine qualification determination filings) with respect to any of the Plans or Benefit Programs or Agreements before the Internal Revenue Service, the Department of Labor, the PBGC, or foreign agents;

(x)

Each trust funding a Plan, which trust is intended to be exempt from federal income taxation pursuant to Section 501(c)(9) of the Code, satisfies the requirements of such section and has received a favorable determination letter from the Internal Revenue Service regarding such exempt status and has not, since receipt of the most recent favorable determination letter, been amended or operated in a way which would adversely affect such exempt status;

(xi)

Neither the Company nor the Company Subsidiaries have any obligation to provide health benefits or death benefits to former employees, except as specifically required by Legal Requirement;

(xii)

Neither the execution and delivery of this Agreement nor the consummation of any or all of the transactions contemplated hereby will: (A) entitle any current or former employee of the Company or the Company Subsidiaries to severance pay, unemployment compensation or any similar payment, (B) accelerate the time of payment or vesting or increase the amount of any compensation due to any such employee or former employee, or (C) directly or indirectly result in any payment made to or on behalf of any person to constitute a "parachute payment" within the meaning of Section 280G of the Code;

(xiii)

Neither the Company nor the Company Subsidiaries have incurred any liability or taken any action, and no action or event has occurred that could reasonably be expected to cause the Company or the Company Subsidiaries to incur any liability (A) under Section 412 of the Code or Title IV of ERISA with respect to any "single-employer plan" within the meaning of Section 4001(a)(15) of ERISA that is not a Plan, or (B) to any Multiemployer Plan, including without limitation on account of a partial or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA; and

(xiv)

Neither the Company nor the Company Subsidiaries is a party to any agreement, and has not established any policy or practice, requiring the Company or the Company Subsidiaries to make a payment or provide any other form of compensation or benefit to any person performing services for the Company or the Company Subsidiaries upon termination of such services which would not be payable or provided in the absence of the consummation of the transactions contemplated by this Agreement.

(d)

Except as set forth in Part 2.13(d) of the Company Disclosure Schedule (i) there is no litigation or employee claims pending or, to the knowledge of the Company, threatened between the Company or the Company Subsidiaries and any of their respective employees; (ii) neither the Company nor the Company Subsidiaries is a party to any collective bargaining agreement or other labor union contract applicable to persons employed by the Company or the Company Subsidiaries, nor, to the knowledge of the Company, are there any activities or proceedings of any labor union to organize any such employees; (iii) neither the Company nor the Company Subsidiaries has breached or otherwise failed to comply with any provision of any such agreement or contract, and there are no grievances outstanding against the Company or the Company Subsidiaries under any such agreement or contract ; (iv) there are no unfair labor practice complaints pending against the Company or the Company Subsidiaries before the National Labor Relations Board or any current union representation questions involving employees of the Company or the Company Subsidiaries; (v) there is no strike, slowdown, work stoppage or lockout, or, to the knowledge of the Company, threat thereof, by or with respect to any employees of the Company or the Company Subsidiaries; and (vi) neither the Company nor the Company Subsidiaries is party to or bound by any labor or employment agreement with any employee or former employee concerning terms and conditions of employment.

(e)

Each of the Company and the Company Subsidiaries is in compliance in all material respects with all applicable Legal Requirements and contracts relating to the employment of labor, including those related to wages, hours, collective bargaining and the payment and withholding of taxes and other sums as required by the appropriate Governmental Body and have withheld and paid to the appropriate Governmental Body or are holding for payment not yet due to such Governmental Body all amounts required to be withheld from employees of the Company or the Company Subsidiaries and are not liable for any arrears of wages, taxes, penalties or other sums for failure to comply with any of the foregoing.  The Company and the Company Subsidiaries have paid in full to all employees or adequately accrued for in accordance with  United States GAAP consistently applied all wages, salaries, commissions, bonuses, benefits and other compensation due to or on behalf of such employees and there is no claim with respect to payment of wages, salary or overtime pay that has been asserted or is now pending or threatened before any Governmental Body with respect to any persons currently or formerly employed by the Company or the Company Subsidiaries.  Neither the Company nor the Company Subsidiaries is a party to, or otherwise bound by, any consent decree with, or citation by, any Governmental Body relating to employees or employment practices. There is no charge or proceeding with respect to a violation of any occupational safety or health standards that has been asserted or is now pending or threatened with respect to the Company or the Company Subsidiaries.  There is no charge of discrimination in employment or employment practices, for any reason, including, without limitation, age, gender, race, religion or other legally protected category, which has been asserted or is n ow pending or threatened before the United States Equal Employment Opportunity Commission, or any other Governmental Body in any jurisdiction in which the Company or the Company Subsidiaries has employed or employ any person.

