Common use of Conduct of Business Pending the Merger Clause in Contracts

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet or

Conduct of Business Pending the Merger. SECTION 5.01Section 6.1 CONDUCT OF BUSINESS BY COMPANY PENDING THE MERGER. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between From the date of this Agreement and to the Effective Time, unless Parent shall otherwise agree in writing, or as otherwise contemplated by this Agreement, or any Exhibit hereto, or the Company Disclosure Letter: (a) the respective businesses of the Company and the Company Subsidiaries shall be conducted only inin the ordinary and usual course of business and consistent with past practices, and there shall be no material changes in the conduct of the operations of Company or any Company Subsidiary; (b) Company shall not (i) sell or pledge or agree to sell or pledge any stock owned by it in any of the Company and Subsidiaries; (ii) amend its Certificate of Incorporation or By-Laws; or (iii) split, combine or reclassify any shares of its outstanding capital stock or declare, set aside or pay any dividend or other distribution payable in cash, stock or property, or redeem or otherwise acquire any shares of its capital stock or shares of the capital stock of any of the Company Subsidiaries; (c) neither Company nor any of the Company Subsidiaries shall not take (i) authorize for issuance, issue or sell any action additional shares of, or rights of any kind to acquire any shares of, its capital stock of any class (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), except infor (a) unissued Shares reserved for issuance upon the exercise of Employee Stock Options, (b) Shares to be issued pursuant to the Warrant Agreement and (c) the Employee Shares; (ii) acquire, dispose of, transfer, lease, license, mortgage, pledge or encumber any fixed or other assets in excess of $5,000,000 in any one or a series of related transactions other than in the ordinary course of business and in a manner consistent with past practicepractices; (iii) incur, assume or prepay any indebtedness or any other material liabilities other than in the ordinary course of business and consistent with past practices; (iv) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other person other than a Company Subsidiary in the ordinary course of business and consistent with past practices; (v) make any loans, advances or capital contributions to, or investments in, any other person, other than to Company Subsidiaries and other than in the ordinary course of business and consistent with past practices; (vi) authorize capital expenditures substantially in excess of the amount currently budgeted therefor; (vii) permit any insurance policy naming Company or any Company Subsidiary as a beneficiary or a loss payee to be cancelled or terminated other than in the ordinary course of business; or (viii) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing; (d) Company shall use its best reasonable efforts to preserve substantially intact the business organization of the Company and the Company Subsidiaries, to keep available the services of the current officersits and their present officers and key employees, employees and consultants of the Company and the Subsidiaries and to preserve the current goodwill of those having business relationships with it and the Company Subsidiaries; (e) neither Company nor any of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or shall make any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make compensation payable or pay any dividend or other distribution, to become payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassifyofficers, combinedirectors or employees, splitenter into or amend any employment, subdivide severance, termination or redeemother similar agreement, purchase adopt any new Plan or otherwise acquire, directly or indirectly, amend in any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or material respect any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any personexisting Plan, or make any loans to any of its officers, directors or advancesemployees or make any changes in its existing borrowing or lending arrangements for or on behalf of any of such persons, except whether contingent on consummation of the Merger or otherwise, other than (i) in the ordinary course of business and consistent with past practice, but in no event shall there (ii) as may be more than $1,000,000 required under applicable Law or the terms of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; existing Plan or agreement, and (iii) enter into any contract or agreement which is outside the granting of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries retention bonuses to certain officers and employees in an aggregate amount of more than U.S. not to exceed $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation2,000,000; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e);and (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees neither Company nor any of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than Subsidiaries shall (i) reasonable and usual actions in knowingly take or allow to be taken any action which would jeopardize the ordinary course treatment of business and consistent with past practice Parent's acquisition of Company as a pooling of interests for accounting purposes; or (ii) knowingly take any action that would jeopardize qualification of the Merger as required by a reorganization within the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to meaning of section 368(a) of the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orCode.

Conduct of Business Pending the Merger. SECTION 5.01Section 6.1. Conduct of Business by the Company Target Pending the Merger. The Company Target covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses business of the Company and the Subsidiaries Target shall be conducted only in, and the Company and the Subsidiaries Target shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company Target shall use its best efforts to preserve substantially intact the business organization of the Company and the SubsidiariesTarget, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries Target and to preserve the current present relationships of the Company and the Subsidiaries Target with customers, suppliers and other persons with which the Company or any Subsidiary Target has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective TimeTarget shall not, directly or indirectly indirectly, do, or propose to do, any of the following without the prior written consent of Parent, which consent shall not be unreasonably withheld: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, encumber or authorize the issuance, sale, pledge, disposition, grant disposition or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) Target or (ii) any assets of Target or any other material assets of the Company or any Subsidiary, except for sales Target other than in the ordinary course of business and in a manner consistent with past practicepractices; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, consolidation or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, partnership or other business organization or any division thereof or any assetsthereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee guaranty or endorse, pledge in respect of endorse or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 1,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 3,000 for the Company and the Subsidiaries taken as a wholeTarget; or (viiiv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter of the effects set forth in this paragraph (e) of Section 5.01(e)6.1; (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries salary or wages of employees of the Company or any Subsidiary Target who are not officers of the CompanyTarget in accordance with past practices, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, director or officer or other employee of the Company or any SubsidiaryTarget, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directordirectors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, action other than (i) reasonable and usual actions in the ordinary course of business and in a manner consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment payments of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability;; or (i) pay, discharge discharge, compromise or consent to any arrangements concerning or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge discharge, compromise, settlement, arrangement or satisfaction, satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of Target or incurred in the ordinary course of business and consistent with past practice. Section 6.2. Conduct of Business by Parent and Acquiror Pending the Merger. Parent and Acquiror covenant and agree that, between the date of liabilities reflected this Agreement and the Effective Time, Parent shall not sell or reserved against in the 1998 Balance Sheet orotherwise dispose of all or substantially all of its assets.

Conduct of Business Pending the Merger. SECTION 5.014.01. Conduct of Business by the Company Parent Pending the Merger. The Company covenants and agrees that, between During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, Parent covenants and agrees that, unless Parent the Company shall otherwise agree in writing, and except as set forth in Section 4.01 of the Parent Disclosure Schedule, Parent shall conduct its business and shall cause the businesses of the Company and the Subsidiaries shall its subsidiaries to be conducted only in, and the Company Parent and the Subsidiaries its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company Parent shall use its best reasonable commercial efforts to preserve substantially intact the business organization of the Company Parent and the Subsidiariesits subsidiaries, to keep available the services of the current present officers, employees and consultants of the Company Parent and the Subsidiaries its subsidiaries and to preserve the current present relationships of the Company Parent and the Subsidiaries its subsidiaries with customers, suppliers and other persons with which the Company Parent or any Subsidiary of its subsidiaries has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company Parent nor any Subsidiary of its subsidiaries shall, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, and except as set forth in Section 4.01 of the Parent Disclosure Schedule, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentthe Company: (a) amend or otherwise change its Articles Parent's Memorandum of Incorporation Association, as altered, or Bylaws or equivalent organizational documentsBye-Laws; (b) issue, sell, pledge, dispose of, grant, of or encumber, or authorize the issuance, sale, pledge, disposition, grant disposition or encumbrance of (i) of, any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest)) in Parent, any of the Company its subsidiaries or any Subsidiary affiliates (except for the issuance of a maximum shares of 994,502 Shares Parent Common Stock issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereofhereof and except for the issuance of options ("New Parent Options"), in the ordinary course of business and consistent with past practice, to purchase up to 1,000,000 shares in the aggregate of Parent Common Stock (other than to the Chief Executive Officer or the Chief Financial Officer of Parent); provided that such New Parent Options shall be issued to employees of Parent and its subsidiaries, shall have an exercise price that is not less than the market price of Parent Common Stock on the date of grant, shall terminate on the employee's termination of employment with Parent and shall vest in accordance with Parent's customary vesting schedule for employee options; and provided further that the issuance of such options would not reasonably be expected to adversely affect the ability of Parent to account for the business combination to be effected by the Merger as a pooling of interests; (c) sell, pledge, dispose of or (ii) encumber any material assets of the Company Parent or any Subsidiary, of its subsidiaries (except for (i) sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, (iii) sales of immaterial assets not in excess of $5,000,000 and (iv) sales pursuant to sale-leasebacks not in excess of $10,000,000 in any individual case or $35,000,000 in the aggregate); (ci) declare, set aside, make or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwise, with any combination thereof) in respect to of any of its capital stock; , except that a wholly owned subsidiary of Parent may declare and pay a dividend to its parent, (dii) reclassify, combine, split, subdivide combine or redeemreclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, purchase in lieu of or in substitution for shares of its capital stock, or (iii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, shares of Parent Common Stock or any option, warrant or right, directly or indirectly, to acquire shares of Parent Common Stock, or propose to do any of its capital stockthe foregoing; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, partnership or other business organization or any division thereof other than those listed on Section 4.01(e) of the Parent Disclosure Schedule and other than any acquisitions in which the consideration payable by Parent does not exceed $10,000,000 for any individual acquisition or any assets$35,000,000 in the aggregate for all such acquisitions; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee (other than guarantees of bank debt of the Parent's subsidiaries entered into in the ordinary course of business) or endorse, pledge in respect of endorse or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into authorize any contract or agreement which is outside capital expenditures other than (x) as described on Section 4.01 of the ordinary course Parent Disclosure Schedule, (y) any capital expenditures not in excess of business, consistent with past practice$5,000,000 in any individual case, or which requires payments by $70,000,000 for all such capital expenditures in the Company or aggregate, and (z) any capital expenditures incurred in connection with the Subsidiaries in an aggregate amount installation of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries subscriber systems in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (viiiv) enter into or amend any contract, agreement, commitment or arrangement with respect to effect any matter set forth in of the matters prohibited by this Section 5.01(e4.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, with any director, officer or other employee of the Company Parent or any Subsidiaryof its subsidiaries, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directorcurrent or former directors, officers or employees, except for (w) increases in salary or wages of employees of Parent or its subsidiaries in accordance with past practices; (x) entering into any employment agreement with any officers or employees of Parent or any of its subsidiaries in accordance with past practices providing for annual compensation of not more than $200,000, (y) entering into any severance or termination agreements or the grant of any severance or termination payment to any employee or officer or employeein accordance with past practices in an amount not in excess of $200,000, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan(z) as may be required by law; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect action to change accounting policies or procedures (including, without limitation, procedures with respect to the payment revenue recognition, payments of accounts payable and collection of accounts receivable), except as required by GAAP; (h) make any material tax election inconsistent with past practice or settle or compromise any material federal, state, local or foreign income tax liability, except to the extent the amount of any such settlement has been reserved for in the financial statements contained in the Parent SEC Reports filed prior to the date of this Agreement; (i) pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements contained in the Parent SEC Reports filed prior to the date of this Agreement or incurred in the ordinary course of business and consistent with past practice; or (j) take, or agree in writing or otherwise to take, any of liabilities reflected the actions described in Sections 4.01(a) through (i) above, or reserved against any action which would make any of the representations or warranties of Parent contained in the 1998 Balance Sheet orthis Agreement untrue or incorrect or prevent Parent or Merger Sub from performing or cause Parent or Merger Sub not to perform its covenants hereunder.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. . (a) The Company covenants and agrees that, between the date of this Agreement and the earlier of the Effective TimeTime and the termination of this Agreement pursuant to Article VIII, except as set forth in Section 5.01 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless Parent shall otherwise agree consent in writingwriting (which consent shall not be unreasonably withheld or delayed): (i) the Company shall, and shall cause each Company Subsidiary to, use its reasonable best efforts to conduct the businesses business of the Company and the Subsidiaries shall be conducted only inCompany Subsidiaries, and in all respects material to the Company and the Subsidiaries shall not take any action except inCompany Subsidiaries, taken as a whole, in the ordinary course of business and in a manner consistent with past practice; and and (ii) the Company shall, and shall cause each Company Subsidiary to, use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Company Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Company Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers and other persons with which the Company or any Company Subsidiary has significant business relations. . (b) By way of amplification and not limitationlimitation of Section 5.01(a), except as contemplated by any other provision of this Agreement or by as set forth in Section 5.01 of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary shall, between the date of this Agreement and the earlier of the Effective TimeTime and the termination of this Agreement pursuant to Article VIII, directly or indirectly indirectly, do, or propose to do, any of the following without the prior written consent of Parent:Parent (which consent shall not be unreasonably withheld or delayed): (ai) amend or otherwise change its Articles Certificate of Incorporation or Bylaws By-laws or equivalent organizational documents; (bii) issue, sell, pledge, dispose of, grant, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (iA) any shares of any class of capital stock of any class of the Company or any Company Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Company Subsidiary (except for the issuance of up to a maximum of 994,502 Shares 6,715,239 shares of Company Class A Common Stock issuable pursuant to employee stock options or up to a maximum of 23,625,885 shares of Company Class A Common Stock issuable pursuant to the terms of the Company Convertible Subordinated Notes outstanding on the date hereof, in the ordinary course of business and in a manner consistent with past practice in accordance with the terms of the Company Stock Option Plans or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan such notes as in effect on as of the date hereof) or (iiB) any material assets of the Company or any Company Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (ciii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any direct or indirect wholly owned Company Subsidiary to the Company or any other Company Subsidiary; (div) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock; (iv) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any material amount of assets; (iiB) except for borrowings under existing credit facilities in the ordinary course of business and in a manner consistent with past practice, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except or grant any security interest in any of its assets; (C) enter into any contract or agreement other than in the ordinary course of business and in a manner consistent with past practicepractice that, but if in no event shall there be more than $1,000,000 of indebtedness outstanding at effect on the date hereof, would qualify as a Company Material Contract; (D) make, authorize or make any one time commitment with respect to any capital expenditure, except for capital expenditures that, in addition to the total amount of indebtedness outstanding as aggregate for each quarter, do not exceed 125% of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries budgeted amounts set forth in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed Company’s capital expenditures described in Schedule 5.01(eexpenditure budget attached as Section 5.01(b)(v) of the Company Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (viiE) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e5.01(b)(v); (fvi) make any investment in any entity (other than a subsidiary) in excess of $25 million; (vii) increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for normal increases in the ordinary course of business and in a manner consistent with past practices practice or as required by applicable Law in salaries or wages of employees of the Company or any Company Subsidiary who are not directors or officers of the Company, or grant any severance or termination pay toto (other than pursuant to existing contractual obligations disclosed in Section 3.10(a) of the Company Disclosure Schedule or in the ordinary course of business and in a manner consistent with past practice), or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, with any director, officer or other employee of the Company or of any Company Subsidiary, or or, except as required by Law, establish, adopt, enter into or amend any collective bargaining, bonus, profit profit-sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee; provided that the Company and Parent hereby agree that, or communicate notwithstanding the foregoing, award grants may be made to employeesemployees of the Company and the Company Subsidiaries pursuant to the ChipPAC, accrue any benefits under Inc. Employee Retention Plan and the ChipPAC, Inc. Special Bonus Plan as contemplated in Section 6.05(c); (A) exercise its discretion with respect to or otherwise implement voluntarily accelerate the Company's 1999 Executive Incentive vesting of any Company Stock Award as a result of the Merger, any other change of control of the Company (as defined in the Company Stock Option Plans) or otherwise; or (B) exercise its discretion with respect to or otherwise amend, modify or supplement the Purchase Plan; (gix) take make any actionchange in any material method of accounting, other than (i) reasonable method of accounting principles or practice, except for such change required by reason of a concurrent change in GAAP or compliance with the applicable requirements of the rules and usual actions in the ordinary course of business and consistent with past practice or (ii) as required regulations promulgated by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (hx) make any tax election inconsistent with past custom and practice or settle or compromise any material United States federal, state, local or foreign non-United States income tax liabilityliability inconsistent with any accrual or reserve therefor on the consolidated balance sheet of the Company and the consolidated Company Subsidiaries as of September 30, 2003; (ixi) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and in a manner consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet consolidated balance sheet of the Company and the consolidated Company Subsidiaries as at September 30, 2003 or subsequently incurred in the ordinary course of business and in a manner consistent with past practice; (xii) amend, modify or consent to the termination of any Material Company Contract, or amend, waive, modify or consent to the termination of the Company’s or any Company Subsidiary’s material rights thereunder; (xiii) commence any Action (except in the ordinary course of business against third parties) or settle any Action (except in the ordinary course of business, it being understood that any settlement involving the payment by the Company or any Company Subsidiary of more than $500,000 is not in the ordinary course of business); (xiv) permit any item of Company Owned Intellectual Property to lapse or to be abandoned, dedicated or disclaimed, by failing to perform or make any applicable filings, recordings or other similar actions or filings, or by failing to pay all required fees and taxes required or advisable to maintain and protect its interest in each and every item of Company Owned Intellectual Property, except where the failure to make such filings and payments results from the exercise of reasonable business judgment; (xv) sell, assign or license any of the Company Owned Intellectual Property, except for licensing of Company Owned Intellectual Property in the ordinary course of business consistent with past practice; (xvi) fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder; or (xvii) announce an intention, enter into any formal or informal agreement or otherwise make a commitment to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. (i) The Company covenants and agrees that, between the date of this Agreement and the Effective TimeTime or earlier termination of this Agreement, unless Parent the Purchaser shall otherwise agree consent in writing, : (a) the businesses business of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall s all not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall will use its best reasonable efforts to preserve substantially intact the business organization of the Company and the SubsidiariesCompany, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries and to preserve the current present relationships of the Company and the Subsidiaries with customers, suppliers and other persons Persons with which the Company or any Subsidiary has significant business relations. By way . (b) the Company will not amend its Certificate of amplification Incorporation or By-Laws; (c) the Company will not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: its Subsidiaries will (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (bi) issue, sell, transfer, pledge, dispose of or encumber any additional shares of, grant, encumberor securities convertible into or exchangeable for, or authorize the issuanceoptions, salewarrants, pledgecalls, dispositioncommitments or rights of any kind to acquire, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiaryof its Subsidiaries, or any other than (A) issuances of Shares pursuant to securities, options, warrants, convertible securities calls, commitments or other rights existing at the date hereof and previously disclosed to the Purchaser in writing (including as disclosed in the SEC Reports) or (B) issuances to employees pursuant to any of any kind the Option Plans of stock options to acquire any purchase in the aggregate up to 10,000 shares of such capital stock, Common Stock which options are exercisable at a price (which price shall be set no earlier than after the tenth trading day following the date of this Agreement) equal to or any other ownership interest greater than fair market value (including, without limitation, any phantom interest), of as defined in the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect relevant Option Plan) on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assetsgrant; (ii) incur any long-term indebtedness for borrowed money (whether evidenced by a note or issue any debt securities or assumeother instrument, guarantee or endorsepursuant to a financing lease, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any personsale-leaseback transaction, or make any loans otherwise) or advances, except in the ordinary course incur short-term indebtedness other than under lines of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of credit existing on the date of this Agreementhereof; (iii) enter into redeem, purchase or otherwise acquire directly or indirectly any contract of its capital stock or agreement which is outside of the ordinary course of business, consistent with past practice, other securities; or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) enter into, amend, terminate, cancel renew or permit fail to use reasonable efforts to renew in any change in, material respect any (x) Material Contract or agree to any change in, any Material Contract, (y) Identified Contract except in the ordinary course of business consistent with past practice; ; (vd) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in except as set forth on Schedule 5.01(e5.1(d) of the Disclosure Schedule, authorize neither the Company nor any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which areits Subsidiaries will, except for normal increases in the aggregateordinary course of business consistent with past practice or pursuant to employment contracts in effect on the date hereof, (i) grant any increase in excess of U.S. $250,000 for the compensation or benefits payable or to become payable by the Company and or any of its Subsidiaries to any employee; (ii) adopt, enter into, amend or otherwise increase, or accelerate the Subsidiaries taken as a wholepayment or vesting of the amounts, benefits or rights payable or accrued or to become payable or accrued under any bonus, incentive compensation, deferred compensation, severance, termination, change in control, retention, hospitalization or other medical, life, disability, insurance or other welfare, profit sharing, stock option, stock appreciation right, restricted stock or other equity based, pension, retirement or other employee compensation or benefit plan, program agreement or arrangement; or (viiiii) enter into or amend in any contractmaterial respect any employment or collective bargaining agreement or, agreementexcept in accordance with the existing written policies of the Company or existing contracts or agreements, commitment grant any severance or arrangement termination pay to any officer, director or employee of the Company or any of its Subsidiaries; (e) neither the Company nor its Subsidiaries will change the accounting principles used by it unless required by GAAP (or, if applicable with respect to any matter set forth in this Section 5.01(eSubsidiaries, foreign generally accepted accounting principles); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees as set forth on Schedule 5.1(f) of the Disclosure Schedule, neither the Company nor any of its Subsidiaries shall acquire by merging or consolidating with, by purchasing an equity interest in or a portion of the assets of, or by any other manner, any business or any Subsidiary who are not officers of the Companycorporation, partnership, association or other business organization or division thereof, or grant otherwise acquire any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit assets of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; other Person (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course purchase of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet assets from suppliers or

Conduct of Business Pending the Merger. SECTION 5.01. 7.1 Conduct of Business by the Company OCG and CMPI Pending the Merger. The Company covenants and agrees that, between Merger From the date of this Agreement and hereof until the Effective Time, unless Parent OCG and CMPI shall otherwise agree in writing, the businesses of the Company and the expect as otherwise contemplated by this Agreement, OCG and CMPI and their respective Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, conduct their business in the ordinary course of business and in a manner consistent with past practice; . Except as otherwise provided in this Agreement, and without limiting the Company shall use its best efforts to preserve substantially intact the business organization generality of the Company and the Subsidiariesforegoing, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between from the date of this Agreement and hereof until the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of ParentOCG and CMPI, which consent shall not be unreasonably withheld: (a) amend Neither OCG nor CMPI will adopt or otherwise propose any change its Articles to their respective certificate or articles of Incorporation incorporation or Bylaws or equivalent organizational documentsbylaws; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of Neither OCG nor CMPI will (i) declare, set aside or pay any dividend or other distribution with respect to any shares of capital stock of any class of the Company or any Subsidiaryrespective OCG and CMPI, or (ii) repurchase, redeem or otherwise acquire any outstanding shares of capital stock or other securities of, or other ownership interests in, OCG or CMPI, as the case may be; (c) Neither OCG nor CMPI will, nor permit any of its Subsidiaries to, merge or consolidate with any other person or acquire assets of any other person except in the ordinary course of business or pursuant to transactions among wholly-owned subsidiaries of OCG or CMPI, as the case may be; (d) Neither OCG nor CMPI will, nor permit any of its Subsidiaries to, sell, lease, license or otherwise surrender, relinquish or dispose of any material assets or properties except in the ordinary course of business; (e) Neither OCG nor CMPI will (i) issue any securities (whether through the issuance or granting of options, warrants, convertible securities rights or other rights of any kind to acquire any shares of such capital stockotherwise, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) enter into any material assets amendment of the Company any term of any outstanding security of such company or of any Subsidiaryof its Subsidiaries, (iii) incur any indebtedness, except for sales trade debt in the ordinary course of business and debt pursuant to existing or previously disclosed contemplated credit facilities or arrangements, (iv) increase in a manner consistent with past practice; (c) declareany material respect compensation, set aside, make or pay any dividend bonus or other distributionbenefits payable to, payable in cashor modify or amend any employment agreements or severance agreements with, stockany executive officer, property or otherwise, (v) enter into any settlement or consent with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnershippending litigation, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except than settlements in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement on terms which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will are not be subject otherwise materially adverse to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company company and the its Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable OCG and CMPI will not change any method of accounting or to become payable to its directors, officers accounting practice by OCG and CMPI or employeesany of their Subsidiaries, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plansuch change required by GAAP; (g) take Neither OCG nor CMPI will, nor permit any actionof its Subsidiaries to, other than (i) reasonable take, or agree or commit to take, any action that would make any representation and usual actions warranty of the respective company hereunder inaccurate in any material respect at, or as of any time prior to, the ordinary course of business and consistent with past practice Effective Time or (ii) as required by the SEComit, with or agree or commit to omit, to take any action necessary or appropriate to prevent any such representation or warranty from being inaccurate in any material respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable);at any such time; and (h) make Neither OCG nor CMPI will, nor permit any tax election of its Subsidiaries to, agree or settle or compromise commit to do any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than of the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orforegoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct Except as otherwise expressly contemplated by this Agreement, required by law or disclosed in Section 5.01 of Business by the Company Pending the Merger. The Company covenants and agrees thatDisclosure Schedule, between after the date of this Agreement hereof and prior to the Effective Time, unless Parent without Parent's consent (which consent shall otherwise agree in writingnot be unreasonably withheld), the businesses of the Company and the Subsidiaries shall be conducted only inshall, and the Company and the shall cause its Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentto: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales conduct their respective businesses in the ordinary and usual course of business and in a manner consistent with past practice; (cb) not (i) amend or propose to amend their respective certificates of incorporation or bylaws or equivalent constitutional documents (or the CVR Trust's certificate of formation or declaration of trust), (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside, make aside or pay any dividend or other distribution, distribution payable in cash, stock, property or otherwise, with respect except for the payment of dividends or distributions to the Company or a Subsidiary of the Company by another Subsidiary of the Company; (c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any additional shares of, or any options, warrants or rights of its any kind to acquire any shares of their capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock, except that the Company may issue shares of capital stock of the Company (A) upon exercise of Company Options outstanding on May 31, 2003 and (B) as required by the 401(k) Plan, the ESPP, the Directors' Plan, the DCP and the Company Rights Agreement as in effect on the date hereof; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; not (i) acquire (including, without limitation, by merger, consolidation, incur or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur become contingently liable with respect to any indebtedness for borrowed money or issue any debt securities or assume(including, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations sake of clarity, any letters of credit), other than borrowings in the ordinary course of business or borrowings to fund working capital needs in the ordinary course of business under the existing credit facilities of the Company or any of its Subsidiaries on the terms of those facilities as they exist on the date of this Agreement (the "Existing Credit Facilities") in an aggregate amount for all such permitted borrowings not to exceed $20,000,000 for any consecutive four business day period, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stock or any options, warrants or rights to acquire any of its capital stock or any security convertible into or exchangeable for its capital stock other than in connection with the exercise of outstanding Company Options pursuant to the terms of the Company Option Plans and the relevant written agreements evidencing the grant of Company Options, or to use for the 401(k) Plan, the ESPP or the Directors' Plan, (iii) make any material acquisition of any person, assets or make any loans or advances, except businesses other than expenditures for current assets in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract expenditures for fixed or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries capital assets in the ordinary course of business, which contracts business with a value that is less than (A) $2,500,000 in the aggregate during the forty-five (45) day period commencing on the date of this Agreement and (B) $5,000,000 in the aggregate during the ninety (90) day period commencing on the date of this Agreement or agreements will not be subject to such $100,000 limitation; (iv) terminatesell, cancel pledge, lease, license dispose of or permit encumber any change inmaterial assets or businesses other than (A) any such transactions disclosed in Section 5.01 of the Company Disclosure Schedule, (B) pledges or agree encumbrances pursuant to any change in, any Material Contract, except Existing Credit Facilities or (C) sales of inventory and other current assets in the ordinary course of business consistent with past practice; practices. (ve) terminateuse reasonable best efforts to preserve intact their respective business organizations and goodwill, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; keep available the services of their respective present officers and key employees (vi) other than terminations of services for cause), and preserve the proposed capital expenditures described in Schedule 5.01(egoodwill and business relationships with customers and others having business relationships with them; (f) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) not enter into or amend or modify any contractemployment, consulting, severance, retirement or special pay arrangement with respect to termination of employment or other similar arrangements or agreements with any directors, officers or key employees or with any other persons, except (i) as required by previously existing contractual arrangements or applicable law or (ii) other employment agreements entered into with a person who is hired or promoted by the Company or one of its Subsidiaries after the date hereof in the ordinary course of business whose annual base salary does not exceed $175,000; (g) not increase the salary, bonus, benefits or other compensation of any person except for increases in the ordinary course of business consistent with past practice or except pursuant to contractual arrangements existing on the date of this Agreement; (h) not adopt, enter into or amend or modify, in each of the latter two cases to materially increase benefits or obligations of any Company Employee Benefit Plan, except as required pursuant to existing contractual arrangements, this Agreement or applicable law; (i) (A) not enter into any new contract or commitment providing for the purchase of goods or services by the Company or any of its Subsidiaries that is inconsistent with the Company's April 2003 forecast (a true, accurate, complete and current copy of which has been provided to Parent prior to the date of this Agreement) or has a term of more than one year and which is reasonably expected to involve payments to retailers of more than $3,000,000 per annum or payments to other third parties of more than $750,000 in the aggregate for such contract or commitment, (B) not amend, modify or change in any material respect, or waive any material rights of the Company or any of its Subsidiaries or any material obligation of any third party under, any contract listed in Section 4.11 of the Company Disclosure Schedule; (j) not make, change or revoke any material Tax election unless required by law or make any agreement or settlement with any taxing authority regarding any material amount of Taxes or which is reasonably likely to materially increase the obligations of the Company or the Surviving Corporation to pay Taxes in the future; (k) not defer the payment of accounts or trade payables, or seek to accelerate the payment of, or factor or otherwise similarly monetize, accounts or trade receivables, of the Company or any of its Subsidiaries, in either such case beyond or in advance (as the case may be) of the customary payment periods of the Company, such Subsidiary(ies) or such third parties for those payables or receivables; (l) not enter into any interest rate, currency or other swap or derivative transaction, other than in the ordinary course of business consistent with past practices and for bona fide hedging purposes; (m) not take any action that would make any representation or warranty of the Company inaccurate in any material respect at any time before the Effective Time; (n) not (i) propose or make, or engage in any discussions or negotiations with respect to, any Settlement Decision (as defined in the CVR Agreement) or (ii) enter into any confidentiality agreement with any third party to the Litigation (as defined in the CVR Agreement) with respect thereto; or (o) not enter into an agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the foregoing. Without limiting the foregoing, after the date hereof and prior to the Effective Time, without Parent's consent the Company or any Subsidiary who are shall not, and shall not officers of the Company, or grant any severance or termination pay permit its Subsidiaries to, or enter into any employment, severance, termination, stay-bonus new contract or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement commitment providing for the benefit outsourcing to third parties of any directorsoftware development, officer data processing, information technology operations or employee, services or communicate analytical services and which is reasonably expected to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other involve payments to third parties of more than (i) reasonable and usual actions $750,000 in the ordinary course of business and consistent with past practice aggregate for such contract or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orcommitment.

Conduct of Business Pending the Merger. SECTION 5.01. 5.1 Conduct of Business by of the Company Pending the Merger. The Company covenants and agrees thatExcept as contemplated by this Agreement, between during the period from the date hereof to the earlier of termination of this Agreement and or the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company agrees to conduct its business and the Subsidiaries shall be conducted that of its subsidiaries only in, and the Company and the Subsidiaries shall not take any action except in, in the ordinary course of business and in a manner consistent with past practice; practice and the Company shall to use its best all reasonable efforts consistent with past practices and policies to preserve substantially intact the its present business organization of the Company and the Subsidiaries, to keep available (including the services of the current officers, employees its existing employees) and consultants of the Company and the Subsidiaries and to preserve the current its relationships of the Company and the Subsidiaries with customers, suppliers and other persons others having business dealings with which it, to the Company or any Subsidiary has significant end that its goodwill and ongoing business relationsshall be unimpaired at the Effective Date. By way Without limiting the generality of amplification the foregoing, and not limitation, except as contemplated by otherwise expressly provided in this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary shallof its subsidiaries will, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentthe Purchaser: (a) amend or otherwise change propose to amend its Articles Certificate of Incorporation or Bylaws or equivalent organizational documentsBy-Laws; (b) (i) authorize for issuance, issue, sell, pledgedeliver or agree or commit to issue, dispose ofsell or deliver (whether through the issuance or granting of options, grantwarrants, encumbercommitments, subscriptions, rights to purchase or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (iotherwise) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest securities or equity equivalents (including, without limitation, any phantom intereststock options or stock appreciation rights), except (x) shares of Company Common Stock issuable upon conversion of the Outstanding Debentures (at a conversion rate of one share of Company Common Stock for every $25.00 of Outstanding Debentures) and (y) shares of Company 32 Common Stock issuable upon exercise of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) Outstanding Options or (ii) amend any material assets of the Company terms of any such securities or any Subsidiaryagreements outstanding as of the date hereof, except for sales in the ordinary course of business and in a manner consistent with past practiceas specifically contemplated by this Agreement; (c) split, combine or reclassify any shares of its capital stock, declare, set aside, make aside or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwise, with any combination thereof) in respect to any of its capital stock, or redeem or otherwise acquire any of its securities or any securities of the Company's subsidiaries, except that the Company may repurchase Outstanding Debentures to the extent necessary to satisfy its 1997 sinking fund obligation under the Indenture by which the Debentures were issued; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, incur or acquisition of stock assume any long-term or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money short-term debt or issue any debt securities or assume, guarantee or endorse, pledge in respect except for borrowings under existing lines of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries credit in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (ivii) terminateassume, cancel guarantee, endorse or permit otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any change in, other person or agree to any change in, any Material Contract, entity except in the ordinary course of business consistent with past practice, and except for obligations of wholly-owned subsidiaries of it; (iii) make any loans, advances or capital contributions to, or investments in, any other person or entity (other than to wholly-owned subsidiaries of it or advances to employees in the ordinary course of business consistent with past practice and in amounts not material to the maker of such loan or advance); (iv) pledge or otherwise encumber shares of its capital stock or any of its subsidiaries; or (v) terminatemortgage or pledge any of its material assets, cancel tangible or permit any change inintangible, or agree create or suffer to exist any change in, any Affiliate Agreement, Broker material Lien thereupon; (e) except as may be required by law or as contemplated by this Agreement or Attorney Engagement; (vi) other than described on the proposed capital expenditures described in Schedule 5.01(e) of the Company Disclosure Schedule, authorize enter into, adopt or amend or terminate any single capital expenditure which is bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the benefit or welfare of any director, officer, employee or former employee or independent contractor in excess any manner, or (except for normal increases in the ordinary course of U.S. $100,000 or capital expenditures which arebusiness consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to it and as 33 required under existing agreements) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including, without limitation, the granting of stock appreciation rights or performance units); (f) acquire, sell, lease, license to others or dispose of any assets outside the ordinary course of business which individually or in the aggregate are material to the Corporation, or enter into any commitment or transaction outside the ordinary course of business consistent with past practice which would be material to the Corporation; (g) except as may be required as a result of a change in law or in generally accepted accounting principles, change any of the accounting principles or practices used by it; (h) revalue in any material respect any of its assets, including, without limitation, writing down the value of inventory or writing-off notes or accounts receivable other than in the ordinary course of business; (i) acquire or agree to acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any equity interest therein, other than as specifically described on the Company Disclosure Schedule; (ii) enter into any contract or agreement other than in the ordinary course of business consistent with past practice which would be material to it; (iii) authorize any new capital expenditure or expenditures which, individually, is in excess of U.S. $250,000 for or, in the Company and the Subsidiaries taken as a wholeaggregate, are in excess of $2,500,000; or (viiiv) enter into or amend any contract, agreement, commitment or arrangement with respect to providing for the taking of any matter set forth in this Section 5.01(e)action that would be prohibited hereunder; (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (hj) make any tax election or settle or compromise any material federal, state, local or foreign income tax liabilityliability material to the Company; (ik) pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, satisfaction in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and the Company Subsidiaries or incurred in the 1998 Balance Sheet ordinary course of business consistent with past practice or customary 34 fees and expenses relating to the transactions contemplated by this Agreement; (l) settle or compromise any pending or threatened suit, action or claim relating to the transactions contemplated hereby; or (m) take, or agree in writing or otherwise to take, any of the actions described in this Section 5.1(a) through 5.1(l) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect as of the date when made.

Conduct of Business Pending the Merger. SECTION 5.01. Section 7.1 Conduct of Business by the Company Pending the The Merger. The Company covenants and agrees that, between From the date of this Agreement until the earlier of (i) the time that persons designated by Parent are appointed as directors of Company pursuant to Section 3.4 hereof and (ii) the Effective Effec- tive Time, unless Parent shall otherwise agree in writing, or as otherwise contemplated by this Agreement, any Schedule hereto or Company Disclosure Schedule: (a) the respective businesses of the Company and the Company Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, in the ordinary and usual course of business and in a manner consistent with past practice; , and there shall be no material change in the conduct of the operations of Company and Company Subsidiaries taken as a whole and, to the extent consistent therewith, each of Company and Company Subsidiaries shall use its reasonable best efforts to preserve substantially intact the its business organization of the Company and the Subsidiariesintact, to keep available the services of the current officersmaintain its existing relations with customers, suppliers, employees and consultants of the Company business associates, and the Subsidiaries and to preserve the current goodwill of those having business relationships with it and Company Subsidiaries; (b) Company shall not (i) sell or pledge or agree to sell, pledge, dispose of the Company and the Subsidiaries with customers, suppliers and or encumber any stock or other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated equity interests owned by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, it in any of the following without the prior written consent of Parent: Company Subsidiaries; (aii) amend or otherwise change its Articles of Incorporation or Bylaws by-laws or, except as contemplated hereby, amend, modify, consummate or equivalent organizational documentsredeem the Rights Agreement or Rights; or (iii) split, combine or reclassify any shares of its outstanding capital stock; or (iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property, or redeem or otherwise acquire any shares of its capital stock or shares of the capital stock of any of Company Subsidiaries; (bc) neither Company nor any of Company Subsidiaries shall (i) authorize for issuance, issue, sell, pledge, dispose of, grant, encumberencumber or sell any additional shares of, or authorize the issuancerights of any kind to acquire, sale, pledge, disposition, grant or encumbrance of (i) any shares of or securities convertible or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, its capital stock of any class (whether through the issuance or granting of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stockcommitments, or any other ownership interest (includingsubscriptions, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiaryotherwise), except for sales unissued Shares which may be issued upon the exercise or conversion of outstanding rights, options and debentures referred to in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assetsSection 6.2 hereof; (ii) incur except as otherwise permitted herein acquire, dispose of, transfer, lease, guarantee, license, mortgage, pledge or encumber any fixed or other assets in excess of $200,000 in any one or a series of related transactions or more than $1,000,000 in the aggregate other than ordinary course acquisitions of supplies used in the day-to-day operations of Company; (iii) incur, assume or prepay any indebtedness for borrowed money or issue any debt securities or other material liabilities; (iv) assume, guarantee or endorseguarantee, pledge in respect of endorse or otherwise as an accommodation become liable or responsible (whether directly, contingently or otherwise) for the obligations of any person, or make any loans or advances, except other person other than a wholly-owned Company Subsidiary in the ordinary course of business and consistent with past practicepractices in an amount in excess of $1,000,000 in the aggregate; (v) make any loans, but advances or capital contributions to, or investments in, any other person in no event shall there be an amount in excess of $200,000 in any one or a series of related transactions or more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagementaggregate; (vi) authorize capital expenditures (other than the proposed presently budgeted capital expenditures described in set forth on Schedule 5.01(e7.1(c)) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 200,000 in any one or capital expenditures which are, a series of related transactions or $500,000 in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet or

Conduct of Business Pending the Merger. SECTION 5.01. 4.1 Conduct of Business by the Company NEC Pending the Merger. The Company covenants NEC and agrees Xxxxxx covenant and agree that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writingMerger Closing Date, the businesses business of the Company and the Subsidiaries NEC shall be conducted only in, and the Company and the Subsidiaries NEC shall not take any action except in, the ordinary course of business and business, consistent in a manner consistent all material respects with past practice; and the Company . NEC shall use its best efforts to preserve substantially intact the its business organization of the Company and the Subsidiariesorganizations, to keep available the services of the its current officers, employees and consultants of the Company and the Subsidiaries consultants, and to preserve the current its present relationships of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary it has significant business relations. By way of amplification illustration and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shallNEC shall not, between the date of this Agreement and the Effective TimeMerger Closing Date, directly or indirectly doindirectly, do or propose or agree to do, do any of the following without the prior written consent of ParentDataMEG: (a) amend or otherwise change its Articles articles of Incorporation incorporation or Bylaws bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or or, authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of its capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) it or (ii) any material assets of the Company its assets, tangible or any Subsidiaryintangible, except for sales in the ordinary course of business and consistent in a manner consistent all material respects with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (ie) acquire (including, without limitation, for cash or shares of stock, by merger, consolidation, or acquisition of stock or assets or assets) any other business combination) interest in any corporation, partnership, partnership or other business organization or any division thereof or any assets, or make any investment either by purchase of stock or securities, contributions of capital or property transfer, or, except in the ordinary course of business, consistent with past practice, purchase any property or assets of any other Person; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of endorse or otherwise as an accommodation become responsible for for, the obligations of any personPerson, except endorsement of checks payable to NEC in the ordinary course of business, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; or (iii) enter into any contract or agreement which is outside of Contract other than in the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase increase, without the consent of DataMEG, the compensation payable or to become payable to its directors, officers or employees, or, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Companyas presently bound to do, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any directorof its directors, officer officers or other employee of the Company or any Subsidiaryemployees, or establish, adopt, enter into or amend or take any action to accelerate any rights or benefits with any collective bargaining, bonus, profit sharing, thrifttrust, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directordirectors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, action other than (i) reasonable and usual actions in the ordinary course of business and in a manner consistent in all material respects with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)procedures; (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liabilitycapital investments without the consent of DataMEG; (i) make any distributions to the Shareholder, other than ordinary and customary salaries and expense reimbursements; (j) pay, discharge or satisfy satisfy, without the consent of DataMEG, any material claimexisting claims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfactionsatisfaction in the ordinary course of business and consistent in all material respects with past practice of due and payable liabilities reflected or reserved against in its financial statements, as appropriate, or liabilities incurred after the date hereof in the ordinary course of business and consistent with past practice; or (k) agree, in writing or otherwise, to take or authorize any of liabilities reflected the foregoing actions or reserved against any action which would make any representation or warranty in the 1998 Balance Sheet orArticle III untrue or incorrect in any material respect.

Conduct of Business Pending the Merger. SECTION 5.015.1. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except Except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, Time do any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws By-laws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) issue any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), stock of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to employee stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereofhereof and except in connection with the establishment of new wholly owned subsidiaries for new locations by the Company); (c) sell, transfer or (ii) encumber in any material respect any assets of the Company or any Subsidiary, Subsidiary for consideration in excess of $1,000,000 in the aggregate except for sales transactions relating to the establishment of new locations or modifications or improvements to its existing locations by the Company in the ordinary course of its business, and except for other transactions in the ordinary course of business and in a manner consistent with past practicepractice provided, however, that the Company shall not sell, transfer or encumber any assets for consideration which, in the opinion of the board, is less than fair value; (cd) declare, set aside, make declare or pay any dividend or other distribution, payable in cash, stock, property or otherwise, distribution with respect to any of its capital stock; (de) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, acquire any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assetsthereof, except for the establishment of new wholly owned subsidiaries for new locations by the Company; (ii) except for borrowings under existing credit facilities, incur any indebtedness for borrowed money or issue any debt securities or assumesecurities, guarantee any indebtedness for borrowed money or endorse, pledge in respect debt securities of or otherwise as an accommodation become responsible for the obligations of any another person, issue or make sell any loans warrants or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at other rights to acquire any one time in addition to the total amount of indebtedness outstanding as debt securities of the date Company or any of this Agreement; (iii) its Subsidiaries, enter into any contract "keep well" or other agreement which is outside to maintain any financial statement condition of another person (except a Subsidiary) or enter into any arrangement having the economic effect of any of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contractforegoing, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to make any change loans, advances or capital contributions to, or investments in, any Affiliate Agreementother person, Broker Agreement other than to the Company or Attorney Engagementany Subsidiary; (viiii) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 500,000 for the Company and the Subsidiaries taken as a wholeSubsidiaries, except for capital expenditures relating to the establishment of new locations by the Company in the ordinary course of its business, and other capital expenditures in the ordinary course of business consistent with past practice; or (viiiv) enter into or amend any contract, agreement, commitment or arrangement agreement with respect to any matter set forth in this Section 5.01(e)Section; (fg) except as provided in Section 2.8, increase the compensation payable or to become payable to its directorscurrent and former officers, officers directors or employees, except for normal increases consistent with past practices in salaries or wages compensation (including bonuses) of employees of the Company or any Subsidiary who are not officers of the CompanyCompany in accordance with past practices, or or, other than in accordance with past practices and policies, grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any current or former director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or materially amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance bargaining agreement or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)plans; (h) other than as required by generally accepted accounting principles, make any tax election material change to its accounting policies or settle or compromise any material federal, state, local or foreign income tax liabilityprocedures; (i) make any material elections or changes in elections for Tax purposes except in accordance with past practice; (j) pay, discharge or satisfy any material claimclaims (including claims of stockholders), liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than except for the payment, discharge or satisfaction, satisfaction (x) of liabilities or obligations in the ordinary course of business and consistent with past practice or in accordance with their terms as in effect on the date hereof or (y) of claims settled or compromised to the extent permitted by Section 5.1(k), or waive, release, grant, or transfer any rights of material value or modify or change in any material respect any existing license, lease, contract or other document, other than in the ordinary course of business consistent with past practice, ; (k) settle or compromise any litigation (whether or not commenced prior to the date of liabilities reflected this Agreement) other than settlements or reserved against compromises of litigation (i) where the amount paid in settlement or compromise does not exceed $100,000 and (ii) potential settlements or compromises which are described in the 1998 Balance Sheet Company Disclosure Schedule; (l) establish any new lines of credit or other credit facilities or replace any existing credit facilities; (m) take any action which would make any representation or warranty of the Company in this Agreement subject to a material qualifier untrue or incorrect and any representation or warranty of the Company in this Agreement that is not so qualified untrue or incorrect in any material respect; (n) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or reorganization (subject to the Company's right to take action specifically permitted by Section 6.5(b)); (o) enter into any new collective bargaining agreement or any successor collective bargaining agreement to any collective bargaining agreement disclosed in the Company Disclosure Schedule except in the ordinary course of business; (p) agree to any modifications to any of the LTAC Leases, or waive any rights under the LTAC Leases, in any respect which would materially and adversely affect the rights of the Company thereunder; (q) take any action to exempt under or make not subject to (x) Section 203 of Delaware Law or (y) any other Takeover Statute or state law that purports to limit or restrict business combinations or the ability to acquire or vote shares, any person or entity (other than Parent, Purchaser and their affiliates) or any action taken thereby, which person, entity or action would have otherwise been subject to the restrictive provisions thereof and not exempt therefrom except to the extent specifically permitted pursuant to Section 6.5(b); (r) authorize any of, or commit or agree to take any of, the foregoing actions; or (s) take any action which would result in the conditions to the Offer or the merger not being satisfied, subject to the Company's right to take such actions specifically permitted by Section 6.5(b).

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, except as set forth in Section 5.01 of the Company Disclosure Schedule or as expressly contemplated by any other provision of this Agreement, unless Parent or Purchaser shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action with respect to their businesses except in, the ordinary course of business and in a manner consistent with past practicebusiness; and each of the Company and the Subsidiaries shall use its best reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries Subsidiaries, and to preserve the current relationships of the Company and the Subsidiaries with physicians, customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, do any of the following without the prior written consent of ParentParent or Purchaser: (a) amend or otherwise change its Articles of Incorporation or Bylaws By-laws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options Company Options outstanding or any rights on the date hereof, 6,500 Shares to purchase Shares under be issued pursuant to the Company's 1995 1996 Employee Stock Purchase Plan in effect on and any Shares required to be issued under the date hereofRights Agreement) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of the business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stockstock except that any Subsidiary may declare and pay a dividend to the Company; (d) reclassify, combine, split, subdivide or redeemredeem any of its capital stock, or purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, other business organization or any division thereof or any assetsthereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreementbusiness; (iii) enter into any material contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (viiv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable or the benefits provided to its directors, officers or key employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, with any director, director or officer or other key employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other similar plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except to the extent such endorsement or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plantermination is required by law; (g) hire or retain any single employee or consultant at an annual rate of compensation in excess of $50,000, or employees or consultants with annual rates of compensation in excess of $250,000 in the aggregate; (h) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SECpractice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (hi) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (ij) paycommence or settle any Action; (k) amend, discharge modify or satisfy consent to the termination of any material claimMaterial Contract or amend, liability modify or obligation (absoluteconsent to the termination of the Company's or any Subsidiary's rights thereunder, accrued, asserted in a manner materially adverse to the Company or unasserted, contingent or otherwise)any Subsidiary, other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice; (l) enter into any contract or agreement that would have been a Material Contract if entered into prior to the date hereof, of liabilities reflected or reserved against other than in the 1998 Balance Sheet ordinary course of business; or (m) enter into any contract or agreement that contemplates the transfer by the Company of any interest in Owned Intellectual Property or Licensed Intellectual Property.

Conduct of Business Pending the Merger. SECTION 5.015.1. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent COLA shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall have consented (such consent to be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use given or withheld within its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedulesole discretion), neither the Company nor any Company Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change conduct its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) business in any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or manner other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales than in the ordinary course of business and in a manner consistent with past practice; (b) amend or propose to amend its certificate of incorporation or by-laws; (c) authorize for issuance, issue, grant, sell, pledge, redeem or acquire for value any of its or their securities, including options, warrants, commitments, stock appreciation rights, subscriptions, or other rights to purchase securities; provided, however, that shares of Common Stock earned as Performance Shares by employees of the Company and Company Subsidiaries pursuant to the Company's 1998 Long-Term Incentive Plan may be issued upon such employees' satisfaction of performance criteria that (i) have been adopted by the Board of Directors prior to the date of this Agreement or (ii) are subsequently approved by COLA; and provided, further, that the Company may issue securities pursuant to the exercise of options, warrants, commitments, subscriptions, or other rights to purchase securities outstanding on the date hereof; (d) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property property, or otherwise, with respect to any of its capital stock; (d) stock or other equity interests, or subdivide, reclassify, combinerecapitalize, split, subdivide combine or redeem, purchase or otherwise acquire, directly or indirectly, exchange any of its shares of capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (ge) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SECpractice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable including tax accounting policies and collection of accounts receivableprocedures); (hf) make take any tax election action that would, or settle could reasonably be expected to result in, any of its representations and warranties set forth in this Agreement being untrue or compromise in any material federalof the conditions to the Merger set forth in Article VII not being satisfied, state, local or foreign income tax liability;except as provided in Articles 6.4 and 8.1 hereof; or (ig) payauthorize any of, discharge or satisfy commit or agree to take any material claimof, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orforegoing actions.

Conduct of Business Pending the Merger. SECTION 5.01. 6.01 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as expressly contemplated by this Agreement or by and Section 5.01 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly indirectly, do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws or equivalent organizational documentsBy-laws; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (i) any shares of any class of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 1,448,662 Shares issuable pursuant to employee stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any direct or indirect wholly owned Subsidiary to the Company or any other Subsidiary; (d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assetsamount of assets other than the acquisition of supplies or inventory in the ordinary course of business and consistent with past practice; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, or grant any security interest in any of its assets except in each case in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business and consistent with past practice; (viv) terminate, cancel or permit any change inauthorize, or agree to make any change incommitment with respect to, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 25,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 75,000 for the Company and the Subsidiaries taken as a whole; or (viiv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e6.01(e); (f) hire additional employees or increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for normal increases in the ordinary course of business and consistent with past practices practice in salaries salaries, wages, bonuses, incentives or wages benefits of employees of the Company or any Subsidiary who are not directors or officers of the CompanyCompany or any Subsidiary, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, officer or other employee of the Company or of any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit profit-sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SECpractice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)procedures; (h) make make, revoke or change any tax Tax election or method of Tax accounting or settle or compromise any material federal, state, local or foreign income tax Tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 2003 Balance Sheet or subsequently incurred in the ordinary course of business and consistent with past practice; (j) amend, modify or consent to the termination of any Material Contract, or amend, waive, modify or consent to the termination of any material rights of the Company or any Subsidiary thereunder, other than in the ordinary course of business and consistent with past practice; (k) commence or settle any Action; (l) engage in any new line of business or abandon any existing line of business; (i) permit any Owned Intellectual Property to lapse or to be abandoned, dedicated, or disclaimed, fail to perform or make any applicable filings, recordings or other similar actions or filings, or fail to pay all required fees and taxes required or advisable to maintain and protect its interest in any Owned Intellectual Property, Licensed Intellectual Property, License or Company IT Systems, (ii) sell, assign, or grant any security interest in or to any Owned Intellectual Property, Licensed Intellectual Property, License or Company IT Systems, (iii) grant to any third party any license with respect to any Owned Intellectual Property, Licensed Intellectual Property or Company IT Systems, (iv) develop, create or invent any Intellectual Property jointly with any third party (other than such joint development, creation or invention with a third party that is in progress prior to the date of this Agreement), (v) disclose, or allow to be disclosed, any confidential Intellectual Property, unless such Intellectual Property is subject to a confidentiality or non-disclosure covenant protecting against disclosure thereof, or (vi) execute or enter into any License or any other agreement relating to Intellectual Property or IT Systems; (n) fail to make in a timely manner any filings with the SEC required under the Securities Act or the Exchange Act or the rules and regulations promulgated thereunder; or (o) announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Section 5.01 Conduct of Business by the Company Pending the MergerEffective Time. The Company covenants and agrees that, between the date of this Agreement and Prior to the Effective Time, unless Parent shall otherwise agree in writing, or unless contemplated by this Agreement or set forth in Section 5.01 of the businesses Company Disclosure Letter, the Company shall conduct, and cause each of its Subsidiaries to conduct, its business only in the ordinary course and consistent with past practice, and the Company shall use, and cause each of its Subsidiaries to use, its reasonable best efforts to preserve intact the present business organization, keep available the services of its present officers and key employees, and preserve the existing business relationships of the Company and its Subsidiaries. Without limiting the Subsidiaries generality of the foregoing, unless Parent shall be conducted only inotherwise agree in writing, and or unless contemplated by this Agreement or set forth in Section 5.01 of the Company Disclosure Letter, prior to the Effective Time the Company shall not, nor shall it permit any of its Subsidiaries to: (a) (i) amend its certificate of incorporation, bylaws or other organizational documents, (ii) allow or authorize any stock dividend, stock split, reverse stock split, division or subdivision, exchange or readjustment, consolidation, reclassification, recapitalization or other similar transaction, in each case, with respect to capital stock of the Company, (iii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property, except for dividends or distributions by a direct or indirect wholly owned Subsidiary of the Company to such Subsidiary's parent or to another wholly owned Subsidiary of the Company, or (iv) directly or indirectly redeem or otherwise acquire any shares of its capital stock or shares of the capital stock of any of its Subsidiaries; (b) authorize for issuance, issue (except upon the exercise of Company Stock Options and Warrants outstanding on the date of this Agreement under the Option Plans and Warrant Agreements) or sell or agree to issue or sell any shares of, or any rights to acquire or securities convertible into, or exercisable or exchangeable for, its capital stock or shares of the capital stock of any of its Subsidiaries shall not take (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise), in each case other than (i) upon the exercise of Company Stock Options and Warrants outstanding on the date of this Agreement under the Option Plans and Warrant Agreements or (ii) issuances by a direct or indirect wholly owned Subsidiary of the Company to such Subsidiary's parent or to another wholly owned Subsidiary of the Company; (c) (i) merge, combine or consolidate with another Person, (ii) acquire or purchase any action except in(A) equity interest in or (B) the assets of another corporation, partnership or other business organization or otherwise acquire any assets outside the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend practice or otherwise change its Articles of Incorporation enter into any contract, commitment or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in transaction outside the ordinary course of business and in a manner consistent with past practice; practice (cother than any acquisition or purchase of such assets by the Company in an aggregate amount not to exceed $1.0 million) declareor (iii) sell, set asidelease, make license, waive, release, transfer, mortgage, pledge, encumber or pay otherwise dispose of or allow or cause any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to Lien upon any of its capital stockassets outside the ordinary course of business and consistent with past practice (other than any disposition of such assets by the Company in an aggregate amount not to exceed $1.0 million); (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (includingincur, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee modify or endorseprepay any indebtedness, pledge obligations or liabilities other than in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except each case in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other Person other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, in each case other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (hiii) make any tax election or settle or compromise any material federalloans, state, local or foreign income tax liability; advances (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, for business expenses incurred in the ordinary course of business and consistent with past practice) or capital contributions to, or investments in, any other Person, other than to any Subsidiary of the Company; (e) pay, satisfy, discharge or, except as required by Law, settle any material claim, liabilities reflected or reserved against obligations (absolute, accrued, contingent or otherwise), other than in the 1998 Balance Sheet ordinary course of business and consistent with past practice or pursuant to mandatory terms of any Company Contract in effect on the date hereof; (f) modify or amend, or waive any material benefit under any material agreement, contract or commitment to which the Company or any of its Subsidiaries is a party or by or to which any of their respective material assets or properties are bound or subject, including any Company Contract; (g) authorize or make capital expenditures in excess of $1.0 million in the aggregate; (h) permit any material insurance policy naming the Company or any Subsidiary of the Company as a beneficiary or a loss payee to be canceled or terminated other than in the ordinary course of business and consistent with past practice; (i) (i) adopt, enter into, terminate or, except as required by Law, amend any employee plan, agreement, contract, arrangement or other Company Benefit Plan (provided that nothing herein is intended to prevent the Company or any of its Subsidiaries from hiring or firing Employees in the ordinary course of business and consistent with past practice), (ii) increase in any material manner the compensation or fringe benefits of, or pay any material bonus to, any director, officer or employee of the Company or any of its Subsidiaries, or (iii) except in the ordinary course of business and consistent with past practice or other than pursuant to Section 2.08 hereof, take any action to fund or in any other way secure, or to accelerate or otherwise remove restrictions with respect to, the payment of compensation or benefits under any Company Benefit Plan; (j) make any material change in its accounting or Tax policies or procedures, except as required by changes in GAAP or as required by Law; (k) settle any material Proceeding; or (l) enter into any contract, agreement, commitment or arrangement with respect to any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the ---------------------------------------------- Merger. The Company covenants and agrees that, between the date of this ------ Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any SubsidiarySubsidiary (which for purposes of this Section 5.01(b)(i) only shall include Durakon Mexicana, S.A. de C.V.), or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 468,000 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (ci) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, or (ii) make any capital contribution with respect to any Subsidiary (which for purposes of this Section 5.01(c)(ii) only shall include Durakon Mexicana, S.A. de C.V.); (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) except as set forth in Section 5.01(e) of the Disclosure Schedule, take any of the actions described in (ii)(B), (ii)(C), (ii)(D), (ii)(F) and (ii)(G) of this subsection (e) as they relate to the GMT805 project, or (ii) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (iiB) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 1,300,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreementtime; (iiiC) enter into any contract or agreement other than (1) a license agreement with Dynamic Manufacturing, Inc. (which is outside of shall only be entered into following consultation with Parent) or (2) contracts or agreements entered into in the ordinary course of business, consistent with past practice, or practice and which requires require payments by the Company or the Subsidiaries in an aggregate amount of more less than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (ivD) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (vE) terminate, cancel or permit any change in, or agree to any change in, any Affiliate AgreementContract, Broker Agreement or Attorney Engagement; (viF) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 250,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 1,000,000 for the Company and the Subsidiaries taken as a whole; or (viiG) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SECpractice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet or subsequently incurred in the ordinary course of business and consistent with past practice or incurred in connection with the Transactions; or (j) announce an intention, enter into any formal or informal agreement, or otherwise make a commitment, to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. 5.1 Conduct of Business by of the Company Pending the Merger. The Company covenants and agrees that, between during the period from the date of this Agreement and hereof to the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries its subsidiaries shall be conducted only in, and the Company and the Subsidiaries its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company and its subsidiaries shall each use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiariesits subsidiaries, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries its subsidiaries and to preserve the current present relationships of the Company and the Subsidiaries its subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary of its subsidiaries has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary of its subsidiaries shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose commit to do, any of the following without the prior written consent of Parent: (a) amend Amend or otherwise change its Articles certificate of Incorporation incorporation or Bylaws by-laws or equivalent organizational documents; (b) issueIssue, deliver, sell, pledge, dispose of, grant, of or encumber, or authorize or commit to the issuance, sale, pledge, disposition, grant disposition or encumbrance of of, (i) any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any including but not limited to stock appreciation rights or phantom intereststock), of the Company or any Subsidiary of its subsidiaries (except for the issuance of a maximum up to 95,500 shares of 994,502 Shares issuable Common Stock required to be issued pursuant to stock options the terms of Options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereofas of May 16, 1998) or (ii) any material assets of the Company or any Subsidiaryof its subsidiaries, except for sales of inventory in the ordinary course of business and in a manner consistent with past practice; (c) declareDeclare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stockstock (other than regular quarterly dividends consistent with past practice, in an amount not to exceed $.32 per share); (d) reclassifyReclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire Acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, partnership or other business organization or any division thereof or any assetsthereof; (ii) incur any indebtedness for borrowed money (except for drawdowns on the Company's existing credit facility in the ordinary course of business consistent with past practice) or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans loans, advances or advancescapital contributions to, except in the ordinary course of business and consistent with past practiceor investments in, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreementother person; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; or (viv) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described except as set forth in Schedule 5.01(e5.1(e)(iv) of the Company Disclosure ScheduleLetter, other than as provided in the Company's capital expenditure budget (a copy of which was provided to Parent) authorize any single capital expenditure which is in excess of U.S. $100,000 200,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 1,000,000 for the Company and the Subsidiaries its subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) Except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement, increase the compensation payable or to become payable to fringe benefits of any of its directors, officers or employees, except for normal increases consistent with past practices in salaries salary or wages of employees of the Company or any Subsidiary its subsidiaries who are not officers of the CompanyCompany in the ordinary course of business in accordance with past practice, or grant any severance or termination pay to, not currently required to be paid under existing severance plans to or enter into any employment, severance, termination, stay-bonus consulting or similar severance agreement with, or arrangement with any present or former director, officer or other employee of the Company or any Subsidiaryof its subsidiaries, or establish, adopt, enter into or amend or terminate any collective bargainingbargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directordirectors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take Except as may be required as a result of a change in law or in generally accepted accounting principles, change any action, other than (i) reasonable and usual actions in of the ordinary course of business and consistent with past practice accounting practices or (ii) as required principles used by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)it; (h) make Make any tax election material Tax election, change any material method of Tax accounting or settle or compromise any material federal, state, local or foreign income tax Tax liability; (i) paySettle or compromise any pending or threatened suit, action or claim which is material or which relates to the transactions contemplated hereby; (j) Adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries not constituting an inactive subsidiary (other than the Merger); (k) Pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, satisfaction (i) in the ordinary course of business and consistent with past practice, practice of liabilities reflected or reserved against in the 1998 Balance Sheet Company Financial Statements or incurred in the ordinary course of business and consistent with past practice and (ii) of liabilities required to be paid, discharged or satisfied pursuant to the terms of any contract in existence on the date hereof (including, without limitation, benefit plans relating to directors); or (l) Take, or offer or propose to take, or agree to take in writing or otherwise, any of the actions described in Sections 5.1(a) through 5.1(k) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue and incorrect as of the date when made if such action had then been taken, or would result in any of the conditions set forth in Annex A not being satisfied.

Conduct of Business Pending the Merger. SECTION 5.01. 6.01 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, except as required by Law, as otherwise specifically contemplated by this Agreement or as set forth in the Disclosure Schedule, unless Parent shall otherwise agree in writingwriting (which agreement shall not be unreasonably withheld or delayed), the businesses of the Company and the Subsidiaries shall be conducted in all material respects only in, and the Company and the Subsidiaries shall not take any action except in, in the ordinary course of business and in a manner consistent with past practice; and the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as expressly contemplated by this Agreement or by and Section 5.01 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly indirectly, do, or propose to do, any of the following without the prior written consent of Parent:Parent (which consent shall not be unreasonably withheld or delayed): (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documentsBylaws; (bi) issue, sell, pledge, dispose of, grant, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) of, any shares of capital stock of any class of the Company or any Subsidiary, or any Company Stock Options or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), ) of the Company or any Subsidiary (except for the issuance of a maximum shares of 994,502 Shares issuable pursuant to stock options Common Stock upon exercise of outstanding Company Stock Options or any rights to purchase Shares under upon conversion of the Company's 1995 Employee Stock Purchase Plan in effect on the date hereofDebentures) or (ii) sell, pledge, dispose of, encumber, or authorize the sale, pledge, disposition or encumbrance of, any material assets of the Company or any Subsidiary, except for sales (x) immaterial assets in the ordinary course of business and in a manner consistent with past practicepractice or (y) assets held for resale; (c) authorize, declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any direct or wholly owned Subsidiary to the Company or any other Subsidiary; (d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stockstock or that of any Subsidiary, other than in connection with the exercise of employee stock options or the purchase of stock of LabOne of Ohio, Inc. from the Ohio Minority Holders pursuant to the terms of existing agreements with the Ohio Minority Holders; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any business, corporation, partnership, other business organization or any division thereof or any assets; (ii) repurchase, repay, cancel or incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advancesadvances or grant any security interest in any of its assets, except for the incurrence of any indebtedness that does not exceed $1,000,000 individually or $1,500,000 in the aggregate and that arises in the ordinary course of business and is consistent with past practice, but in no event practice (which shall there be more than $1,000,000 deemed to include the renewal of indebtedness outstanding at any one time in addition to and borrowings and repayments under the total amount of indebtedness outstanding as of the date of this Credit Agreement); (iii) enter into any contract or agreement which is outside of that requires the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount payment of more than U.S. $100,000, 1,500,000 during the term of such contract or agreement other than contracts or agreements relating that are terminable pursuant to the purchase terms of inventory by such contract upon not more than 90 days' notice without penalty (it being agreed and understood that retroactive price increases permitted under the Company or the Subsidiaries in the ordinary course terms of business, which contracts or agreements will such agreement shall not be subject to considered for purposes of determining the aggregate payments required under any such $100,000 limitationcontract or agreement or constitute a penalty under any such contract or agreement); (iv) terminate(x) with respect to fiscal year 2005, cancel or permit any change inauthorize, or agree make any commitment with respect to, capital expenditures outside of the Company's fiscal year 2005 capital expenditure budget, attached hereto as Schedule 6.01(e), other than any individual capital expenditure in excess of $500,000 or aggregate capital expenditures in excess of $1,500,000 for the Company and its Subsidiaries, taken as a whole, and (y) with respect to fiscal year 2006, authorize, or make any change incommitment with respect to, any Material Contractcapital expenditures, except which in the ordinary course case of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single individual capital expenditure which is in excess of U.S. $100,000 1,500,000 or which in the case of aggregate capital expenditures which are, in the aggregate, is in excess of U.S. $250,000 5,000,000 for the Company and the Subsidiaries Subsidiaries, taken as a whole, in any fiscal quarter; or (viiv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e6.01(e); except in each case as may reasonably be required in connection with the construction of the Cincinnati Facility as disclosed in Section 6.01(e) of the Disclosure Schedule; (f) except in each case as required to comply with any Plan, written policy or agreement in effect on the date of this Agreement that has been previously disclosed in writing to Parent, increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for normal increases in the ordinary course of business and consistent with past practices practice in salaries or wages of employees of the Company or any Subsidiary who are not directors or officers of the CompanyCompany or any Subsidiary, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement withwith (other than employment offer letters which do not provide for severance on termination provisions), any director, officer or other employee of the Company or of any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit profit-sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take change any actionof the accounting principles, policies or procedures used by it other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by GAAP or applicable Law, which Law shall have been enacted or effective after the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)date hereof; (h) make make, revoke or change any tax express or deemed Tax election or method of Tax accounting, settle or compromise any material federalliability with respect to Taxes, state, local consent to any material claim or foreign income tax liabilitymaterial assessment relating to Taxes or waive the statute of limitations for any such claim or assessment; (i) subject to Section 6.01(e)(ii), pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice; (j) amend or modify in any material respect or consent to the termination of any Listed Contract, or waive in any material respect any rights of liabilities reflected the Company or reserved against any Subsidiary thereunder, other than in the 1998 Balance Sheet ordinary course of business and consistent with past practice; (k) settle any material Action; (l) sell, transfer, or grant any license or sublicense of, or execute any agreement with respect to, any right under or with respect to any material Intellectual Property held by the Company or any of its Subsidiaries or disclose any Intellectual Property held by the Company or any of its Subsidiaries in the form of confidential information to any third party, except in the ordinary course of business and consistent with past practice; or (m) announce an intention, enter into any formal or informal agreement, or otherwise make a commitment, to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall Except as (x) otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as expressly contemplated by this Agreement Agreement, (y) required by the terms of any Contract existing on the date hereof between Parent or by any of its Subsidiaries and any other Person or (z) as otherwise set forth in Section 5.01 4.2 of the Disclosure ScheduleParent Letter, neither the Company nor any Subsidiary shallParent shall not, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, shall not permit any of the following its Subsidiaries to, without the prior written consent of Parent:the Company (which shall not be unreasonably withheld, conditioned or delayed): (a) (i) declare, set aside or pay any dividends on, or make any other actual, constructive or deemed distributions in respect of, any of its capital stock, or otherwise make any payments to its stockholders in their capacity as such, other than (A) annual aggregate cash dividends by Parent to its stockholders with respect to Parent Common Stock not in excess of $0.50 per share with usual declaration, record and payment dates or (B) dividends or distributions paid or made by any wholly owned Subsidiary of Parent, (ii) split, combine or reclassify any of its capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, except with respect to any transaction by a wholly owned Subsidiary of Parent which remains a wholly owned Subsidiary of Parent after consummation of such transaction, (iii) purchase, redeem or otherwise acquire, or modify or amend, any shares of capital stock of Parent or any Subsidiary or any other securities thereof or any rights, warrants or options to acquire, any such shares or other securities, other than (A) in the ordinary course of business consistent with past practice in connection with any net share settlement or Tax withholding pursuant to any Parent Plans or (B) repurchases, redemptions or other acquisitions of the capital stock of Parent or any Subsidiary pursuant to any plans, arrangements or contracts between Parent or any of its Subsidiaries existing on the date hereof in an amount not to exceed 5% of the fully diluted number of shares of Parent capital stock outstanding after giving effect to the Merger, (iv) redeem the rights issued under the Parent Rights Agreement or amend or otherwise change its Articles terminate the Parent Rights Agreement prior to the Effective Time other than (A) as required to do so by a court of Incorporation competent jurisdiction (in which case, to the extent permitted by such court of competent jurisdiction, Parent shall provide the Company with written notice at least three Business Days prior to taking any such action), (B) as required to comply with the Parent Board of Director’s fiduciary obligations or Bylaws (C) in response to a shareholder proposal or equivalent organizational documentsin response to a request or recommendation from an institutional shareholder or institutional shareholder service if, in each case, such action would not adversely affect the consummation of the Merger, in any material respect, or affect the holders of Company Common Stock whose shares are converted into Parent Common Stock at the Effective Time in a manner different, in any material respect, than holders of Parent Common Stock prior to the Effective Time or (v) amend, modify or waive any material provision of the Stockholder’s Agreement, dated as of September 8, 2000, among Parent and the stockholders from time to time party thereto in a manner that would adversely affect the consummation of the Merger or affect the holders of Company Common Stock whose shares are converted into Parent Common Stock at the Effective Time in a manner different than holders of Parent Common Stock prior to the Effective Time; (b) except for transactions among Parent and its wholly owned Subsidiaries or among Parent’s wholly owned Subsidiaries (i) authorize for issuance, issue, deliver, sell, pledge, dispose of, grant, encumbertransfer or otherwise encumber or agree or commit to issue, or authorize the issuancedeliver, salesell, pledge, dispositiondispose of, grant grant, transfer or encumbrance of (i) encumber any shares of its capital stock of stock, any class of the Company other voting securities or equity equivalent or any Subsidiarysecurities convertible into or exchangeable for, or any optionsrights, warrants, convertible securities warrants or other rights options of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitationacquire, any phantom interest)such shares, of the Company voting securities, equity equivalent or any Subsidiary convertible or exchangeable securities, other than (except for A) the issuance of Parent Shares upon the exercise of options to purchase Parent Common Stock or the issuance of Parent Shares in settlement of, or upon exercise or conversion of, any other equity-based compensation award of Parent under a maximum Parent Plan, (B) the issuance of 994,502 Shares issuable any securities of Parent pursuant to stock options outstanding a Parent Plan, (C) the issuance of Parent Shares or any rights to purchase other securities of Parent in connection with bona fide acquisitions, mergers, strategic partnership transactions or similar transactions not prohibited by Section 4.2(d) or (D) the issuance of Parent Shares under the Company's 1995 Employee Stock Purchase Plan or other securities of Parent in effect on the date hereof) connection with Parent’s general capital raising efforts or (ii) enter into any amendment of any material assets term of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practiceits outstanding securities; (c) declare, set aside, make amend the Parent Charter or pay any dividend the Parent Bylaws in a manner that would adversely affect the consummation of the Merger or other distribution, payable affect the holders of Company Common Stock whose shares are converted into Parent Common Stock at the Effective Time in cash, stock, property or otherwise, with respect a manner different than holders of Parent Common Stock prior to any of its capital stockthe Effective Time; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to acquire by merging or consolidating with, by purchasing a substantial portion of the assets of or equity in or by any change inother manner, any Material Contracttotalisator business or any advance deposit wagering business; or (e) authorize, except in the ordinary course of business consistent with past practice; (v) terminaterecommend, cancel publicly propose or permit announce an intention to do any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, foregoing or enter into any employment, severance, termination, stay-bonus or similar agreement with, Contract to do any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orforegoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees has agreed that, between the date of this Agreement and prior to the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only init will, and the Company and the Subsidiaries shall not take any action except init will cause its subsidiaries to, conduct business in the ordinary course of business and in a manner consistent with past custom and practice; and the Company shall , use its best commercially reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiariesto, to keep available the services of the current officersamong other things, employees and consultants of the Company and the Subsidiaries and to preserve the current relationships of the Company and the Subsidiaries its subsidiaries with customers, suppliers distributors, suppliers, licensors, licensees, contractors and other persons with which the Company or any Subsidiary its subsidiaries has significant business relations. By way of amplification and not limitationFurther, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shallwill not, between the date of this Agreement and will cause its subsidiaries to not, prior to the Effective Time, directly or indirectly do, or propose to do, do any of the following without the prior written consent of Parent: (a) Merger Sub: - amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) By-laws; - issue, sell, pledge, dispose of, grant, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) of, any shares of capital stock or other equity securities of any type or class of the Company or any Subsidiaryits subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stockstock or other equity securities, or any other ownership interest (including, without limitation, any phantom interestinterests), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding its subsidiaries, or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiaryits subsidiaries, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) custom and practice and other asset sales for consideration or having a fair market value aggregating not more than $500,000; - declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) stock or other equity securities; - reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) stock or other equity securities; - acquire (including, without limitation, by merger, consolidation, consolidation or acquisition of stock or assets assets) or any other business combination) agree to acquire any corporation, partnership, limited liability company, or other business organization or any division thereof division, other than certain acquisitions of assets previously agreed to; - other than under the Company's existing credit facilities as in effect as of the date of the Merger Agreement, incur or any assets; (ii) agree to incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or loans, advances, except or capital contributions to or investments in, any other person; or authorize or make capital expenditures which are not in accordance with the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition Company's calendar year 2000 budget which has been presented to the total amount Board of indebtedness outstanding as of Directors prior to the date of this the Merger Agreement; (iii) - enter into into, establish, adopt, amend or renew any contract employment, consulting, severance or similar agreement which is outside of the ordinary course of businessor arrangements with any director, consistent with past practiceofficer, or which requires payments by the Company employee, or the Subsidiaries in an aggregate amount of more than U.S. $100,000, grant any salary or wage increase (other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past custom and practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet or

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between 6.01 - CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER (a) Between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree except as set forth in writing, the businesses Section 6.01(a) of the Company Disclosure Letter or as specifically required by another provision of this Agreement, the Company shall, and the Subsidiaries shall be conducted only cause each Subsidiary to, (i) conduct its business in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practicebusiness; and the Company shall (ii) use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries Subsidiaries, and to preserve preserve, in all material respects, the current relationships of the Company and the Subsidiaries with customers, franchisees, licensees, suppliers and other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation. (b) Without limiting the foregoing, except as contemplated required by this Agreement or by as disclosed in Section 5.01 6.01(b) of the Company Disclosure ScheduleLetter, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly doindirectly, do or propose agree to do, any of the following without the prior written consent of Parent: (ai) amend make, revoke or otherwise change its Articles any Tax election, change any method of Incorporation Tax accounting, settle, compromise or Bylaws incur any liability for Taxes, fail to timely file any Tax Return that is due, file any amended Tax Return or equivalent organizational documentsclaim for refund, surrender any right to claim a Tax refund, or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment; (bii) issuechange the accounting principles used by it unless required by a change in GAAP or any Governmental Authority; (A) except for short-term borrowings incurred in the ordinary course of business under the existing credit facility, incur or guarantee indebtedness for borrowed money or commit to borrow money, (B) guarantee any indebtedness of another person, (C) enter into any "keep well" or other contract to maintain any financial statement condition of another person or enter into any arrangement having the economic effect of any of the foregoing, or (D) make any loans or cancel, release or assign any indebtedness to any person; (iv) make any capital expenditure in excess of $1,200,000 in the aggregate; (v) subject to clause (xi), acquire, lease or license from any person (by merger, consolidation, acquisition of stock or assets or otherwise) or sell, pledgelease, license, dispose ofor effect an Encumbrance (by merger, grantconsolidation, encumbersale of stock or assets or otherwise), or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class assets other than inventory in the ordinary course of business; (vi) change any compensation arrangement or contract with any present or former Employee (except for increases in the base salaries of employees other than officers or senior managers in the ordinary course of business), officer, director, consultant, stockholder or other service provider of the Company or any Subsidiary or grant any severance or termination or change in control pay to any such present or former Employee, officer, director, consultant, stockholder or other service provider or increase any benefits payable under any severance or termination or change in control pay policies or establish, amend or terminate any Plan or increase benefits made or proposed to be made under such Plan, except as required by applicable Law or grant any Company Stock Awards or other awards under any Company Stock Award plan, other than (A) required pursuant to the terms of any Plan as in effect on the date of this Agreement or (B) required by Law; (vii) declare, set aside or pay any dividend or make any other distribution with respect to Equity Interests of the Company or any Subsidiary, or otherwise make any payments to stockholders in their capacity as such, other than dividends declared or paid by any Subsidiary to any other wholly owned Subsidiary or to the Company; (viii) effect a "plant closing" or "mass layoff," as those terms are defined in the Worker Adjustment and Retraining Notification Act; (i) except as otherwise required pursuant to an existing contract set forth on Section 4.03(a) of the Company Disclosure Schedule, issue, deliver, sell, pledge, transfer, convey, dispose or permit the imposition of an Encumbrance on any Equity Interests, or any options, warrants, securities exercisable, exchangeable or convertible securities into or other rights award, unit or contracts of any kind relating to acquire any shares of such capital stock, Equity Interest or any Right or Voting Debt other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for than the issuance of a maximum Shares upon the exercise of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Company Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness Awards outstanding as of the date of this Agreement; , (ii) redeem, purchase or otherwise acquire, or propose to redeem, purchase or otherwise acquire, any of its outstanding Equity Interests or (iii) split, combine, subdivide or reclassify any Equity Interests; (x) enter into any contract or agreement which is outside of the ordinary course of business(i) with an Affiliate, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, (ii) other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts (iii) that would have been set forth on Section 4.14(a) of the Company Disclosure Letter if in effect on the date of this Agreement or agreements will not be subject to such $100,000 limitation; (iv) terminatethat amends, cancel extends or permit terminates any change in, or agree to any change in, any Material Contract, except in of the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(econtracts set forth on Section 4.14(a) of the Company Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or Letter; (viixi) enter into any contract providing for the sale of Intellectual Property; (xii) subject to Section 7.03, modify, amend or amend terminate, or waive, release or assign any contract, agreement, commitment material rights or arrangement claims with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable confidentiality agreement or non-competition agreement or standstill contracts that relate to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of a business combination involving the Company or any Subsidiary who are not officers of the CompanySubsidiaries; (xiii) take any action to render inapplicable, or to exempt any third party from, any Takeover Law or state Law that purports to limit or restrict business combinations or the ability to acquire or vote shares; (xiv) lease, license, mortgage, hypothecate, pledge, sell, sublease, grant any severance material Encumbrance affecting and/or transfer any interest on any Owned Real Property or termination pay toLeased Real Property, or enter into any employmentamendment, severanceextension or termination of any leasehold interest in any Leased Real Property or create any new leasehold interest in any Leased Real Property; (xv) except as permitted by Section 7.03, terminationtake any action that is intended or would reasonably be expected to result in any of the conditions to the Merger set forth in Article 8 not being satisfied; (xvi) make any acquisition of, stay-bonus capital contributions to, or similar agreement withinvestment in, assets or stock of any directorperson (other than any wholly owned Subsidiary) (whether by way of merger, officer consolidation, tender offer, share exchange or other employee of the Company activity); (xvii) merge or consolidate with any Subsidiary, or person (other than mergers among wholly owned Subsidiaries; (xviii) establish, adopt, enter into or materially amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Planbargaining contract; (gxix) take waive, release, assign, settle or compromise any actionmaterial claims, or any material litigation or arbitration; (xx) satisfy, discharge, waive or settle any material liabilities, other than in the ordinary course of business; (ixxi) fail to maintain in full force and effect or fail to use commercially reasonable efforts to replace or renew insurance policies existing as of the date of this Agreement; (xxii) amend the certificate of incorporation or by-laws of the Company; (xxiii) do any other thing that would have required disclosure under Section 4.08; or (xxiv) permit any Shares to be sold pursuant to any public offering, including the Secondary Offering; or (xxv) enter into any contract by the Company or any of the Subsidiaries to do any of the foregoing. Notwithstanding the foregoing, Parent and usual actions Merger Sub acknowledge that the Company may enter into licenses in the ordinary course of business and consistent with past practice or (ii) as required on terms determined in good faith by the SEC, with respect Company to accounting policies or procedures (including, without limitation, procedures with respect be fair and reasonable to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orCompany. 44 ARTICLE 7

Conduct of Business Pending the Merger. SECTION Except as otherwise contemplated by this Agreement, required by law, disclosed in Schedule 5.01 of the Company Disclosure Schedule, or, subject to such Schedule 5.01. Conduct of Business , provided for in the Company's Annual Budgets, including the draft budget for the calendar year 2002 (as the same may be required to be revised by the Company's lenders) and Capital Plan, as attached to the Company Pending Disclosure Schedule and identified as the Merger. The Company covenants Budgets and agrees thatCapital Plan (collectively, between the "COMPANY BUDGETS") or except, in the case of clause (a) and clause (i) below only, in connection with necessary repairs due to breakdown or casualty, or other necessary actions taken in response to a business emergency or other unforeseen operational matters, after the date of this Agreement hereof and prior to the Effective Time, unless Parent without Parent's consent (which shall otherwise agree in writingnot be unreasonably withheld or delayed), the businesses of the Company and the Subsidiaries shall be conducted only inshall, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use cause its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentsubsidiaries to: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales conduct their respective businesses in the ordinary course of business and in a manner consistent with past practicegood operating practice in the electric generating industry taking into account the age, type and location of the assets of the Company and its subsidiaries; (cb) not (i) amend or propose to amend their respective certificates of incorporation or by-laws or equivalent organizational documents, (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside, make aside or pay any dividend or other distribution, distribution payable in cash, stock, property or otherwise, with respect except for the payment of dividends or distributions to the Company or any of its subsidiaries by a direct or indirect subsidiary of the Company; (c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of, any additional shares of, or any options, warrants or rights of any kind to acquire any shares of their capital stock of any class or any debt or equity securities which are convertible into or exchangeable for such capital stock, except that (i) the Company may issue shares of capital stock of the Company (A) upon exercise of Company Options outstanding on the date hereof or hereafter granted in accordance with the provisions of subclause (ii) of this clause (c), (B) upon conversion of the Convertible Notes or in accordance with the Company Rights Agreement as in effect on the date hereof and (C) upon exercise of Warrants outstanding on the date hereof, (ii) the Company may grant Company Options pursuant to existing contractual obligations as set forth in Schedule 5.01 of the Company Disclosure Schedule, and (iii) issuances, sales or dispositions of capital stock among the Company and its subsidiaries shall be permitted; (d) reclassifyexcept for transactions among the Company and its subsidiaries or as otherwise provided in Schedule 5.01 of the Company Disclosure Schedule, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; not (i) acquire (including, without limitation, by merger, consolidation, incur or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur become contingently liable with respect to any indebtedness for borrowed money or issue enter into any debt securities "keepwell" or assume, guarantee other agreement to maintain the financial condition of another person or endorse, pledge in respect of or otherwise as an accommodation become responsible for enter into arrangements having the obligations effect of any personof the foregoing (including any capital leases, "synthetic" leases or make any loans conditional sale or advances, except other title retention agreements) in excess of $25 million other than (A) borrowings in the ordinary course of business under existing credit facilities of the Company or any of its subsidiaries as such facilities may, if permitted by clause (ii) of this Section 5.01(d), be amended or replaced in a manner that does not have a Material Adverse Effect (the "EXISTING CREDIT FACILITIES") and consistent (B) if permitted by clause (ii) of this Section 5.01(d), borrowings to refinance existing indebtedness, (ii) incur or become contingently liable with past practicerespect to any indebtedness (other than indebtedness to be incurred under Liberty Electric PA, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to LLC's Note Purchase Agreement with the total amount of indebtedness outstanding "Institutional Lenders" dated as of July 31, 2001 as amended to the date of this Agreement; , relating to the Liberty electric generating station) that bears interest at a fixed rate or that requires payment of a makewhole or other premium in the event of redemption or repayment before stated maturity or enter into any interest rate swap, cap, collar or similar agreements, (iii) enter redeem, purchase, acquire or offer to purchase or acquire any shares of its capital stock or any options, warrants or rights to acquire any of its capital stock or any security convertible into any contract or agreement which is outside exchangeable for its capital stock other than in connection with the exercise of outstanding Company Options and Warrants pursuant to the terms of the ordinary course Company Option Plan and the relevant written agreements evidencing the grant of businessCompany Options and Warrants, consistent with past practice(iv) make any acquisition for consideration valued at $25 million or more individually (for any single acquisition) or $50 million or more in the aggregate (for all acquisitions) of any operating assets, securities or which requires payments businesses other than acquisitions by the Company or a subsidiary of the Subsidiaries Company of any operating assets, securities or businesses of a subsidiary of the Company, (v) sell or dispose of assets or businesses having a value of $25 million or more individually or $50 million or more in an aggregate amount of more than U.S. $100,000the aggregate, or pledge or encumber any assets or businesses, other than contracts (A) pledges or agreements relating encumbrances required pursuant to Existing Credit Facilities or other permitted borrowings to the purchase extent replacing Existing Credit Facilities in whole or in part and in such case only to the extent of inventory the pledge or encumbrance required pursuant to Existing Credit Facilities, (B) sales or dispositions of businesses or assets by the Company or a subsidiary of the Subsidiaries Company to a subsidiary of the Company or as may be required by applicable law, (C) if permitted by Section 5.01(j), sales of power and services and capacity and other current assets or dispositions of obsolete assets or equipment, in the ordinary course of businesseach case, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; good operating practices in the electric generating industry taking into account the age, type and location of the assets of the Company and its subsidiaries, (vD) terminateif in connection with an actual or threatened eminent domain proceeding where fair value, cancel in the Company's reasonable judgment, is paid for the asset or permit any change inbusiness, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any binding contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e)of the foregoing; (e) use reasonable best efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present senior officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them; (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices as otherwise provided in salaries or wages of employees Schedule 5.01 of the Company or any Subsidiary who are Disclosure Schedule, not officers of the Company, or grant any severance or termination pay to, or enter into or amend any employment, severance, termination, stay-bonus or similar agreement with, any director, officer special pay arrangement with respect to termination of employment or other employee similar arrangements or agreements with any directors, officers or key employees or pay any benefit not required by any plan or arrangement in effect on the date hereof, except pursuant to (i) the requirements of applicable law, (ii) the ordinary course of business consistent with past practice, (iii) the Company Plans or collective bargaining agreements in effect on the date of this Agreement or (iv) employment agreements entered into with a person who is hired or promoted by the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for one of its subsidiaries after the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions date hereof in the ordinary course of business based on job performance or workplace requirements and that are consistent with past practice and comparable in form and amount to individual compensation or benefit plans or agreements maintained by the Company and its subsidiaries on the date of this Agreement; (g) not increase the base salary or other monetary compensation of any officer or employee, except for increases in the ordinary course of business consistent with past practice or as permitted by Section 5.06(f) or except pursuant to previously existing contractual obligations; (h) not adopt, enter into, amend to materially increase benefits or obligations of or accelerate the payment or vesting of any benefit or amount payable under any Company Plan, except (i) in the ordinary course of business, (ii) as required pursuant to existing contractual obligations or this Agreement or (iii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)applicable law; (hi) excluding expenditures made to support projects described in the Company Budgets to the extent permitted by Schedule 5.01 of the Company Disclosure Schedule, (i) except to the extent permitted by item (ii) of this Section 5.01(i), not make any expenditures (capital or otherwise) in respect of those projects and (ii) not make any capital expenditures (whether on those projects or otherwise) in excess of $1 million individually or $10 million in the aggregate, or, in either case, enter into any binding commitment or contract to make such expenditures; (j) not enter into, terminate, grant any material waiver or consent under or materially amend any material contract or commitment or series of related contracts or commitments, including any contract or commitment or series of related contracts or commitments (i) providing for sales of goods or services by the Company or any of its subsidiaries that has a term of more than one year and which is reasonably expected to generate more than $25 million in revenues over its term, excluding forward sales in respect of the calendar year 2002 to the extent permitted under the Company's two principal subsidiaries' credit agreements in their current form or (ii) providing for purchases of goods or services by the Company or any of its subsidiaries that has a term of more than one year and which is reasonably expected to involve payments of more than $25 million over its term; (k) maintain insurance coverages as contemplated by Section 4.18 and file and prosecute any claims thereunder relating to the business of the Company and its subsidiaries; (l) invest available cash balances, to the extent not otherwise required by the terms of the Existing Credit Facilities, in investments that would qualify as "Permitted Investments" under the terms of the Company's Credit Agreement, dated as of July 27, 2000, with Union Bank of California, N.A., CIBC World Markets Corp., The Bank of Novia Scotia and various other financial institutions; (m) not make any tax election or settle or compromise any material federaltax liability or refund, state, local or foreign income tax liabilityexcept as would not reasonably be expected to have a Material Adverse Effect; (in) not pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)) in excess of $10 million, net of any insurance benefit to Company, in the aggregate, other than the payment, discharge or satisfaction, satisfaction in the ordinary course of business consistent with past practice of liabilities reflected or reserved against in the financial statements contained in the Company SEC Reports or incurred in the ordinary course of business and consistent with past practicepractices; (o) not settle or compromise any pending or threatened suit, of liabilities reflected action or reserved against claim relating to this Agreement and the transactions contemplated hereby; and (p) not commit or agree in the 1998 Balance Sheet orwriting or otherwise to do any act restricted by this Section 5.01.

Conduct of Business Pending the Merger. SECTION 5.01. 6.01 Conduct of Business by the Company Pending the Merger. ----------------------------------------------------- The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writingwriting and except for actions taken or omitted for the purpose of complying with this Agreement, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as expressly contemplated by this Agreement or by and Section 5.01 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly doindirectly, or propose to do, do any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws By- laws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (i) any shares of any class of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends by any direct or indirect wholly owned Subsidiary to the Company or any other Subsidiary; (d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any significant amount of assets, except for purchases of inventory in the ordinary course of business consistent with past practice; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except ; (iii) enter into any contract or agreement other than in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, 2,500,000 in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (viiv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e6.01(e); (f) increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for normal increases in the ordinary course of business and consistent with past practices practice in salaries or wages of employees of the Company or any Subsidiary who are not directors or officers of the CompanyCompany or any Material Subsidiary, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar severance agreement with, any director, officer or other employee of the Company or of any Subsidiary, or enter into any employment with any director, officer or other employee (other than with a newly hired employee, who is not an officer or a director, with an annual salary of less than $125,000) of the Company or any Subsidiary, or establish, adopt, enter into or amend (except as may be required by law) any collective bargaining, bonus, profit profit-sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SECpractice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)procedures; (h) make any material tax election or settle or compromise any material United States federal, state, local or foreign non-United States income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 2000 Balance Sheet or subsequently incurred in the ordinary course of business and consistent with past practice; (j) amend, modify or consent to the termination of any Material Contract, or amend, waive, modify or consent to the termination of the Company's or any Subsidiary's material rights thereunder; (k) commence or settle any material Action; or (l) publicly announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. (a) The Company covenants and agrees that, between the date of this Agreement and the Effective TimeTime or the date, unless Parent if any, on which this Agreement is terminated pursuant to Section 8.1, except (1) as required by Law or any Governmental Authority, (2) as agreed in writing by Buyer (which consent shall otherwise agree in writingnot be unreasonably withheld, delayed or conditioned), (3) as expressly required under this Agreement, the businesses Ancillary Agreements or the Related Transaction Agreements or (4) as set forth in Section 6.1(a) of the Company Disclosure Schedule, the business of the Post-Sale Company and the Post-Sale Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, in the ordinary course of business and in a manner consistent with past practicepractice in all material respects; and the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company Post-Sale Company’s and the Post-Sale Subsidiaries’ business organizations, preserve intact the Post-Sale Company’s and the Post-Sale Subsidiaries’ goodwill and ongoing business relationships with borrowers, schools, insurers, service providers and others having business dealings with them and to keep available the services of the current their present officers, employees and consultants consultants. Without limiting the generality of the foregoing, the Company agrees with Buyer that, except (A) as required by Law or any Governmental Authority, (B) as agreed in writing by Buyer (which consent shall not be unreasonably withheld, delayed or conditioned), (C) as required under this Agreement, the Ancillary Agreements or the Related Transaction Agreements or (D) as set forth in Section 6.1(a) of the Company Disclosure Schedule, the Company shall not, and shall not permit any of its Subsidiaries to, to the extent relating to the Post-Sale Company and the Subsidiaries and to preserve Post-Sale Subsidiaries: (i) amend, modify or otherwise change the current relationships Company Charter or the by-laws of the Company and the Subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary has significant business relations. By way such equivalent organizational documents of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of its Subsidiaries, including the following without the prior written consent of Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documentsSecuritization Basic Documents; (bii) issue, sell, pledge, dispose ofdispose, grant, encumber, encumber or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of its or its Subsidiaries’ capital stock of any class of the Company or any Subsidiarystock, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such its or its Subsidiaries’ capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (ciii) (A) declare, set asideauthorize, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to the Company’s or any of its Subsidiaries’ capital stock, other than (1) dividends paid by any Subsidiary of the Company to the Company or any wholly owned Subsidiary of the Post-Sale Company, (2) the payment referred to in Section 6.1(e)(vii) of the Indemnification Agreement, and (3) the payment of ordinary dividends of the Company declared prior to the date hereof and set forth on Section 6.1(a) of the Company Disclosure Schedule, (B) split, combine or reclassify the Company’s or any of its Subsidiaries’ capital stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its or its Subsidiaries’ capital stock, or (C) purchase, redeem or otherwise acquire any shares of the Company’s or any of its Subsidiaries’ capital stock or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (div) reclassifyestablish or create any employee benefit plan or arrangement for the benefit of any Company Employee, combineamend or modify in any material respect any Benefit Plan with respect to a Company Employee, splitor materially change the compensation of any Company Employee, subdivide except to the extent undertaken (A) in connection with any such actions by CBNA or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stockAffiliates (other than the Company or its Subsidiaries) and not targeted to the Company Employees or (B) in connection with any such actions related to the filling of any position existing as of the date hereof that becomes vacant prior to the Closing Date; provided, that such actions are consistent with the Company’s usual and customary past practices; (iv) acquire (including, without limitation, by merger, consolidation, merge or acquisition of stock or assets or consolidate with any other business combination) person, acquire any corporation, partnership, limited liability company, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assumethereof, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000or, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts any material amount of assets in connection with acquisitions or agreements will investments with a purchase price in excess of $1,000,000 individually or $5,000,000 in the aggregate, provided that there is no ongoing obligation of the Post-Sale Company and the acquisition is unrelated to the Post-Sale Company; (vi) (A) incur any Indebtedness or guarantee any such Indebtedness for any person except for any (1) Indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice under the Omnibus Credit Agreement or (2) renewals or refinancings of existing Indebtedness, so long as the principal amount of the Indebtedness issued in such renewal or refinancing (x) does not exceed the principal amount of such existing Indebtedness, (y) has a final maturity date later than the final maturity date of such existing Indebtedness and (z) does not contain any change of control or similar provision, does not subject any assets or properties of the Company or any of its Affiliates (including Buyer and its Affiliates after the Closing) to any Lien, and does not contain any provision that would be violated or breached in connection with the Transactions or (B) make any loans, advances or capital contributions to any other person; (vii) except as may be permitted by Section 6.1(a)(vi), (A) modify, amend, terminate, cancel, extend or grant any consent or waiver under any Company Material Contract or (B) enter into any Contract that would have been required to be set forth in Section 4.16(a) of the Company Disclosure Schedule if it were in effect on the date hereof, other than renewals or replacements, on commercially reasonable terms, of such Contracts terminated in accordance with their terms prior to the Effective Time; (viii) make any material change to its methods of accounting in effect at December 31, 2009, except as required by GAAP or Regulation S-X of the Exchange Act or as required by a quasi-Governmental Authority (including the Financial Accounting Standards Board or any similar organization); (ix) sell, lease, license, transfer, exchange or swap, mortgage, pledge or otherwise encumber, or subject to such $100,000 limitation; any Lien (ivother than Permitted Liens), or otherwise dispose of any material portion of its properties or assets, other than in the ordinary course of business consistent with past practice and except (A) terminate, cancel pursuant to existing agreements in effect prior to the execution of this Agreement and set forth on Section 4.16(a) of the Company Disclosure Schedule or permit any change in, (B) FFELP Purchased Assets and CBNA Purchased Assets in compliance with the terms of the FFELP Transaction Agreement and the CBNA Transaction Agreement; (x) make or agree to make any change innew capital expenditures other than capital expenditures that (A) are not in excess of $1,000,000 individually or $5,000,000 in the aggregate or (B) as contemplated by the Company’s existing budget and business plan previously delivered to Buyer; (xi) commence any Proceeding (other than in the ordinary course of business or as a result of a Proceeding commenced against the Company or any of its Subsidiaries), or compromise, settle or agree to settle any Material ContractProceeding resulting in any post-Closing obligations for the Post-Sale Company or any modification to any Contract of the Post-Sale Company (including any Proceeding relating to this Agreement, the Related Transaction Agreements or the Transactions) other than compromises, settlements or agreements entered into in the ordinary course of business or addressed in Section 6.1(a)(xii)(A) below; (xii) (A) settle or compromise any material Liability for non-income Taxes for an amount in excess of $50,000 in any particular instance or (B) except in the ordinary course of business consistent with past practice; , (vI) terminatemake any material non-income Tax election, cancel (II) file any amended material non-income Tax Return or permit (III) change in any change in, or agree to material respect any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) method of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which areaccounting for non-income Tax purposes, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth each case in this Section 5.01(e); clause (fB) increase to the compensation payable or extent such action could reasonably be expected to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees have a material adverse effect on the Tax liability of the Company or any Subsidiary who are not officers of its Subsidiaries for any taxable periods ending after the CompanyClosing Date; (xiii) waive, or grant any severance or termination pay toextend, renew or enter into any employmentnon-compete, severanceexclusivity, termination, staynon-bonus solicitation or similar agreement withContract that would restrict or limit, in any directormaterial respect, officer the operations of Buyer or other employee the Company, as the case may be, or any of their respective Subsidiaries; (xiv) enter into (including via any acquisition) any new line of business which represents a material change in its operations, or make any material change to the Company’s or its Subsidiaries’ businesses; (xv) make any material change in internal accounting controls; (xvi) cancel any Student Loan Insurance Policies or any material Commercial Insurance Policies, or fail to renew any such insurance policies upon expiration on substantially the same terms as those in place on the date of this Agreement to the extent commercially available; (xvii) knowingly violate or knowingly fail to perform any obligation or duty imposed on the Company or any Subsidiaryof its Subsidiaries by applicable Law; (xviii) enter into any transaction, arrangement or understanding, or establishamend or modify the terms of any existing transaction, adoptarrangement or understanding, enter into with any Related Party which would constitute an Acquired Asset or amend a Retained Liability; (xix) hire any collective bargaining, bonus, profit sharing, thrift, compensation new employee or engage any new independent contractor to provide services (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit person employed by any Affiliate of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action), other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice practice; (xx) enter into any agreement that grants any right to severance or termination pay to any Company Employee or independent contractor; (iixxi) as required take any action that could result in any Liability or notice or other obligation for the Company or any of its Subsidiaries under the WARN Act; (xxii) enter into any compromise or settlement of any material Proceeding by any Governmental Authority relating to any Company Employee; or (xxiii) authorize or enter into any written agreement or otherwise make any binding commitment to do any of the SEC, with respect foregoing. Other than the right to accounting policies consent or procedures (including, without limitation, procedures withhold consent with respect to the payment foregoing matters, nothing contained in this Agreement shall give to Buyer, directly or indirectly, any right to control or direct the operation of accounts payable the business or operations of the Company or its Subsidiaries prior to the Closing. Subject to the foregoing and collection the other terms and conditions of accounts receivable);this Agreement, prior to the Effective Time, the Company and its Subsidiaries shall exercise complete control over their business and operations. (hb) make any tax election The Company covenants and agrees that, between the date of this Agreement and the Effective Time or settle or compromise any material federalthe date, stateif any, local or foreign income tax liability; (i) payon which this Agreement is terminated pursuant to Section 8.1, discharge or satisfy any material claimit shall, liability or obligation (absoluteand shall cause each of the Depositor, accruedthe Securitization Trusts, asserted or unassertedthe Other Securitization Trusts and each of its other Affiliates to, contingent or otherwise), other than comply with the payment, discharge or satisfaction, in terms and conditions of the ordinary course of business Securitization Basic Documents and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orOther Securitization Basic Documents.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the MergerPurchaser's Election Date. The Company covenants and agrees that, between the date of this Agreement and the Effective Timeelection or appointment of Purchaser's designees to the Board pursuant to Section 6.03 upon the purchase by Purchaser of any Shares pursuant to the Offer (the "Purchaser's Election Date"), unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries and to preserve the goodwill of those 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. By way of amplification and not limitation, except as contemplated by this Agreement or by as disclosed in Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shallshall not, between the date of this Agreement and the Effective TimePurchaser's Election Date, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles the certificate of Incorporation incorporation or Bylaws by-laws or equivalent organizational documentsdocuments of the Company or the Subsidiaries; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options Options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales of products in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stockstock (except for such declarations, set asides, dividends and other distributions made from any Subsidiary to the Company); (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, other business organization or any division thereof or any assetsmaterial amount of assets other than in the ordinary course of business; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans loans, advances or advancescapital contribution to, or investments in, any other person (other than such of the foregoing as are made by the Company to or in a wholly-owned subsidiary of the Company), except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (viiiii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent in accordance with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the CompanyCompany or any Subsidiary, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (ih) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 1996 Balance Sheet or subsequently incurred in the ordinary course of business and consistent with past practice; (i) settle or compromise any pending or threatened suit, action or claim which is material or which relates to any of the Transactions; (j) undertake any capital commitment not reflected in the Company's budget in an individual amount greater than $100,000 or, when aggregated with all other capital commitments not reflected in the Company's budget, in an aggregate amount greater than $1,000,000; or (k) take or offer or propose to take, or agree to take in writing, or otherwise, any of the actions described in paragraphs (a) through (j) of this Section 5.01 or any action which would result in any of the conditions to the Offer not being satisfied (other than as contemplated by this Agreement).

Conduct of Business Pending the Merger. SECTION 5.015.1. Conduct of the Business of the Company. Except as otherwise expressly contemplated by the Company Pending the Merger. The Company covenants and agrees thatthis Agreement, between the date of this Agreement and prior to the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following Company Subsidiaries will, without the prior written consent of the Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws or equivalent organizational documentsBy-Laws; (b) authorize for issuance, issue, sell, pledgedeliver or agree or commit to issue, dispose ofsell or deliver (whether through the issuance or granting of additional options, grantwarrants, encumbercommitments, subscriptions, rights to purchase or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (iotherwise) any shares of capital stock of any class of the Company or any Subsidiary, securities convertible into or any options, warrants, convertible securities or other rights exercisable for shares of capital stock of any kind to acquire class, except as required by any shares employee benefit or stock option plan or agreement existing as of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) split, combine or reclassify any shares of its capital stock, declare, set aside, make aside or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwiseany combination thereof) in respect of its capital stock or partnership interest, with respect to or redeem or otherwise acquire any shares of its capital stock;, except any distribution made by any of the Company Subsidiaries to the Company or any of the other Company Subsidiaries; or (d) reclassify, combine, split, subdivide merge with or redeem, purchase into or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or consolidate with any other business combinationPerson (other than between the Company Subsidiaries) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans acquisition of all or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as part of the date assets or capital stock or business of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries Person except for tangible property acquired in the ordinary course of business. 5.2. Conduct of the Business of Parent and the Purchaser. Except as contemplated by this Agreement, which contracts or agreements during the period from the date of this Agreement to the Effective Time, the Parent and the Parent Subsidiaries will not take no action that could reasonably be subject deemed to such $100,000 limitation; (iv) terminate, cancel or permit any change inhave a material adverse effect on the ability of the parties to consummate the transactions contemplated by this Agreement, or agree to any change inthe timing thereof. Without limiting the generality of the foregoing, any Material Contract, and except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate as otherwise expressly contemplated by this Agreement, Broker Agreement or Attorney Engagement; (vi) other than prior to the proposed capital expenditures described in Schedule 5.01(e) Effective Time, neither the Parent nor any of the Disclosure ScheduleParent Subsidiaries will, authorize any single capital expenditure without the prior written consent of the Company: (a) amend the Articles of Incorporation or By-Laws of Parent in a manner which is in excess would materially adversely change the rights of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess holders of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e)Parent Common Stock; (fb) increase during the compensation payable period in which the Parent Common Stock Value is being determined, pay any dividend or to become payable to other distribution (whether in cash, stock or property or any combination thereof) in respect of its directors, officers or employeescapital stock, except for normal increases consistent with past practices in salaries or wages of employees any distribution made by any of the Company Parent Subsidiaries to the Parent or any Subsidiary who are not officers of the Company, or grant other Parent Subsidiaries; or (c) agree to do any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orforegoing.

Conduct of Business Pending the Merger. SECTION 5.01. 5.1 Conduct of Business by of the Company Pending the Merger. The Company covenants and agrees thatExcept as contemplated by this Agreement, between during the period from the date hereof to the earlier of termination of this Agreement and or the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company agrees to conduct its business and the Subsidiaries shall be conducted that of its subsidiaries only in, and the Company and the Subsidiaries shall not take any action except in, in the ordinary course of business and in a manner consistent with past practice; practice and the Company shall to use its best all reasonable efforts consistent with past practices and policies to preserve substantially intact the its present business organization of the Company and the Subsidiaries, to keep available (including the services of the current officers, employees its existing employees) and consultants of the Company and the Subsidiaries and to preserve the current its relationships of the Company and the Subsidiaries with customers, suppliers and other persons others having business dealings with which it, to the Company or any Subsidiary has significant end that its goodwill and ongoing business relationsshall be unimpaired at the Effective Date. By way Without limiting the generality of amplification the foregoing, and not limitation, except as contemplated by otherwise expressly provided in this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary shallof its subsidiaries will, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentthe Purchaser: (a) amend or otherwise change propose to amend its Articles of Incorporation or Bylaws or equivalent organizational documentsBy-Laws; (b) (i) authorize for issuance, issue, sell, pledgedeliver or agree or commit to issue, dispose ofsell or deliver (whether through the issuance or granting of options, grantwarrants, encumbercommitments, subscriptions, rights to purchase or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (iotherwise) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest securities or equity equivalents (including, without limitation, any phantom interest), stock options or stock appreciation rights) except shares of Company Common Stock issuable upon exercise of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) Outstanding Options or (ii) amend any material assets of the Company terms of any such securities or any Subsidiaryagreements outstanding as of the date hereof, except for sales in the ordinary course of business and in a manner consistent with past practiceas specifically contemplated by this Agreement; (c) split, combine or reclassify any shares of its capital stock, declare, set aside, make aside or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwise, with any combination thereof) in respect to any of its capital stock, or redeem or otherwise acquire any of its securities or any securities of the Company's subsidiaries; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, incur or acquisition of stock assume any long-term or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money short-term debt or issue any debt securities or assume, guarantee or endorse, pledge in respect except for borrowings under existing lines of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries credit in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (ivii) terminateassume, cancel guarantee, endorse or permit otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any change in, other person or agree to any change in, any Material Contract, entity except in the ordinary course of business consistent with past practice, and except for obligations of wholly-owned subsidiaries of it; (iii) make any loans, advances or capital contributions to, or investments in, any other person or entity (other than to wholly-owned subsidiaries of it or advances to employees in the ordinary course of business consistent with past practice and in amounts not material to the maker of such loan or advance); (iv) pledge or otherwise encumber shares of its capital stock or any of its subsidiaries; or (v) terminatemortgage or pledge any of its material assets, cancel tangible or permit any change inintangible, or agree create or suffer to exist any change in, any Affiliate Agreement, Broker material Lien thereupon; (e) except as may be required by law or as contemplated by this Agreement or Attorney Engagement; (vi) other than described on the proposed capital expenditures described in Schedule 5.01(e) of the Company Disclosure Schedule, authorize enter into, adopt or amend or terminate any single capital expenditure which is bonus, profit sharing, compensation, severance, termination, stock option, stock appreciation right, restricted stock, performance unit, stock equivalent, stock purchase agreement, pension, retirement, deferred compensation, employment, severance or other employee benefit agreement, trust, plan, fund or other arrangement for the benefit or welfare of any director, officer, employee or former employee or independent contractor in excess any manner, or (except for normal increases in the ordinary course of U.S. $100,000 or capital expenditures which arebusiness consistent with past practice that, in the aggregate, do not result in a material increase in benefits or compensation expense to it and as required under existing agreements) increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any plan and arrangement as in effect as of the date hereof (including, without limitation, the granting of stock appreciation rights or performance units); (f) acquire, sell, lease, license to others or dispose of any assets outside the ordinary course of business which individually or in the aggregate are material to the Corporation, or enter into any commitment or transaction outside the ordinary course of business consistent with past practice which would be material to the Corporation; (g) except as may be required as a result of a change in law or in US GAAP, change any of the accounting principles or practices used by it; (h) revalue in any material respect any of its assets, including, without limitation, writing down the value of inventory or writing-off notes or accounts receivable other than in the ordinary course of business; (i) acquire or agree to acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any equity interest therein, other than as specifically described on the Company Disclosure Schedule; (ii) enter into any contract or agreement other than in the ordinary course of business consistent with past practice which would be material to it; (iii) authorize any new capital expenditure or expenditures which, individually, is in excess of U.S. $250,000 for or, in the Company and the Subsidiaries taken as a wholeaggregate, are in excess of $2,500,000; or (viiiv) enter into or amend any contract, agreement, commitment or arrangement with respect to providing for the taking of any matter set forth in this Section 5.01(e)action that would be prohibited hereunder; (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (hj) make any tax election or settle or compromise any material federal, state, local or foreign income tax liabilityliability material to the Company; (ik) pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, satisfaction in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in, or contemplated by the Company Financial Statements and the Company Subsidiaries or incurred in the 1998 Balance Sheet ordinary course of business consistent with past practice or customary fees and expenses relating to the transactions contemplated by this Agreement; (l) settle or compromise any pending or threatened suit, action or claim relating to the transactions contemplated hereby; or (m) take, or agree in writing or otherwise to take, any of the actions described in this Section 5.1(a) through 5.1(l) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect as of the date when made.

Conduct of Business Pending the Merger. SECTION 5.01. 5.01 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Timeelection or appointment of Purchaser's designees to the Board pursuant to Section 6.03 upon the purchase by Purchaser of any Shares pursuant to the Offer (the "Purchaser's Election Date"), unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; practice and the Company shall use its best all reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, the Company agrees that neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective TimePurchaser's Election Date, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documentsConstituent Documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 2,000,000 Shares issuable pursuant to employee stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereofhereof and including up to 1,250 restricted Shares per quarter issuable to outside directors in accordance with past practice pursuant to the Stock Option Plans) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for such declarations, set asides dividends and other distributions made by any Subsidiary to the Company; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assetsmaterial amount of assets other than in the ordinary course of business consistent with past practice; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement, other than any contract or agreement which is outside of entered into in the ordinary course of business, business consistent with past practice, or practice and which requires payments by the Company or the Subsidiaries in an aggregate amount of more less than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation250,000; (iv) terminate, cancel or permit request any material change in, or agree to any material change in, any Material Contract, except in the ordinary course of business consistent with past practice; or (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure (excluding software development activity) which is in excess of U.S. $100,000 500,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 2,500,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent in accordance with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, officer or other employee of the Company or any SubsidiarySubsidiary (other than in connection with hiring and terminating employees in the ordinary course of the Company's business), or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, termination or severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, employee or communicate circulate to employees, accrue any benefits under employee any details of any proposal to adopt or otherwise implement the Company's 1999 Executive Incentive Planamend any such plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SECpractice, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any material tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet included in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 1997 or subsequently incurred in the ordinary course of business consistent with past practice; or (j) settle or comprise any pending or threatened suit, action or claim that is material or which relates to any of the Transactions; or (k) announce an intention, enter into any formal or informal agreement, or otherwise make a commitment, to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Conduct of Business by the Company Pending the Merger. The ----------------------------------------------------- Except as set forth in Section 5.01 of the Disclosure Schedule, the Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only inshall, and the Company and the shall cause its Subsidiaries shall not take any action except into, conduct its businesses only in the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best all reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the their current officers, officers and 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. By way As amplification of amplification and not limitationthe foregoing, except as contemplated by this Agreement or by in Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws By- laws or equivalent organizational documents; (b) issue, deliver, sell, pledge, dispose of, grant, encumber, or authorize the issuance, delivery, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except Subsidiary for sales consideration in excess of $25,000,000 in the ordinary course of business and in a manner consistent with past practiceaggregate; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for regular quarterly dividends on the Shares declared and paid at times consistent with past practices; (d) reclassify, combine, split, subdivide subdivide, or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of its capital stock, or redeem, purchase or otherwise acquire, directly or indirectly, any shares of the capital stock of the Company or any of its capital stockSubsidiaries or any other securities thereof or any rights, warrants or options to acquire any such shares or other securities; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, other business organization or any division thereof or any assetsfor consideration in excess of $10,000,000 in the aggregate; (ii) except for borrowings under existing credit facilities not to exceed $30,000,000 in the aggregate and excepting transactions between the Company and any Subsidiary, incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into except for transactions between the Company and any contract or agreement which is outside of the ordinary course of businessSubsidiary, consistent with past practicemake any loans, advances, or which requires payments by the Company capital contributions to, or the Subsidiaries investments in, any person, for an amount in an aggregate amount excess of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries 10,000,000 in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitationaggregate; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 25,000,000 for the Company and the Subsidiaries taken as a wholeSubsidiaries; (v) acquire any assets for consideration in excess of $10,000,000 in the aggregate; or (viivi) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) except as provided in Section 5.01 of the Disclosure Schedule, as contemplated by this Agreement or in the ordinary course of business consistent with past practices (i) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent (ii) other than in accordance with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Companyexisting policies and arrangements, or grant any severance pay to or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or (iii) establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, except as contemplated by the Agreement or communicate to employees, accrue any benefits under the extent required by applicable law or otherwise implement the Company's 1999 Executive Incentive Planterms or a collective bargaining agreement or a contractual obligation existing on the date hereof; (g) take other than as required by generally accepted accounting principles, make any actionchange to its accounting policies or procedures; (h) agree to the settlement of any claim or litigation which would have a Material Adverse Effect; (i) make, change or rescind any material Tax election (other than (i) reasonable and usual actions recurring elections that customarily are made in connection with the ordinary course filing of business and any Tax Return; provided that any such elections are consistent with the past practice practices of the Company or its Subsidiaries, as the case may be; (ii) as required by gain recognition agreements under Section 367 of the SEC, Code and Treasury regulations thereunder with respect to accounting policies or procedures transactions occurring in the 1998 fiscal year of the Company; and (including, without limitation, procedures iii) elections with respect to Subsidiaries purchased by the payment Company under Section 338(h)(10) of accounts payable and collection the Code or, solely in the case of accounts receivable); (hnon-U.S. Subsidiaries purchased by the Company, Section 338(g) make any tax election of the Code) or settle or compromise any material federalTax liability that is the subject of an audit, stateclaim for delinquent Taxes, local examination, action, suit, proceeding or foreign income tax liabilityinvestigation by any taxing authority; (ij) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement or as contemplated by this Agreement, accelerate the payment, right to payment or vesting of any bonus, severance, profit sharing, retirement, deferred compensation, stock option, insurance or other compensation or benefits; (k) pay, discharge or satisfy any material claimclaims, liability material liabilities or obligation material obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfactionsatisfaction (A) of any such material claims, material liabilities or material obligations in the ordinary course of business and consistent with past practicepractice or (B) of material claims, of material liabilities or material obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) contained in the 1998 Balance Sheet Company SEC Reports; (l) enter into any agreement, understanding or commitment that restrains, limits or impedes the Company's or any of its Subsidiaries' ability to compete with or conduct any business or line of business, including, but not limited to, geographic limitations on the Company's or any of its Subsidiaries' activities; (m) materially modify, amend or terminate any material contract to which it is a party or waive any of its material rights or claims except in the ordinary course of business consistent with past practice; or (n) agree or enter into, in writing or otherwise, or amend any contract, agreement commitment or arrangement with respect to any of the actions set forth in this Section 5.01.

Conduct of Business Pending the Merger. SECTION 5.01. Section 5.1 Conduct of Business by of the Company Pending the Merger. The Except as required or permitted under this Agreement or set forth in the Company’s Disclosure Letter, or with the consent of Buyer (which consent shall not be unreasonably withheld or delayed), the Company covenants agrees as to itself and agrees that, between to its Subsidiaries that during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, unless Parent shall otherwise agree in writing, (1) the businesses business of the Company and the its Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, in all material respects in the ordinary course of business and in a manner consistent with past practice; and practices, (2) the Company and its Subsidiaries shall use its commercially reasonable best efforts to preserve substantially intact the in all material respects their business organization of the Company and the Subsidiariesorganization, to keep available the services of their respective present executive officers and key employees, and to preserve in all material respects the current officers, employees and consultants goodwill of those having business relationships with the Company and the Subsidiaries and to preserve the current relationships of the Company and the Subsidiaries with customersits Subsidiaries, suppliers and other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, and (3) neither the Company nor any Subsidiary its Subsidiaries shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws (or equivalent similar organizational documentsdocuments of the Company’s Subsidiaries); (b) split, combine or reclassify any shares of its outstanding capital stock, declare, set aside or pay any dividend or other distribution payable in cash, stock or property in respect of its capital stock, or directly or indirectly redeem, purchase or otherwise acquire any shares of its capital stock or other securities; (c) issue, sell, pledge, dispose of, grant, encumber, deliver or authorize the issuanceauthorize, saleagree or commit to issue, sell, pledge, disposition, grant dispose of or encumbrance of (i) deliver any additional shares of capital stock of any class of the Company or any Subsidiaryof, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of, its capital stock of such capital stock, any class or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for whether through the issuance or granting of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any options, warrants, commitments, subscriptions, rights to purchase Shares under the Company's 1995 Employee or otherwise) other than (A) Company Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales Options awarded in the ordinary course of business and in a manner amounts consistent with past practice; practice and (cB) declareshares of Company Common Stock issued to holders of Company Stock Options upon exercise or subject to Section 2.4(f)(vii) hereof, set aside, make or pay any dividend or other distribution, payable issued pursuant to the Company ESPP (provided that such issuance will not cause a breach of the representation contained in cash, stock, property or otherwise, with respect to any Section 3.2(d) of its capital stockthis Agreement); (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (includingdispose of, without limitationtransfer, by mergerlease, consolidationlicense, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorsemortgage, pledge in respect of or otherwise as an accommodation become responsible for the obligations of encumber any person, material fixed or make any loans or advances, except other assets other than in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iiiii) enter into incur or assume any contract material indebtedness, liability or agreement which is outside of the ordinary course of business, consistent with past practice, obligation or which requires payments by the Company any other material liabilities or the Subsidiaries in an aggregate amount of more than U.S. $100,000, issue any debt securities other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of businessbusiness consistent with past practice; (iii) modify, which contracts amend or agreements will not be subject to such $100,000 limitationterminate any material indebtedness of the Company or its Subsidiaries; (iv) terminateassume, cancel guarantee, endorse or permit otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any change in, or agree to any change in, any Material Contract, except other Person in a material amount other than in the ordinary course of business consistent with past practice; (v) terminatemake any material loans, cancel advances or permit any change incapital contributions to, or agree to any change investments in, any Affiliate Agreement, Broker Agreement or Attorney Engagementother person other than in the ordinary course of business; (vi) fail to maintain insurance consistent with past practices for its business; (vii) make any settlement of pending or threatened actions, suits or other than the proposed capital expenditures described in Schedule 5.01(esimilar claims (including penalties, fees, or taxes related thereto) of the Disclosure Schedule, authorize any single capital expenditure which is for amounts in excess of U.S. $100,000 or cancel, modify or waive any material claims or material rights; (viii) acquire (by merger, consolidation or acquisition of stock or assets) any material company, corporation, partnership or other business organization or division thereof; (ix) make any changes with respect to accounting policies or material procedures (other than as required by changes in GAAP or to comply with Applicable Law) or (x) enter into any material lease for real property; (e) repay any guarantors of the Company’s or its Subsidiaries’ material obligations or pledgors of collateral to secure the Company’s or its Subsidiaries’ material obligations (including collateral pledged to secure letters of credit relating to such obligations) if and to the extent such guarantors pay any amount under the guaranty, or such pledgors have such collateral foreclosed upon, in connection with any of the Company’s or its Subsidiaries’ material obligations, on behalf of the Company or its Subsidiaries; (f) make capital expenditures which are, in or commitment for the aggregate, purchase of fixed assets in excess of U.S. $250,000 for 500,000; (g) other than in the Company and ordinary course of business, terminate or make any material amendment or modification to any Material Contract or enter into an agreement or other arrangement that would reasonably be likely to fall within the Subsidiaries taken as a wholedefinition of “Material Contract” if such new agreement or arrangement were in place during the time period set forth in such definition; or or (viih) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(eof the foregoing. Notwithstanding anything to the contrary contained herein, the Company shall be permitted to take the following actions: (i) pay any judgment or settlement of pending legal actions, suits or other similar claims (including penalties, fees, or taxes related thereto); ; (fii) increase repay any guarantors of the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees obligations of the Company or any Subsidiary who are not officers of its Subsidiaries or pledgors of collateral to secure the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee obligations of the Company or any Subsidiaryof its Subsidiaries (including collateral pledged to secure letters of credit relating to such obligations) if and to the extent such guarantors pay any amount under the guaranty, or establishsuch pledgors have such collateral foreclosed upon, adoptin connection with any of the obligations of the Company or its Subsidiaries, enter into on behalf of the Company or amend any collective bargainingof its Subsidiaries, bonus(iii) subject to Section 5.2 hereof, profit sharing, thrift, compensation (including hire any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance new employees or other plan, agreement, trust, fund, policy or arrangement for the benefit of terminate any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions existing employees in the ordinary course course, and (iv) pay compensation and severance as permitted under Section 5.2, below. The Company shall deliver to Buyer a copy of business and consistent with past practice any new agreement or (ii) as required by other arrangement entered into after the SEC, with respect date hereof that would reasonably be likely to accounting policies fall within the definition of “Material Contract” if such agreement or procedures (including, without limitation, procedures with respect to other arrangement were in place during the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, time period set forth in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orsuch definition.

Conduct of Business Pending the Merger. SECTION 5.01. 4.1 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, unless Parent shall otherwise agree in writing, the Company shall conduct its business and shall cause the businesses of the Company and the Subsidiaries shall its subsidiaries to be conducted only in, and the Company and the Subsidiaries its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practicepractice other than actions taken by the Company or its subsidiaries in contemplation of the Merger; and the Company shall use its best all reasonable commercial efforts to preserve substantially intact the business organization of the Company and the Subsidiariesits subsidiaries, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries its subsidiaries and to preserve the current present relationships of the Company and the Subsidiaries its subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary of its subsidiaries has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary of its subsidiaries shall, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parent: (a) amend or otherwise change its the Articles of Incorporation or Bylaws By-Laws of the Company or equivalent organizational documentsany of its subsidiaries; (b) issue, sell, pledge, dispose of, grant, of or encumber, or authorize the issuance, sale, pledge, disposition, grant disposition or encumbrance of (i) of, any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest)) in the Company, any of the Company its subsidiaries or any Subsidiary affiliates (except for the issuance of a maximum shares of 994,502 Shares Company Common Stock issuable pursuant to stock options outstanding or any rights to purchase Shares Stock Options which were granted under the Company's 1995 Employee Company Stock Purchase Option Plan in effect and are outstanding on the date hereof). (c) sell, pledge, dispose of or (ii) encumber any material assets of the Company or any Subsidiary, of its subsidiaries (except for (i) sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $10,000 in the aggregate); (ci) declare, set aside, make or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwise, with any combination thereof) in respect to of any of its capital stock; , except that a wholly owned subsidiary of the Company may declare and pay a dividend to its parent and except that the Company may pay normal quarterly dividends of $.25 per Share to shareholders of record on August 31, 1997 and on November 30, 1997, (dii) reclassify, combine, split, subdivide combine or redeemreclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, purchase in lieu of or in substitution for shares of its capital stock, or (iii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, shares of Company Common Stock or any option, warrant or right, directly or indirectly, to acquire shares of Company Common Stock, or propose to do any of its capital stockthe foregoing; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, partnership or other business organization or any division thereof or any assetsthereof, except as described in Section 2.8 of the Company Disclosure Schedule; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of endorse or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contractperson or, except in the ordinary course of business consistent with past practice, make any loans or advances; (viii) terminate, cancel enter into or permit amend any change in, material contract or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is agreement calling for aggregate payments in excess of U.S. $100,000 or 25,000; (iv) authorize any capital expenditures or purchase of fixed assets which are, in the aggregate, in excess of U.S. $250,000 50,000 (other than for office furnishings in an amount in the aggregate not to exceed $10,000 and capital expenditures described in Section 4.1(e) of the Company Disclosure Schedule) for the Company and the Subsidiaries its subsidiaries taken as a whole; or (viiv) enter into or amend any contract, agreement, commitment or arrangement with respect to effect any matter set forth in of the matters prohibited by this Section 5.01(e4.1(e); (f) other than the payment of normal cash bonuses payable to employees for the year ending July 31, 1997 in an aggregate amount not to exceed $260,000, and normal raises reasonably acceptable to Parent, increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, with any director, officer or other employee of the Company or any Subsidiaryof its subsidiaries, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directorcurrent or former directors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Planexcept, in each case, as may be required by law; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect action to change accounting policies or procedures (including, without limitation, procedures with respect to the payment revenue recognition, payments of accounts payable and collection of accounts receivable); (h) make any material tax election inconsistent with past practice or settle or compromise any material federal, state, local or foreign income tax liabilityliability or agree to an extension of a statute of limitations; (i) pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements contained in the Company SEC Reports filed prior to the date of this Agreement or incurred in the ordinary course of business and consistent with past practice; or (j) take, or agree in writing or otherwise to take, any of liabilities reflected the actions described in Sections 4.1 (a) through (i) above, or reserved against any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect or prevent the 1998 Balance Sheet orCompany from performing or cause the Company not to perform its covenants hereunder.

Conduct of Business Pending the Merger. SECTION 5.01. 7.01 Conduct of Business by the Company Pending the Merger. . (a) The Company covenants and agrees that, between the date of this Agreement and the Effective Time, except as expressly contemplated by any other provision of this Agreement, as set forth in Section 7.01 of the Company Disclosure Schedule or as required by a Governmental Authority of competent jurisdiction, unless Parent shall otherwise agree consent in writing, : (i) the businesses of the Company and the Subsidiaries shall be conducted in all material respects only in, and the Company and the Subsidiaries shall not take any material action except in, the ordinary course of business and in a manner consistent with past practice; and and (ii) the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. . (b) By way of amplification and not limitation, except as expressly contemplated by any other provision of this Agreement or by as set forth in Section 5.01 7.01 of the Company Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly indirectly, do, or propose to do, any of the following without the prior written consent of Parent: (ai) amend or otherwise change its Articles certificate of Incorporation incorporation or Bylaws by-laws or equivalent organizational documents; (bii) issue, sell, pledge, dispose of, grant, grant or encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (iA) any shares of any class of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of up to a maximum of 994,502 Shares 3,822,307 shares of Company Common Stock issuable pursuant to stock options Company Stock Options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (iiB) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (ciii) except as expressly set forth in, and permitted by, Section 4.04 of the Company Disclosure Schedule, waive any stock repurchase rights, accelerate, amend or change the period of exercisability of options or restricted stock, reprice options granted under any Company Stock Option Plan or authorize cash payments in exchange for any options granted under any of such plans; (iv) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock, except for dividends payable by a Subsidiary of the Company to the Company or any other Subsidiary; (dv) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stockstock or other securities; (ivi) (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any material amount of assets; (iiB) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, or grant any security interest in any of its assets except in the ordinary course of business and consistent with past practice, but in no event practice (which shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition deemed to the total amount of indebtedness outstanding as of the date of this Agreementinclude borrowings under its senior credit facility); (iiiC) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business and consistent with past practice; (vD) terminate, cancel or permit any change inauthorize, or agree to make any change incommitment with respect to, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 500,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for 500,000 per month (the Company "Monthly CapEx Amount") from the date hereof until the earlier of (x) the Acceptance Date or (z) the termination of this Agreement pursuant to Section 10.01 (it being understood that any unused portion of the Monthly CapEx Amount may be rolled forward and the Subsidiaries taken as a wholeutilized in any subsequent month); or (viiE) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e7.01(vi); (fvii) sell, lease, license, mortgage, pledge, encumber or dispose of in any manner any properties or assets which are material, individually or in the aggregate, to the Company; (viii) increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for normal increases in the ordinary course of business and consistent with past practices practice in salaries or wages of employees of the Company or any Subsidiary who are not directors or officers of the CompanyCompany or any Subsidiary, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, officer or other employee of the Company or of any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit profit-sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (gix) change any of the accounting principals used by it, other than as required by GAAP; (A) make or rescind any Tax election, settle or compromise any liability for Taxes or change or revoke any of its methods of Tax accounting, or (B) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures action with respect to the payment computation of accounts payable and collection Taxes or the preparation of accounts receivableTax returns that is inconsistent with past practice; provided, however, that, in the case of this clause (x), Parent shall not unreasonably withhold its consent; (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (ixi) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than in the paymentordinary course of business and consistent with past practice or claims, discharge liabilities or satisfactionobligations not exceeding $500,000 in the aggregate; (A) amend, modify or consent to the termination of any Material Contract, or amend, waive, modify or consent to the termination of the Company's or any Subsidiary's rights thereunder, or (B) enter into any contract or agreement that would be a Restrictive Agreement or a Related Party Agreement; (xiii) except with respect to trademarks in the ordinary course of business and consistent with past practice, (A) grant any license in respect of liabilities reflected any material Intellectual Property of the Company or reserved against any Subsidiary, (B) develop any Intellectual Property jointly with any third party, or (C) disclose any confidential Intellectual Property or other confidential information of the Company or any Subsidiary, unless such disclosure is made in the 1998 Balance Sheet ordinary course of business consistent with past practice or would not reasonably be expected to have a Company Material Adverse Effect; (xiv) commence or settle any material Action; or (xv) announce an intention, enter into any formal or informal agreement or otherwise make a commitment to do any of the foregoing or take any action that would materially delay the consummation of the Offer and the Merger.

Conduct of Business Pending the Merger. SECTION 5.015.1. Conduct of the Business of the Company. Except as contemplated by this Agreement or as otherwise set forth on Section 5.1 of the Company Pending Disclosure Letter, during the Merger. The Company covenants and agrees that, between period from the date of this Agreement and to the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Company Subsidiaries shall be conducted only inwill each conduct its operations in all material respects according to its ordinary and usual course of business, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall will use its best commercially reasonable efforts to preserve substantially intact the its business organization of the Company and the Subsidiariesorganization, to keep available the services of the current officers, its officers and employees and consultants to maintain satisfactory relationships with customers, suppliers and others having business relationships with it and will take no action that could reasonably be deemed to have a material adverse effect on the ability of the Company to consummate the transactions contemplated by this Agreement, or the timing thereof. The Company shall consult regularly with Parent on the management and business affairs of the Company and the Subsidiaries and to preserve Company Subsidiaries. The Company will promptly advise the current relationships Parent in writing of any change in the Company's or any of the Company Subsidiaries' business or financial condition which is materially adverse to it and the Company Subsidiaries with customers, suppliers and other persons with which taken as a whole. Without limiting the Company or any Subsidiary has significant business relations. By way generality of amplification and not limitationthe foregoing, except as set forth on Section 5.1 of the Company Disclosure Letter, and except as otherwise expressly contemplated by this Agreement or by Section 5.01 of Agreement, prior to the Disclosure ScheduleEffective Time, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following Company Subsidiaries will, without the prior written consent of the Parent: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documentsBy-Laws; (b) authorize for issuance, issue, sell, pledgedeliver or agree or commit to issue, dispose ofsell or deliver (whether through the issuance or granting of additional options, grantwarrants, encumbercommitments, subscriptions, rights to purchase or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (iotherwise) any shares of capital stock of any class or any securities convertible into or exercisable for shares of capital stock of any class, except as required by any employee benefit or stock option plan or agreement or pursuant to the Warrants existing as of the date hereof, and listed in Section 5.1 of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practiceDisclosure Letter; (c) split, combine or reclassify any shares of its capital stock, declare, set aside, make aside or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwiseany combination thereof) in respect of its capital stock or partnership interest, with respect to or redeem or otherwise acquire any shares of its capital stock, except any distribution made by any of the Company Subsidiaries to the Company or any of the other Company Subsidiaries; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire create, incur, assume, maintain or permit to exist any debt (includingincluding obligations in respect of capital leases) other than as in existence on the date hereof (or which, without limitationin the ordinary course of business, by merger, consolidation, or acquisition of stock or assets or replaces any other business combinationsuch debt) any corporation, partnership, other business organization or any division thereof or any assetsin an aggregate amount for the Company and the Company Subsidiaries taken as a whole exceeding $50,000; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practicepractices assume, but in no event shall there be more guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any Person other than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this AgreementCompany Subsidiaries; or (iii) enter into make any contract loans, advances or agreement capital contributions to, or investments in, any Person other than any of the Company Subsidiaries, except for customary advances to employees or trade credit in the ordinary course of business and consistent with past practices, which is outside in any event will not exceed $25,000 in the aggregate; (e) except in the ordinary course of business or as otherwise contemplated by or described or referred to in the Company SEC Filings filed on or before the date hereof, sell, transfer, mortgage, lease, license or otherwise dispose of or encumber any assets, or cancel any indebtedness, of the Company or a Company Subsidiary which have a value on the Company's books, either individually or in the aggregate, in excess of $25,000; (i) increase in any manner the compensation of any of its directors, officers or employees except in the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount practice as part of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitationtheir regularly scheduled review; (ivii) terminate, cancel or permit any change in, pay or agree to pay any change inpension, any Material Contractretirement allowance or other employee benefit not required, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, enter into or amend or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment agreement or arrangement with respect to any matter set forth in this Section 5.01(e); (f) increase the compensation payable or to become payable to of its directors, officers or employees, whether past or present, relating to any such pension, retirement allowance or other employee benefit, except for normal increases consistent with past practices as required under currently existing agreements, plans or arrangements and other than such additional severance and stay bonus plans as set forth in salaries or wages of employees of the Company Disclosure Letter; (iii) grant (other than as required pursuant to existing agreements or any Subsidiary who are not officers of the Company, or grant plans) any severance or termination pay to, or enter into or amend any employment, severance, termination, stay-bonus severance or similar change in control agreement with, any directorof its directors, officer officers or other employee of the Company employees; or any Subsidiary, or establish, adopt(iv) except as may be required to comply with applicable law, enter into or amend become obligated under any collective bargainingbargaining agreement or any agreement with, any labor union or association representing employees, pension plan, welfare plan, multiemployer plan, employee benefit plan, benefit arrangement, or similar plan or arrangement, which was not in existence on the date hereof, including any bonus, profit sharingincentive, thriftdeferred compensation, compensation (including any sales compensation plan)stock purchase, stock option, restricted stockstock appreciation right, pension, retirement, deferred compensation, employment, terminationgroup insurance, severance pay, retirement or other benefit plan, agreementagreement or arrangement, trust, fund, policy or arrangement employment or consulting agreement with or for the benefit of any director, officer or employeePerson, or communicate to employees, accrue amend any benefits under of such plans or otherwise implement any of such agreements in existence on the Company's 1999 Executive Incentive Plandate hereof; (g) take authorize or commit to make any action, other than (i) reasonable and usual actions material capital expenditures in the ordinary course excess of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)$50,000 per expenditure; (h) make any tax election material change in the accounting methods or settle or compromise any material federalaccounting practices followed by the Company, state, local or foreign income tax liabilityexcept as required by GAAP; (i) paysettle any action, discharge or satisfy any material suit, claim, liability investigation or obligation proceeding (absolutelegal, accrued, asserted administrative or unasserted, contingent arbitrative) for an amount in excess of $50,000; (j) make any election under the Code; (k) enter into any contract that if entered into on or otherwise), prior to the date hereof would be required to be disclosed on Section 3.16 of the Company Disclosure Letter; (l) merge with or into or consolidate with any other Person (other than between the payment, discharge Company Subsidiaries) or satisfaction, make any acquisition of all or any part of the assets or capital stock or business of any other Person except for tangible property acquired in the ordinary course of business business; or (m) agree to do any of the foregoing. 5.2. Conduct of the Business of Parent and consistent with past practicethe Purchaser. Except as contemplated by this Agreement or as otherwise set forth on Section 5.2 of the Parent Disclosure Letter, during the period from the date of liabilities reflected this Agreement to the Effective Time, the Parent and the Parent Subsidiaries will take no action that could reasonably be deemed to have a material adverse effect on the ability of the parties to consummate the transactions contemplated by this Agreement, or reserved against the timing thereof. Without limiting the generality of the foregoing, and except as otherwise expressly contemplated by this Agreement, prior to the Effective Time, neither the Parent nor any of the Parent Subsidiaries will, without the prior written consent of the Company: (a) amend the Articles of Incorporation or By-Laws of Parent in a manner which would materially adversely change the 1998 Balance Sheet rights of holders of Parent Common Stock; (b) during the period in which the Parent Common Stock Value is being determined, pay any dividend or other distribution (whether in cash, stock or property or any combination thereof) in respect of its capital stock, except any distribution made by any of the Parent Subsidiaries to the Parent or any of the other Parent Subsidiaries; or (c) agree to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. V.1 Conduct of Business by of the Company Pending the Merger. The Company covenants and agrees that, between during the period from the date hereof until the Effective Time, except as specifically contemplated by this Agreement or the Management Agreements, as set forth on Section 5.1 of the Disclosure Schedule or as required by law, or unless Newco shall otherwise consent in writing, the business of the Company and its Subsidiaries shall be conducted in its ordinary course of business consistent with past practice and the Company shall use its reasonable best efforts to preserve substantially intact its business organization, to keep available the services of its officers and employees and to preserve its present relationships with customers, suppliers, Governmental Entities and other persons with which it has significant business relations. Between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as specifically contemplated by this Agreement or by the Management Agreements, as set forth on Section 5.01 5.1 of the Disclosure ScheduleSchedule or as required by law, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following its Subsidiaries shall without the prior written consent of ParentNewco: (a) amend or otherwise change its Articles certificate of Incorporation incorporation or Bylaws by-laws or equivalent organizational documents; (b) authorize for issuance, issue, deliver, sell, pledge, dispose of, grant, encumber, of or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) encumber any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any including but not limited to stock appreciation rights or phantom intereststock rights), of the Company or any Subsidiary of its Subsidiaries (except (i) for the issuance of a maximum shares of 994,502 Shares Company Class A Common Stock issuable pursuant to stock options outstanding or any rights to purchase Shares under in accordance with the Company's 1995 terms of Employee Stock Purchase Plan Options as in effect on the date hereof) or , 31 (ii) any material assets for the conversion of shares of Company Class B Common Stock into shares of Company Class A Common Stock, (iii) for the grant of Employee Options, and issuances of Company or any SubsidiaryClass A Common Stock pursuant thereto, except for sales in the ordinary course of business and in a manner consistent with past practicepractice or (iv) in connection with the dividend reinvestment plan of the Company); (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stockstock (except for (i) any dividend or distribution by a wholly-owned (other than directors' qualifying shares) Subsidiary of the Company or (ii) regular quarterly dividends of the Company in an amount not to exceed $0.07125 per Share per quarter, subject to increases consistent with past practice); (d) effect any reorganization or recapitalization or reclassify, combine, split, subdivide or subdivide, redeem, purchase or otherwise acquire, directly acquire any capital stock of the Company or indirectly, any of its capital stockSubsidiaries (except in connection with the conversion of shares of Company Class B Common Stock into shares of Company Class A Common Stock), other than the transactions contemplated hereby and by the Stockholder Agreement; (i) acquire (including, without limitation, by merger, consolidation, consolidation or acquisition of stock or assets assets) or any other business combinationsell (by merger, consolidation or sale of stock or assets) any corporation, partnership, partnership or other business organization or any division thereof or any assets; , in each case, which are material to the Company and its Subsidiaries taken as a whole, (ii) incur any long-term indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans loans, advances or advancescapital contributions to, except or investments in, any other person (other than a Subsidiary of the Company), in each case, other than (A) in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 practice or (B) any letter of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter credit entered into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; , (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (viiii) other than in the proposed capital expenditures described ordinary course of business consistent with past practice, enter into or renew or amend in Schedule 5.01(eany material respect any contract or agreement which is or would be material to the Company and its Subsidiaries taken as a whole or (iv) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or new capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e)25,000,000; (f) except as contemplated by Section 6.6 or except to the extent required under the Company Plans and Employment Agreements as in effect on the date of this Agreement, increase the compensation payable or to become payable to fringe benefits of any of its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of for officers and employees of the Company or any Subsidiary who are not officers its Subsidiaries in the ordinary 32 course of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiarybusiness consistent with past practice, or establish, adopt, enter into or amend or terminate any collective bargainingbargaining agreement, Company Plan or bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directordirectors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take sell, lease or otherwise dispose of, or grant any actionlien with respect to, other than (i) reasonable any assets or properties of the Company or its Subsidiaries which are, individually or in the aggregate, material to the Company and usual actions its Subsidiaries, taken as a whole, except for dispositions of excess or obsolete assets and sales of inventories in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)practice; (h) change in any material respect any of the accounting principles or practices used by it, except as may be required as a result of a change in SEC guidelines or generally accepted accounting principles; (i) make any tax material Tax election or settle or compromise any material federalTax liability, state, local or foreign income tax liabilityother than in the ordinary course of business; (ij) pay, discharge or satisfy any material claim, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the any payment, discharge or satisfaction, satisfaction (i) in the ordinary course of business and consistent with past practice, (ii) in accordance with the terms of any such liabilities reflected or obligations, (iii) as otherwise permitted by this Agreement or (iv) which does not involve an amount in excess of $500,000; (k) settle or compromise any litigation (whether or not commenced prior to the date of this Agreement) other than settlements or compromises of litigation where the amount paid (less the amount reserved against for such matters by the Company) in settlement or compromise in each case does not exceed $250,000; (l) adopt a plan of complete or partial liquidation, dissolution, consolidation, restructuring, recapitalization, merger or other reorganization of the 1998 Balance Sheet Company or any of its Subsidiaries not constituting an inactive Subsidiary (other than the Merger); or (m) agree to take any of the actions described in Sections 5.1(a) through 5.1(l). 33

Conduct of Business Pending the Merger. SECTION 5.016.01. Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as expressly contemplated by this Agreement or by and Section 5.01 6.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly doindirectly, do or propose initiate any significant steps to do, do any of the following without the prior written consent of Parent: (a) amend or otherwise change its Articles Certificate of Incorporation or Bylaws By-laws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of of, (i) any shares of any class of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 1,394,166 Shares issuable pursuant to employee stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock; (e) (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any significant amount of assets; (ii) except in the ordinary course of business and consistent with past practice incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, person or make any loans or advancesadvances or grant any security interest in any of its assets; (iii) enter into any customer contract related to the Company's military and medical businesses, except (iv) enter into any other contract or agreement other than in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change inauthorize, or agree to make any change incommitment with respect to, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 500,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 1,000,000 for the Company and the Subsidiaries taken as a whole; or (viivi) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e6.01(e); (f) increase the compensation payable or to become payable or the benefits provided to its directors, officers or employees, except for normal increases in the ordinary course of business and consistent with past practices practice in salaries salaries, wages, bonuses, incentives or wages pension benefits of employees of the Company or any Subsidiary who are not directors or officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, officer or other employee of the Company or of any Subsidiary, or establish, adopt, enter into or amend (other than as may be required by applicable Law) any collective bargaining, bonus, profit profit-sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take change any action, other than (i) reasonable and usual actions in of the ordinary course of business and consistent with past practice or (ii) as accounting methods used by it unless required by the SEC, with respect to accounting policies GAAP or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)applicable law; (h) make any tax election or settle or compromise any material United States federal, state, local or foreign non-United States income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 1999 Balance Sheet oror subsequently incurred in the ordinary course of business and consistent with past practice; (j) amend, modify or consent to the termination of any Material Contract, or amend, waive, modify or consent to the termination of the Company's or any Subsidiary's material rights thereunder; (l) publicly announce an intention, enter into any formal or informal agreement or otherwise make a commitment, to do any of the foregoing.

Conduct of Business Pending the Merger. SECTION 5.01. Section 6.01 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between . (a) From the date of this Agreement and until the Effective Timeearlier of the Closing Date and the date on which this Agreement is terminated in accordance with Section 9.01, unless Parent shall otherwise agree except, (i) as set forth in writing, the businesses Section 6.01 of the Company Disclosure Letter, (ii) as contemplated by the Contemplated Transactions, (iii) for actions required by Applicable Law and (iv) as Parent otherwise shall consent to in writing (such consent not to be unreasonably withheld, delayed or conditioned), (A) the Subsidiaries shall be conducted only inCompany shall, and the Company shall cause its Subsidiaries to, use reasonable best efforts to conduct its and the Subsidiaries shall not take any action except in, their businesses in the ordinary course in all material respects and preserve intact in all material respects the business organization and assets of business and in a manner consistent with past practice; and the Company shall use its their businesses, including by using reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to (1) keep available the services of the current officers, Company’s and its Subsidiaries’ key employees and consultants of the Company and the Subsidiaries and to (2) preserve the goodwill and current relationships of the Company and the its Subsidiaries with customers, suppliers and other persons Persons with which they have business relations and (B) the Company or any Subsidiary has significant business relations. By way of amplification shall not, and shall cause its Subsidiaries not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentto: (ai) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (bA) issue, sell, pledge, sell or dispose of, grant, encumber, of or (B) authorize the issuance, sale, pledge, disposition, grant sale or encumbrance disposition of (i) any shares of capital stock of any class of capital stock, or other ownership interests, of the Company or any Subsidiaryof its Subsidiaries, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, including any phantom interest), ) of the Company or any of its Subsidiaries, other than, as applicable, (1) any such transaction by a directly or indirectly wholly owned Subsidiary of the Company which remains a directly or indirectly wholly owned Subsidiary of the Company after consummation of such transaction and (except for 2) upon the issuance exercise or settlement of, or as otherwise required by, any Company Stock Options, Company RSUs, awards of a maximum of 994,502 Shares issuable Company Restricted Stock, Company PSUs or Company Performance Units granted pursuant to stock options the Company Stock Plans and, in each case, outstanding or any rights to purchase Shares under on the Company's 1995 Employee Stock Purchase Plan date of this Agreement, in accordance with their terms in effect on the date hereof) of this Agreement or thereafter granted in accordance with Section 6.01(a)(vi); (ii) (A) sell, pledge or dispose of, (B) xxxxx x Xxxx on or permit a Lien to exist on or (C) authorize the sale, pledge or disposition of, or granting or placing of a Lien on, any material assets of the businesses of the Company or any Subsidiaryand its Subsidiaries, except for sales (1) in the ordinary course of business and in a manner consistent with past practice, (2) dispositions of obsolete or worn-out assets that are no longer used or useful in the operation or conduct of the businesses of the Company or its Subsidiaries, (3) Liens that are Permitted Liens and (4) Liens securing indebtedness that would not be prohibited by Section 6.01(a)(ix); (ciii) amend or restate the articles or certificate of incorporation or bylaws (or similar organizational documents) of the Company or any of its material Subsidiaries (other than immaterial amendments to the organizational documents of any such Subsidiary of the Company); (iv) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property stock or otherwiseproperty, with respect to any of its capital stockstock except for (A) the declaration and payment of regular quarterly cash dividends not in excess of $0.14 per share per quarter in respect of the Company Common Stock (adjusted to appropriately reflect the effect of any stock split, reverse stock split, recapitalization or other like change with respect to the Company Common Stock) and (B) dividends or distributions by any directly or indirectly wholly owned Subsidiary of the Company; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (iA) acquire or dispose of (including, without limitation, including by merger, consolidation, consolidation or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof thereof, other than acquisitions and investments involving cash consideration not exceeding $5,000,000 in the aggregate and dispositions not exceeding $5,000,000 in the aggregate or (B) make any loans or advances or capital contribution to, or investment in, any Person other than the Company or a Subsidiary of the Company; (vi) (A) grant any increase in the base salaries, target bonus opportunity, or other benefits payable by the Company or its Subsidiaries to any of its employees, (B) adopt, terminate, accelerate the timing of payments or vesting under, or otherwise materially amend or supplement, any Company Plans, (C) adopt any collective bargaining agreements or similar labor agreements or arrangements or (D) enter into or amend any employment, consulting, change in control, transaction-related bonus, retention, severance or termination agreement with any Company Employee except, in the case of clauses (A), (B) and (C) above, (1) as required by Applicable Law, (2) as required by any Company Plan in effect on the date hereof or pursuant to the terms of any Company Union Contract, (3) grants of equity or equity-based awards pursuant to the Company’s equity compensation plans as set forth in Section 6.01(a)(vi)(3) of the Company Disclosure Letter, (4) in the ordinary course of business consistent with the past practices of the Company or its Subsidiaries (including in the context of new hires or promotions based on job performance or workplace requirements) or (5) to the extent undertaken in connection with the implementation of a program that affects all similarly situated employees of the Company and/or its Subsidiaries; (vii) change any method of accounting or accounting practice or policy used by the Company as it relates to the businesses of the Company and its Subsidiaries, other than such changes as are required by GAAP, Applicable Law or a Governmental Authority; (viii) other than in the ordinary course of business and consistent with past practice or as required by Applicable Law, (A) make any change (or file any such change) in any method of Tax accounting or any assets; annual Tax accounting period, (iiB) incur make, change or rescind any Tax election, (C) settle or compromise any Tax Liability or consent to any claim or assessment relating to Taxes, (D) file any amended Tax Return or claim for refund, (E) enter into any closing agreement relating to Taxes or (F) waive or extend the statute of limitations in respect of Taxes, in each case, to the extent that doing so would reasonably be expected to result in a material incremental cost to Parent, the Company or any of their respective Subsidiaries; (ix) incur, guarantee or assume or otherwise become responsible for any indebtedness for borrowed money other than (A) indebtedness incurred under the Company’s and its Subsidiaries’ current credit facilities and the Existing Company Financing Documents, (B) indebtedness solely between or issue among the Company and its Subsidiaries, (C) refinancings, replacements, extensions and renewals of existing indebtedness entered into in the ordinary course of business consistent with past practice, (D) indebtedness incurred in connection with the Contemplated Transactions, (E) letters of credit or similar arrangements entered into in the ordinary course of business consistent with past practice and (F) guarantees made by any debt securities or assume, guarantee or endorse, pledge Company Entity in respect of or otherwise as an accommodation become responsible for the obligations of any personother Company Entity; (x) commence or settle any Proceeding other than (A) in the ordinary course of business and consistent with past practice, (B) settlements that result solely in monetary obligations that will be satisfied prior to the Closing and/or customary confidentiality obligations or (C) as contemplated by Section 7.16; (xi) other than in the ordinary course of business and consistent with past practice, materially amend (other than an extension), cancel or terminate any Company Material Contract or any Company License; (xii) fail to exercise any rights of renewal with respect to any material Company Leased Real Property that by its terms would otherwise expire unless the Company (or, if the lessee is a Subsidiary of the Company, such Subsidiary) determines in good faith that a renewal would not be in the best interests of the Company; (xiii) (A) abandon, disclaim, sell, assign or grant any security interest in, to or under any material Company Owned Intellectual Property, including failing to perform or cause to be performed all applicable filings, recordings and other acts, or make to pay or cause to be paid all required fees and Taxes, to maintain and protect its interest in any loans material Company Owned Intellectual Property, (B) grant to any third party any exclusive license, or advancesenter into any covenant not to xxx, or (C) disclose to any Person any trade secret or confidential information, in the case of (B) and (C) with respect to any material Company Owned Intellectual Property, except in the ordinary course of business and consistent with past practice, but ; (xiv) fail to use commercially reasonable efforts to maintain (with insurance companies substantially as financially responsible as their existing insurers) insurance in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time least such amounts and against at least such risks and losses as are consistent in addition to all material respects with the total amount of indebtedness outstanding as past practice of the date of this Agreement; (iii) enter into any contract or agreement which is outside businesses of the ordinary course of businessCompany and its Subsidiaries; (xv) make any capital expenditures or other expenditures with respect to property, consistent with past practice, plant or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000equipment, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practicepractice and not exceeding $3,000,000 per calendar month ($2,500,000 per calendar month effective as of January 1, 2019); or (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (viixvi) enter into any agreement to do any of the foregoing. (b) From the date of this Agreement until the Merger Effective Time, the Company shall, and shall cause each of its Subsidiaries to, use commercially reasonable efforts to (i) prepare and timely file all material Tax Returns that it is required to file, (ii) timely pay all material Taxes shown to be due and payable on such Tax Returns and (iii) promptly notify Parent of any notice of any material Proceeding or amend audit in respect of any contract, agreement, commitment Tax matters (or arrangement any significant developments with respect to any matter set forth ongoing Proceedings or audits in this Section 5.01(erespect of such Tax matters); (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any director, officer or other employee of the Company or any Subsidiary, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet or.

Conduct of Business Pending the Merger. SECTION 5.014.1. Conduct of Business by the Company Pending the Merger. The During the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, the Company covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent GT shall otherwise agree consent in writing, and except as set forth in Section 4.1 of the Company Disclosure Schedule, the Company shall conduct its business and shall cause the businesses of the Company and the Subsidiaries shall its subsidiaries to be conducted only in, and the Company and the Subsidiaries its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best reasonable commercial efforts to preserve substantially intact the business organization of the Company and the Subsidiariesits subsidiaries, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries its subsidiaries and to preserve the current present relationships of the Company and the Subsidiaries its subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary of its subsidiaries has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary of its subsidiaries shall, between during the period from the date of this Agreement and continuing until the earlier of the termination of this Agreement or the Effective Time, and except as set forth in Section 4.1 of the Company Disclosure Schedule, directly or indirectly do, or propose to a third party to do, any of the following without the prior written consent of ParentGT: (a) amend or otherwise change its Articles the Company's Certificate of Incorporation or Bylaws or equivalent organizational documentsBy-Laws; (b) issue, sell, pledge, dispose of, grant, of or encumber, or authorize the issuance, sale, pledge, disposition, grant disposition or encumbrance of (i) of, any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest)) in the Company, any of the Company its subsidiaries or any Subsidiary affiliates (except for (i) the issuance of a maximum shares of 994,502 Shares Company Common Stock issuable pursuant to stock options outstanding or any rights to purchase Shares Stock Options under the Company's 1995 Employee Company Stock Purchase Plan in effect Option Plans, which options are outstanding on the date hereof) , or upon conversion of the Notes, Company Preferred Stock, the Warrant or the warrant expiring October 17, 1997 to purchase 90,278 shares of Company Common Stock at a price of $9.00 per share, subject to adjustment, held by Grotech Partners II, L.P. and (ii) the issuance of options to purchase up to 400,000 shares of Company Common Stock, at fair market value at the time of grant, to employees (excluding officers) of the Company engaged in product development activities, provided that the grant to any material individual does not exceed 25,000 shares of Company Common Stock, and the issuance of shares of Company Common Stock pursuant to the exercise of such options); (c) sell, pledge, dispose of or encumber any assets of the Company or any Subsidiary, of its subsidiaries (except for (i) sales of assets in the ordinary course of business and in a manner consistent with past practice, (ii) dispositions of obsolete or worthless assets, and (iii) sales of immaterial assets not in excess of $100,000); (ci) declare, set aside, make or pay any dividend or other distribution, payable distribution (whether in cash, stock, stock or property or otherwise, with any combination thereof) in respect to of any of its capital stock; , (dii) reclassify, combine, split, subdivide combine or redeemreclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, purchase in lieu of or in substitution for shares of its capital stock, or (iii) amend the terms or change the period of exercisability of, purchase, repurchase, redeem or otherwise acquire, or permit any subsidiary to purchase, repurchase, redeem or otherwise acquire, any of its securities or any securities of its subsidiaries, including, without limitation, shares of Company Common Stock or any option, warrant or right, directly or indirectly, to acquire shares of Company Common Stock, or propose to do any of its capital stockthe foregoing; (e) (i) acquire or agree to acquire (including, without limitation, by merger, consolidationmerging or consolidating with, or acquisition by purchasing any equity interest in or a material portion of stock the assets of, or assets or by any other manner) any business combination) or any corporation, partnershippartnership interest, association or other business organization or division thereof; acquire or agree to acquire any division thereof assets other than in the ordinary course of business; or enter into any assetsjoint ventures, strategic partnerships or alliances; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of endorse or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into authorize or make any contract capital expenditures or agreement which is outside purchases of fixed assets or lease (whether by capital or operating lease) any personal property if such capital expenditures and purchases, together with the ordinary course fair market value of businesssuch leased assets, consistent with past practiceexceed, or which requires payments by in the aggregate for the Company or the Subsidiaries in an aggregate amount of more than U.S. and its subsidiaries taken as a whole, $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation1,000,000; (iv) terminate, cancel take any action to install or permit otherwise implement any change in, material accounting or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; inventory software system (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described payment of not more than $150,000 if required to be paid pursuant to the contract dated May 27, 1997 for such system), provided that the Company shall not be obligated to take, or refrain from taking, any action which would cause the Company to breach a contract in Schedule 5.01(e) of effect on the Disclosure Scheduledate hereof, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which arebe obligated to pay a termination penalty, in respect of any software license or installation contract relating to such system in effect on the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a wholedate hereof; or (viiv) enter into or amend any contract, agreement, commitment or arrangement with respect to effect any matter set forth in of the matters prohibited by this Section 5.01(e4.1(e); (f) except as set forth in Section 4.1(f) of the Disclosure Schedule increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Company, or grant or modify any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, officer or other employee of the Company or any Subsidiaryof its subsidiaries, or establish, adopt, enter into or amend any collective bargaining, bonusagreement, profit sharing, thrift, compensation Company Employee Plan (including any sales compensation planwithin the meaning of Section 2.11 of this Agreement), stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directorcurrent or former directors, officer officers or employeeemployees or any of their beneficiaries, or communicate to employeesexcept, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Planin each case, as may be required by law; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) as required by the SEC, with respect action to change accounting policies or procedures (including, without limitation, procedures with respect to the payment revenue recognition, payments of accounts payable and collection of accounts receivable); (h) make any material tax election inconsistent with past practice or settle or compromise any material federal, state, local or foreign income tax liabilityliability or agree to an extension of a statute of limitations, except to the extent the amount of any such settlement has been reserved for in the financial statements contained in the Company SEC Reports filed prior to the date of this Agreement; (i) pay, discharge or satisfy (including, without limitation, any material claimsettlement of a litigation or arbitration) any claims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise)) in excess of $500,000 in the aggregate, other than the payment, discharge or satisfaction, satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements contained in the Company SEC Reports filed prior to the date of this Agreement or incurred in the ordinary course of business and consistent with past practice, or make payment on any claim, liability or obligation prior to such time as it becomes due and payable under applicable payment terms; (j) except as set forth in Section 4.1(j) of liabilities reflected the Company Disclosure Schedule, enter into, amend or reserved against modify any contract, agreement, arrangement or understanding (including, without limitation, any letter of intent or understanding), whether legally binding or non-binding, transfer or license to or from any person or entity or otherwise enter into or extend the term of any agreement with respect to, or amend or modify in any material respect, any Intellectual Property Rights (including without limitation distribution rights), or enter into assignments of any Intellectual Property Rights, or commence, originate or undertake any new internal or third-party development project with respect to any software title, except where the failure to so commence, originate or undertake such third-party project would result in a breach by the Company or any of its subsidiaries of its legal obligations existing on the date of this Agreement; (k) enter into, extend, modify or amend any forward purchase or other hedging agreements except hedging of foreign receivables and payables in the 1998 Balance Sheet orordinary course of business consistent with past practice; (l) without consulting with GT prior thereto, (i) commence or institute any litigation (including without limitation, any counterclaim) or arbitration or (ii) settle or agree to settle any claim, dispute, litigation or arbitration on terms which include any obligation on the part of the Company or any of its subsidiaries other than the payment of money to the plaintiff; (m) authorize or make any expenditures with respect to the marketing of products (including without limitation, expenditures relating to consumer, trade or in-store marketing) other than in the ordinary course of business and consistent with past practice; (n) make any sale of products other than on terms and conditions which are in the ordinary course of business and consistent with past practice (including without limitation, payment terms, dating, discounts, and return and market development funds policies); (o) extend, amend, modify, renew or enter into any agreement, arrangement or understanding with respect to any lease of any real property; (p) except as set forth in Section 4.1(p) of the Company Disclosure Schedule, hire, retain or engage any employees or consultants, or enter into, amend or modify any agreement, arrangement or understanding with respect to employment of any employees or consultants; (q) take, or agree in writing or otherwise to take, any of the actions described in Sections 4.1(a) through (p) above, or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect or prevent the Company from performing or cause the Company not to perform its covenants hereunder; The Company further agrees and covenants that, in the event that its subsidiary referenced in Section 4.1(t) of the Company Disclosure Schedule (the "Party Subsidiary") is entitled to terminate the Agreement (the "Sales Agreement") with the company referenced in Section 4.1(t) of the Company Disclosure Schedule (the "Contract Party") pursuant to the terms of such agreement as furnished to GT prior to the date of this Agreement and in accordance with applicable law, it shall immediately notify GT thereof and shall cause the Party Subsidiary to terminate the Sales Agreement within five business days after such termination right accrues if GT furnishes an indemnity agreement reasonably acceptable to the Company indemnifying the Party Subsidiary, the Company and their respective officers, employees and against any losses incurred by such persons as a result of claims with respect to the termination of the Sales Agreement and offers to provide the Company with distribution services on substantially the same terms as the Sales Agreement. Upon request by GT, the Company shall consult with GT in good faith with respect to the existence of such termination right. Following such consultation, in the event that GT delivers to the Company a written request for the Company's basis or explanation for its determination that such termination right has not then accrued, the Company shall provide to GT in writing such basis or explanation, in reasonable detail, within five business days of such written request.

Conduct of Business Pending the Merger. SECTION 5.01. Section 7.1 Conduct of Business by the Company Pending the The Merger. The Company covenants and agrees that, between From the date of this Agreement until the earlier of (i) the time that persons designated by Parent are appointed as directors of Company pursuant to Section 3.4 hereof and (ii) the Effective Time, unless Parent shall otherwise agree in writing, or as otherwise contemplated by this Agreement, any Schedule hereto or Company Disclosure Schedule: (a) the respective businesses of the Company and the Company Subsidiaries shall be conducted only in, and the Company and the Subsidiaries shall not take any action except in, in the ordinary and usual course of business and in a manner consistent with past practice; , and there shall be no material change in the conduct of the operations of Company and Company Subsidiaries taken as a whole and, to the extent consistent therewith, each of Company and Company Subsidiaries shall use its reasonable best efforts to preserve substantially intact the its business organization of the Company and the Subsidiariesintact, to keep available the services of the current officersmaintain its existing relations with customers, suppliers, employees and consultants of the Company business associates, and the Subsidiaries and to preserve the current goodwill of those having business relationships with it and Company Subsidiaries; (b) Company shall not (i) sell or pledge or agree to sell, pledge, dispose of the Company and the Subsidiaries with customers, suppliers and or encumber any stock or other persons with which the Company or any Subsidiary has significant business relations. By way of amplification and not limitation, except as contemplated equity interests owned by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, it in any of the following without the prior written consent of Parent: Company Subsidiaries; (aii) amend or otherwise change its Articles of Incorporation or Bylaws by-laws or, except as contemplated hereby, amend, modify, consummate or equivalent organizational documentsredeem the Rights Agreement or Rights; or (iii) split, combine or reclassify any shares of its outstanding capital stock; or (iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property, or redeem or otherwise acquire any shares of its capital stock or shares of the capital stock of any of Company Subsidiaries; (bc) neither Company nor any of Company Subsidiaries shall (i) authorize for issuance, issue, sell, pledge, dispose of, grant, encumberencumber or sell any additional shares of, or authorize the issuancerights of any kind to acquire, sale, pledge, disposition, grant or encumbrance of (i) any shares of or securities convertible or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, its capital stock of any class (whether through the issuance or granting of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stockcommitments, or any other ownership interest (includingsubscriptions, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiaryotherwise), except for sales unissued Shares which may be issued upon the exercise or conversion of outstanding rights, options and debentures referred to in the ordinary course of business and in a manner consistent with past practice; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assetsSection 6.2 hereof; (ii) incur except as otherwise permitted herein acquire, dispose of, transfer, lease, guarantee, license, mortgage, pledge or encumber any fixed or other assets in excess of $200,000 in any one or a series of related transactions or more than $1,000,000 in the aggregate other than ordinary course acquisitions of supplies used in the day-to-day operations of Company; (iii) incur, assume or prepay any indebtedness for borrowed money or issue any debt securities or other material liabilities; (iv) assume, guarantee or endorseguarantee, pledge in respect of endorse or otherwise as an accommodation become liable or responsible (whether directly, contingently or otherwise) for the obligations of any person, or make any loans or advances, except other person other than a wholly-owned Company Subsidiary in the ordinary course of business and consistent with past practicepractices in an amount in excess of $1,000,000 in the aggregate; (v) make any loans, but advances or capital contributions to, or investments in, any other person in no event shall there be an amount in excess of $200,000 in any one or a series of related transactions or more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagementaggregate; (vi) authorize capital expenditures (other than the proposed presently budgeted capital expenditures described in set forth on Schedule 5.01(e7.1(c)) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 200,000 in any one or capital expenditures which are, a series of related transactions or $500,000 in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e)of the foregoing; (fd) increase neither Company nor any of Company Subsidiaries shall make any change in the compensation payable or to become payable to any of its directorsofficers, officers directors or employees, except for normal increases consistent with past practices in salaries or wages of employees of the Company or any Subsidiary who are not officers of the Companypursuant to existing agreements, or grant any severance or termination pay to, or enter into or amend any employment, severance, termination, stay-bonus or similar agreement with, any director, officer termination or other employee of the Company or similar agreement, adopt any Subsidiary, or establish, adopt, enter into new Plan or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including existing Plan or voluntarily accelerate the vesting of any sales compensation plan), stock optionoptions, restricted stock, pension, retirement, deferred compensation, employment, termination, severance stock or other plancompensation or benefit or make any loans to any of its officers, agreementdirectors or employees or make any changes in its existing borrowing or lending arrangements for or on behalf of any of such persons, trustwhether contingent on consummation of the Merger or otherwise, fundother than as may be required under applicable law or the terms of any existing Plan or agreement provided, policy or arrangement however, that Company and Company Subsidiary may amend any Plan to provide for the benefit effectuation thereof immediately prior to the expiration of the Amended Offer and/or the Effective Time so long as the amounts payable thereunder, individually or in the aggregate, are not increased. (e) neither Company nor any directorCompany Subsidiary shall settle or compromise any material claims or litigation or, officer except in the ordinary and usual course of business, modify, amend or employeeterminate any of its material Contracts or waive, release or assign any material rights or claims; (f) neither Company nor any Company Subsidiary shall take, or communicate omit to employeestake, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Planaction that is reasonably likely to cause any representation and warranty of Company in this Agreement to become untrue in any material respect; (g) take neither Company nor any actionCompany Subsidiary shall make any Tax election or permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to Purchaser, other than (i) reasonable and usual actions except in the ordinary and usual course of business and consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable);business; and (h) make neither Company nor any tax election Company Subsidiary will authorize or settle or compromise enter into an agreement to do any material federal, state, local or foreign income tax liability; (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than of the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orforegoing.

Conduct of Business Pending the Merger. SECTION 5.01. 6.1 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees thatExcept as otherwise contemplated by this Agreement, between after the date hereof and prior to the Closing Date or earlier termination of this Agreement and the Effective TimeAgreement, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries shall be conducted only inshall, and the Company and the Subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company shall use cause its best efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, 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. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose to do, any of the following without the prior written consent of Parentsubsidiaries to: (a) amend or otherwise change its Articles of Incorporation or Bylaws or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, or authorize the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares of capital stock of any class of the Company or any Subsidiary, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) or (ii) any material assets of the Company or any Subsidiary, except for sales conduct their respective businesses in the ordinary and usual course of business and in a manner consistent with past practice; (cb) not (i) amend or propose to amend their respective charters or By-laws, (ii) split, combine or reclassify their outstanding capital stock or (iii) declare, set aside, make aside or pay any dividend or other distribution, distribution payable in cash, stock, property or otherwise, with respect except for the payment of dividends or distributions by a wholly owned subsidiary of the Company; (c) not issue, sell, pledge or dispose of, or agree to issue, sell, pledge or dispose of or otherwise cause to become outstanding, any additional shares of, or any options, warrants or rights of its any kind to acquire any shares of their capital stock of any class or any debt or equity securities convertible into or exchangeable for such capital stock;, except that the Company may issue shares (i) upon conversion of convertible securities and exercise of options outstanding on the date hereof and (ii) in connection with the potential acquisitions described in Schedule 6.1; ------------ (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; not (i) acquire (including, without limitation, by merger, consolidation, incur or acquisition of stock or assets or any other business combination) any corporation, partnership, other business organization or any division thereof or any assets; (ii) incur become contingently liable with respect to any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for the obligations of any person, or make any loans or advances, except other than (x) borrowings in the ordinary course of business and consistent with past practiceor (y) borrowings to refinance existing indebtedness, but in no event the terms of which shall there be more than $1,000,000 reasonably satisfactory to Parent, (ii) redeem, purchase, acquire or offer to purchase or acquire any shares of indebtedness outstanding at its capital stock or any one time in addition options, warrants or rights to the total amount acquire any of indebtedness outstanding as of the date of this Agreement; its capital stock or any security convertible into or exchangeable for its capital stock, (iii) enter into take any contract or agreement action which is outside would jeopardize the treatment of the ordinary course Merger as a pooling of businessinterests under APB 16, consistent with past practice, (iv) take or fail to take any action which requires payments by action or failure would cause the Company or its stockholders (except to the Subsidiaries extent that any stockholders receive cash in an aggregate amount lieu of more than U.S. $100,000fractional shares) to recognize gain or loss for federal income tax purposes as a result of the consummation of the Merger, (v) make any acquisition of any assets or businesses other than contracts or agreements relating to the purchase acquisitions of inventory by the Company or the Subsidiaries assets in the ordinary course of business, which contracts (vi) sell, pledge, dispose of or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel encumber any assets or permit any change in, or agree to any change in, any Material Contract, except businesses other than sales in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 for the Company and the Subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth of the foregoing; (e) use all commercially reasonable efforts to preserve intact their respective business organizations and goodwill, keep available the services of their respective present officers and key employees, and preserve the goodwill and business relationships with customers and others having business relationships with them and not engage in any action, directly or indirectly, with the intent to adversely impact the transactions contemplated by this Section 5.01(e)Agreement; (f) increase confer on a regular and frequent basis with one or more representatives of Parent to report operational matters of materiality and the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries or wages general status of employees of the Company or any Subsidiary who are ongoing operations; (g) not officers of the Company, or grant any severance or termination pay to, or enter into or amend any employment, severance, termination, stay-bonus or similar agreement with, any director, officer special pay arrangement with respect to termination of employment or other employee of similar arrangements or agreements with any directors, officers or key employees, except in the Company or any Subsidiary, or establish, ordinary course and consistent with past practice; (h) not adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employmenthealth care, termination, severance employment or other employee benefit plan, agreement, trust, fund, policy fund or arrangement for the benefit or welfare of any directoremployee or retiree, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, other than (i) reasonable and usual actions in the ordinary course of business and consistent with past practice or (ii) except as required by the SEC, to comply with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability;changes in applicable law; and (i) pay, discharge or satisfy any material claim, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, maintain with financially responsible and adequately capitalized insurance companies insurance coverage on its assets and its businesses in the ordinary course of business such amounts and against such risks and losses as are consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet or.

Conduct of Business Pending the Merger. SECTION 5.01. Section 7.01 Conduct of Business by the Company Pending the Merger. The Company covenants and agrees that, between From the date of this Agreement and the Effective Time, unless Parent hereof until such time as Parent’s designees shall otherwise agree in writing, the businesses constitute a majority of the Company Board, except as required or expressly permitted by this Agreement or as set forth in Section 7.01 of the Company Disclosure Schedule and except with the Subsidiaries prior written consent of Parent which consent shall not be conducted only inunreasonably withheld or delayed, the Company shall, and shall cause each of the Company and the Subsidiaries shall not take any action except inSubsidiaries, to conduct its business in the ordinary course of business and in a manner consistent with past practice; and the Company shall use its best commercially reasonable efforts to preserve substantially intact the business organization of the Company and the Subsidiaries, to keep available the services of the current officers, employees and consultants of the Company and the Subsidiaries and to preserve the current relationships of the Company and the Company Subsidiaries with customers, suppliers and other any persons with which the Company or any Company Subsidiary has significant business relations. By way of amplification and not limitationExcept as required, except as permitted or otherwise contemplated by this Agreement or by as set forth in Section 5.01 7.01 of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary shall, between the date of this Agreement and such time as Parent’s designees shall constitute a majority of the Effective TimeCompany Board, directly or indirectly do, or propose to do, do any of the following without the prior written consent of Parent, which consent shall not be unreasonably withheld or delayed: (a) amend or otherwise change its Articles any provision of Incorporation the Company Charter or Bylaws Company Bylaws, or equivalent similar organizational documentsor governance documents (whether by merger, consolidation or otherwise); (b) issue, sell, pledge, dispose of, grant, encumber, or authorize amend the issuance, sale, pledge, disposition, grant or encumbrance terms of (i) any shares of capital stock of any class of the Company or any SubsidiaryCompany Subsidiary (in each case, whether by merger, consolidation or otherwise); (c) (i) authorize for issuance, issue or sell or agree or commit to issue or sell any shares of any class of capital stock of the Company or any Company Subsidiary or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Company Subsidiary (except for including any “phantom” stock, “phantom” stock rights, stock appreciation rights or stock based performance units), other than the issuance of a maximum of 994,502 Company Common Shares issuable (A) pursuant to stock options Company Stock Awards and Company Warrants outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof, (B) or (ii) any material assets upon the award of the Company or any Subsidiary, except for sales Stock Awards granted in the ordinary course of business and in a manner consistent with past practice; practice to new hires and (C) upon the conversion of the Convertible Notes and upon exercise of the Call-Spread Warrants; (ii) repurchase, redeem or otherwise acquire any capital stock, securities or equity equivalents, except in connection with the exercise of the Company Hedge Options or upon the exercise of holders of Company Notes of their rights pursuant to Sections 3.02 of each of the indentures referred to in clauses (b) and (c) of the definition of “Indentures”; (iii) declare, set aside, make aside or pay any dividend dividends on, or make any other distributionactual, payable constructive or deemed distributions (whether in cash, stockshares, property or otherwise) in respect of, with respect to any of its shares of capital stock, other than dividends by any direct or indirect wholly owned Company Subsidiary to the Company or any other Company Subsidiary; or (iv) split, combine or reclassify any of its shares, stock or other equity interests or issue or authorize the issuance of any securities in respect of, in lieu of or in substitution for shares of its shares, stock or other equity interests; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire (including, without limitation, by merger, consolidation, or acquisition of stock equity interests or assets or assets, any other business combinationcombination or otherwise) any corporation, partnership, limited liability company, joint venture or other business organization (or division thereof) or any division thereof property, for a purchase price exceeding Twenty Five Million Dollars ($25,000,000) individually or Seventy Five Million Dollars ($75,000,000) in the aggregate; (e) sell, lease, license, transfer or otherwise dispose of any of its properties or assets, having a fair market value in excess of Twenty Five Million Dollars ($25,000,000) individually or Seventy Five Million Dollars ($75,000,000) in the aggregate, except (A) sales of inventory in the ordinary course of business, (B) pursuant to written Contracts in force on the date of this Agreement, (C) dispositions of obsolete or worthless assets; (iiD) pursuant to transactions solely among the Company and the Company Subsidiaries; (f) enter into any license agreement with respect to the Intellectual Property of a third person or any Company Intellectual Property, except in the ordinary course of business consistent with past practice and as would not materially restrict the Company or any of the Company Subsidiaries in the operation of their businesses as currently conducted or proposed by the Company to be conducted; (g) take (or omit to take) any action that adversely affects, or would reasonably be expected to adversely affect, any material patent or patent application, or abandon or permit to lapse any rights to any material patent or patent application, in each case, of the Company or any Company Subsidiary; (h) (i) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for or liable for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more person (other than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iiia Company Subsidiary) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000for borrowed money, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (ivA) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except indebtedness for borrowed money incurred in the ordinary course of business consistent with past practice; practice (vwhich shall be deemed to include, without limitation, draws or standby letters of credit under the Company’s line of credit facility or other similar lines of credit) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (viB) other than the proposed capital expenditures described indebtedness for borrowed money in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is an amount not in excess of U.S. Twenty Five Million Dollars ($100,000 or capital expenditures which are, 25,000,000) in the aggregate, in excess of U.S. $250,000 aggregate for the Company and the Company Subsidiaries taken as a whole; or (viiii) enter into make any loans, advances or amend capital contributions to, or investments in, any contractPerson in an amount in excess of Fifteen Million Dollars ($15,000,000) individually or Fifty Million Dollars ($50,000,000) in the aggregate, agreement, commitment other than in or arrangement with respect to any matter set forth in this direct or indirect wholly owned Company Subsidiary, except as permitted by Section 5.01(e7.01(d); (fi) except as required by applicable Law, materially amend or terminate any Company Material Contract or enter into any new Contract that, if entered into prior to the date of this Agreement, would have been required to be listed in Section 5.19 of the Company Disclosure Schedule as a Company Material Contract; (j) except as required by applicable Law or by the terms of the Plans, (i) increase the compensation payable or to become benefits payable to its current or former directors, officers or employeesemployees other than increases awarded to employees with an aggregate annual base salary of $250,000 or less, except for normal increases which are made in the ordinary course of business consistent with past practices in salaries practice or wages of employees of the Company (ii) grant to any current or any Subsidiary who are not officers of the Company, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus or similar agreement with, any former director, officer or other employee of the Company or of any SubsidiaryCompany Subsidiary any new severance, change of control or termination pay, grant any increase in, or otherwise alter or amend, any right to receive any severance, change of control or termination pay or benefits or establish, adopt, enter into or amend any Plan, agreement or arrangement relating to benefits under any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, loan, retention, consulting, indemnification, termination, severance or other similar plan, agreement, trust, fund, policy or arrangement for the benefit of with any current or former director, officer or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (gk) take except as required by Law or changes in GAAP which become effective after the date of this Agreement, or as recommended by the Company’s audit committee or independent auditors, in which case the Company shall notify Parent, materially change any actionof its accounting policies (whether for financial accounting or Tax purposes); (l) except as required by Law or changes in GAAP which become effective after the date of this Agreement, change an annual Tax accounting period, adopt or materially change any Tax accounting method, file any material amended Tax Return, or settle a material Tax claim or assessment, in each case, relating to the Company or a Company Subsidiary; (m) authorize, or enter into any commitment for, any new material capital expenditure (such authorized or committed new material capital expenditures being referred to hereinafter as the “Capital Expenditures”) other than (i) reasonable Capital Expenditures set forth on Section 7.01(m) of the Company Disclosure Schedule and usual actions (ii) any other individual Capital Expenditures not exceeding Twenty Five Million Dollars ($25,000,000) in the ordinary course of business and consistent aggregate; (n) pay, discharge, settle or satisfy any material litigation, arbitrations, proceedings, claims, liabilities or obligations (including with past practice respect to Company Intellectual Property) other than any settlement, payment, discharge or satisfaction where the amounts paid or to be paid (i) are covered by insurance coverage maintained by the Company or (ii) as required by in an amount less than Twenty Five Million Dollars ($25,000,000) in the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)aggregate; (ho) make any tax election fail to use commercially reasonable efforts to maintain existing insurance policies or settle or compromise any material federal, state, local or foreign income tax liabilitycomparable replacement policies to the extent available for a reasonable cost; (ip) payadopt a plan or agreement of complete or partial liquidation or dissolution, discharge merger, consolidation, recapitalization or satisfy other similar reorganization; (q) withdraw or modify, nor permit the withdrawal or modification of, the Compensation Arrangement Approvals; or (r) announce an intention, enter into any material claimagreement or otherwise make a commitment, liability or obligation (absolute, accrued, asserted or unasserted, contingent or otherwise), other than to do any of the payment, discharge or satisfaction, in the ordinary course of business and consistent with past practice, of liabilities reflected or reserved against in the 1998 Balance Sheet orforegoing.

Conduct of Business Pending the Merger. SECTION 5.01. 5.1 Conduct of Business by of the Company Pending the Merger. The Company covenants and agrees that, between during the period from the date of this Agreement and hereof to the Effective Time, unless Parent shall otherwise agree in writing, the businesses of the Company and the Subsidiaries its subsidiaries shall be conducted only in, and the Company and the Subsidiaries its subsidiaries shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company and its subsidiaries shall each use its reasonable best efforts to preserve substantially intact the business organization of the Company and the Subsidiariesits subsidiaries, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries its subsidiaries and to preserve the current present relationships of the Company and the Subsidiaries its subsidiaries with customers, suppliers and other persons with which the Company or any Subsidiary of its subsidiaries has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure Schedule, neither the Company nor any Subsidiary of its subsidiaries shall, between the date of this Agreement and the Effective Time, directly or indirectly do, or propose commit to do, any of the following without the prior written consent of Parent: (a) amend Amend or otherwise change its Articles certificate of Incorporation incorporation or Bylaws by-laws or equivalent organizational documents; (b) issueIssue, deliver, sell, pledge, dispose of, grant, of or encumber, or authorize or commit to the issuance, sale, pledge, disposition, grant disposition or encumbrance of of, (iA) any shares of capital stock of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares of such capital stock, or any other ownership interest (including, without limitation, any including but not limited to stock appreciation rights or phantom intereststock), of the Company or any Subsidiary of its subsidiaries (except for the issuance of a maximum up to 1,749,829 shares of 994,502 Shares issuable Company Common Stock required to be issued pursuant to stock options (1) the terms of Options outstanding or any rights to purchase Shares as of April 16, 1997, (2) the employment agreement effective July 1, 1996 between the Company and Thomxx X. XxXxxxxxx, xxd (3) the plan under the Company's 1995 Employee Stock Purchase Plan which non-employee directors are paid one-half of their annual retainer in effect on the date hereofshares of Company Common Stock) or (iiB) any material assets of the Company or any Subsidiaryof its subsidiaries, except for sales of products in the ordinary course of business and in a manner consistent with past practice; (c) declareDeclare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stockstock (other than (1) regular quarterly dividends consistent with past practice, in an amount not to exceed $.20 per share and (2) the distribution of Rights pursuant to the Rights Plan); (d) reclassifyReclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stock; (i) acquire Acquire (including, without limitation, by merger, consolidation, or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, partnership or other business organization or any division thereof or any assetsthereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee or endorse, pledge in respect of or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans loans, advances or advancescapital contributions to, except or investments in, any other person (other than in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement); (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; or (viv) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 1,500,000 or capital expenditures (during any three month period) which are, in the aggregate, in excess of U.S. $250,000 7,500,000 for the Company and the Subsidiaries its subsidiaries taken as a whole; or (vii) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter set forth in this Section 5.01(e); (f) Except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement, increase the compensation payable or to become payable to fringe benefits of any of its directors, officers or employees, except for normal increases consistent with past practices in salaries salary or wages of employees of the Company or any Subsidiary its subsidiaries who are not officers of the CompanyCompany in the ordinary course of business in accordance with past practice, or grant any severance or termination pay to, not currently required to be paid under existing severance plans to or enter into any employment, severance, termination, stay-bonus consulting or similar severance agreement with, or arrangement with any present or former director, officer or other employee of the Company or any Subsidiaryof its subsidiaries, or establish, adopt, enter into or amend or terminate any collective bargainingbargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directordirectors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take Except as may be required as a result of a change in law or in generally accepted accounting principles, change any action, other than (i) reasonable and usual actions in of the ordinary course of business and consistent with past practice accounting practices or (ii) as required principles used by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment of accounts payable and collection of accounts receivable)it; (h) make Make any material tax election or settle or compromise any material federal, state, local or foreign income tax liability; (i) paySettle or compromise any pending or threatened suit, action or claim which is material or which relates to the transactions contemplated hereby; (j) Adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its subsidiaries not constituting an inactive subsidiary (other than the Merger); (k) Pay, discharge or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, satisfaction (1) in the ordinary course of business and consistent with past practice, practice of liabilities reflected or reserved against in the 1998 Balance Sheet financial statements of the Company or incurred in the ordinary course of business and consistent with past practice and (2) of liabilities required to be paid, discharged or satisfied pursuant to the terms of any contract in existence on the date hereof (including, without limitation, benefit plans relating to directors); or (l) Take, or offer or propose to take, or agree to take in writing or otherwise, any of the actions described in Sections 5.1(a) through 5.1(k) or any action which would make any of the representations or warranties of the Company contained in this Agreement untrue and incorrect as of the date when made if such action had then been taken, or would result in any of the conditions set forth in Annex A not being satisfied.

Conduct of Business Pending the Merger. SECTION 5.01Section 6.1. Conduct of Business by the Company Target Pending the Merger. The Company Target covenants and agrees that, between the date of this Agreement and the Effective Time, unless Parent shall otherwise agree in writing, the businesses business of the Company and the Subsidiaries Target shall be conducted only in, and the Company and the Subsidiaries Target shall not take any action except in, the ordinary course of business and in a manner consistent with past practice; and the Company Target shall use its best efforts to preserve substantially intact the business organization of the Company and the SubsidiariesTarget, to keep available the services of the current present officers, employees and consultants of the Company and the Subsidiaries Target and to preserve the current present relationships of the Company and the Subsidiaries Target with customers, suppliers and other persons with which the Company or any Subsidiary Target has significant business relations. By way of amplification and not limitation, except as contemplated by this Agreement or by Section 5.01 of the Disclosure ScheduleAgreement, neither the Company nor any Subsidiary shall, between the date of this Agreement and the Effective TimeTarget shall not, directly or indirectly indirectly, do, or propose to do, any of the following without the prior written consent of Parent, which consent shall not be unreasonably withheld: (a) amend or otherwise change its Articles of Incorporation Organization or Bylaws Regulations, or equivalent organizational documents; (b) issue, sell, pledge, dispose of, grant, encumber, encumber or authorize the issuance, sale, pledge, disposition, grant disposition or encumbrance of (i) any shares of capital stock ownership interests of any class of the Company or any Subsidiaryclass, or any options, warrants, convertible securities or other rights of any kind to acquire any shares ownership interests of such capital stock, or any other ownership interest (including, without limitation, any phantom interest), of the Company or any Subsidiary (except for the issuance of a maximum of 994,502 Shares issuable pursuant to stock options outstanding or any rights to purchase Shares under the Company's 1995 Employee Stock Purchase Plan in effect on the date hereof) Target or (ii) any assets of Target or any other material assets of the Company or any Subsidiary, except for sales Target other than in the ordinary course of business and in a manner consistent with past practicepractices; (c) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stockownership interests; (d) reclassify, combine, split, subdivide or redeem, purchase or otherwise acquire, directly or indirectly, any of its capital stockownership interests; (i) acquire (including, without limitation, by merger, consolidation, consolidation or acquisition of stock or assets or any other business combinationassets) any corporation, partnership, partnership or other business organization or any division thereof or any assetsthereof; (ii) incur any indebtedness for borrowed money or issue any debt securities or assume, guarantee guaranty or endorse, pledge in respect of endorse or otherwise as an accommodation become responsible for for, the obligations of any person, or make any loans or advances, except in the ordinary course of business and consistent with past practice, but in no event shall there be more than $1,000,000 of indebtedness outstanding at any one time in addition to the total amount of indebtedness outstanding as of the date of this Agreement; (iii) enter into any contract or agreement which is outside of the ordinary course of business, consistent with past practice, or which requires payments by the Company or the Subsidiaries in an aggregate amount of more than U.S. $100,000, other than contracts or agreements relating to the purchase of inventory by the Company or the Subsidiaries in the ordinary course of business, which contracts or agreements will not be subject to such $100,000 limitation; (iv) terminate, cancel or permit any change in, or agree to any change in, any Material Contract, except in the ordinary course of business consistent with past practice; (v) terminate, cancel or permit any change in, or agree to any change in, any Affiliate Agreement, Broker Agreement or Attorney Engagement; (vi) other than the proposed capital expenditures described in Schedule 5.01(e) of the Disclosure Schedule, authorize any single capital expenditure which is in excess of U.S. $100,000 1,000 or capital expenditures which are, in the aggregate, in excess of U.S. $250,000 3,000 for the Company and the Subsidiaries taken as a wholeTarget; or (viiiv) enter into or amend any contract, agreement, commitment or arrangement with respect to any matter of the effects set forth in this paragraph (e) of Section 5.01(e)6.1; (f) increase the compensation payable or to become payable to its directors, officers or employees, except for normal increases consistent with past practices in salaries salary or wages of employees of the Company or any Subsidiary Target who are not officers of the CompanyTarget in accordance with past practices, or grant any severance or termination pay to, or enter into any employment, severance, termination, stay-bonus employment or similar severance agreement with, any director, director or officer or other employee of the Company or any SubsidiaryTarget, or establish, adopt, enter into or amend any collective bargaining, bonus, profit sharing, thrift, compensation (including any sales compensation plan)compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directordirectors, officer officers or employee, or communicate to employees, accrue any benefits under or otherwise implement the Company's 1999 Executive Incentive Plan; (g) take any action, action other than (i) reasonable and usual actions in the ordinary course of business and in a manner consistent with past practice or (ii) as required by the SEC, with respect to accounting policies or procedures (including, without limitation, procedures with respect to the payment payments of accounts payable and collection of accounts receivable); (h) make any tax election or settle or compromise any material federal, state, local or foreign income tax liability;; or (i) pay, discharge discharge, compromise or consent to any arrangements concerning or satisfy any material claimclaims, liability liabilities or obligation obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge discharge, compromise, settlement, arrangement or satisfaction, satisfaction in the ordinary course of business and consistent with past practice of liabilities reflected or reserved against in the financial statements of Target or incurred in the ordinary course of business and consistent with past practice. Section 6.2. Conduct of Business by Parent and Acquiror Pending the Merger. Parent and Acquiror covenant and agree that, between the date of liabilities reflected this Agreement and the Effective Time, Parent shall not sell or reserved against in the 1998 Balance Sheet orotherwise dispose of all or substantially all of its assets.