2.14

Environmental Matters.  Except for non-compliance that, individually or in the aggregate, has not had and would not reasonably be expected to have a Material Adverse Effect on the Company, or as set forth in Part 2.14 of the Company Disclosure Schedule, (a) the Company and the Company Subsidiaries are in compliance in all material respects with all applicable Environmental Laws, which compliance includes the possession by the Company or the Company Subsidiaries of all permits and other Governmental Authorizations required under applicable Environmental Laws, and compliance with the terms and conditions thereof; (b) neither the Company nor the Company Subsidiaries has received any notice that alleges that any such entity is not in compliance with any Environmental Law; and (c) to the knowledge of the Company, no curren t owner of any property leased or controlled by the Company or the Company Subsidiaries has received any notice or other communication (in writing or otherwise), whether from a Governmental Body, citizens group, employee or otherwise, that alleges that such current or prior owner or the Company or the Company Subsidiaries is not in compliance with any Environmental Law.  For purposes of this Agreement (i) “Environmental Law” means any applicable federal, state, local or foreign Legal Requirement relating to pollution or protection of human health or the environment (including ambient air, surface water, ground water, land surface or subsurface strata), including any law or regulation relating to emissions, discharges, releases or threatened releases of Materials of Environmental Concern, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern; and (ii) “Materials of Environ mental Concern” include chemicals, pollutants, contaminants, wastes, toxic substances, petroleum and petroleum products and any other substance that is now or hereafter regulated by any Environmental Law or that is otherwise a danger to health, reproduction or the environment.

2.15

Legal Proceedings; Orders.  Except as set forth in Part 2.15 of the Company Disclosure Schedule, there is no pending Legal Proceeding, and to the knowledge of the Company, no Person has threatened to commence any Legal Proceeding (i) that involves the Company or the Company Subsidiaries or any of the assets owned, used or controlled by them; or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, the Merger or any of the other transactions contemplated by this Agreement or any of the Related Agreements.  Neither the Company nor the Company Subsidiaries nor any property or asset of the Company or the Company Subsidiaries is subject to any continuing order of, consent decree, settlement agreement or similar written agreement with, or, to the knowle dge of the Company, continuing investigation by, any Governmental Body, or any order, writ, judgment, injunction, decree, determination or award of any Governmental Body that would, in each case, individually or in the aggregate, prevent or materially delay consummation of the Merger or would, individually or in the aggregate, have a Material Adverse Effect.

2.16

Authority; Binding Nature of Agreement.  The Company has the absolute and unrestricted right, power and authority to enter into and to perform its obligations under this Agreement and any Related Agreement to which it is a party and, subject to satisfaction of all conditions precedent to this Agreement and obtaining all approvals and consents as contemplated by this Agreement, to consummate the transactions contemplated by this Agreement; and the execution, delivery and performance by the Company of this Agreement and any Related Agreement to which it is a party have been duly authorized by all necessary action on the part of the Company.  This Agreement and each Related Agreement to which the Company is a party has been duly executed and delivered by the Company and constitutes the legal, valid and binding oblig ation of the Company, enforceable against the Company in accordance with its terms, subject to (i) laws of general application relating to bankruptcy, fraudulent conveyance, insolvency and the relief of debtors, and (ii) rules of law governing specific performance, injunctive relief and other equitable remedies.

2.17

Non-Contravention; Consents.

(a)

Except as set forth in Part 2.17 of the Company Disclosure Schedule, to the knowledge of the Company, neither (1) the execution, delivery or performance of this Agreement or any of the Related Agreements, nor (2) the consummation of the Merger or any of the other transactions contemplated by this Agreement or any of the Related Agreements, will (with or without notice or lapse of time):

(i)

materially contravene or conflict with or result in a material violation of, or give any Governmental Body or other Person the right to challenge any of the transactions contemplated by this Agreement or any of the Related Agreements or to exercise any material remedy or obtain any material relief under, any Legal Requirement or any order, writ, injunction, judgment or decree to which the Company, or any of the assets owned, used or controlled by the Company, is subject;

(ii)

materially contravene or conflict with or result in a material violation of any of the terms or requirements of, or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify, any Governmental Authorization that is held by the Company or that otherwise relates to the Company’s business or to any of the assets owned, used or controlled by the Company; or

(iii)

materially contravene or conflict with or result in a material violation or breach of, or result in a material default under, any provision of any material note, bond, mortgage, indenture, contract, agreement, lease, license or other instrument or obligation of the Company or the Company Subsidiaries or to which any property or asset of the Company or the Company Subsidiaries is bound or affected.

(b)

The execution and delivery of this Agreement by the Company do not, and the performance of this Agreement by the Company will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Body except for (i) the filing and recordation of appropriate merger documents as required by the DGCL, (ii) the filing of the Proxy Statement and any other documents necessary to comply with applicable securities Legal Requirements, and (iii) where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, prevent or materially delay consummation of the Merger and would not, individually or in the aggregate, have a Material Adverse Effect on the Company.

2.18

Full Disclosure.

(a)

This Agreement (including the Company Disclosure Schedule) does not, (i) contain any representation, warranty or information that is false or misleading with respect to any material fact, or (ii) omit to state any material fact necessary in order to make the representations, warranties and information contained herein and therein, in the light of the circumstances under which such representations, warranties and information were or will be made or provided, not false or misleading.

(b)

The Proxy Statement to be sent to the shareholders of the Company in connection with the Company Shareholders shall not, at the date the Proxy Statement (or any amendment or supplement thereto) is first mailed to shareholders of the Company, at the time of the Company Shareholders Meeting and at the Effective Time, contain any statement which, at the time and in light of the circumstances under which it was made, is false or misleading with respect to any material fact, or which omits to state any material fact necessary in order to make the statements therein not false or misleading or necessary to correct any statement in any earlier communication with respect to the solicitation of proxies for the Company Shareholders Meeting which shall have become false or misleading.  Notwithstanding the foregoing, the Company makes no representation or warranty with respect to any information supplied by Parent, Merger Sub or any of Parent’s or Merger Sub’s representatives for inclusion in the Proxy Statement.  The Proxy Statement shall comply in all material respects as to form with the requirements of the Exchange Act and the rules and regulations thereunder.

2.19

Company Action.

(a)

The Board of Directors of the Company (at a meeting duly called and held in accordance with the Company Constituent Documents) has (i) unanimously determined that the Merger is advisable and is fair to and in the best interests of the Company and its shareholders, (ii) unanimously approved and adopted this Agreement and unanimously recommended the adoption and approval of the Merger and this Agreement by the shareholders of the Company, (iii) directed that this Agreement and the Merger be submitted for a vote at the Company Shareholders’ Meeting and (iv) received the opinion of CIBC World Markets Corp. to the effect that, as of the date of this Agreement, the Merger Consideration is fair, from a financial point of view, to holders of Company Common Stock (other than those holders who are also holders of the 2003 Notes and who enter into the Shareholders Agree ment in connection with the Merger).  The aforesaid approvals of the Board of Directors of the Company are sufficient so that the restrictions on business combinations set forth in Section 203(a) of the DGCL shall not apply to the Merger.  To the knowledge of the Company, no other state takeover statute is applicable to the Merger.

(b)

The affirmative vote of a majority of the shares of Company Common Stock outstanding on the date of such vote is the only vote of the shareholders of the Company needed to approve and adopt this Agreement and approve the Merger and the transactions contemplated hereby under the DGCL (the “Required Company Shareholder Vote”).  The Company has been advised by its directors and executive officers that they intend to vote their shares of Company Common Stock in favor of the approval and adoption of the Merger and this Agreement.

2.20

Customers and Suppliers.  Part 2.20 of the Company Disclosure Schedule sets forth a true and complete list of each customer of the Company or the Company Subsidiaries which accounted for more than five percent of the Company’s consolidated revenues during the 12 month period ended March 31, 2004.  None of the Company’s customers listed in Part 2.20 of the Company’s Disclosure Schedule and no material supplier of the Company and the Company Subsidiaries, (i) has cancelled or otherwise terminated any contract with the Company or the Company Subsidiaries prior to the expiration of the contract term, (ii) has returned, or threatened to return, a substantial amount of any of the products, equipment, goods and services purchased from the Company or the Company Subsidiaries, or (iii) to the Company’s knowledge, has threatened, or indicated its intention, to cancel or otherwise terminate its relationship with the Company or the Company Subsidiaries or to reduce substantially its purchase from or sale to the Company or the Company Subsidiaries of any products, equipment, goods or services.

2.21

Insurance.  Part 2.21 of the Company Disclosure Schedule sets forth, with respect to each insurance policy under which the Company or the Company Subsidiaries has been an insured, a named insured or otherwise the principal beneficiary of coverage at any time within the past three years, (i) the names of the insurer, the principal insured and each named insured, (ii) the policy number, (iii) the period, scope and amount of coverage and (iv) the premium charged.

2.22

Interested Party Transactions.  No director, officer or other affiliate of the Company or the Company Subsidiaries has or has had, directly or indirectly, (i) an economic interest in any person that has furnished or sold, or furnishes or sells, services or products that the Company or the Company Subsidiaries furnishes or sells, or proposes to furnish or sell; (ii) an economic interest in any person that purchases from or sells or furnishes to, the Company or the Company Subsidiaries, any goods or services; (iii) a beneficial interest in any contract or agreement disclosed in Part 2.6, 2.7 or 2.8 of the Company Disclosure Schedule; or (iv) any contractual or other arrangement with the Company or the Company Subsidiaries; provided, however, that ownership of no more than one percent (1%) of the outstandin g voting stock of a publicly traded corporation shall not be deemed an “economic interest in any person” for purposes of this Section 2.22.  The Company and the Company Subsidiaries have not, since January 1, 2001, (i) extended or maintained credit, arranged for the extension of credit or renewed an extension of credit in the form of a personal loan to or for any director or executive officer (or equivalent thereof) of the Company or the Company Subsidiaries, or (ii) materially modified any term of any such extension or maintenance of credit.  There are no extensions of credit maintained by the Company or the Company Subsidiaries to which the second sentence of Section 13(k)(1) of the Exchange Act applies.

2.23

Brokers or Finders.  Except for the engagement of CIBC World Markets Corp. by the Company, no agent, broker, investment banker, financial advisor or other firm or Person is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company or the Company Subsidiaries.

3.

REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB