Common use of Interim Operations of the Company Clause in Contracts

Interim Operations of the Company. The Company covenants and agrees that, except (i) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. (a) The Company hereby covenants and agrees agrees, as to itself and its Subsidiaries, that, except from the date hereof until the Effective Time: (i) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only conduct and operate their respective business in all material respects in the ordinary and usual course of business in a manner consistent with past practice practices; (including payment of accounts payableii) to the extent consistent with (a)(i) above, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its their reasonable best efforts to (i) preserve their business organization substantially intact the business organization and assets of the Company maintain existing relationships and its Subsidiariesgoodwill with contract parties, (ii) keep available the services of the present customers, distributors, creditors, lessors, principal officers and key officers, employees and consultants of the Company and its Subsidiaries, employees; and (iii) preserve the present relationships of the Company and its Subsidiaries with customersshall use their reasonable best efforts to maintain and keep their properties and assets in as good repair and condition as at present, suppliers ordinary wear and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer;tear excepted. (b) The Company hereby covenants and agrees, as to itself and its Subsidiaries, that, from the date hereof until the Effective Time, (except as otherwise expressly contemplated by this Agreement or as set forth in Section 6.1(b) of the Company will not, directly or indirectly, Disclosure Schedule) without the prior written consent of Parent: (i) sellthe Company shall not, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of and shall cause its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shallnot to: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iiA) issue, deliver, sell, pledge, dispose of or encumber any additional capital stock owned by it in any of its Subsidiaries; (B) amend its certificate of incorporation or bylaws; (C) adjust, split, combine or reclassify its outstanding shares of stock, or effect any reorganization or recapitalization of its capital stock; (D) authorize, declare, set aside or pay any dividend payable in cash, stock or property in respect of any capital stock; or (E) repurchase, redeem or otherwise acquire, except in connection with any Company Option or Company Warrant, or permit any of its Subsidiaries to purchase or otherwise acquire, any shares of its stock or any securities convertible into or exchangeable or exercisable for any shares of its capital stock; (ii) neither the Company nor any of its Subsidiaries shall (A) issue, grant, sell, pledge, dispose of or encumber any (1) shares of, or securities convertible into or exchangeable or exercisable for, or options, warrants, calls, commitments or rights of any kind to acquire, acquire any shares of of, its capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance Shares issuable pursuant to Company Options and Company Warrants outstanding on the date hereof upon the exercise of outstanding Optionshereof), or (2) securities convertible into or exchangeable for any other property or assets; (iiiB) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any other property or assets that are material to the Company and its Subsidiaries, taken as a whole; or (C) make or authorize or commit for any capital expenditures other than in amounts less than One Hundred Thousand Dollars ($100,000) in the aggregate; or (D) make any acquisition of, or encumber investment in, the assets or stock of any material assets, whether tangible other Person or intangible, entity (other than sales of products in the a Subsidiary) except for ordinary and usual course of business and investment activities consistent with past practice; (iv) incur or modify any indebtedness or other practice and not in the aggregate, material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereofamount; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (eiii) neither the Company nor any of its Subsidiaries shall permit terminate, establish, adopt, enter into, make any material insurance policy naming it new grants or awards under, amend or otherwise modify, any Company Compensation and Benefit Plans or increase the salary, wage, bonus or other compensation of any employee, provided that, the Company may hire, in the ordinary and usual course of its business, non-executive employees of the Company at an annual salary not to exceed One Hundred Thousand Dollars ($100,000) as a beneficiary or a loss payable payee to be canceled or terminated except any single individual and Five Hundred Thousand Dollars ($500,000) in the aggregate provided that the Company shall give Parent notice of any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiarieshiring under this Section 6.1(b)(iii); (fiv) neither the Company nor any of its Subsidiaries shall (i)acquire A) incur any obligation of indebtedness for borrowed money, whether or not evidenced by a note, bond, debenture or similar instrument, (by merger, consolidation, acquisition of stock or assets or otherwiseB) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise as an accommodation become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, Person other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of Company’s business consistent with past practice, which in (C) take any event would either (a) involve aggregate consideration under such bidaction to modify any material indebtedness, proposal, contract or agreement in excess of $2 million or (bD) be a bid, proposal make or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize forgive any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect loans to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)Person; (gv) neither the Company nor any of its Subsidiaries shall (A) make, rescind or change any Tax election, settle any material Tax audit or file any material amended Tax Returns, or (B) revalue any of the its assets or change any accounting methods principle used by it unless except, in each case, as may be required by GAAPto be implemented pursuant to GAAP or applicable rules and regulations of the SEC; (hvi) neither the Company nor any of its Subsidiaries will shall enter into any agreement containing any provision or covenant limiting in any material respect the ability of the Company or any Subsidiary to (A) sell any products or services of or to any other Person, (B) engage in any line of business, or (C) compete with any Person; (vii) neither the Company nor any of its Subsidiaries shall adopt a plan of complete complete, nor shall their respective Board of Directors adopt partial, liquidation or partial liquidation, resolutions providing for or authorizing such a liquidation or a dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of reorganization; (viii) neither the Company or nor any of its Subsidiaries (other than the Merger)shall take any action that would cause any of its representations and warranties herein to become untrue in any material respect, except as may be required by applicable law; (iix) the Company shall not modify, amend or terminate, or waive, release or assign any material rights or claims under any (A) Company Material Contract, or (B) except to the extent required under existing employee and director benefit plansin compliance with Section 6.4 hereof, agreements any confidentiality or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, standstill agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employers; (jx) make or change neither the Company nor any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) of it Subsidiaries shall settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby;claim; and (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nxi) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will shall authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that(a) During the Pre-Closing Period, except (w) as otherwise expressly required or permitted hereby, (x) with the prior written consent of the Parent (which the Parent shall not unreasonably withhold, delay, or condition), (y) as required by applicable Law, or (z) as set forth in Section 6.1(a) of the Company Disclosure Letter, the Company shall (and shall cause each of the Company Subsidiaries to), subject to Sections 6.1(b) and (c): (i) as permitted by this Agreement, carry on the Company Business in the Ordinary Course; (ii) as indicated on Schedule 5.1, or use its commercially reasonable efforts to preserve substantially intact each Company Entity’s current business organization; (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its commercially reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present such Company Entity’s current officers and key officers, employees and consultants of the preserve and maintain such Company and its Subsidiaries, (iii) preserve the present relationships of the Entity’s existing relations with such Company and its Subsidiaries with Entity’s customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relationssuppliers, creditors; and (iv) maintain net cash cooperate with the Parent in connection with the Parent’s renegotiation with the respective contract counterparties of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer;Entities. (b) During the Pre-Closing Period, except (w) as otherwise expressly required or permitted hereby, (x) with the prior written consent of the Parent (which the Parent shall not unreasonably withhold, delay, or condition), (y) as required by applicable Law, or (z) as set forth in Section 6.1(b) of the Company will notDisclosure Letter, directly or indirectly, the Company shall not (and shall cause each of the Company Subsidiaries not to): (i) sell, transfer or pledge or agree enter into any new line of business material to sell, transfer or pledge any Shares or capital stock of any of it and its Subsidiaries beneficially owned by it, either directly or indirectly; taken as a whole; (ii) amend its Certificate of Incorporation make capital expenditures that are more than $25,000 individually or By-laws or similar organizational documents; or $100,000 in the aggregate; (iii) splitamend, combine violate, or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Companybreach such Company Entity’s Organizational Documents; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside aside, or pay any dividend or other distribution distribution, whether payable in cash, stock stock, or any other property or right, with respect to its such Company Entity’s capital stock; except that this Section 6.1(b)(iv) will not prohibit the Company from paying dividends to the Company Series B Preferred Stock Holders in accordance with the Charter; (iiv) (1) adjust, split, combine, or reclassify any capital stock or issue, delivergrant, sell, transfer, pledge, dispose of of, or encumber any additional shares ofof capital stock of any class, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or of the Company any other such securities or its Subsidiariesagreements, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v2) redeem, purchase purchase, or otherwise acquire directly or indirectly any of its such Company Entity’s capital stock or rights any other securities or agreements of the type described in respect thereofthe immediately foregoing clause (1), except shares of Company Common Stock that are withheld to satisfy applicable tax withholding requirements; except that (x) the Company is permitted to combine the Company Capital Stock as necessary in order to satisfy Nasdaq continued listing requirements, (y) for the avoidance of doubt, the Company is permitted to issue shares of Company Common Stock to any Company Series B Preferred Stock Holder, Company Option Holder, or Warrant Holder (or any of the foregoing) in connection with the exercise, conversion, or cancellation, as the case might be, of such Holder’s Company B Series Preferred Stock, Company Option, or Warrant, respectively, and (z) this Section 6.1(b)(v) will not prohibit the Company from paying dividends in shares of Company Capital Stock to the Company Series B Preferred Stock Holders in accordance with the Charter; (dvi) (1) enter into, adopt, amend, renew, or terminate any Benefit Plan or any other benefit plan or arrangement of any Company Entity, (2) except as disclosed required by the terms of any Benefit Plan as in effect as of the Signing Date, and except with respect to non-executive officer employees, independent contractors, and consultants in the Ordinary Course, increase in any manner the compensation, bonus, or fringe or other benefits of, or pay any bonus of any kind or amount to, any current or former director, officer, employee, independent contractor, consultant or Affiliate; except that each Company Entity shall not make any equity or equity-based grants, (3) pay any benefit or amount not required under any Benefit Plan or any other benefit plan or arrangement of any Company Entity as in effect on Schedule 5.1(dthe Signing Date, (4) grant or pay any severance or termination pay or increase in any manner the severance or termination pay of any current or former director, officer, employee, independent contractor, consultant or Affiliate, (5) except as required to comply with law or with any agreement or policy in existence as of the Signing Date in the Ordinary Course, (A) grant any awards under any bonus, incentive, performance, or other compensation plan or arrangement or Benefit Plan (including the grant of any equity or equity-based awards), neither (B) take any action to fund or in any other way secure the payment of compensation or benefits under any employee plan, agreement, contract, or arrangement or Benefit Plan, or (C) take any action to accelerate the vesting or payment of any compensation or benefit under any Benefit Plan. (vii) enter into any employment Contract (other than at-will employment arrangements), compensation Contract, or change of control Contract with any Person, including any Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign Entity’s employees; (viii) change in any material rights or claimsrespect such Company Entity’s methods of accounting in effect at December 31, 2011, except in the ordinary course of business and consistent accordance with past practicechanges in GAAP as concurred with by such Company Entity’s independent auditors; (eix) neither the Company nor any acquire an amount of its Subsidiaries shall permit any assets material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiariesby merging or consolidating with, or by purchasing an equity interest in or all or a significant portion of the assets or business of, any Person, or by any other means, other than in the Ordinary Course; (fx) neither the Company nor sell, lease, exchange, transfer or otherwise dispose of, or agree to sell, lease, exchange, transfer or otherwise dispose of, any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assumeexcept for (A) the sale of inventory or the leasing of equipment in the Ordinary Course and (B) sales to non-affiliated Persons in arms’-length transactions for not less than fair market value, guaranteenot less than book value, endorse and not in excess of $50,000 individually or otherwise become liable or responsible (whether directly, contingently or otherwise) for $250,000 in the material obligations of any other personaggregate, other than guarantees sales of obligations of wholly-owned Subsidiaries of the Company products and assets in the ordinary course of business; Ordinary Course; (iixi) make mortgage, pledge, hypothecate, grant any loans, advances or capital contributions tosecurity interest in, or investments inotherwise subject to any other Lien (other than Permitted Liens), any other personCompany Assets; (xii) pay, discharge, or satisfy any material Liabilities if such payment, discharge, or satisfaction would require any material payment, other than to wholly owned Subsidiaries the payment, discharge, or satisfaction of the Company liabilities or obligations in the ordinary course Ordinary Course or in accordance with the terms of business and consistent with past practice; any Material Contract as in effect on the Signing Date, or compromise, settle, or grant any waiver or release relating to any Action; (iiixiii) make except pursuant to the terms of any bid or proposalMaterial Contract as in effect on the Signing Date insofar as such agreement is referenced in Section 4.21, engage in any transaction with, or enter into any Contract with, directly or amend in indirectly, any Company Affiliate (except that, for the purpose of this clause (xiii) only, the term Company Affiliate excludes any employee of any Company Entity, other than directors and executive officers thereof and other than any employees who share the same household as any such directors and executive officers); (xiv) except as required by Law, make, change, or revoke any material respect Tax election, change any contract annual Tax accounting period, adopt or agreement other than change any Tax accounting method, file any Return in ordinary course of business consistent a manner that is materially inconsistent with past practice, which in amend any event would either (a) involve aggregate consideration under such bidReturn, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transactionclosing or similar agreement, contract surrender any right to claim a refund, offset, or commitment with other reduction in Taxes, settle any affiliate claim made by any Governmental Entity relating to Taxes, consent to any extensions or waivers of the Company; limitations period applicable to any claim for Taxes or (vi) Tax assessment, or enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)a Tax Sharing Agreement; (gxv) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (ixvi) except incur or otherwise become liable with respect to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to Indebtedness or enter into any employment, consulting or severance agreement or arrangement with Contracts that obligate any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) Entity to make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount cash expenditures in excess of $50,000 individually or which is material or which relates to $250,000 in the transactions contemplated herebyaggregate (except in connection with the purchase of products and equipment in the Ordinary Course); (lxvii) make enter into any change in Contract that materially restrains, limits, or impedes any Company Entity’s ability (or that would materially restrain, limit, or impede the key management structure ability of the Company Parent or any Parent Subsidiary following the Effective Time) to compete with or conduct any business or line of its Subsidiariesbusiness, including, without limitation, the hiring of additional officers including geographic limitations on any Company Entity’s activities (or the termination activities of existing officersthe Parent or any Parent Subsidiary following the Effective Time); (mxviii) pay, discharge or satisfy enter into any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), material Contract other than the payment, discharge or satisfaction in the ordinary course of business Ordinary Course, or modify or amend in accordance with the terms of such obligation any material respect, waive in any material respect, or liability and consistent with past practice of liabilities reflected assign any Company Entity’s rights or reserved against in the financial statements of the claims under, or terminate any material Contract to which any Company or incurred in the ordinary course of business and consistent with past practiceEntity is a party; (nxix) neither cause or permit, by any act or failure to act, any material Permit to expire or to be revoked, suspended, or modified, or knowingly take any action that causes, or that is reasonably likely to cause, any Governmental Entity to institute proceedings for the suspension, revocation, or adverse modification of any material Permit; (xx) fail to maintain any material property in customary repair, order, and condition, consistent with current maintenance policies, ordinary wear and tear excepted; (xxi) fail to maintain in full force and effect the existing insurance policies covering the Company nor any of its Subsidiaries will takeEntities or their respective properties, assets, and businesses or replacement policies that are comparable in all material respects, or agree to commit to take, knowingly take any action that would make cause any representation such policy to terminate or warranty be terminable prior to the expiration of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date)its stated term; or (oxxii) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement any Contract to do take any of the foregoing.actions otherwise prohibited by this Section 6.1

Interim Operations of the Company. The Except as expressly set forth in Section 5.1 of the Company covenants Disclosure Schedule, as expressly required pursuant to this Agreement (including with respect to the consummation of the Contribution and agrees that, except (ithe Spin-Off) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parentthe Purchaser, after from the date hereof, hereof until the earlier of (A) the valid termination of this Agreement in accordance with Article VIII hereto and prior to (B) the time the directors designees of the Purchaser have been elected to, and shall constitute a majority of, the Company Board of Directors pursuant to Section 1.3 (the "“Appointment Date"): (a) the business of ”), the Company shall, and its shall cause the Company Subsidiaries shall be conducted only to, (i) conduct the ADS Business in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiariespractice, (ii) use commercially reasonable efforts to preserve intact the ADS Business present business organizations, (iii) use commercially reasonable efforts to maintain satisfactory relations with and keep available the services of their current officers and other key employees who are employed in the present key officers, employees and consultants of the Company and its SubsidiariesADS Business, (iiiiv) preserve maintain in effect all material foreign, federal, state and local licenses, approvals and authorizations relating to the present relationships of ADS Business, the Company Acquired Assets or the Retained Liabilities, including all material licenses and its Subsidiaries with customers, suppliers and other persons with which permits that are required for the Company or any of its Subsidiaries has significant business relations, Company Subsidiary to carry on the ADS Business and (ivv) maintain net cash use commercially reasonable efforts to preserve existing relationships with material customers, lenders, suppliers, distributors and others having material ADS Business relationships with the Company and the Company Subsidiaries. Without limiting the generality of the foregoing, except as expressly set forth in Section 5.1 of the Company and its Subsidiaries of at least $10 million Disclosure Schedule, as expressly required pursuant to this Agreement (without giving effect including with respect to any transaction-related fees and expenses the consummation of the Financial AdvisorContribution and the Spin-Off) or as agreed in writing by the Purchaser, financial printers from the date hereof until the earlier of (x) the valid termination of this Agreement in accordance with Article VIII hereto and outside counsel not exceeding $1.35 million in (y) the aggregateAppointment Date, the Company shall not, nor shall it permit any Company Subsidiary to, directly or indirectly: (a) as amend the Company Governing Documents or equivalent documents of any Company Subsidiary or amend the terms of any outstanding security of the close of business on the date of the expiration of the OfferCompany or any Company Subsidiary; (b) the Company will notsplit, directly combine, subdivide, redeem or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge reclassify any Shares or shares of capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares Company or any outstanding capital stock of any of the Subsidiaries of the CompanyCompany Subsidiary; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to its capital stock; ; (iid) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any Equity Interests; (e) issue, deliver, sell, pledge, deliver, transfer, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or optionsgrant any Company Stock Rights, Restricted Stock or warrants, calls, commitments or rights of any kind to acquire, acquire any shares of of, capital stock of any class of the Company or its Subsidiariesclass, or grant to any Person any right the value of which is based on the value of Shares or other ownership interest (including stock appreciation rights and phantom capital stock), other than shares the issuance of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Company Stock Rights disclosed in Section 3.2(b) of the Company Disclosure Schedule and outstanding Options; on the date hereof in the ordinary course of business consistent with past practice of the Company Stock Plans (iiior, if a Triggering Event (as defined in the Company Rights Agreement) by a party other than the Purchaser shall occur, the Company Rights); (f) acquire (whether pursuant to merger, stock or asset purchase or otherwise) in one transaction or any series of related transactions (i) except in the ordinary course of business consistent with past practice, any assets (not constituting Excluded Assets) having a fair market value in excess of $25,000 or (ii) any Equity Interests in any Person or any business or division of any Person or all or substantially all of the assets of any Person (or business or division thereof); (g) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangibleAcquired Assets, other than (i) sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practicepractice and (ii) dispositions of equipment and property no longer used in the operation of the business; (eh) neither (i) (A) incur or assume any long-term or short-term indebtedness for borrowed money constituting Retained Liabilities, other than under the Company nor any Bank of its Subsidiaries shall permit America and General Electric Capital Corporation credit facilities referred to in the definition of “Retained Liabilities,” or (B) make any material insurance policy naming it as a beneficiary modification or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable amendment to the Company and its Subsidiaries; terms thereof; (fii) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of Person to the extent such obligations of wholly-owned Subsidiaries of the Company in the ordinary course of businessconstitute Retained Liabilities; or (iiiii) make any loans, advances or capital contributions to, or investments in, any other person, Person other than to (x) loans, advances or capital contributions to, or investments in, wholly owned Company Subsidiaries of the Company made in the ordinary course of business consistent with past practice or (y) loans, advances, capital contributions or investments that constitute Assumed Liabilities; (i) make any change in, or accelerate the vesting of, the compensation or benefits payable or to become payable to, or grant any severance or termination pay to, any of its directors or ADS Employees (other than increases in wages to employees who are not directors, executive officers or affiliates, in the ordinary course of business consistent with past practice or as required by applicable law or the terms of any agreement existing on the date hereof and other than the acceleration of the vesting of Company Options), other than as required by law enter into or amend any employment, consulting, severance, retention, change in control, termination pay, collective bargaining or other agreement or any equity based compensation, pension, deferred compensation, welfare benefits or other employee benefit plan or arrangement, or make any loans to any of its directors or ADS Employees or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to a Company Benefit Plan or otherwise; (j) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any director or ADS Employee or make any accrual or arrangement for payment to any directors of the Company or ADS Employees of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business consistent with past practice; (iii) make adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any bid pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, Company Stock Plan, stock purchase, group insurance, severance pay, retirement or proposalother employee benefit plan, agreement or arrangement, or enter into any employment or consulting agreement with or for the benefit of any Company director or ADS Employee, whether past or present, or amend in any material respect any contract such existing plan, agreement or agreement arrangement in a manner inconsistent with the foregoing; (k) except as publicly announced prior to the date hereof, plan, announce, implement or effect any material reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of ADS Employees other than routine employee terminations for cause or following performance reviews; (l) incur any capital expenditures relating to the ADS Business or any Retained Liabilities in respect thereof in excess of $20,000, individually, or $75,000, in the aggregate during any calendar month; (m) enter into any agreement or arrangement that limits or otherwise restricts the Company, any Company Subsidiary (other than the PPB Sub) or any of their present or future affiliates or any successor thereto from engaging or competing in any line of business or in any location; (n) enter into, amend, modify or terminate any material contract, agreement or arrangement (including any Company Material Contract) relating to the ADS Business, the Acquired Assets or the Retained Liabilities, or otherwise waive, release or assign any material rights, claims or benefits thereunder; (o) settle, pay or discharge any litigation, investigation, arbitration, proceeding or other claim relating to the ADS Business or Retained Liability, other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, which of such claims and Liabilities (i) expressly disclosed or reserved against in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement the most recent Company Financial Statements included in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder SEC Documents filed prior to the Company, (iv) authorize any single capital expenditure which is date hereof in excess of $250,000 or capital expenditures which are, in amounts no greater than the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction amount reserved with respect to any the relevant Liability therein or (ii) incurred in the ordinary course of business consistent with past practice since the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease date of assets)such financial statements; (gp) neither permit any insurance policy relating to the Company nor any of its Subsidiaries shall ADS Business naming it as a beneficiary or a loss payee to be cancelled or terminated without reasonable prior notice to the Purchaser; (q) change any of the accounting methods used by it unless materially affecting its assets, liabilities or business, except for such changes required by GAAPGAAP or Regulation S-X promulgated under the Exchange Act, as concurred in by its independent registered public accountants; (hr) neither revalue in any material respect any Acquired Assets, including writing down the Company nor value of inventory or writing down notes or accounts receivable, other than in the ordinary course of business consistent with past practice; (s) make or change any of its Subsidiaries will material Tax election, change an annual accounting period, adopt or change any accounting method, file any amended Tax Returns; (t) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries Company Subsidiary (other than the Mergeras contemplated by this Agreement); (iu) except to take any action, including the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees amendment of the Company Rights Agreement (other than as contemplated by this Agreement) or its Subsidiaries who are not officers the adoption of any other shareholder rights plan, which would, directly or indirectly, restrict or impair the ability of the Purchaser to vote, or otherwise to exercise the rights and receive the benefits of a shareholder with respect to, securities of the Company in the ordinary course of business in accordance with past practice, acquired or grant any retention, severance controlled or termination pay not currently required to be paid under existing severance plans to acquired or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of controlled by the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employersPurchaser; (jv) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit in writing or otherwise to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VII hereto or any of the conditions or requirements to the Offer set forth in Annex I not being satisfied, or would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as Time, or that would materially impair the ability of a specific date)the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation; orand (ow) neither the Company nor enter into any written agreement, contract, commitment or arrangement to do any of its Subsidiaries will authorize the foregoing, or enter into authorize, recommend, propose, in writing or announce an agreement intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except (i) as permitted contemplated by this Agreement, (ii) as indicated on Schedule 5.1, disclosed in Section 5.1 of the Company Disclosure Letter or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Board of Directors of the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner and, to the extent consistent with past practice (including payment therewith, each of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the in all material respects its business organization intact and assets of the Company and maintain its Subsidiariesexisting relations with customers, (ii) keep available the services of the present key officerssuppliers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerassociates; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate Articles of Incorporation or By-laws or similar organizational documents; or (iiiii) split, combine or reclassify the outstanding Shares Company Common Stock or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stockstock (other than dividends from any Subsidiary of the Company to the Company or any other Subsidiary of the Company); (ii) issue, deliver, sell, pledge, dispose of issue or encumber sell any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Company Common Stock reserved for issuance on the date hereof upon exercise of outstanding Rights pursuant to the Rights Agreement, issuances pursuant to the exercise of Options outstanding Optionson the date hereof, or issuances pursuant to the Company Convertible Notes; (iii) transfer, lease, licenseacquire, sell, mortgage, pledge, lease or dispose of, or encumber of any material assets, whether tangible or intangibleassets in excess of $5 million, other than sales of products in the ordinary and usual course of business and consistent with past practicebusiness; (iv) incur or modify any indebtedness or material debt, other material liability or issue any debt securitiesthan in the ordinary and usual course of business; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereofother than redemption of the outstanding Rights pursuant to the Rights Agreement; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modifyshall, except as may be required or contemplated by this Agreement or in the ordinary and usual course of business, terminate or materially amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practiceBenefit Plans; (e) neither the Company nor any of its Subsidiaries shall permit shall, except as contemplated by this Agreement, enter into, adopt or materially amend any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into employee benefit plans or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting employment or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement (except for the benefit of any directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change normal increases in the key management structure ordinary and usual course of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), business to persons other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nemployees listed as Tier I through Tier V on Schedule 5.4(b) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate hereof) increase in any material respect at, or as manner the compensation of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing.employees;

Interim Operations of the Company. The Except as expressly set forth in Section 5.1 of the Company covenants and agrees thatDisclosure Schedule, except (i) as permitted by expressly required pursuant to this Agreement, (ii) in the ordinary course of business consistent with past practice as indicated on Schedule 5.1, to matters which would not require the approval of the Company Board of Directors or (iii) as agreed in writing by Parent, after from the date hereof, hereof until the earlier of (A) the valid termination of this Agreement in accordance with Article VIII hereto and prior (B) the acceptance of Shares for payment pursuant to the time Offer (the directors of “Consummation Date”), the Purchaser have been elected toCompany shall, and shall constitute a majority of, cause the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payableto, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its commercially reasonable best efforts to (i) conduct their businesses in all material respects in the ordinary course consistent with past practice, (ii) preserve substantially intact the their present business organization organizations, and assets of the Company and its Subsidiaries, (iiiii) keep available the services of the present their current officers and other key officers, employees and consultants preserve relationships with material customers, suppliers, distributors and others having material business relationships with the Company and the Company Subsidiaries. Without limiting the generality of the foregoing, except as expressly set forth in Section 5.1 of the Company and its SubsidiariesDisclosure Schedule, (iii) preserve as expressly required pursuant to this Agreement, in the present relationships ordinary course of business consistent with past practice which would not require the approval of the Company Board of Directors or as agreed in writing by Parent, from the date hereof until the earlier of (x) the valid termination of this Agreement in accordance with Article VIII hereto and its Subsidiaries with customers(y) the Consummation Date, suppliers and other persons with which the Company shall not, nor shall it permit any Company Subsidiary to, directly or indirectly: (a) amend the Company Governing Documents or equivalent documents of any Company Subsidiary or amend the terms of any outstanding security of the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the OfferSubsidiary; (b) the Company will notsplit, directly combine, subdivide or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge reclassify any Shares or shares of capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares Company or any outstanding capital stock of any of the Subsidiaries of the CompanyCompany Subsidiary; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to its capital stock; stock except (i) for regular quarterly cash dividends (having customary record and payment dates not in excess of $0.175 per Share) and (ii) except as required to effect the transactions (the “HIA Dividend”) described in Section 6.10; (d) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any Equity Interests (other than the withholding of Equity Interests to satisfy withholding tax or exercise price obligations with respect to awards under the Company Stock Plan), except pursuant to agreements entered into prior to the date hereof; (e) issue, deliver, sell, pledge, deliver, transfer, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or optionsgrant any Company Stock Rights, Restricted Stock or warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiariesclass, or grant to any Person any right the value of which is based on the value of Shares or other ownership interest (including stock appreciation rights and phantom capital stock), other than shares the issuance of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Company Stock Rights disclosed in Section 3.3(b) of the Company Disclosure Schedule and outstanding Options; on the date hereof in the ordinary course of business consistent with past practice of the Company Stock Plans; (iiif) acquire (whether pursuant to merger, stock or asset purchase or otherwise) in one transaction or any series of related transactions except in the ordinary course of business consistent with past practice, (i) any assets having a fair market value in excess of $50 million or (ii) any equity interests in any Person or any business or division of any Person or all or substantially all of the assets of any Person (or business or division thereof), in each case having a fair market value in excess of $50 million; (g) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangibleassets having a fair market value in excess of $50 million, other than sales of products in the ordinary and usual course of business and consistent with past practice; (ivi) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice, (ii) dispositions of equipment and property no longer used in the operation of the business, (iii) dispositions of assets related to discontinued operations as reflected in Company SEC Documents filed prior to the date hereof and (iv) pursuant to borrowings reasonably necessary to effect the HIA Dividend; (eh) neither (i) (A) incur or assume any long-term or short-term indebtedness, issue any industrial revenue bonds or enter into any capital lease except for (1) borrowings under the Company nor Company’s existing revolving credit facility (or any replacement facility therefor) in the ordinary course of its Subsidiaries shall permit business consistent with past practice, (2) pursuant to borrowings reasonably necessary to effect the HIA Dividend and (3) a renewal, amendment or replacement of the Company’s existing accounts receivable securitization facility or (B) make any material insurance policy naming it as a beneficiary modification or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable amendment to the Company and its Subsidiaries; terms thereof; (fii) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of businessPerson; or (iiiii) make any loans, advances or capital contributions to, or investments in, any other person, Person other than to loans, advance or capital contributions to, or investments in, wholly owned Company Subsidiaries of the Company made in the ordinary course of business and consistent with past practice; ; (iiii) make any bid or proposalchange in, or enter into accelerate the vesting of, the compensation or amend in benefits payable or to become payable to, or grant any material respect severance or termination pay to, any contract of its officers, directors, employees, agents or agreement consultants (other than (i) increases in wages to employees who are not directors, executive officers or affiliates, in the ordinary course of business consistent with past practice, which or (ii) as required by applicable law or the terms of any Company Stock Plan or agreement existing on the date hereof); or, other than as required by law, or in connection with the hiring of any new employee, enter into or amend any material employment, consulting, severance, retention, change in control, termination pay, collective bargaining or other agreement or any equity based compensation, pension, deferred compensation, welfare benefits or other employee benefit plan or arrangement; or make any loans to any of its officers, directors, employees, affiliates, agents or consultants (other than ordinary course relocation loans or loans from tax-qualified Benefit Plans); or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise; (j) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company or any Company Subsidiary of any amount relating to unused vacation days, except, in each case, payments and accruals made in the ordinary course of business consistent with past practice; other than as required by applicable law or in connection with the hiring of any new employee or promotion made in the ordinary course of business, adopt or pay, grant, issue, accelerate, adjust or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, Company Stock Plan, stock purchase, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any Company or any Company Subsidiary director, officer, employee, agent or consultant, whether past or present, or amend in any event would either material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing, except in the ordinary course of business consistent with past practice for individuals who are not directors or officers of the Company; (ak) involve aggregate consideration under such bidexcept as publicly announced prior to the date hereof, proposalplan, contract announce, implement or agreement effect any material reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of the Company or any Company Subsidiary other than routine employee terminations for cause or following performance reviews; (l) incur any capital expenditures or any obligations or liabilities in respect thereof in excess of $2 50 million individually, or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, 100 million in the aggregate, except those contemplated in excess of $1.0 million the capital expenditures budgets for the Company and its the Company Subsidiaries taken as a whole, set forth in Section 5.1(l) of the Company Disclosure Schedule; (vm) enter into any transaction, contract agreement or commitment with any affiliate of arrangement that limits or otherwise restricts the Company; , any Company Subsidiary or any of their present or future affiliates or any successor thereto from engaging or competing in any line of business or in any location; (vin) enter into into, amend, modify or terminate any Company Material Contract or otherwise waive, release or assign any material commitment rights, claims or transaction benefits thereunder; (o) settle, pay, discharge or propose to settle, pay or discharge, any material litigation, investigation, arbitration, proceeding or other claim, liability or obligation (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, of such claims, liabilities or obligations (i) expressly disclosed or reserved against in the most recent Financial Statements included in the Company SEC Documents filed or furnished (and publicly available) prior to the date hereof in amounts no greater than the amount reserved with respect to any the relevant liability therein or (ii) incurred in the ordinary course of business consistent with past practice since the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease date of assets)such financial statements; (gp) neither intentionally cause, without reasonable prior notice to Purchaser, any insurance policy naming it as a beneficiary or a loss payee to be cancelled or terminated that is not replaced or renewed in the Company nor any ordinary course of its Subsidiaries shall business; (q) change any of the accounting methods used by it unless materially affecting its assets, liabilities or business, except for such changes required by GAAPGAAP or Regulation S-X promulgated under the Exchange Act, as concurred in by its independent registered public accountants; (hr) neither the Company nor revalue in any material respect any of its Subsidiaries will assets, including writing down the value of inventory or writing down notes or accounts receivable, other than in the ordinary course of business consistent with past practice; (s) other than in the ordinary course of business consistent with past practice and except to the extent required by law, make or change any material Tax election (which for this purpose, Tax elections as to the classification of an entity for Tax purposes shall not be considered to be in the ordinary course of business), adopt or change any Tax accounting method or period, file any amended material Tax Return, enter into any closing agreement, settle or consent to any Tax Claim, take any affirmative action to surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax Claim; (t) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries Company Subsidiary (other than the Merger); (iu) except take any action, including the adoption of any shareholder rights plan, which would, directly or indirectly, restrict or impair the ability of Parent to vote, or otherwise to exercise the extent required under existing employee rights and director benefit plans, agreements or arrangements as in effect on receive the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directorsa shareholder with respect to, officers or employees, except for increases in salary or wages of employees securities of the Company acquired or its Subsidiaries who are not officers controlled or to be acquired or controlled by Parent or Purchaser in accordance with the terms of the this Agreement; (v) sell, lease, abandon, transfer, dispose of, or grant material rights under any material Company Intellectual Property or materially modify any existing rights with respect thereto, except in the ordinary course of business in accordance consistent with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employmentsettlement regarding (i) the infringement of any material Company Intellectual Property or (ii) the breach of any license agreements governing use of material Company Intellectual Property; and (w) enter into any written agreement, consulting or severance agreement contract, commitment or arrangement with to do any present or former director, officer or other employee of the Company or any of its Subsidiariesforegoing, or establishauthorize, adopt enter into recommend, propose, in writing or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for announce an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except Except (ia) as permitted expressly provided by this Agreement, (iib) as indicated on Schedule 5.1, required by Law or (iiic) as agreed in writing consented to by Parent, Parent after the date hereof, of this Agreement and prior to the time Effective Time (which consent shall not be unreasonably withheld, conditioned or delayed, except in the directors case of the Purchaser have been elected toclauses (i)(C), (ii), (iii), (iv), (vi), (x), (xi), (xii), (xiii) and shall constitute a majority of(xv) of this Section 5.1 below), the Company Board pursuant to Section 1.3 (the "Appointment Date"):covenants as follows: (ai) the Company and its Subsidiaries will conduct business in the ordinary course of business consistent with past practice and, to the extent consistent therewith, each of the Company and its Subsidiaries shall be conducted only in (A) preserve its business organizations intact, (B) use commercially reasonable efforts to maintain its existing relationships with customers, suppliers, employees, creditors and business partners, to keep available the ordinary services of its present officers and usual course of business in a manner consistent with past practice employees and to manage its working capital (including the payment of accounts payable, collection payable and the receipt of accounts receivable receivable), and inventory purchases(C) (i) file all Tax Returns required to be filed by it and pay all of its debts and Taxes when due and (ii) pay or perform its other liabilities when due, in compliance with applicable laws and each case, subject to good faith disputes over such debts, Taxes or liabilities; (ii) the Company and its Subsidiaries shall each use its reasonable best efforts will secure, safeguard and protect all inventory and minimize the risk of theft or other loss of or damage to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiariesany such inventory, provided that this clause (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which shall not prohibit the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million from engaging in the aggregate) as sale of inventory in the close ordinary course of business on the date of the expiration of the Offerto customers consistent with past practice; (biii) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) not amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the CompanyCompany Charter Documents and no Subsidiary will amend its Subsidiary Charter Documents; (civ) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: will (iA) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stockstock (other than by and among the Company and its Subsidiaries); (iiB) issue, deliversell, transfer, pledge, dispose of or encumber or agree to issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, puts, collars, commitments or rights of any kind to acquireacquire or sell (or stock appreciation rights with respect to), any shares of capital stock of any class of the Company or any of its Subsidiaries, or other ownership interest Subsidiaries (including stock appreciation rights and phantom treasury stock), other than in respect of the shares of Common Stock the Company’s capital stock reserved for issuance on the date hereof upon of this Agreement pursuant to the exercise of Options outstanding Options; on the date of this Agreement or the vesting of Company Restricted Shares, (iiiC) transfersplit, lease, license, sell, mortgage, pledge, dispose ofcombine or reclassify the Shares or any outstanding capital stock of any of the Subsidiaries, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (vD) redeem, purchase or otherwise acquire acquire, directly or indirectly indirectly, any of the Company’s capital stock; (v) except as required by applicable Law or under the terms of any Company Plan, the Company will not (A) make any changes in the compensation payable or to become payable to any of its capital stock officers, directors, employees, agents, consultants or rights other Persons providing management services (other than increases in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except wages in the ordinary course of business and consistent with past practice to employees of the Company or its Subsidiaries who are not officers, directors or Affiliates of the Company), (B) adopt, enter into or amend (including acceleration of vesting) any employment, severance, consulting, termination, deferred compensation or other employee benefit agreement (collectively, “Employment Agreements”) including, without limitation, any Company Plan, (C) make any loans (other than travel and payroll advances to non-officer employees in the ordinary course of business consistent with past practice) to any of its officers, directors, employees, Affiliates, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to a Company Plan or otherwise, (D) take (or omit to take) any action which would reasonably be expected to result in a “good reason”, “constructive termination”, or similar event, for purposes of any Employment Agreement; (evi) except as required by applicable Law or under the terms of any Company Plan, the Company will not (A) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan or agreement to any officer, director, employee or Affiliate, other than in the ordinary course of business consistent with past practice, (B) pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or Affiliates of the Company of any amount relating to unused vacation days, or (C) adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any Company Plan, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant; (vii) neither the Company nor any of its Subsidiaries shall permit will, (A) incur or assume any material insurance policy naming it as a beneficiary long-term or a loss payable payee to be canceled or terminated except that short-term Indebtedness (other than drawing down any such policy may be replaced amounts under the Credit Facility in the ordinary course of business consistent with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; past practice), (fB) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other personPerson, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (iiC) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid Person or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assetsassets or real estate); (gviii) neither the Company nor any of its Subsidiaries shall will make or authorize any capital expenditure(s) other than capital expenditures that do not exceed, in the aggregate for the Company and all of its Subsidiaries, $20,000.00; (ix) neither the Company nor any of its Subsidiaries will pay, discharge, waive or satisfy any rights, claims, liabilities or obligations, other than the payment, discharge, waiver, settlement or satisfaction of any such rights, claims, liabilities or obligations, in the ordinary course of business consistent with past practice, or claims, liabilities or obligations reflected or reserved against in, or contemplated by, the Financial Statements (or the notes to the Financial Statements); (x) neither the Company nor any of its Subsidiaries will (A) change any of the accounting methods used by it or any of its methods of reporting income or deductions for Tax purposes unless required by GAAPa change in GAAP or Law, (B) settle any material Tax claim, assessment, audit or investigation, (C) consent to any material Tax claim or assessment or any waiver of the statute of limitations for any such claim or assessment, (D) make, revoke or change any Tax election, (E) request a Tax ruling, (F) amend any Tax Return or (G) file any Tax Return in a manner that is materially inconsistent with past custom and practice with respect to the Company or any of its Subsidiaries unless required by applicable Law; (hxi) neither the Company nor any of its Subsidiaries will adopt or approve a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Mergerthis Agreement); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nxii) neither the Company nor any of its Subsidiaries will takeacquire (by merger, consolidation, acquisition of stock or agree to commit to takeassets or otherwise), directly or indirectly, any action that would make any representation assets (other than inventory in the ordinary course of business consistent with past practice), securities, properties, interests or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); orbusinesses; (oxiii) neither the Company nor any of its Subsidiaries will authorize transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any assets, securities, properties, interests or businesses, other than the sale of inventory in the ordinary course of business consistent with past practice; (xiv) other than in the ordinary course of business consistent with past practice, neither the Company nor any of its Subsidiaries will (A) amend, supplement, or terminate any Material Contract or (B) enter into any Contract that would have been required to be disclosed in Section 3.9(a) or Section 3.9(b) of the Company Disclosure Letter as a Material Contract had it been entered into prior to the date hereof; (xv) neither the Company nor any of its Subsidiaries will place or allow the creation of any material Encumbrance (other than a Permitted Encumbrance) on any of their respective assets and properties; (xvi) neither the Company nor any of its Subsidiaries will initiate or settle any material Action, including any Action under or pursuant to any applicable bankruptcy, reorganization, insolvency, moratorium or other similar Law; (xvii) neither the Company nor any of its Subsidiaries will take any action that would give rise to a claim under the WARN Act or any similar foreign, state or local Law because of a “plant closing” or “mass layoff” (each as defined in the WARN Act) without in good faith attempting to comply with the WARN Act or such foreign, state or local Law; (xviii) neither the Company nor any of its Subsidiaries will enter into an agreement agreement, contract, commitment, understanding or arrangement to do any of the foregoing, or to authorize or announce an intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except (i) with the prior written consent of the Parent which shall not be unreasonably withheld, conditioned or delayed, for the matters set forth in Section 5.1 of the Company Disclosure Schedule and as permitted expressly contemplated by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereofof this Agreement, and prior to the earlier of (x) the termination of this Agreement in accordance with Article VIII and (y) the time the directors designees of the Purchaser have been elected to, and shall Parent constitute a majority of, of the Company Board pursuant to Section 1.3 (the "Appointment Date"):of Directors: (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment practice, and each of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the its present business organization and assets of the Company and its Subsidiariesintact, (ii) to keep available the services of the present key its current officers, key employees and consultants of the Company consultants, and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries to maintain good relations with material customers, suppliers suppliers, contractors, distributors and other persons others having material business dealings with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerit; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: , (i) directly or indirectly, except for the issuance of Shares upon the exercise of the Options outstanding on the date of this Agreement pursuant to the terms of such Options, for the amount of Shares attributable to Restricted Stock Units outstanding as of the date hereof that subsequently vest pursuant to the terms of such Restricted Stock Unit grants, for the issuance of up to 1,659,420 shares of Common Stock issuable to a trust as provided in Section 5.1(e) or for any other written agreement or instrument pursuant to which the Company is required to issue or sell shares of capital stock of the Company and which are disclosed in Section 3.3(a) of the Company Disclosure Schedule, issue, sell, modify, transfer, dispose of, encumber or pledge any shares of capital stock of the Company or any capital stock or other equity interests of any of the Company’s Subsidiaries, securities convertible into or exchangeable for, or options, warrants or rights of any kind to acquire any shares of such capital stock or other equity interests or any other ownership interest; (ii) amend or otherwise change its Certificate of Incorporation or Bylaws or similar organizational documents; (iii) except for the purchase of shares of Common Stock in connection with matching contributions made in accordance with the Company’s 401(k) plans, split, combine, reclassify, subdivide or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock or other equity interests; or (iv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (ec) neither the Company nor any of its Subsidiaries shall permit will (i) incur or assume any material insurance policy naming it as a beneficiary indebtedness or a loss payable payee to be canceled issue any debt securities; (ii) assume, guarantee, endorse or terminated except that otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; other Person (fbut not including intracompany or intercompany transactions); (iii) neither the Company nor make any of its Subsidiaries shall loans, advances or capital contributions to, or investments in, any other Person; (i)acquire iv) acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assetsequity interest therein; (v) transfer, assumelease, guaranteelicense, endorse sell, mortgage, pledge, dispose of, or otherwise become liable encumber any of its assets or responsible (whether directly, contingently or otherwise) for the material obligations of any other personproperties, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business consistent with past practice (including any such transaction permitted under the debt instruments set forth in Section 3.14(b) of the Company Disclosure Schedule), or create an Lien, except Permitted Liens, on any Intellectual Property that, individually or in the aggregate, is material to the Company and/or any of its Subsidiaries’ business; (d) neither the Company nor any of its Subsidiaries shall (i) change the compensation or benefits payable or to become payable to any of its officers or its directors or in any material respect its employees, agents or consultants other than in the ordinary course of business consistent with past practice or pursuant to a contract entered into prior to the date hereof; (ii) enter into, extend or amend any employment, collective bargaining, severance, consulting, termination or other agreement or employee benefit plan; or (iii) make any loans or advances to any of its officers, directors, employees, agents, consultants or affiliates or change its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to an employee benefit plan or otherwise; (e) except as may be required pursuant to the terms of a Company Plan as in effect as of the date of this Agreement, applicable Law or the terms of any Company Plan prior to the date hereof, neither the Company nor any of its Subsidiaries shall (i) pay or arrange for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate, except payments and accruals made to employees other than executive officers, in the ordinary course of business consistent with past practice; (iiiii) make except as may be required pursuant to the terms of a Company Plan as in effect as of the date of this Agreement or applicable Law, adopt or pay, grant, issue, accelerate or accrue salary or other payments, benefits or awards pursuant to any bid Company Plan or proposalany other pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, restricted stock, restricted stock unit, group insurance, severance pay, retention, change in control, retirement or other employee benefit plan, policy, program, agreement or arrangement, or enter into any employment or amend in consulting agreement with or for the benefit of any material respect any contract current or agreement former director, consultant, officer or employee, whether past or present, except payments and accruals made to current employees other than executive officers, in the ordinary course of business consistent with past practice, which or (iii) amend in any event would either (amaterial respect any such existing plan, agreement or arrangement other than an amendment necessary to comply with applicable Law; provided that the Company may establish a grantor trust for the payment of its potential change in control obligations under Company Plans that are employment agreements with its current employees and that are set forth in Section 5.1(e) involve aggregate consideration under such bid, proposal, contract of the Company Disclosure Schedule and fund the trust with up to 1,659,420 shares of Common Stock or agreement in excess other assets with a value of $2 million 31,943,835 (with the Common Stock valued at the Offer Price for this purpose); (f) neither the Company nor any of its Subsidiaries will (i) modify, extend, amend or (b) be a bid, proposal or renewal at an amount of terminate any Material Contract to which the Company would expect such bid, proposal or renewal to result in any of its Subsidiaries is a loss thereunder to party or by which the Company, (iv) authorize Company or any single capital expenditure which is in excess of $250,000 its Subsidiaries or capital expenditures which are, any of their respective properties or assets may be bound other than for contracts for raw materials in the aggregateordinary course of business consistent with past practice and other than as contemplated by Section 5.1(n); (ii) waive, in excess release or assign any rights or claims under any of $1.0 million for the Company and its Subsidiaries taken as a whole, such Contracts; or (viii) enter into any transaction, contract or commitment Material Contract other than for contracts for raw materials in the ordinary course of business consistent with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assetspast practice and other than as contemplated by Section 5.1(n); (g) neither the Company nor any of its Subsidiaries shall shall, except as necessary in the ordinary course of business consistent with past practice, grant or acquire, agree to grant to or acquire from any Person, or dispose of or permit to lapse any rights to, any Intellectual Property, or disclose or agree to disclose to any Person, other than representatives of Purchaser and Parent, any trade secret or other confidential information which is material to the business of the Company and its Subsidiaries; (h) neither the Company nor any of its Subsidiaries will (i) change any of the accounting methods used by it unless except for such changes required by GAAPGAAP or applicable Law or (ii) make any Tax election or change or revoke any Tax election already made, adopt any Tax accounting method, change any Tax accounting method, enter into any closing agreement or settle any claim or assessment relating to Taxes or consent to any claim or assessment relating to Taxes or any waiver of the statute of limitations for any such claim or assessment; (hi) neither the Company nor any of its Subsidiaries will pay, discharge or satisfy any material claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, in the ordinary course of business consistent with past practice, or of claims, liabilities or obligations reflected or reserved against in the Financial Statements of the Company for the period ended December 31, 2007 or incurred since December 31, 2007 in the ordinary course of business consistent with past practice; (j) neither the Company nor any of its Subsidiaries will (i) settle or commence any action, suit, claim, litigation or other proceeding involving an amount in excess of $500,000 or, in the aggregate, an amount in excess of $2,000,000 or (ii) enter into any non-monetary consent decree, injunction or other similar restraint or form of equitable relief in settlement of any action, suit, claim, litigation or other proceeding; (k) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (il) except to neither the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of Company nor any of its directorsSubsidiaries will take or permit any action that would reasonably expected to result in any of the conditions to the Merger set forth in Article VII or any of the conditions to the Offer set forth in Annex I not being satisfied or that could delay the consummation of, officers or employees, except for increases in salary or wages of employees impair the ability of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitationconsummate, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business Transactions in accordance with the terms of such obligation this Agreement; (m) neither the Company nor any of its Subsidiaries shall enter into, amend, modify or liability and consistent supplement any agreement, transaction, commitment or arrangement with past practice any officer or director (or any affiliate of liabilities reflected or reserved against in the financial statements any of the Company or incurred in the ordinary course of business and consistent with past practiceforegoing); (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would shall make any representation or warranty capital expenditure which is not in all material respects in accordance with the annual budget for the fiscal year 2008, a true and correct copy of which is attached to Section 5.1(n) of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date)Disclosure Schedule; orand (o) neither the Company nor any of its Subsidiaries will authorize or enter into any agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose or announce an agreement intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except (i) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the such time the directors of the Purchaser have been elected to, and as Purchaser's designees shall constitute a majority of, of the members of the Board of Directors of the Company Board pursuant to Section 1.3 (the "Appointment DateTransition Time") (unless Purchaser shall otherwise agree in writing and except as otherwise contemplated by this Agreement or the Company Disclosure Schedule): (a) the business of the Company and its the Company Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner and, to the extent consistent with past practice (including payment of accounts payabletherewith, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and the Company Subsidiaries shall use commercially reasonable efforts to preserve its Subsidiaries, (ii) keep available the services of the present key officersbusiness organization intact and maintain its existing relations with customers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerassociates; (b) the Company will not, directly or indirectly, shall not (i) sell, transfer sell or pledge or agree to sell, transfer sell or pledge any Shares or capital stock of owned by it in any of the Company Subsidiaries (except in connection with its Subsidiaries beneficially owned by it, either directly or indirectlybank working capital facility); (ii) amend its Restated Certificate of Incorporation or By-laws Bylaws or the similar organizational documentsdocuments of any of the Company Subsidiaries; or (iii) split, combine or reclassify the outstanding Shares Shares; or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside or pay (unless declared prior to this date) any dividend or other distribution payable in cash, stock or property with respect to its capital stock; the Shares; (iic) neither the Company nor any of the Company Subsidiaries shall (i) issue, deliverdeliver or sell or authorize or propose the issuance, selldelivery or sale of, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), the Company Subsidiaries other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable Shares issuable pursuant to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries agreements described in Section 3.3 of the Company in the ordinary course of business; Disclosure Schedule or (ii) make any loansrepurchase, advances redeem or capital contributions tootherwise acquire, or investments inpermit any Company Subsidiary to repurchase, redeem or otherwise acquire, any other person, other than to wholly owned Subsidiaries shares of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate stock of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees thatDuring the period from the date of this Agreement to the Effective Time or the date, if any, on which this Agreement is earlier terminated pursuant to Section 8.1 (except (iw) as may be required by Law, (x) with the prior written consent of Parent (provided that Parent shall be deemed to have consented if Parent does not object within seventy-two (72) hours after a written request for such consent is delivered to Parent by the Company), which consent shall not be unreasonably withheld, delayed or conditioned, (y) as expressly permitted by this Agreement, Agreement or (iiz) as indicated on Schedule 5.1, or (iii) as agreed set forth in writing by Parent, after the date hereof, and prior to the time the directors Section 6.1 of the Purchaser have been elected toCompany Disclosure Schedule), and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner all material respects consistent with past practice (including payment of accounts payablepractice, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and and, to the extent consistent therewith, the Company and its Subsidiaries shall each use its commercially reasonable best efforts to (i) preserve substantially intact the their current business organization and assets of the Company and its Subsidiariesorganization, (ii) keep available the services of the present key officers, employees maintain appropriate staffing levels consistent with past practice and consultants of the Company and its Subsidiaries, (iii) preserve the present their relationships of the Company and its Subsidiaries with customers, suppliers and other persons others having business dealings with them. Without limiting the generality of the foregoing, except (w) as may be required by Law, (x) with the prior written consent of Parent (provided that Parent shall be deemed to have consented if Parent does not object within seventy-two (72) hours after a written request for such consent is delivered to Parent by the Company), which the Company consent shall not be unreasonably withheld, delayed or any of its Subsidiaries has significant business relationsconditioned, and (ivy) maintain net cash as expressly permitted by this Agreement or (z) as set forth in Section 6.1 of the Company and its Subsidiaries of at least $10 million (without giving effect Disclosure Schedule, prior to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c)Effective Time, neither the Company nor any of its Subsidiaries shall: will: (ia) declareamend its articles of incorporation or bylaws (or equivalent organizational documents); (b) except for issuance of Common Stock upon the exercise of Options or the vesting of RSUs, set aside or pay any dividend or other distribution payable in casheach case outstanding on the date hereof, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, pledge or securities convertible into or exchangeable forotherwise encumber, or optionsauthorize or propose the issuance, warrantssale, calls, commitments disposition or rights pledge or other Encumbrance of any kind to acquire, (i) any shares of capital stock of any class or series or any other ownership interest of the Company or any of its Subsidiaries, or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for any shares of capital stock or any other ownership interest (including stock appreciation rights and phantom stock)of the Company or any of its Subsidiaries, or any rights, warrants, options, calls, commitments or any other than agreements of any character to purchase or acquire any shares of capital stock or any other ownership interest of the Company or any of its Subsidiaries or any securities or rights convertible into, exchangeable for, or evidencing the right to subscribe for, any shares of capital stock or any other ownership interest of the Company or any of its Subsidiaries, or (ii) any other securities of the Company or any of its Subsidiaries in respect of, in lieu of, or in substitution for, Common Stock reserved for issuance outstanding on the date hereof upon the exercise of outstanding Options; hereof; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (vc) redeem, purchase or otherwise acquire directly acquire, or indirectly propose to redeem, purchase or otherwise acquire, any of its capital stock or rights in respect thereofoutstanding Common Stock; (d) except split, combine, subdivide, reclassify, recapitalize, exchange, readjust or otherwise alter any Common Stock or declare, set aside for payment or pay any dividend or other distribution in respect of any Common Stock or otherwise make any payments to shareholders in their capacity as disclosed on Schedule 5.1(d)such; (e) adopt a plan of complete or partial liquidation, neither dissolution, merger, acquisition, consolidation, restructuring, recapitalization or other reorganization of the Company nor or any of its Subsidiaries shall modifySubsidiaries, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except other than the Merger; (f) other than in the ordinary course of business and consistent with past practicepractice (including, for the avoidance of doubt, pursuant to the current Credit Agreement with Xxxxx Fargo Foothill, LLC), acquire, sell, lease, dispose of, pledge or encumber any assets that, in the aggregate, are material to the Company and/or its Subsidiaries, taken individually or as a whole; (eg) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) business consistent with past practice, incur any material indebtedness for borrowed money in addition to that incurred as of the date of this Agreement or guarantee any such indebtedness or make any loans, advances or capital contributions to, or investments in, any other personPerson, other than to the Company or any wholly owned Subsidiaries Company Subsidiary; (h) waive, release, grant or transfer any rights of the Company in the ordinary course of business and consistent with past practice; material value; (iiii) make or commit to make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which that are, in the aggregate, in excess of $1.0 million 300,000; (j) take any action that would cause any of the representations or warranties set forth in Article 4 to be materially inaccurate as of the Effective Time; (k) enter into, terminate or modify any Material Contract outside the ordinary course of business consistent with past practice; (l) hire any employee, except for the replacement of any current employee whose employment with the Company and or a Company Subsidiary is terminated or who resigns for any reason, provided that such replacement employee’s annual aggregate compensation does not exceed $55,000; (m) grant any increases in the compensation (in any form) of its Subsidiaries taken as a wholedirectors, (v) officers or employees, or enter into any transaction, contract new employment or commitment severance protection agreements with any affiliate such directors, officers or employees, or increase any benefits payable under its current severance, change of the Company; control or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)termination pay policies; (gn) neither the Company nor terminate, amend or otherwise modify any of its Subsidiaries shall Benefit Plans; (o) change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, unless required by GAAP or grant any retention, severance applicable Law or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent election inconsistent with past practice; (np) neither settle or compromise any Legal Proceeding (i) existing as of the Company nor any of its Subsidiaries will takedate hereof, (ii) resulting from or in connection with the Merger, or agree to commit to take(iii) arising after the date hereof, including without limitation as may be brought by Company shareholders; (q) enter into any action that would make any representation hedge, swap or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date)other derivative transaction; or (or) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement any contract, agreement, commitment or arrangement to do any of the foregoing.;

Interim Operations of the Company. The Company covenants and agrees --------------------------------- agrees, as to itself and its subsidiaries, that, except (i) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, hereof and prior to the time the directors date on which Purchaser's nominees comprise a majority of the Purchaser have been elected to, and shall constitute a majority of, Board of Directors of the Company Board pursuant to (unless Purchaser shall otherwise agree in writing and except as otherwise permitted by this Agreement (including Section 1.3 (7.2) or specifically disclosed in the "Appointment Date"corresponding section of the Disclosure Letter): (a) the business of the Company and its Subsidiaries subsidiaries shall be conducted only in the ordinary and usual course of business in a manner and, to the extent consistent with past practice (including payment of accounts payabletherewith, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiariessubsidiaries shall use its best efforts to preserve its business organization intact and maintain its existing relations with customers, (ii) keep available the services of the present key officerssuppliers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerassociates; (b) the Company will not, directly or indirectly, shall not (i) sell, transfer sell or pledge or agree to sell, transfer sell or pledge any Shares or capital stock of owned by it in any of its Subsidiaries beneficially owned by it, either directly or indirectlysubsidiaries; (ii) amend the Certificate or its Certificate of Incorporation Bylaws or By-laws amend, modify or similar organizational documentsterminate the Rights Agreement, or redeem the Rights issued pursuant thereto; or (iii) split, combine or reclassify the outstanding Shares Shares; or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Shares; (c) neither the Company nor any of its capital stock; subsidiaries shall (iii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class of the Company or its Subsidiariessubsidiaries or any other property or assets other than, or other ownership interest (including stock appreciation rights and phantom stock)in the case of the Company, other than shares of Common Stock reserved for issuance Shares issuable pursuant to options outstanding on the date hereof upon under the exercise of outstanding OptionsStock Plans; (iiiii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, of or encumber any material assets, whether tangible assets or intangible, incur or modify any indebtedness (other than sales drawings under existing credit facilities in the ordinary course of products business) or other liability other than in the ordinary and usual course of business and consistent with past practicebusiness; (iviii) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly by redemption or otherwise any shares of its the capital stock of the Company or rights (iv) authorize capital expenditures in respect thereofexcess of $500,000 individually or $5,000,000 in the aggregate or make any acquisition of another company (by merger, consolidation or acquisition of stock or assets) or any investment in, assets or stock of any other person or entity; (d) except to the extent required under the existing Compensation and Benefit Plans (as disclosed on Schedule 5.1(d), neither in effect prior to the Company nor any date of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except this Agreement and set forth in the ordinary course of business and consistent with past practice; (eDisclosure Schedule) neither the Company nor any of its Subsidiaries subsidiaries shall permit grant any material insurance policy naming it as a beneficiary severance or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions termination pay to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting employment or severance agreement or arrangement with any present or former director, officer or other employee of the Company or such subsidiaries, other than as required by statute in foreign jurisdictions and except in the ordinary course of business consistent with past practice; and neither the Company nor any of its Subsidiaries, or subsidiaries shall establish, adopt adopt, enter into into, make any new grants or amend awards under or terminate amend, any collective bargaining agreement or Company Plan, including, but not limited tobargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employers;employees (the "Benefit Plans"); -------------- (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (ne) neither the Company nor any of its Subsidiaries will take, subsidiaries shall settle or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in compromise any material respect atclaims or litigation or, except in the ordinary and usual course of business and with the consent of Purchaser (which consent shall not be unreasonably withheld), modify, amend or as terminate any of its material Contracts or waive, release or assign any time prior to, the Effective Time (except for representations made as of a specific date); ormaterial rights or claims; (of) neither the Company nor any of its Subsidiaries subsidiaries 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, except in the ordinary and usual course of business; (g) except as may be required as a result of a change in law or in generally accepted accounting principles, neither the Company nor any of its subsidiaries shall change any of the accounting practices or principles used by it; (h) neither the Company nor any of its subsidiaries shall 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); and (i) neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoingforegoing or take any action that would knowingly cause any of the representations or warranties of the Company contained in this Agreement to be untrue or incorrect or would result in any of the Offer Conditions set forth in Annex A not being satisfied.

Interim Operations of the Company. The Except as set forth in --------------------------------- Section 5.1 of the Company covenants Disclosure Schedule, during the period from the date of this Agreement to the Effective Time or termination of this Agreement pursuant to Section 7.1 hereof (unless Parent shall otherwise agree in writing and agrees that, except (i) as permitted expressly provided by this Agreement), (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected toCompany shall, and shall constitute a majority ofcause each Company Subsidiary to, the Company Board pursuant conduct its operations according to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a substantially the same manner consistent with past practice (including payment of accounts payable, collection of accounts receivable as heretofore conducted and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the its current business organization and assets of the Company and its Subsidiariesorganization, (ii) keep available the services of its current officers and subject to the present key officersprudent management of workforce needs, its employees and consultants (including all Worksite Employees, except to the extent required by clients of the Company and Company), preserve its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons others having business dealings with which it, consult with Parent concerning important business matters affecting the Company or any and the Company's Subsidiaries and periodically report to Parent concerning the status of its Subsidiaries has significant business relationsthe business, operations and (iv) maintain net cash finances of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses the Company Subsidiaries. Without limiting the generality of the Financial Advisorforegoing, financial printers and outside counsel not exceeding $1.35 million except as expressly provided by this Agreement or as set forth in the aggregate) as Section 5.1 of the close of business on the date of the expiration of the Offer; (b) Company Disclosure Schedule, the Company will notshall not and shall not permit any Company Subsidiary to, directly or indirectly, without the prior written consent of Parent: (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) indirectly amend its Certificate of Incorporation or By-laws Laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (cii) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iA) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Company's capital stock or that of any Company Subsidiary, except that a wholly owned Company Subsidiary may declare and pay a dividend or make an advance to its parent or the Company, (B) redeem, purchase or otherwise acquire directly or indirectly any shares of any class or series of the Company's capital stockstock or that of any Company Subsidiary or any instrument or security which consists of or includes a right to acquire such shares; (iiC) issue, deliversell, selltransfer, pledge, dispose of or encumber any additional shares ofof any class or series of the Company's capital stock or that of any Company Subsidiary or voting debt, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of any class or series of the Company's capital stock or that of any class Company Subsidiary or voting debt, other than Shares issued upon the exercise of Options outstanding on the date hereof in accordance with the Option Plans as in effect on the date hereof; or (D) split, combine or reclassify the outstanding capital stock of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; any Company Subsidiary; (iii) transferacquire or agree to acquire (A) by merging or consolidating with, lease, license, sell, mortgage, pledge, dispose or by purchasing an equity interest in a substantial portion of the assets of, or encumber by any material other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, or (B) any assets, whether tangible or intangible, other than sales except purchases of products assets in the ordinary and usual course of business and consistent with past practice; practices and which individually do not exceed $50,000 or in the aggregate do not exceed $100,000; (iv) incur alter (through merger, liquidation, reorganization, restructuring or modify in any indebtedness other fashion), the corporate structures or other material liability ownership of the Company or issue any debt securities; or Company Subsidiary; (v) redeemmake any new capital expenditure or expenditures which exceed the amounts budgeted therefor in the fiscal year ending June 30, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof2000 budget for the Company provided to Parent; (dvi) (A) amend, terminate or transfer any Company Material Contract except as disclosed on Schedule 5.1(d)in the ordinary course of business consistent with past practice and provided that any such amendment, neither termination or transfer does -------- not have, individually or in the aggregate, a Company nor any of its Subsidiaries shall modifyMaterial Adverse Effect, amend or terminate any of its Contracts or (B) waive, release or assign any material rights or claims, (C) enter into any contract that would be a Company Material Contract pursuant to clauses (ii) through (viii) of Section 3.10, or (D) enter into any agreement for the provision of professional employer services except in the ordinary course of business consistent with past practices; (vii) transfer, lease, license, sell or dispose of any of their respective assets other than dispositions in the ordinary course of business and consistent with past practice; provided that the fair market -------- value of assets sold does not exceed $50,000 in any single transaction or $100,000 in the aggregate; (eviii) neither the Company nor mortgage, pledge or encumber any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiariestheir respective assets; (fix) neither enter into or amend any employment or severance agreement or any other agreement or arrangement that provides for payment upon a change of control with or grant any severance or termination pay to any officer, director or employee (including Worksite Employees, except to the extent required by clients of the Company) of the Company nor or any Company Subsidiary; (x) except, as required to comply with applicable law or expressly provided in this Agreement, (A) adopt, enter into, amend or increase the amount or accelerate the payment or vesting of its Subsidiaries shall any benefit or award or amount payable, under any Benefit Plan or other contract, agreement, commitment, arrangement, plan, trust, fund or policy maintained by, contributed to or entered into by the Company or any Company Subsidiary for the current or future benefit or welfare of any director, officer or current or former employee, except to the extent necessary to coordinate any such Benefit Plans with the terms of this Agreement, (i)acquire B) increase in any manner the compensation or fringe benefits of, or pay any bonus to, any director, officer or employee (by mergerother than Worksite Employees) or consultant of the Company or any Company Subsidiary (other than normal recurring increases in wages to employees who are not officers or directors or Affiliates in the ordinary course of business consistent with past practice), consolidation(C) pay any benefit not provided for under any Benefit Plan, acquisition (D) grant any awards under any bonus, incentive, performance or other compensation plan or arrangement or Benefit Plan (including the grant of stock options, stock appreciation rights, stock based or assets stock related awards, performance units or otherwiserestricted stock, or the removal of existing restrictions in any Benefit Plans or agreements or awards made thereunder) or (E) take any corporationaction to fund or in any other way secure the payment of compensation or benefits under any employee plan, partnership agreement, contract or arrangement or Benefit Plan; (xi) (A) incur or assume any long-term indebtedness for borrowed funds, or except in the ordinary course of business, incur or assume any short-term indebtedness for borrowed funds in amounts not consistent with past practice, provided, that the aggregate of such short- term indebtedness and long-term indebtedness outstanding does not exceed $3,300,000 at any given time, (B) modify the terms of any indebtedness or other business organization or division thereof or any material assetsliability except as set forth in Section 5.1 of the Company Disclosure Schedule, (C) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company person (except for checks endorsed for collection in the ordinary course of business; ) or (iiD) make any loans, advances or capital contributions to, or investments in, in any other person, person (other than to wholly owned Company Subsidiaries of the Company and other than (x) travel advances to employees in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either practices and (ay) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate publicly traded securities constituting less than 1.0% of the Company; or (vi) enter into any material commitment or transaction with respect to any outstanding equity of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assetsissuing entity); (gxii) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by changes in GAAP; (hxiii) neither the Company nor make any of its Subsidiaries will material election relating to Taxes, change any material election relating to Taxes already made, adopt a plan of complete any material accounting method relating to Taxes, change any material accounting method relating to Taxes unless required by changes in GAAP, enter into any closing agreement relating to Taxes, settle any claim or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization assessment relating to Taxes or other reorganization consent to any claim or assessment relating to Taxes or any waiver of the Company statute of limitations for any such claim or any of its Subsidiaries (other than the Merger)assessment; (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (mxiv) pay, release, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of or otherwise), other than the payment, release, discharge or satisfaction in the ordinary course of business in accordance with the terms of (A) any such obligation claims, liabilities or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred obligations, in the ordinary course of business and consistent with past practice, and (B) claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company and its consolidated Company Subsidiaries filed with the SEC prior to the date hereof; (nxv) neither the Company nor amend in any material respect, renew, terminate or cause to be extended any lease, agreement or arrangement relating to any of its Subsidiaries will leased properties or enter into any lease, agreement or arrangement with respect to any real property; (xvi) permit any insurance policy having the Company or any Company Subsidiary as a beneficiary or a loss payable payee to be cancelled or terminated unless comparable replacement coverage is obtained, provided that written notice has been provided to Parent and the premium therefor is reasonably acceptable to Parent ; (xvii) take, or agree to or commit to take, any action that would or is reasonably likely to result in any of the conditions to the Offer set forth in Annex A or any of the conditions to the consummation of the Merger set forth in Article VI hereof not being satisfied, or would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as Time, or that would materially impair the ability of a specific date)the Company, Parent, Sub or the holders of Shares to consummate the Offer or the Merger in accordance with the terms hereof or materially delay such consummation; orand (oxviii) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or publicly announce an intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and --------------------------------- agrees that, prior to the earlier of the purchase of the Shares pursuant to the Offer or the termination of this Agreement in accordance with its terms (unless Purchaser shall otherwise agree in writing and except (i) as permitted otherwise expressly contemplated by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries subsidiaries shall be conducted only in the ordinary and usual course of business in a manner and, to the extent consistent with past practice (including payment of accounts payabletherewith, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees subsidiaries shall use its commercially reasonable best efforts to preserve its business organization intact and consultants of the Company and maintain its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries existing relations with customers, suppliers suppliers, employees, creditors and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerassociates; (b) the Company will not, directly or indirectly, shall not (i) sell, transfer sell or pledge or agree to sell, transfer sell or pledge any Shares or capital stock of owned by it in any of its Subsidiaries beneficially owned by it, either directly or indirectlysubsidiaries; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documentsLaws; or (iii) split, combine or reclassify the outstanding Shares Shares; or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Shares; (c) neither the Company nor any of its capital stock; subsidiaries shall (iii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class of the Company or its Subsidiariessubsidiaries or any other property or assets (other than, or other ownership interest in the case of the Company, (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance x) Shares issuable pursuant to options outstanding on the date hereof upon under the exercise Stock Plans and (y) options to be granted pursuant to the terms of outstanding OptionsSection 3.12 hereof); (iiiii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, of or encumber any material assets, whether tangible assets or intangible, incur or modify any indebtedness or other liability other than sales in the ordinary and usual course of products business; (iii) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company; (iv) make or authorize capital expenditures other than in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securitiesin amounts not exceeding those contemplated by the Company's current capital expenditure budget provided to Purchaser; or (v) redeemmake or authorize any acquisition of, purchase or otherwise acquire directly investment in, assets or indirectly stock of any other person or entity other than the acquisition of, or investment in, any entity listed on Schedule 3.1(c) of its capital stock the Company Disclosure Schedule involving amounts not in excess of $10,000,000 individually or rights $25,000,000 in respect thereofthe aggregate; (d) except as disclosed on Schedule 5.1(d)other than the Employment Agreements, neither the Company nor any of its Subsidiaries subsidiaries shall modifygrant any severance or termination pay to, amend or terminate enter into any employment or severance agreement with, any director or officer of its Contracts the Company or waivesuch subsidiaries; and, release or assign any material rights or claimsother than the options to be granted pursuant to the terms of Section 3.12 hereof, except in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by mergerestablish, consolidationadopt, acquisition of stock or assets or otherwise) any corporationenter into, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances new grants or capital contributions to, awards under or investments inamend, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited tobargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employers;employees (the "Benefit Plans"); ------------- (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (ne) neither the Company nor any of its Subsidiaries will takesubsidiaries shall (i) settle or compromise any claims or litigation (including any claims for Taxes made by a Governmental Entity) in excess of $1,000,000, (ii) modify, amend or terminate any of its material Contracts or waive, release or assign any material rights or claims, (iii) cancel or forgive any indebtedness owed to the Company or any of its subsidiaries by any officer or director of the Company or by any of its subsidiaries, or agree (iv) cancel or forgive any other indebtedness owed to commit the Company or any of its subsidiaries other than in the ordinary and usual course of business; (f) neither the Company nor any of its subsidiaries shall make any Tax Election for a Tax Return or permit any insurance policy naming it as a beneficiary or a loss payable payee to takebe canceled or terminated without notice to Purchaser, in each case except in the ordinary and usual course of business; (g) neither the Company nor any of its subsidiaries shall waive, release or fail to use commercially reasonable efforts to enforce any of its rights under any confidentiality agreement, standstill agreement or any similar agreement to which it is a party, unless the Board of Directors of the Company determines in good faith, after consultation with its outside counsel, that it is necessary to do so in order for its directors to comply with their respective fiduciary duties; (h) neither the Company nor any of its subsidiaries shall enter into any material contract or agreement; (i) neither the Company nor any of its subsidiaries shall, except as specifically permitted in Section 3.2, take or fail to take any action that would is reasonably likely to result in any failure of the Offer, or is reasonably likely to make any representation or warranty of the Company contained herein inaccurate if qualified by "Company Material Adverse Effect" or inaccurate in any material respect if not so qualified at, or as of any time prior to, Purchaser's purchase of Shares pursuant to the Effective Time (except for representations made as of a specific date)Offer; orand (oj) neither the Company nor any of its Subsidiaries subsidiaries will authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except Except as (i) as permitted by this Agreementset forth on Section 6.1 of the Company Disclosure Letter, (ii) as indicated on Schedule 5.1, expressly provided herein or (iii) as agreed consented to in writing by ParentParent (such consent not to be unreasonably withheld), from and after the date hereof, and prior to of this Agreement until the time the directors earlier of the Purchaser have been elected totermination of this Agreement in accordance with its terms or the Effective Time, the Company shall, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business cause each of the Company and its Subsidiaries shall be conducted to, act and carry on its business only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) maintain and preserve substantially intact the business organization and assets of the Company its and its Subsidiaries’ business organization, (ii) assets and properties, keep available the services of the present its officers and key officers, employees and consultants of the Company maintain and preserve its Subsidiaries, (iii) preserve the present advantageous business relationships of the Company and its Subsidiaries with customers, clients, suppliers and other persons others having material business dealings with which it. Without limiting the generality of the foregoing, from and after the date of this Agreement until the earlier of the termination of this Agreement in accordance with its terms or the Effective Time, the Company or shall not, and shall not permit any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer; (b) the Company will notto, directly or indirectly, do any of the following without the prior written consent of Parent (isuch consent not to be unreasonably withheld or delayed) except as otherwise contemplated by Section 6.1 of the Company Disclosure Letter or by this Agreement: (a) except as contemplated by Section 2.1, amend its Amended and Restated Certificate of Incorporation, as amended, or Bylaws or comparable governing documents; (b) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or shares of capital stock of any of its Subsidiaries beneficially or other equity interests owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or it in any outstanding capital stock of any of the Subsidiaries of the Companyother Person; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock securities or other property with respect to to, or split, combine, redeem or reclassify, or purchase or otherwise acquire, any shares of its capital stock; stock (or other equity interests) or other securities of the Company or any of its Subsidiaries, other than the making of a dividend or other distribution by a wholly-owned Subsidiary to another wholly-owned Subsidiary or to the Company, or any other change in the capital structure of the Company on any of its Subsidiaries, and except that the Company may (i) declare and pay the Special Distribution in accordance with Section 6.14 or (ii) issuerepurchase unvested shares of Restricted Stock upon the termination of employment of the holder thereof; (d) except as contemplated by Sections 2.1 and 3.1, deliver, issue or sell, pledgeor authorize to issue or sell, dispose any shares of its capital stock (whether unrestricted or encumber restricted) or any additional shares ofother securities (equity or debt) of the Company or any of its Subsidiaries, or issue or sell, or authorize to issue or sell, any securities (equity or debt) convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquirepurchase or subscribe for, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its capital stock of any class of the Company or its SubsidiariesVoting Debt or other securities (equity or debt), or make any other ownership interest change in its capital structure, except for (including stock appreciation rights and phantom stock), other than i) the issuance by the Company of shares of Company Common Stock reserved for issuance pursuant to the terms of any Options outstanding on the date hereof upon and disclosed in Section 4.2(a) of the exercise Company Disclosure Letter or (ii) pursuant to the terms of outstanding Options; the Purchase Plan; (iiie) acquire, authorize or make (or commit to make) any investment in, or make any capital contribution to, any Person; (f) make (or commit to make), or enter into any Contracts (or any amendments, modifications, supplements or replacements to existing Contracts) to be performed relating to the making of capital expenditures in excess of $25,000 in any calendar year, or in the aggregate for capital expenditures with a value in excess of $100,000; (g) acquire, by merging or consolidating with, by purchasing an equity interest in or by purchasing all or a portion of the assets of, or by any other manner, any business or any Person (other than the purchase of equipment, inventories and supplies in the ordinary course of business consistent with past practice); (h) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, subject to any Lien (other than a Permitted Lien) or otherwise encumber any material assets, whether tangible assets or intangible, other assets that have a value individually in excess of $10,000 other than sales with respect to (i) transactions between a wholly-owned Subsidiary of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any and the Company or between wholly-owned Subsidiaries of its Subsidiaries shall modifythe Company, amend (ii) dispositions of excess or terminate any of its Contracts or waive, release or assign any material rights or claims, except obsolete assets in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage practice and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid leases, licenses or proposal, sales of the Company’s software or enter into or amend other assets in any material respect any contract or agreement other than in the ordinary course of business consistent with past practice; (i) except to the extent required under existing employee and director benefit plans, which agreements or arrangements in effect as of the date hereof or required by applicable law or contemplated by Section 3.4, (i) increase the compensation or fringe benefits of any event would either of its directors, officers or employees (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess except for immaterial increases to employees who are not officers of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bidor any of its Subsidiaries in the ordinary course of business consistent with past practice) or grant any severance or termination pay not currently required to be paid under existing severance plans, proposal policies or renewal arrangements except with respect to result non-officer employees in a loss thereunder the ordinary course of business and as consistent with past practice (ii) enter into, amend, modify, supplement or replace any employment, benefit (including with respect to life or disability insurance or with respect to premiums therefor), consulting or severance agreement, policy or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, (iii) establish, adopt, enter into or, except to the Companyextent necessary to retain favorable tax treatment or avoid adverse tax treatment, amend, modify, supplement, replace or terminate any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, benefit (including with respect to life or disability insurance or with respect to premiums therefor), pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the collective benefit of any directors, officers or employees; (iv) authorize loan or advance any single capital expenditure which is money or other property to any present or former director, officer or employee of the Company or its Subsidiaries, except for advances to officers, directors or employees in excess respect of travel and entertainment expenses in the ordinary course of business in amounts of $250,000 5,000 or capital expenditures which are, less to any individual on any date of determination and $25,000 in the aggregate, in excess aggregate outstanding on any date of $1.0 million for the Company and its Subsidiaries taken as a wholedetermination, (v) enter into grant any transactionequity or equity-based awards, contract or commitment with any affiliate of the Company; or (vi) enter into allow for the commencement of any material commitment new offering periods under any employee stock purchase plans. (j) except as may be required by applicable law, GAAP or transaction with respect to SEC rule, make any change in any of the foregoing (includingits accounting practices, but not limited topolicies or procedures or any of its methods of reporting income, any borrowing, capital expenditure deductions or purchase, sale or lease of assets)other items for income tax purposes; (gk) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used except as contemplated by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will Sections 2.1 and 3.1, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger)or any agreement relating to an Acquisition Proposal, except as expressly permitted in Section 6.3; (l) (i) except incur, assume, modify or prepay any indebtedness for borrowed money, issue any debt securities or warrants or other rights to acquire debt securities, issue any credit notes for future goods or services, or guarantee, endorse or otherwise become liable or responsible for the obligations or indebtedness of another Person, other than indebtedness owing to the extent required under existing employee and director benefit plans, agreements Company or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation any direct or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees indirect wholly-owned Subsidiary of the Company or its Subsidiaries who are not officers guarantees of indebtedness of the Company or any direct or indirect wholly-owned Subsidiary of the Company, or enter into any capital lease in each case, in an amount in excess of $10,000, or (ii) make any loans, extensions of credit or advances to any other Person, other than to the Company or to any direct or indirect wholly-owned Subsidiary of the Company, except, in the case of preceding clauses (i) and (ii), for loans, extensions of credit or advances constituting trade payables or receivables arising in the ordinary course of business and in the case of preceding clause (ii), for advances to employees in respect of travel and entertainment expenses in the ordinary course of business in accordance with past practiceamounts of $1,000 or less to any individual on any date of determination and $25,000 in the aggregate outstanding on any date of determination; (m) except as provided by this Agreement, accelerate the payment, right to payment or grant vesting of any retentionbonus, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonusseverance, profit sharing, thriftretirement, deferred compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance insurance (including arrangements or agreements for the premiums therefor) or other plan, agreement, trust, fund, policy compensation or arrangement for the benefit of any directors, officers or employersbenefits; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (mn) pay, discharge discharge, settle or satisfy any claims, litigation, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of or otherwise), ) other than (i) the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice practice, of (A) liabilities reflected or reserved against in the financial statements March 31, 2005 balance sheet included in the Company SEC Documents or (B) liabilities (other than litigation) subsequently incurred in the ordinary course of business consistent with past practice and (ii) other claims, litigation, liabilities or obligations (qualified as aforesaid) that in the aggregate do not exceed $200,000; (o) plan, announce, implement or effectuate any reduction in force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of the Company or incurred its Subsidiaries, other than routine employee terminations in the ordinary course of business and consistent with past practice; (np) neither take any action or omit to take any action (including the adoption of any shareholder rights plan or amendments to its Amended and Restated Certificate of Incorporation, as amended, or Bylaws (or comparable governing documents)) which would, directly or indirectly, restrict or impair the ability of Parent or Merger Subsidiary, as the case may be, to vote or otherwise to exercise the rights and receive the benefits of a stockholder with respect to securities of the Company nor that may be acquired or controlled by Parent or Merger Subsidiary, as the case may be, or any action which would permit any Person to acquire securities of the Company or any of its Subsidiaries will takefrom the Company or such Subsidiary on a basis not available to Parent or Merger Subsidiary; (q) take any action or omit to take any action which (i) constitutes a violation of any Company Permit, which violations would result in or would reasonably be likely to result in, individually or in the aggregate, the modification, suspension, cancellation, termination of any one or more Company Permits or otherwise have or would reasonably be likely to have a material adverse impact on any customer or client contract or relationship or the nature or level of discipline imposed on account of future violations of the Laws applicable to the Company and the Surviving Corporation or (ii) would (or would reasonably be likely to) materially impede, delay, hinder or make more burdensome for the Surviving Corporation or Parent to obtain and maintain any and all authorizations, approvals, consents or orders from any Governmental Entity or other third party necessary or required to maintain the Company Permits in effect as of the date hereof in effect at all times following the Merger on the same terms as in effect on the date of this Agreement; (r) enter into any new material line of business, enter into any agreement 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 or enter into or alter any agreement on terms less favorable than the Company’s or its Subsidiary’s normal terms (including, but not limited to, any agreements that have unusual discounts); (i) file or cause to be filed any materially amended Tax Returns or claims for refund; (ii) make or rescind any material Tax election or otherwise fail to prepare all Tax Returns in a manner which is consistent with the past practices of the Company and each Subsidiary of the Company, as the case may be, with respect to the treatment of items on such Tax Returns except to the extent that any inconsistency (A) would not reasonably be expected to materially increase Parent’s, the Company’s or any of the Company’s Subsidiaries’ liability for Taxes for any period or (B) is required by Law; (iii) incur any material liability for Taxes other than in the ordinary course of business, apart from any Tax Liability that may result from the Asset Purchase; or (iv) enter into any settlement or closing agreement with a taxing authority that materially increases or would reasonably be likely to materially increase the Tax liability of the Company or any of its Subsidiaries for any period; (t) fail to maintain with current or other financially responsible insurance companies insurance on its assets, tangible and intangible, and its businesses in such amounts and against such risks and losses as are consistent with past practice and standard practice in the Company’s industry; (u) subject to Section 6.3, approve any “business combination”, or approve any Person becoming an “interested stockholder” (in each case as such terms are defined in Section 203 of the DGCL), under or for purposes of Section 203 of the DGCL; (v) adopt or authorize any stockholder rights plan or similar device or arrangement, commonly or colloquially known as a “poison pill” or “anti-takeover plan,” or any similar plan, device or arrangement; or (w) authorize, agree or announce an intention, in writing or otherwise, to commit take any of the foregoing actions or fail to take, take any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do prevent any of the foregoingforegoing from occurring.

Interim Operations of the Company. The Company covenants and agrees that(a) During the period from the date of this Agreement to the Closing Date, except as (iA) as permitted expressly contemplated by this Agreement, (iiB) as indicated on Schedule 5.1, or required by applicable Law and (iiiC) as agreed may be consented to in writing by ParentHeineken, after the date hereof, FEMSA Parties shall cause the Company and prior to the time the directors each of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant Subsidiaries to Section 1.3 (the "Appointment Date"): (ai) conduct the business of the Company and its the Company Subsidiaries shall be in the same manner in all material respects as heretofore conducted and only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiariesall material Laws, (ii) pay or perform its material obligations when due and (iii) use its commercially reasonable efforts consistent with past practice to (1) preserve intact its present business organization, (2) keep available the services of the its present key officers, employees officers and consultants of the Company and its Subsidiariesemployees, (iii3) preserve the present its relationships of the Company and its Subsidiaries with customers, suppliers suppliers, distributors, licensors, licensees and other persons others with which the Company or any of its Subsidiaries it has significant business relations, dealings and (iv4) maintain net cash of preserve intact the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer;Intellectual Property: (b) Without limiting the Company will notgenerality of the foregoing, directly or indirectlyexcept as (A) expressly contemplated by this Agreement, (B) required by applicable Law and (C) may be consented to in writing by any Heineken Party, the FEMSA Parties shall assure that, after the date hereof and prior to the Closing Date: (i) sell, transfer or pledge or agree to sell, transfer or pledge neither the Company nor any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) Company Subsidiary shall amend its Certificate certificate of Incorporation incorporation or Byby-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), documents and neither the Company nor any of its Subsidiaries Company Subsidiary shall: : (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iiA) issue, deliversell, selltransfer, pledge, dispose of or encumber any additional shares ofof any class or series of its capital stock, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of any class or series of its capital stock (unless such action with respect to a Company Subsidiary does not reduce the Company’s aggregate direct or indirect ownership of such Company Subsidiary), (B) except if by a wholly owned Company Subsidiary or for any Permitted Dividend (and up to the Permitted Dividend Amount), declare, set aside or pay any dividend or any other distribution payable in stock or property with respect to any shares of any class or series of the its capital stock; (C) except with respect to securities of a wholly owned Company Subsidiary, split, combine or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than reclassify any shares of Common Stock reserved for issuance on the date hereof upon the exercise any class or series of outstanding Options; its stock, or (iiiD) transfer, lease, license, sell, mortgage, pledge, dispose of, except with respect to securities of a wholly owned Company Subsidiary or encumber any material assets, whether tangible or intangible, other than sales of products with respect to pension fund assets in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) business, redeem, purchase or otherwise acquire directly or indirectly any shares of any class or series of its capital stock stock, or rights in respect thereofany instrument or security which consists of or includes a right to acquire such shares; (dii) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries Company Subsidiary shall modify, amend make any change in the compensation payable or terminate to become payable to any of its Contracts or waive, release or assign any material rights or claims, except employees (other than normal recurring changes in the ordinary course of business and consistent with past practiceor pursuant to plans, programs, commitments or agreements existing on the date hereof); (eiii) neither the Company nor any of its Subsidiaries Company Subsidiary shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization corporate reorganization; (iv) neither the Company nor any Company Subsidiary shall change in any material respect any of the accounting methods (including tax accounting methods) used by it unless required by Mexican FRS or Brazilian GAAP; (v) neither the Company nor any Company Subsidiary shall become legally committed to any new capital expenditure requiring expenditures after the Closing in excess of $10,000,000, individually or in the aggregate, except for expenditures pursuant to projects for which work has already been commenced or committed; (vi) except in the ordinary course of business or as required by Law (including with respect to Taxes of Kaiser or of any of its Subsidiaries), neither the Company nor any Company Subsidiary shall transfer, sell, lease, license, mortgage or create an Encumbrance upon (other than Permitted Encumbrances) any of their respective assets or properties; (vii) neither the Company nor any Company Subsidiary shall make any loans or advances to any Person such that the amount of principal owed by such Person to the Company and the Company Subsidiaries shall be in excess of $20,000,000, individually or in the aggregate, except for any such loans or advances made to its customers in the ordinary course of business consistent with past practice; (viii) neither the Company nor any Company Subsidiary shall make any loans or advances to any officers, directors or managers of the Company or the Company Subsidiaries, except for payroll advances or, for the avoidance of doubt, for loans or advances made by Sociedad Xxxxxxxxxx y Famosa, in each case consistent with past practice; (ix) neither the Company nor any Company Subsidiary shall enter into any new, or amend, terminate or renew any existing, material agreements with FEMSA or an Affiliate of its Subsidiaries FEMSA (other than the Merger)Company or any Company Subsidiary) including any agreement under which FEMSA or an Affiliate of FEMSA (other than the Company or any Company Subsidiary) is liable for Indebtedness to the Company or any Company Subsidiary; (ix) except the Company and the Company Subsidiaries shall manage their consolidated Working Capital, Net Debt and Cash only in the ordinary course consistent with past practice; (xi) neither the Company nor any Company Subsidiary shall make transfer, sell or otherwise dispose of material amount of assets other than sales of inventory in the ordinary course of business; (xii) neither the Company nor any Company Subsidiary shall settle, or propose to settle, any Proceeding or liability to the extent required under existing employee and director benefit plans, agreements such settlement (A) would provide for any injunctive relief or arrangements as in effect other material restriction on the date business of the Company or the Company Subsidiaries or any admission by the Company or any Company Subsidiary of material liability of wrongdoing; (B) would require a payment in excess of $5,000,000 in the aggregate (whether or not covered by insurance); or (C) relates to Taxes in a manner that would adversely affect the Heineken Parties or any of the Company or a Company Subsidiary without the prior written consent of Heineken, which consent shall not be unreasonably withheld or delayed, provided that this Agreement and disclosed Section 6.1(b)(xii) shall not apply to Parentany settlement of any Proceeding or liability pertaining to Taxes with respect or relating solely to any Tax period ending on or before the Reference Date for which FEMSA has responsibility under Section 6.17(a), increase provided, however, that the compensation Company or fringe benefits Company Subsidiary, as applicable, shall not settle or propose to settle such Proceeding or liability in a manner that would adversely affect the Heineken Parties or any of the Company or a Company Subsidiary without the prior written consent of Heineken, which consent shall not be unreasonably withheld or delayed; (xiii) neither the Company nor any Company Subsidiary shall adopt, amend, modify or terminate any bonus, profit sharing, incentive, severance, employee benefit, or other plan for the benefit of any of its directors, officers and/or senior or employees, except for increases managerial employees or make any contributions to any employee benefit plan in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently an amount exceeding contributions required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employersby Law; (jxiv) make neither the Company nor any Company Subsidiary shall take, or change knowingly agree to or omit to take, any Tax election, make or change action that would result in any method or accounting with respect of the conditions to Taxes, file any amended Tax Return or settle or compromise any material Tax liability;the Closing set forth in Article VII not being satisfied; and (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nxv) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or shall enter into an agreement any agreement, contract, commitment or arrangement to do any of the foregoing. The Heineken Parties shall give good faith consideration to any reasonable consent sought by the FEMSA Parties or the Company to deviate from the restrictions set forth in this Section 6.1 and shall not withhold such consent without a good faith reason for doing so. (c) Notwithstanding any other provision of this Agreement, other than the sponsorship agreements listed on Schedule 6.1(c) hereto (true and complete copies of which have been delivered to Heineken prior to the date hereof), prior to the date hereof FEMSA has transferred and assumed all assets and liabilities of the Company and Company Subsidiaries related to the Monterrey Rayados football team, including any such assets and liabilities related to the construction of a stadium for the Monterrey Rayados football team, provided that the current arrangements with respect to the sponsorship of the Monterrey Rayados football team will continue until June 2010, at which time it shall be renewed by the Company on the same terms and conditions currently in effect, except for (i) inflation adjustment of the amount thereof and (ii) a term that shall expire one year from the date of renewal. (d) Notwithstanding any other provision of this Agreement, subsequent to the date hereof and on or prior to the Closing Date, (i) the Company and FEMSA shall agree to modifications to the existing Intercompany Loan Agreements such that all Indebtedness under the Intercompany Loan Agreements shall become due and payable one month following the Closing Date without any prepayment penalties and (ii) the Company shall assume the Santander Loan and FEMSA shall be released from the Santander Loan, and FEMSA Cerveza shall be released from the Santander Intercompany Loan, provided that in the event that the Company does not assume the Santander Loan, the Company and FEMSA shall agree to modifications to the existing Santander Intercompany Loan such that all Indebtedness under the Santander Intercompany Loan shall become due and payable one month following the Closing Date without any prepayment penalties and FEMSA shall take such actions as necessary so that the Company and the Company Subsidiaries are released from any associated guarantee.

Interim Operations of the Company. The Company covenants and agrees that, except (i) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after During the period from the date hereofof this Agreement until the Effective Time, and prior to the time the directors of the Purchaser have been elected toCompany shall, and shall constitute a majority of, cause each of its Subsidiaries to (unless the Company Board pursuant to Section 1.3 (Parent shall otherwise approve in writing and except as otherwise expressly contemplated by or provided in this Agreement or as set forth in the "Appointment Date"): (a) the business corresponding section of the Company and Disclosure Schedule): 3.1.1. conduct its Subsidiaries shall be conducted only businesses in the ordinary and usual course of business in a manner all material respects and, to the extent consistent with past practice (including payment of accounts payabletherewith, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its commercially reasonable best efforts to preserve its business organization intact and maintain its existing relations and goodwill with employees, customers, clients, suppliers, creditors, lessors and business associates; 3.1.2. not (i) preserve substantially intact amend the business organization and assets certificate of incorporation or by-laws of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectlyCompany; (ii) amend its Certificate split, combine, subdivide or reclassify any of Incorporation or By-laws or similar organizational documentsthe outstanding shares of capital stock of the Company; or (iii) split, combine adopt a plan of complete or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Companypartial liquidation; (c) except as disclosed on Schedule 5.1(c), neither 3.1.3. with respect to the Company nor any of and its Material Subsidiaries shall: (i) subject to Section 3.11.2, not declare, set aside or pay any dividend or other distribution payable in cash, stock or property with in respect to of any of its capital stock or any securities convertible, exchangeable or exercisable for or into shares of its capital stock, other than (w) in respect of the Company Common Shares, regular quarterly cash dividends of no more than $.025 per Company Common Share, (x) in respect of the Company Money Market Preferred Shares, dividends required pursuant to the terms thereof, (y) in respect of the Company Convertible Notes, interest payments required to be made under the terms thereof, and (z) dividends paid to the Company or wholly owned Subsidiaries of the Company; and (ii) not repurchase, redeem or otherwise acquire (except for repurchases, redemptions or acquisitions (A) required by the terms of its capital stock or securities outstanding on the date of this Agreement, (B) required by the respective terms as of the date of this Agreement of any Company Stock Plans, or (C) repurchases of Company Money Market Preferred Shares for not more than the Preferred Consideration per share) any shares of its capital stock, or any securities convertible, exchangeable or exercisable for or into any shares of its capital stock; 3.1.4. except as permitted by Section 3.1.5, not (i) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable or exercisable for, or rights, options, warrants, conversion rights, stock appreciation rights, redemption rights, repurchase rights, agreements, arrangements, calls, commitments or rights of any kind to acquire, any shares of its capital stock (other than (x) grants to new hires and to employees who become Company Employees as a result of any class acquisitions or other business combinations permitted by this Agreement of Company Stock Options to purchase up to 800,000 Company Common Shares, in the aggregate; provided that those Company Stock Options are granted under Company Stock Plans in effect as of the date of this Agreement in a manner consistent with past practice and shall not vest or become exercisable as a result of this Agreement or the consummation of the transactions contemplated by this Agreement, (y) Company Common Shares issuable pursuant to Company Stock Options outstanding on the date of this Agreement under the Company Stock Plans or granted after the date of this Agreement in accordance with the terms of this Agreement, or (z) upon conversion of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares Convertible Notes outstanding as of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Optionsthis Agreement); (iiiii) transfer, lease, license, sell, mortgage, pledge, dispose of, incur or encumber modify in any material assets, whether tangible respect (x) any material indebtedness or intangible, any of the terms of any material indebtedness or (y) any other than sales of products liability except in the ordinary and usual course of business and consistent with past practiceexcept for any judgment issued against the Company or any of its Subsidiaries or any other liability, the incurrence of which is not within the control of the Company or any of its Subsidiaries; (iii) enter into any merger, reorganization, consolidation or share exchange; (iv) incur or modify sell, lease, license to any indebtedness or other material liability or issue any debt securities; or (vPerson(s) redeem, purchase or otherwise acquire directly dispose of any business or indirectly material assets or any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d)other assets, neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in outside the ordinary and usual course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or asset disposition or otherwise); or (v) purchase, lease or license from any Person or otherwise acquire any assets (outside of the ordinary and usual course of business) and/or business(s) (by merger, consolidation, stock or asset acquisition or otherwise) (any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposalthese transactions an "Acquisition Transaction"), or enter into any agreement with respect to any Acquisition Transaction; provided that the Company and its Subsidiaries may enter into or amend consummate any Acquisition Transaction so long as (1) no individual Acquisition Transaction (together with all related transactions) entered into after the date of this Agreement involves payment, delivery of consideration or an agreement to deliver any future consideration of a value or an estimated value of more than $50 million, (2) all Acquisition Transactions entered into after the date of this Agreement do not involve payment, delivery of consideration or an agreement to deliver any future consideration of a value or an estimated value of more than $100 million, in the aggregate, and (3) Parent is given notice no later than concurrently with the entry into any agreement with respect to an Acquisition Transaction and, in any material respect event, before any contract public disclosure regarding an Acquisition Transaction is made by the Company any of its Subsidiaries or by any other party (if any Company Officer is aware that any public disclosure is to be made by the other party); 3.1.5. not (i) terminate, establish, adopt, enter into, implement, make any new grants or awards of equity-based compensation or other benefits under, amend or otherwise modify any compensation or benefit plan or outstanding award thereunder or agreement or increase the salary, wage, bonus or other than compensation of any directors, officers or employees except (1) for increases in salary, wages or non-equity bonus compensation or non-equity benefits in the ordinary and usual course of business consistent with past practice, which ; and (2) as permitted in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement accordance with Section 3.1.4 and pursuant to the agreements listed in excess Section 3.1.5 of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bidDisclosure Schedule; and (3) any immaterial amendment or modification to any compensation or benefit plan, proposal (ii) cause the acceleration of the time of payment or renewal to result vesting, or trigger any payment or funding, of any compensation, benefits or awards, under any Company Employment Agreement, any Company Employee Plan or any Company Foreign Plan, except in a loss thereunder each case as required by the applicable Company Employee Plan, Company Foreign Plan or Company Employment Agreement pursuant to the Companyterms in effect as of the date of this Agreement, (iii) settle the exercise of stock options in other than Company Common Shares or (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, terminate Without Cause (as defined in the aggregate, in excess No-Sale Agreement) the employment of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization employee of the Company or any of its Subsidiaries (other than the Merger); (i) except who is a party to the extent required under existing employee and director benefit plans, agreements a No-Sale Agreement or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of take any action that would permit any of its directors, officers those employees to terminate his or employeesher employment for Good Reason (as defined in the Employment Agreement), except for increases in salary or wages if the Board of employees Directors of the Company determines in good faith that any such termination or action is required for it to comply with its Subsidiaries who are fiduciary duties under applicable law; 3.1.6. subject to Section 3.6.1(b), not officers take any action or omit to take any action which to the knowledge of the Company Officers would prevent, materially delay or materially impede the consummation of the Merger or the other transactions contemplated by this Agreement, including any action or omission that would cause the Merger to fail to qualify as a reorganization under Section 368 of the Code; 3.1.7. timely satisfy, or cause to be timely satisfied, all applicable Tax reporting and filing requirements contained in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting Code with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiariesby this Agreement, including, without limitation, the hiring of additional officers or the termination of existing officersreporting requirements contained in United States Treasury Regulation Section 1.367(a)-3(c)(6); 3.1.8. not (mw) paytake any action to amend the Rights Agreement, discharge (x) redeem the rights subject to the Rights Agreement or satisfy (y) take any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than action to exempt any third party from the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practiceRights Agreement; (n) neither the Company nor 3.1.9. not waive any of its Subsidiaries will takerights under, or agree release any other party from, amend, or fail to commit to takeenforce its rights under, any provision of any standstill agreement; 3.1.10. except as permitted by Section 3.1.4, not enter into, or modify, amend the terms of, or terminate any material joint venture, partnership or similar arrangement; 3.1.11. not (i) change its (w) Tax accounting policies, practices or methods, or (x) Tax elections; and (ii) settle any material audits, examinations or litigation with respect to Taxes; 3.1.12. not take any action that would make any representation or warranty of to cause the Company contained herein inaccurate in any material respect at, or as of any time prior to, Common Shares to cease to be listed on the Effective Time (except for representations made as of a specific date)NYSE; or (o) neither the Company nor any of its Subsidiaries will 3.1.13. authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. The Company covenants From the date of this Agreement and agrees thatuntil the Effective Time or the earlier termination of this Agreement in accordance with its terms, except (ia) as permitted contemplated by this Agreement, (iib) as indicated set forth on Schedule 5.1Section 5.1 of the Company Disclosure Letter, (c) as required by applicable Law, or (iiid) as agreed consented to in writing by Parent, Parent after the date hereof, of this Agreement and prior to the time Effective Time, which consent will not be unreasonably withheld or delayed with respect to the directors of matters in paragraphs (i), (iv), (v), (vi), (vii), (x) and, to the Purchaser have been elected toextent related thereto, and shall constitute a majority of(xiii), the Company Board pursuant to Section 1.3 (the "Appointment Date"):agrees that: (ai) the business of the Company and its Subsidiaries shall be conducted will use commercially reasonable efforts to conduct business only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerpractice; (bii) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) not amend its Restated Certificate of Incorporation or By-laws or similar organizational documents; or Laws and the Company’s Subsidiaries will not amend the Company Subsidiary Organizational Documents; (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: will (iA) declare, set aside or pay any dividend or other distribution distribution, whether payable in cash, stock or property other property, with respect to its capital stock; , except for quarterly cash dividends payable in the amounts and at the times consistent with the Company’s current dividend policy, (iiB) issue, deliversell, transfer, pledge, dispose of or encumber or agree to issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or other Rights of the Company or any of its SubsidiariesSubsidiaries or Taiwan Chlorine Industries, or other ownership interest (including stock appreciation rights and phantom stock)Ltd., other than in respect of the shares of Common Stock the Company’s capital stock reserved for issuance on the date hereof upon of this Agreement and issued pursuant to the exercise awards under the Company Stock Plans outstanding the date of this Agreement or in respect of account balances under the Deferred Plans as of the date of this Agreement, (C) split, combine or reclassify the Shares or any other outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose capital stock of the Company or any of the Subsidiaries of the Company or issue or authorize the issuance of any other securities in respect of, in lieu of or encumber any material assetsin substitution therefor, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (vD) redeem, purchase or otherwise acquire acquire, directly or indirectly indirectly, any capital stock or other Rights of the Company or any of its capital stock or rights Subsidiaries, except, in respect thereofthe case of each of clauses (A) through (D), as required by any Company Benefit Plan in effect as of the date of this Agreement; (div) except as required by applicable Law, under the terms of any Company Benefit Plan or collective bargaining agreement as of the date of this Agreement disclosed on Schedule 5.1(d), neither to Parent or contemplated hereby or by the Company nor any of Disclosure Letter, the Company will not and will not permit its Subsidiaries shall modifyto (A) grant or announce any increase in the salaries, amend bonuses or terminate other compensation or benefits payable to any officer, executive officer or director of its Contracts the Company (other than annual salary or waive, release or assign any material rights or claims, except wage rate adjustments in the ordinary course of business and consistent with past practicepractice for employees whose base salaries are less than $200,000 annually), (B) enter into any new, or amend in any material respect any existing, employment, indemnification, severance, retention, change in control or similar agreement, except to implement any grant or increase to the extent permitted pursuant to clause (A) of this subsection (iv) or any new hire to the extent permitted pursuant to clause (D) of this subsection (iv) or, (C) establish, adopt, enter into, amend, terminate or take any action to accelerate rights under any Company Benefit Plan or any plan, agreement, program, policy, trust, fund or other arrangement that would be a Company Benefit Plan if it were in existence as of the date of this Agreement, or (D) hire or transfer any officer or employee who would earn more than $200,000 in base salary annually (other than offers extended prior to the date of this Agreement and disclosed to Parent and other than positions that become open after the date of this Agreement); (ev) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; will (fA) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other personPerson, other than guarantees of except for obligations of wholly-owned Subsidiaries of the Company in the ordinary course or any of business; its wholly owned Subsidiaries or (iiB) make any loans, advances or capital contributions to, or investments in, any other personPerson except for loans among the Company and any of its wholly owned Subsidiaries, other than advances to wholly owned Subsidiaries officers, directors or employees of the Company or any of its Subsidiaries made in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend for expenses incurred in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken their capacity as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)such; (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (hvi) neither the Company nor any of its Subsidiaries will make any capital expenditures that, in the aggregate, materially exceed the amount of capital expenditures contemplated by the Company’s existing capital budget, a copy of which has been furnished to Parent; (vii) neither the Company nor any of its Subsidiaries will pay, discharge, waive, settle or satisfy any rights, claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than for amounts, individually or in the aggregate, not to exceed $5,000,000 (in excess of third-party insurance); (viii) neither the Company nor any of its Subsidiaries will (A) incur, guarantee or otherwise become liable for or modify in any material respect any Indebtedness or (B) other than as required by the terms of such Indebtedness, prepay, redeem, repurchase, defease, cancel or otherwise acquire any Indebtedness, in each case, excluding borrowings under the Revolver in the ordinary course of business consistent with past practice and other than for amounts, individually or in the aggregate, not to exceed $5,000,000; (ix) neither the Company nor any of its Subsidiaries will change any of the accounting methods, principles or practices used by it unless required by a change in GAAP or applicable Law; (x) neither the Company nor any of its Subsidiaries will (A) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Mergerthis Agreement); , (iB) except to the extent required under existing employee and director benefit plansacquire by merging or consolidating with, agreements or arrangements as by purchasing any equity interest in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees portion of the Company assets of, or its Subsidiaries who are not officers by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or Person, or division thereof, other than acquisitions of the Company feedstock or other raw materials in the ordinary course of business in accordance with past practicebusiness, or grant (C) acquire, transfer, lease, license, sell, mortgage, pledge, or otherwise dispose of or encumber any retentionof its material assets, severance or termination pay not currently required to be paid under existing severance plans other than (x) Permitted Encumbrances and (y) to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee in favor of the Company or any a wholly owned Subsidiary of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employersCompany; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nxi) neither the Company nor any of its Subsidiaries will take(A) accelerate, terminate, cancel, renew, fail to exercise an expiring renewal option, amend, waive any material right under, or agree to commit to take, otherwise modify any action Material Contract or any Contract that would make constitute a Material Contract if it were in effect on the date of this Agreement or (B) enter into any representation or warranty Contract that would constitute a Material Contract if it were in effect on the date of this Agreement, in each case, other than in the ordinary course of business consistent with past practice (it being understood that solely for purposes of this Section 5.1(xi), the reference to $10,000,000 in clause (vii) of the Company contained herein inaccurate definition of Material Contract will be deemed to reference $5,000,000, and the reference to $50,000,000 in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific datesuch clause will be deemed to reference $25,000,000); or; (oxii) neither the Company nor any of its Subsidiaries will authorize make, change or revoke any material Tax election, change any material Tax accounting method, file any material amended Tax Return, enter into an any closing agreement within the meaning of Section 7212 of the Code (or any comparable provision of state, local or foreign Law) or request any material Tax ruling; and (xiii) neither the Company nor any of its Subsidiaries, will agree to do take or make any commitment to take any of the foregoingactions described in the foregoing clauses (i)-(xii). Nothing contained in this Agreement will give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s operations prior to the Effective Time. Prior to the Effective Time, the Company will exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its operations.

Interim Operations of the Company. The Company covenants and agrees that, except (i) as permitted expressly contemplated by this Agreement, (ii) as indicated on set forth in Schedule 5.15.2 of the Company Disclosure Schedules, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors designees of the Purchaser Parent have been elected to, and shall constitute a majority of, the Company Company's Board of Directors pursuant to Section 1.3 hereof (the "Appointment Date"): (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course and, to the extent consistent therewith, each of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the its business organization intact and assets of the Company and maintain its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries existing relations with customers, suppliers suppliers, employees, creditors, business partners and other persons others having business dealings with which it, such that its good will and ongoing business shall be unimpaired at the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash Effective Time of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the OfferMerger; (b) the The Company will not, directly or indirectly, (i) except upon exercise of the options or other rights to purchase shares of Common Stock pursuant to presently outstanding stock options under the plans described in Section 2.4 hereof, issue, sell, transfer or pledge or agree to sell, issue, transfer or pledge any Shares treasury stock of the Company or any capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate Articles of Incorporation or By-laws Laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or optionsoptions (including any automatic grants of options under the Company Stock Plans), warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock (A) Shares reserved for issuance on the date hereof upon pursuant to the exercise of options outstanding Optionson the date hereof under the plans described in Section 2.4 hereof and (B) Shares issued under the ESPP if the Offer extends beyond June 30, 1999; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales in the ordinary and usual course of products business and consistent with past practice, or incur or modify any indebtedness or other liability, other than in the ordinary and usual course of business and consistent with past practice; or (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire acquire, directly or indirectly indirectly, any shares of any class or series of its capital stock stock, or rights in respect thereofany instrument or security which consists of or includes a right to acquire such shares (other than the cancellation of options outstanding on the date hereof pursuant to Section 2.4 hereof); (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall make any change in the compensation payable or to become payable to any of its officers, directors, employees, agents or consultants (other than general increases in wages to employees who are not officers or directors or affiliates in the ordinary course consistent with past practice), or to Persons (as hereinafter defined) providing management services, enter into or amend any employment, severance, consulting, termination or other agreement or plan or make any loans to any of its officers, directors, employees, affiliates, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to any Plan or otherwise; 66 (e) neither the Company nor any of its Subsidiaries shall pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing Plan, agreement or arrangement to any officer, director, employee or affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other Plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant, whether past or present; or amend in any material respect any such existing Plan, agreement or arrangement in a manner inconsistent with the foregoing, except that the Company and its Subsidiaries may continue to make quarterly bonus payments to certain key employees consistent with past business practice in an aggregate amount not to exceed $1.8 million; (f) the Company shall not modify, amend or terminate any of the Company Agreements, and neither the Company nor any of its Contracts or Subsidiaries shall waive, release or assign any material rights or claimsclaims under any of the Company Agreements, except in the ordinary course of business and consistent with past practice; (eg) neither the Company nor any of its Subsidiaries shall permit will cause any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable without notice to the Company and its SubsidiariesParent; (fh) neither the Company nor any of its Subsidiaries shall will (i)acquire i) incur or assume any long-term debt, or except in the ordinary course of business and in an amount consistent with past practice, incur or assume any short-term indebtedness; (by merger, consolidation, acquisition of stock or assets or otherwiseii) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other personPerson, other than guarantees of obligations of wholly-owned Subsidiaries of the Company except in the ordinary course of businessbusiness and consistent with past practice; (iiiii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the CompanyPerson; or (viiv) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assetsassets or real estate), any agreement to develop customized software products out of the ordinary course of business; (gi) neither the Company nor any of its Subsidiaries shall will change any of the accounting methods used by it unless required by GAAP, make any Tax election or change any Tax election already made or settle any Tax Audit, other than in the ordinary course of business; (hj) neither the Company nor any of its Subsidiaries will pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, in the ordinary course of business and consistent with past practice, of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company; (k) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VII or any of the conditions to the Offer set forth in Annex I not being satisfied, or would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as Time, or that would materially impair the ability of a specific date)the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation; orand (om) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose or announce an intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except (i) as permitted expressly contemplated by this Agreement, (ii) as indicated on Schedule 5.1, in the ordinary course of business consistent with past practice which would not require the approval of the Company Board of Directors or (iii) as agreed in writing by Parent, after the date hereof, and prior to the earlier of (x) the termination of this Agreement in accordance with Article VIII and (y) the time the directors designees of the Purchaser Parent have been elected to, and shall constitute a majority of, the Company Board of Directors pursuant to Section 1.3 (the "Appointment Date"): (a) the business each of the Company and its the Company Subsidiaries shall be conducted only use commercial best efforts to conduct their business in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payablepractice, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company Subsidiaries shall use its commercial best efforts to preserve its present business and its Subsidiaries, (iii) preserve the present relationships of the Company organization substantially intact and its Subsidiaries maintain such relations with customers, suppliers suppliers, employees, contractors, distributors and other persons others having business dealings with which the Company or any of it as are reasonably necessary to preserve substantially intact its Subsidiaries has significant present business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerorganization; (b) the Company will shall not, directly or indirectly, take any of the actions described in Section 4.13(a) (other than, subject to the Company consulting with Parent with respect to the approval of the Company's operating budget for 2005, clauses (xii) and (xvi)) or Sections 4.13(b) or 4.13(c) of the Company Bylaws. (c) the Company shall not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws Bylaws or similar organizational documents; or , (ii) increase the size of the Company Board of Directors, (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; , (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; stock (iiother than regular quarterly dividends on the Preferred Shares or dividends paid by a wholly owned Company Subsidiary to the Company or any other wholly owned Company Subsidiary), (v) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or optionsoptions (other than such options listed on Section 5.1(c) of the Company Disclosure Schedule), warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its any Company Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Company Stock Options outstanding Optionson the date hereof or issued upon the conversion of the Class B Shares or Series A Preferred Stock outstanding on the date hereof; (iiivi) transfer, lease, license, sell, mortgage, pledge, dispose of, effect any registration of shares of capital stock of any class of the Company or encumber any material assets, Company Subsidiaries (whether tangible pursuant to demand registration rights of stockholders or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (ivotherwise) incur or modify any indebtedness or other material liability or issue any debt securities; or (vvii) redeem, purchase or otherwise acquire directly any shares of any class or indirectly any series of its capital stock stock, or any instrument or security which consists of or includes a right to acquire such shares except in connection with the exercise of repurchase rights or rights of first refusal in favor of the Company with respect thereofto shares of Common Stock issued upon exercise of Company Stock Options granted under the Company Option Plans; (d) except as disclosed on Schedule 5.1(d)required by applicable law, neither the Company nor any of its Subsidiaries Company Subsidiary shall modify, amend make any change in the compensation or terminate benefits payable or to become payable to any of its Contracts officers, directors, employees, agents or consultants (other than increases in wages to employees who are not directors or affiliates, in the ordinary course of business consistent with past practice) or as required under the terms of any Benefit Plan or under applicable law, enter into or amend any employment, severance, consulting, termination or other agreement or employee benefit plan or make any loans to any of its officers, directors, employees, affiliates, agents or consultants (other than advances for reasonable business travel or other customary business expenses or in connection with the Transactions) or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to a Benefit Plan or otherwise; (e) except as required by applicable law, neither the Company nor any Company Subsidiary shall pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any Company director, officer, employee, agent or consultant, whether past or present, or amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (f) neither the Company nor any Company Subsidiary shall waive, release or assign any material rights or claimsclaims under any of (i) the Company Agreements and (ii) the IP Agreements, except in either cases having a value in excess of $250,000 individually or $1,000,000 in the ordinary course of business and consistent with past practiceaggregate; (eg) neither the Company nor any of its Subsidiaries shall Company Subsidiary will permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled cancelled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable without notice to the Company and its SubsidiariesParent; (fh) neither the Company nor any of its Subsidiaries shall Company Subsidiary will (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (iii) make any loans, advances or capital contributions to, or investments in, any other personPerson, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 individually or capital expenditures which are, $1,000,000 in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, ; (vii) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale sale, lease or license of assets (tangible or intangible) or real estate) involving aggregate payments to or by the Company or any Company Subsidiary with respect to such commitment or transaction of $5,000,000 or greater; provided, however, that with respect to any transaction or commitment involving aggregate payments to or from the Company or any Company Subsidiary in an amount greater with respect to such commitment or transaction than $1,000,000, the Company shall (A) subject to applicable law, take into account the integration plans and strategy for the combined businesses and (B) with respect to any such commitment or transaction involving aggregate payments to or from the Company or any Company Subsidiary in an amount greater with respect to such commitment or transaction than $3,000,000, obtain the consent of Parent (such consent not to be unreasonably withheld) prior to proceeding therewith; provided, however, that nothing in this Section 5.1(h)(ii) shall prohibit the Company from entering into a lease agreement for office space at the Company's current headquarters building for a term not in excess of assetsthree years at an aggregate cost not in excess of $1,000,000 (provided, that in making any decision to enter into such lease, subject to applicable law, the Company shall give due consideration to any plans of Parent for office space expansion after the Closing and otherwise takes into account the integration plans and strategy for the combined businesses); or (iii) create or allow to be created any Encumbrance (other than Permitted Encumbrance) upon the current assets of the Company, including, without limitation, cash and cash equivalents as reflected on the most recent balance sheet of the Company in an amount greater than $250,000 individually or $1,000,000 in the aggregate; (gi) neither the Company nor any of its Subsidiaries shall Company Subsidiary will (i) change any of the accounting methods used by it unless materially affecting its assets, liabilities or business, except for such changes required by GAAPGAAP or (ii) make or change any Tax election, change an annual accounting period, adopt or change any accounting method, file any amended income, franchise or other material Tax Returns, enter into any closing or similar agreement, settle or consent to any Tax Claim, or consent to any extension or waiver of the limitation period applicable to any Tax Claim; (hj) neither the Company nor any Company Subsidiary will pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), in excess of its Subsidiaries $5,000,000 or greater; provided, however, that with respect to any claims, liabilities or obligations in excess of $1,000,000, the Company shall (A) subject to applicable law, take into account the integration plans and strategy for the combined businesses and (B) with respect to claims, liabilities or obligations in excess of $3,000,000, obtain the consent of Parent (such consent not to be unreasonably withheld) prior to taking any action with respect thereto; provided, however, that the Company shall be subject to the limitations set forth in Section 5.1(b) (which requires Parent's consent to take certain actions) if such actions are otherwise described in Section 4.13(a), (b) or (c) of the Company Bylaws; (k) neither the Company nor any Company Subsidiary will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries Company Subsidiary (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby;; and (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries Company Subsidiary will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement any written agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose, in writing or announce an intention to do any of the foregoing. Subject to applicable law, following the date of this Agreement, except in connection with the payment of invoices or other ordinary course business or correspondence (x) consistent with past practice and (y) not in connection with the modification, amendment or waiver of any material term thereof, the Company agrees not to initiate, or to respond to, any written correspondence with the applicable counterparty (or any of its affiliates) in connection with any Company Agreement set forth on Schedule 5.1, without first obtaining the prior approval of Parent. Notwithstanding anything to the contrary contained herein, the Company shall not, and shall cause its affiliates not to, without the written consent of Parent (i) enter into any new Company Agreement that is described in clauses (b), (e), (f) or (n) of Section 3.14 (the "Restricted Clauses") or (ii) modify or amend in any respect, or terminate any Company Agreement described in the Restricted Clauses or on Schedule 5.1 or modify or amend any Company Agreement described in Schedule 5.1 in a manner to include in such agreements a restriction or limitation described in the Restricted Clauses.

Interim Operations of the Company. The Except as (x) set forth on Section 6.1 of the Company covenants and agrees that, except (i) as permitted by this AgreementDisclosure Letter, (iiy) as indicated on Schedule 5.1, expressly provided herein or (iiiz) as agreed consented to in writing by ParentParent (such consent not to be unreasonably withheld, conditioned or delayed), from and after the date hereof, and prior to of this Agreement until the time the directors earlier of the Purchaser have been elected totermination of this Agreement in accordance with its terms or the Effective Time, the Company shall, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business cause each of the Company and its Subsidiaries shall be conducted to, act and carry on its business only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company use commercially reasonable efforts to preserve intact its and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the Subsidiaries’ business organization and assets of the Company and preserve its Subsidiariesrelationships with material customers, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customersclients, suppliers and other persons others having material business dealings with which it. Without limiting the generality of the foregoing, from and after the date of this Agreement until the earlier of the termination of this Agreement in accordance with its terms or the Effective Time, the Company or shall not, and shall not permit any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer; (b) the Company will notto, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of do any of the Subsidiaries following without the prior written consent of Parent (such consent, except with respect to clauses (a), (b), (c), (e), (f), (g), (h), (i), (j), (k), (o), (p) or, solely to the extent relating to the foregoing, (r) below, not to be unreasonably withheld, conditioned or delayed) except as otherwise expressly provided in Section 6.1 of the CompanyCompany Disclosure Letter or in this Agreement: (a) except as contemplated by Section 2.1, amend the Amended and Restated Certificate of Incorporation, as amended or Bylaws of the Company or comparable organizational documents of its Subsidiaries; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (ib) declare, set aside or pay any dividend or other distribution payable in cash, stock securities or other property with respect to to, or split, combine, redeem or reclassify, or purchase or otherwise acquire, any shares of its capital stockstock (or other equity interests) or other securities of the Company or any of its Subsidiaries, other than the making of a dividend or other distribution by a wholly-owned Subsidiary to another wholly-owned Subsidiary or to the Company; provided, that the Company may repurchase unvested shares of restricted Company Common Stock upon the termination of employment of the holder thereof to the extent contractually obligated to do so; (iic) issueexcept as contemplated by Sections 2.1 and 3.1, deliver, issue or sell, pledge, dispose or authorize the issuance or sale of any shares of capital stock (whether unrestricted or encumber restricted) or other securities (equity or debt) of the Company or any additional shares ofof its Subsidiaries, or issue or sell, or authorize the issuance or sale of any securities (equity or debt) convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquirepurchase or subscribe for, or enter into any Contract with respect to the issuance or sale of, any shares of the foregoing, or make any other material change in the capital stock of any class structure of the Company or and its Subsidiaries, except for the issuance by the Company of shares of Company Common Stock pursuant to the terms of any Options or other ownership interest (including stock appreciation rights and phantom stock), other than shares of securities convertible into or exchangeable or exercisable for Company Common Stock reserved for issuance outstanding on the date hereof upon and disclosed in Section 4.2(a) of the exercise Company Disclosure Letter; (d) except as contemplated by the Company’s budget, a copy of outstanding Options; which has been provided to Parent prior to the date hereof, make (iiior commit to make), or enter into any Contracts (or any amendments, modifications, supplements or replacements to existing Contracts to which the Company or any of its Subsidiaries is a party) to be performed relating to the making of any capital expenditure in excess of $1 million, or in the aggregate for capital expenditures with a value in excess of $3 million; (e) acquire, by merging or consolidating with, by purchasing an equity interest in or by purchasing all or a portion of the assets of, any business or Person, in each case which are material to the Company and its Subsidiaries, taken as a whole, other than (A) non-taxable transfers by or among the Company and its Subsidiaries or between the Company’s Subsidiaries, and (B) acquisitions of equipment, inventories and supplies in the ordinary course of business consistent with past practice; (f) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, or encumber subject to any material assets, whether tangible or intangible, Lien (other than sales of products in the ordinary and usual course of business and consistent with past practice; (iva Permitted Lien) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock properties or rights assets, in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any each case which are material rights or claims, except in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; , taken as a whole, except (fi) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwisepursuant to existing Contracts and commitments described in Section 6.1(f) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; Disclosure Letter, (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of non-taxable transfers between the Company in and its Subsidiaries or between the ordinary course of business and consistent with past practice; Company’s Subsidiaries, (iii) make any bid dispositions of excess or proposal, or enter into or amend obsolete assets in any material respect any contract or agreement other than in the ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, and (iv) authorize any single capital expenditure which is in excess of $250,000 leases, licenses or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate sales of the Company; ’s software or other assets in the ordinary course of business consistent with past practice; (vig) enter into any material commitment except to the extent required under existing employee and director benefit plans, agreements or transaction with respect to arrangements in effect as of the date hereof or required by applicable Law, (i) increase the compensation or fringe benefits of any of its directors, officers or employees (except for increases to employees who are not officers of the foregoing Company or any of its Subsidiaries in the ordinary course of business consistent with past practice) or xxxxx xxxxxxxxx or termination pay not currently required to be paid under existing severance plans, policies or arrangements unless as agreed between the Parties (includingsuch agreement not to be unreasonably withheld), any such payments to include, but not limited to, appropriate stay bonus and/or other similar consideration, (ii) enter into, amend, modify, supplement or replace any borrowingemployment, capital expenditure benefit, consulting or purchaseseverance agreement, sale policy or lease arrangement with any present or former director, officer or other employee of assets); (g) neither the Company nor or any of its Subsidiaries, (iii) hire any employee other than (A) any new employee who is hired to replace any current employee whose employment with the Company or any of its Subsidiaries shall change is terminated for any reason (with such replacement employee receiving substantially similar or lesser compensation and benefits as such terminated employee) and (B) any new employee who does not replace any current employee pursuant to clause (A) above whose reasonably anticipated annual base salary and bonus will not exceed $200,000 individually or $2.0 million in the aggregate among all such new employees hired pursuant to this clause (B), (iv) establish, adopt, enter into or, except to the extent necessary to retain favorable Tax treatment or avoid adverse Tax treatment, amend, modify, supplement, replace or terminate any bonus, profit sharing, thrift, compensation, stock option, restricted stock, benefit, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the collective benefit of any directors, officers or employees, (v) make any loans or advances to any present or former director, officer or employee of the accounting methods used by it unless required by GAAPCompany or its Subsidiaries, except in the ordinary course consistent with past practice, or (vi) grant any equity or equity-based awards to any Person; (h) neither the Company nor except as may be required by applicable Law, GAAP or SEC rules and regulations, make any material changes in any of its Subsidiaries will accounting practices, policies or procedures or any of its methods of reporting income, deductions or other items for income Tax purposes; (i) except as contemplated by Sections 2.1 and 3.1, adopt or enter into a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger)or any agreement relating to an Acquisition Proposal, except as expressly permitted by Section 6.3; (j) incur or assume any Indebtedness, enter into any agreement to incur or assume any Indebtedness, or guarantee or agree to guarantee, any such Indebtedness, other than (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance consistent with past practice, practice under the Company’s senior secured credit facility in effect as of the date of this Agreement or grant any retention, severance or termination pay not currently required (ii) incurrences that constitute refinancing of existing obligations on terms no less favorable to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or its Subsidiaries than existing terms; (k) except as provided by this Agreement, under any existing Benefit Plans, agreements or arrangements in effect as of its Subsidiariesthe date hereof or as required by applicable Law, accelerate the payment, right to payment or establishvesting of any bonus, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonusseverance, profit sharing, thriftretirement, deferred compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance insurance or other plan, agreement, trust, fund, policy compensation or arrangement for the benefit of any directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated herebybenefits; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge discharge, settle or satisfy any material claims, litigation, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise)obligations, other than (i) the payment, discharge discharge, settlement or satisfaction satisfaction, in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of (A) liabilities reflected or reserved against in the financial statements of Company’s January 31, 2006 balance sheet included in the Company SEC Documents, or (B) liabilities (other than material litigation) subsequently incurred in the ordinary course of business consistent with past practice, and (ii) claims, litigation, liabilities or obligations that in the aggregate do not exceed $3 million; (m) plan, announce, implement or effectuate any material reduction in force, lay-off, early retirement program, severance program or other program concerning the termination of employment of employees of the Company or its Subsidiaries, other than routine employee terminations in the ordinary course of business consistent with past practice; (n) neither take any action or omit to take any action which (i) constitutes a violation of any Company Permit, which violations would result or would reasonably be likely to result, individually or in the aggregate, in the modification, suspension, cancellation, termination of any one or more Company Permits, or (ii) would (or would reasonably be likely to) materially impede, delay, hinder or make more burdensome for the Surviving Corporation or Parent to obtain and maintain all material authorizations, approvals, consents or orders from any Governmental Entity or other third party necessary or required to maintain the Company nor Permits in effect as of the date hereof; (o) enter into any new material line of business or enter into any agreement 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; (i) file or cause to be filed any materially amended Tax Returns or claims for refund, (ii) make or rescind any material Tax election or otherwise fail to prepare all Tax Returns in a manner which is consistent with the past practices of the Company and each Subsidiary of the Company, as the case may be, with respect to the treatment of items on such Tax Returns except to the extent that any inconsistency (A) would not materially increase Parent’s, the Company’s or any of the Company’s Subsidiaries’ liability for Taxes for any period, or (B) is required by Law, (iii) incur any material liability for Taxes other than in the ordinary course of business, or (iv) enter into any settlement or closing agreement with a taxing authority that materially increases or would reasonably be likely to materially increase the Tax liability of the Company or any of its Subsidiaries will takefor any period; (q) fail to maintain with current or other financially responsible insurance companies insurance on its assets, or agree to commit to taketangible and intangible, any action that would make any representation or warranty of the Company contained herein inaccurate and its businesses in any material respect at, or such amounts and against such risks and losses as of any time prior to, the Effective Time (except for representations made as of a specific date)are consistent with past practice; or (or) neither the Company nor any of its Subsidiaries will authorize authorize, agree or enter into an agreement commit to do take any of the foregoingforegoing actions.

Interim Operations of the Company. The Company covenants --------------------------------- and agrees that, except (i) as permitted expressly contemplated by this Agreement, (ii) as indicated on Schedule 5.1, in the ordinary course of business consistent with past practice or (iii) as agreed set forth in Section 5.2 of the Company Disclosure Schedule (indicating the appropriate subsection for each such disclosure) or (iv) consented to in writing by Designated Parent Individuals on behalf of Parent, after the date hereof, and prior to the earlier of (x) the termination of this Agreement in accordance with Article VIII and (y) the time the directors designees of the Purchaser Parent have been elected to, and shall constitute a majority of, the Company Board of Directors pursuant to Section 1.3 (the "Appointment Date"):), which consent shall not be unreasonably ---------------- withheld: (a) the business of the Company and its the Company Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payablepractice, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company Subsidiaries shall use its reasonable efforts to preserve its present business organization intact and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries maintain satisfactory relations with customers, suppliers suppliers, employees, contractors, distributors and other persons others having business dealings with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerit; (b) the Company will (and for all purposes of this Section 5.2, the term Company shall be deemed to include the Company and each Company Subsidiary) shall not, directly or indirectly, (i) except upon exercise of the Company Stock Options or other rights to purchase Shares pursuant to the Company Stock Option Plans outstanding on the date hereof or granted in compliance with this Section 5.2, issue, sell, transfer or pledge or agree to sell, transfer or pledge any Shares or treasury stock of the Company or, except to the Company, any capital stock of any of its Subsidiaries Company Subsidiary beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws Bylaws or similar organizational documents; or (iii) split, combine 45 or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries Company Subsidiary shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stockstock (except for dividends or distributions from any Company Subsidiary to the Company); (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its any Company Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Company Stock Options outstanding Optionson the date hereof; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assetsof assets (real, whether personal or mixed, tangible or intangible, ) (other than sales (x) personal property having an aggregate book value not in excess of products $300,000 and sold in the ordinary and usual course of business consistent with past practice, (y) product sold to customers in the ordinary course of business and consistent (z) short-term investments which (A) are re-invested in accordance with past practiceSection 5.2(c)(iii)(z) of the Company Disclosure Schedule or (B) the proceeds of which are used for working capital purposes or capital expenditures permitted in accordance with Section 5.2(h)(iv)(x)), or dispose of or permit to lapse any rights to the use of any Intellectual Property material to the Company and the Company Subsidiaries on a consolidated basis, or disposed of or disclosed (except as necessary in the conduct of its business) to any person other than representatives of Parent, any Trade Secret or other Intellectual Property material to the Company and the Company Subsidiaries on a consolidated basis and not theretofore a matter of public knowledge; (iv) incur or modify any material indebtedness or other material liability or issue any debt securitiesliability, other than in the ordinary course of business consistent with past practice; or (v) redeemredeem (other than shares underlying Company Stock Options in connection with a cashless exercise of any Company Stock Option permitted by this Agreement), purchase or otherwise acquire directly any shares of any class or indirectly any series of its capital stock stock, or any instrument or security which consists of or includes a right to acquire such shares except in connection with the exercise of repurchase rights or rights of first refusal in favor of the Company with respect thereofto shares of Common Stock issued upon exercise of Company Stock Options granted under the Company Stock Option Plans; (d) except as disclosed on Schedule 5.1(d)required pursuant to Benefit Plans in effect as of the date hereof and set forth in Section 3.12(a) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary shall (i) make any change in the compensation or benefits payable or to become payable (including any increase pursuant to any Benefit Plan) to any of its Subsidiaries officers, directors, employees, agents or (e) except as required pursuant to Benefit Plans in effect as of the date hereof and which are set forth in Section 3.12(a) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary shall (i) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing Benefit Plan to any officer, director, employee or affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officer, director, employee or affiliate of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business consistent with past practice; (ii) adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any Benefit Plan with or for the benefit of any Company director, officer, employee, agent or consultant, whether past or present; or (iii) amend in any material respect any such existing Benefit Plan (other than amendments to consulting agreements terminable within thirty days without the payment of penalties) in a manner inconsistent with subsection (d) above or this subsection (e); (f) the Company will not enter into (i) any Company Agreement that would be a Material Company Agreement described in one or more of subsections (a), (b), (d), (f), (g) of Section 3.14 hereof (other than, in the case of subsection (g), agreements regarding obligations aggregating not more than $100,000), were it in effect as of the date hereof, (ii) any Company Agreement with a term of greater than one month with any of the 25 biggest airlines (in terms of the Company's published fare gross bookings for the first 6 months of 2001) that would be a Material Company Agreement described in subsection (c)(i) of Section 3.14 hereof, were it in effect as of the date hereof, (iii) any Company Agreement that would be a Material Company Agreement described in subsection (c)(ii) of Section 3.14 hereof, were it in effect as of the date hereof, (iv) any Company Agreement that would be a Material Company Agreement described in subsection (c)(iii) of Section 3.14 hereof, were it in effect as of the date hereof, or (v) any Company Agreement that would be a Material Company Agreement described in subsection (h) of Section 3.14 hereof (other than agreements regarding obligations aggregating not more than $200,000), were it in effect as of the date hereof, (vi) any material License Agreement or (vi) any real estate lease (the foregoing collectively referred to herein as "New Material Company Agreements"); and the Company will not, (A) in any material respect, modify, amend or terminate any Material Company Agreement or New Material Agreement or (B) in any respect modify, amend or terminate any New Material Agreement described in clause (ii) immediately above and any Material Company Agreement that would be such a New Material Agreement were it entered into after the date hereof which would either extend the term thereof or reduce the benefit to the Company of its Contracts or the commissions available thereunder; and neither the Company nor any Company Subsidiary shall waive, release or assign any material rights on claims under any Material Company Agreement or claims, except in the ordinary course of business and consistent with past practiceNew Material Agreement; (eg) except pursuant to agreements in effect as of the date hereof and set forth in Section 5.2(g) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries shall Company Subsidiary will permit any material insurance policy insuring material assets or material risks naming it as a beneficiary or a loss payable payee to be canceled cancelled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable without notice to the Company and its SubsidiariesParent; (fh) neither the Company nor any of its Subsidiaries shall Company Subsidiary will (i)acquire i) incur or assume any short-term indebtedness or long-term indebtedness; (by merger, consolidation, acquisition of stock or assets or otherwiseii) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of businessPerson; (iiiii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practicePerson; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)assets or real estate) except (x) to the extent set forth (and then only in time frame set forth) in the overall operating plan and capital and operating budgets for the Company authorized and approved by the Company Board of Directors, in each case as set forth in Section 5.2(h) of the Company Disclosure Schedule or (y) investments in short-term investments which are re-invested in accordance with Section 5.2(c)(iii)(z) of the Company Disclosure Schedule; or (v) dispose of or permit any Encumbrance upon (x) the current assets of the Company, including, without limitation, cash and cash equivalents as reflected on the most recent balance sheet of the Company or, (y) except for Permitted Liens, any other assets of the Company; (gi) neither the Company nor any of its Subsidiaries shall Company Subsidiary will (i) change any of the accounting methods used by it unless materially affecting its assets, liabilities or business, except for such changes required by GAAPGAAP or (ii) make or change any election, change an annual accounting period, adopt or change any Tax accounting method, file any amended Tax Returns, enter into any closing agreement, settle or consent to any Tax Claim, surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax Claim; (hj) except pursuant to agreements in effect as of the date hereof and set forth in Section 5.2(j) of the Company Disclosure Schedule, neither the Company nor any Company Subsidiary will pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, in the ordinary course of business consistent with past practice (including payments under Company Agreements in accordance with the terms of such agreements as in effect on the date hereof), or of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company; (k) cancel any debts owing to the Company or any Company Subsidiary that are material to the Company and the Company Subsidiaries on a consolidated basis or waive any claims or rights of material value to the Company and the Company Subsidiaries on a consolidated basis; (l) neither the Company nor any of its Subsidiaries Company Subsidiary will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries Company Subsidiary (other than the Merger); (im) except to write down the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits value of any inventory (including write-downs by reason of its directors, officers shrinkage or employeesxxxx-down) or write off as uncollectible any notes or accounts receivable, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company write-downs and write-offs in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of that are not material to the Company or incurred in and the ordinary course of business and consistent with past practiceCompany Subsidiaries on a consolidated basis; (n) neither the Company nor any of its Subsidiaries Company Subsidiary will take, or agree to commit in writing or otherwise to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VII or any of the conditions to the Offer set forth in Annex I not being satisfied, or would make any many representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as Time, or that would materially impair the ability of a specific date)the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation; orand (o) neither the Company nor any of its Subsidiaries Company Subsidiary will authorize or enter into an agreement any written agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose, in writing or announce an intention to do any of the foregoing. A Designated Parent Individual shall respond to any request from the Company for any consents sought pursuant to this Section 5.2 as promptly as practicable, with due regard and consideration to the relevant business needs of the Company in seeking and obtaining such consent.

Interim Operations of the Company. The Company covenants and agrees --------------------------------- agrees, as to itself and its subsidiaries, that, except (i) as permitted by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed set forth in writing by Parentthe Disclosure Letter, after the date hereof, hereof and prior to the time the directors of the Effective Time (unless Purchaser have been elected to, shall otherwise agree in writing and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"except as otherwise permitted or required by this Agreement): (a) the business of the Company and its Subsidiaries subsidiaries shall be conducted only in the ordinary and usual course of business in a manner and, to the extent consistent with past practice (including payment of accounts payabletherewith, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiariessubsidiaries shall use its best efforts to preserve its business organization intact and maintain its existing relations with customers, (ii) keep available the services of the present key officerssuppliers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerassociates; (b) the Company will not, directly or indirectly, shall not (i) sell, transfer sell or pledge or agree to sell, transfer sell or pledge any Shares or capital stock of owned by it in any of its Subsidiaries beneficially owned by it, either directly or indirectlysubsidiaries; (ii) amend its the Company Certificate of Incorporation or Company By-laws Laws or similar organizational documentsamend, modify or terminate the Rights Agreement, or redeem the Rights issued pursuant thereto; or (iii) split, combine or reclassify the outstanding Shares Shares; or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Shares; (c) neither the Company nor any of its capital stock; subsidiaries shall (iii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of its capital stock of any class of the Company or its Subsidiariessubsidiaries or any other property or assets other than, or other ownership interest (including stock appreciation rights and phantom stock)in the case of the Company, other than shares of Common Stock reserved for issuance Shares issuable pursuant to options outstanding on the date hereof upon under the exercise of outstanding OptionsStock Plans; (iiiii) transfer, lease, license, guarantee, sell, mortgage, pledge, dispose of, of or encumber any material assets, whether tangible assets or intangible, incur or modify any indebtedness or other liability other than sales of products in the ordinary and usual course of business and consistent with past practicebusiness; (iii) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company; (iv) incur authorize capital expenditures for items other than those relating to the Company's Palmetto, South Carolina facility in excess of $250,000 individually or modify any indebtedness or other material liability or issue any debt securities$1,500,000 in the aggregate; or (v) redeemauthorize capital expenditures for items relating to the Company's Palmetto, purchase South Carolina facility in excess of $8,500,000 in the aggregate or otherwise acquire directly (vi) make any acquisition of another person or indirectly any entity (by merger, consolidation or acquisition of its capital stock or rights in respect thereofassets) or any investment in, assets or stock of any other person or entity; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries subsidiaries shall permit grant any material insurance policy naming it as a beneficiary severance or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions termination pay to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting employment or severance agreement or arrangement with any present or former director, officer or other employee of the Company or such subsidiaries; and neither the Company nor any of its Subsidiaries, or subsidiaries shall establish, adopt adopt, enter into into, make any new grants or amend awards under or terminate amend, any collective bargaining agreement or Company Plan, including, but not limited tobargaining, bonus, profit sharingshar ing, thrift, compensation, stock option, restricted stock, pension, retirement, employee stock ownership, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employers;employees (the "Benefit Plans"); ------------- (je) make or change except in the ordinary and usual course of business and with the consent of Purchaser, neither the Company nor any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or of its subsidiaries shall settle or compromise any material Tax liabilityclaims or litigation or, modify, amend or terminate any of its joint venture agreements, partnership agreements or material Contracts or waive, release or assign any material rights or claims; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nf) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would subsidiaries shall make any representation tax election or warranty permit any insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated without notice to Purchaser, except in the ordinary and usual course of business; (g) except as may be required as a result of a change in law or in generally accepted accounting principles, neither the Company nor any of its subsidiaries shall change any of the Company contained herein inaccurate in any material respect at, accounting practices or as of any time prior to, the Effective Time (except for representations made as of a specific date); orprinciples used by it; (oh) neither the Company nor any of its Subsidiaries subsidiaries shall 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); and (i) neither the Company nor any of its subsidiaries will authorize or enter into an agreement to do any of the foregoingforegoing or take any action that would make any of the representations or warranties of the Company contained in this Agreement untrue or incorrect as of the date when made if such action had then been taken, or would result in any of the Offer Conditions set forth in Annex A not being satisfied.

Interim Operations of the Company. The Company covenants --------------------------------- and agrees that, except (i) as permitted expressly contemplated by this Agreement or the Option Agreement, (ii) as indicated on Schedule 5.1set forth in Section 5.2 of the Company Disclosure Schedule, or (iii) as agreed in writing by Parent, (iv) for the consummation of the Xxxxxx Disposition pursuant to and in accordance with the terms of the Xxxxxx Agreement, or (iv) pursuant to Section 2.4 hereof, after the date hereof, and prior to the time the directors designees of the Purchaser Parent have been elected to, and shall constitute a majority of, the Board of Directors of the Company Board pursuant to Section 1.3 hereof (the "Appointment Date"):): ---------------- (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course and, to the extent consistent therewith, each of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its best reasonable best efforts to (i) preserve substantially intact the its business organization intact and assets of the Company and maintain its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries existing relations with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant suppliers, employees, creditors, business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerpartners; (b) the Company will not, directly or indirectly, (i) except upon exercise of the Warrant or Options or other rights to purchase shares of Common Stock pursuant to the Stock Plans and the Stock Subscription Warrant outstanding on the date hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any Shares treasury stock of the Company or any capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate Articles of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Warrant or Options outstanding Optionson the date hereof; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales in the ordinary and usual course of products business and consistent with past practice, or incur or modify any indebtedness or other liability, other than in the ordinary and usual course of business and consistent with past practice; or (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire acquire, directly or indirectly indirectly, any shares of any class or series of its capital stock stock, or rights in respect thereofany instrument or security which consists of or includes a right to acquire such shares; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall make any change in the compensation payable or to become payable to any of its officers, directors, employees, agents or consultants (other than general increases in wages to employees who are not officers or directors or affiliates in the ordinary course consistent with past practice), or to persons providing management services, enter into or amend any employment, severance, consulting, termination or other agreement or employee benefit plan or make any loans to any of its officers, directors, employees, affiliates, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to an employee benefit plan or otherwise; (e) neither the Company nor any of its Subsidiaries shall pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any director, offi- cer, employee, agent or consultant, whether past or present; or amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (f) the Company shall not modify, amend or terminate any of the Company Agreements or any provision of the Rights Agreement, and neither the Company nor any of its Contracts or Subsidiaries shall waive, release or assign any material rights or claimsclaims under any of the Company Agreements, except in the ordinary course of business and consistent with past practice; (eg) neither the Company nor any of its Subsidiaries shall will permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled cancelled or terminated without notice to Parent except that any such policy may be replaced in the ordinary course of business and consistent with a policy with coverage and on terms and conditions no less favorable to past practice unless the Company and its Subsidiariesshall have obtained a comparable replacement policy; (fh) neither the Company nor any of its Subsidiaries shall will (i)acquire i) incur or assume any long-term debt, or except in the ordinary course of business, incur or assume any short-term indebtedness in amounts not consistent with past practice; (by merger, consolidation, acquisition of stock or assets or otherwiseii) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company except in the ordinary course of businessbusiness and consistent with past practice; (iiiii) make any loans, advances or capital contributions to, or investments in, any other person, person (other than travel and expense advances to wholly owned Subsidiaries of the Company employees in the ordinary course of business and consistent with past practice); or (iiiiv) make any bid or proposal, or enter into any other material commitment or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement transaction involving an amount in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing 50,000 (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assetsassets or real estate); (gi) neither the Company nor any of its Subsidiaries shall will change any of the accounting methods used by it unless required by GAAP, make any Tax election or change any Tax election already made or settle any Tax Audit; (hj) neither the Company nor any of its Subsidiaries will pay, discharge or satisfy any claims, liabil- ities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of any such claims, liabilities or obligations, in the ordinary course of business and consistent with past practice, of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company; (k) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VII or any of the conditions to the Offer set forth in Annex I not being satisfied, or would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as Time, or that would materially impair the ability of a specific date)the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation; orand (om) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose or announce an intention to do any of the foregoing.

Interim Operations of the Company. The Except as set forth in Section 5.1 of the Company covenants and agrees thatDisclosure Schedule, except (i) as permitted by required pursuant to this Agreement, (ii) as indicated on Schedule 5.1, Agreement or (iii) as agreed in writing by ParentParent (which agreement shall not be unreasonably withheld or delayed), after from the date hereof, hereof until the earlier of (A) the valid termination of this Agreement in accordance with Article VIII hereto and prior to (B) the time the directors designees of the Purchaser Parent have been elected to, and shall constitute a majority of, the Company Board of Directors pursuant to Section 1.3 (the "“Appointment Date"): (a) the business of ”), the Company and shall (i) conduct its Subsidiaries shall be conducted only businesses in all material respects in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiariespractice, (ii) use commercially reasonable efforts to preserve intact its present business organizations, (iii) use commercially reasonable efforts to maintain satisfactory relations with and keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers their current officers and other persons with which the Company or any of its Subsidiaries has significant business relationskey employees, and (iv) maintain net cash in effect all material foreign, federal, state and local licenses, approvals and authorizations, including all material licenses and permits that are required for the Company to carry on its business and (v) use commercially reasonable efforts to preserve existing relationships with material customers, lenders, suppliers, distributors and others having material business relationships with the Company. Without limiting the generality of the foregoing, except as set forth in Section 5.1 of the Company Disclosure Schedule, as required pursuant to this Agreement or as agreed in writing by Parent (which agreement shall not be unreasonably withheld or delayed), from the date hereof until the earlier of (x) the valid termination of this Agreement in accordance with Article VIII hereto and its Subsidiaries (y) the Appointment Date, the Company shall not: (a) amend the Company Governing Documents or amend the terms of at least $10 million (without giving effect to any transaction-related fees and expenses outstanding security of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the OfferCompany; (b) the Company will notsplit, directly combine, subdivide or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge reclassify any Shares or shares of capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property (or any combination thereof) with respect to its the Company’s capital stock; ; (d) redeem, purchase or otherwise acquire, or offer to redeem, purchase or otherwise acquire, any Equity Interests, except (i) repurchases of unvested shares at cost in connection with the termination of the services relationship with any service provider pursuant to stock option or purchase agreements in effect on the date hereof, and (ii) repurchases of unvested shares in connection with the withholding of shares upon vesting of restricted stock; (e) issue, deliver, sell, pledge, deliver, transfer, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or optionsgrant any Company Stock Rights, Restricted Stock or warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiariesclass, or grant to any Person any right the value of which is based on the value of Shares or other ownership interest (including stock appreciation rights and phantom capital stock), other than shares the issuance of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Company Stock Rights disclosed in Section 3.2(a) of the Company Disclosure Schedule and outstanding Options; on the date hereof in the ordinary course of business consistent with past practice of the Company Stock Plans; (iiif) acquire (whether pursuant to merger, stock or asset purchase or otherwise) in one transaction or any series of related transactions (i) except in the ordinary course of business consistent with past practice, any assets having a fair market value in excess of $2.0 million or (ii) any equity interests in any Person or any business or division of any Person or all or substantially all of the assets of any Person (or business or division thereof); (g) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its material assets, whether tangible or intangible, other than (i) sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice, and (ii) dispositions of equipment and property no longer used in the operation of the business; (eh) neither (i) incur or assume any long-term or short-term indebtedness except (A) short-term indebtedness made in the ordinary course of business consistent with past practice or (B) additional indebtedness under existing debt facilities in excess of indebtedness of the Company nor any outstanding as of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; date hereof; (fii) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of businessPerson; or (iiiii) make any loans, advances or capital contributions to, or investments in, any other personPerson; provided, however, that after the Appointment Time, the Company shall not accelerate the vesting of, or make changes in, equity based compensation, Restricted Stock or Company Stock Rights, other than (i) by permitting the acceleration of any Company Options or other equity based compensation pursuant to wholly owned Subsidiaries the terms of agreements in existence on the date hereof which provide for such acceleration or (ii) as otherwise provided in Section 5.1 of the Company Disclosure Schedule; (i) other than in the ordinary course of business and consistent with past practice; (iii) practice or as required by applicable law or the terms of any agreement existing on the date hereof, and in the case of any officer or director of the Company only to the extent that the Compensation Committee has duly approved such action as an Employment Compensation Arrangement, make any bid change in, or proposalaccelerate the vesting of, the compensation or benefits payable or to become payable to, or grant any severance or termination pay to, any of its officers, directors, employees, agents or consultants or enter into or amend any employment, consulting, severance, retention, change in control, termination pay, collective bargaining or other agreement or any equity based compensation, pension, deferred compensation, welfare benefits or other employee benefit plan or arrangement, or make any loans to any of its officers, directors, employees, affiliates or agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to a Benefit Plan or otherwise; provided, however, that after the Appointment Time, the Company shall not accelerate the vesting of, or make changes in, equity based compensation, Restricted Stock or Company Stock Rights, other than (i) by permitting the acceleration of any Company Options or other equity based compensation pursuant to the terms of agreements in existence on the date hereof which provide for such acceleration or (ii) as otherwise provided in Section 5.1 of the Company Disclosure Schedule; (j) other than in the ordinary course of business consistent with past practice or as required by applicable law or the terms of any agreement or plan existing on the date hereof and in the case of any officer or director of the Company only to the extent that the Compensation Committee has duly approved such action as an Employment Compensation Arrangement: (i) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days; or (ii) adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, Company Stock Plan, stock purchase, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment agreement with or for the benefit of any Company director, officer, employee or agent, whether past or present, or amend in any material respect any contract such existing plan, agreement or agreement arrangement in a manner inconsistent with the foregoing; (k) except as publicly announced prior to the date hereof, announce, implement or effect any material reduction in labor force, lay-off, early retirement program, severance program or other program or effort concerning the termination of employment of employees of the Company other than routine employee terminations; (l) incur any capital expenditures or any obligations or liabilities in respect thereof in excess of $2.0 million, in the aggregate, except those contemplated in the capital expenditures budgets for the Company previously made available to Parent or otherwise in the ordinary course of business consistent with past practice; (m) enter into any agreement or arrangement that limits or otherwise restricts the Company, or upon completion of the Transactions, Parent or its Subsidiaries or any successor thereto from engaging or competing in any line of business or in any location; (n) amend or modify in a material respect or terminate any Company Material Contract or otherwise waive, release or assign any material rights, claims or benefits thereunder, or enter into any contract that would be a Company Material Contract; (o) settle, pay or discharge any litigation, investigation, arbitration, other than the payment, discharge or satisfaction, in the ordinary course of business consistent with past practice, which of such claims, liabilities or obligations (i) disclosed or reserved against in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement the Financial Statements included in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder SEC Documents filed prior to the Company, (iv) authorize any single capital expenditure which is date hereof in excess of $250,000 or capital expenditures which are, in amounts no greater than the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction amount reserved with respect to any the relevant liability therein or (ii) incurred in the ordinary course of business consistent with past practice since the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease date of assets)such financial statements; (gp) neither the Company nor permit any of its Subsidiaries shall material insurance policy naming it as a beneficiary or a loss payee to be cancelled or terminated without reasonable prior notice to Purchaser; (q) change any of the accounting methods used by it unless materially affecting its assets, liabilities or business, except for such changes required by GAAPGAAP or Regulation S-X promulgated under the Exchange Act, as concurred in by its independent registered public accountants; (hr) neither the Company nor revalue in any material respect any of its Subsidiaries will material assets, including writing down the value of inventory or writing down notes or accounts receivable, other than in the ordinary course of business consistent with past practice; (s) make or change any material Tax election, change an annual accounting period, adopt or change any accounting method, file any material amended Tax Returns, enter into any closing agreement with respect to material Taxes, settle or consent to any material Tax Claim, take any affirmative action to surrender any right to claim a refund of Taxes, or consent to any extension or waiver of the limitation period applicable to any Tax Claim; (t) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (u) take any action which would, directly or indirectly, restrict or impair the ability of Purchaser to vote, or otherwise to exercise the rights and receive the benefits of a stockholder with respect to, securities of the Company acquired or controlled or to be acquired or controlled by Parent or Purchaser; (v) except as required by applicable law, convene any regular or special meeting (or any adjournment or postponement thereof) of the stockholders of the Company other than the Special Meeting; (w) take any action that is intended or is reasonably likely to result in (i) except any of its representations and warranties set forth in this Agreement being or becoming untrue in any respect at any time prior to the extent required under existing employee and director benefit plans, agreements Effective Time in any manner that would be reasonably likely to cause the conditions set forth in Annex I hereto or arrangements as in effect on the date Article VII of this Agreement and disclosed to Parentnot be satisfied, increase the compensation or fringe benefits (ii) a violation of any provision of its directorsthis Agreement, officers or employeesexcept, except for increases in salary or wages of employees each of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practiceforegoing cases, or grant any retention, severance or termination pay not currently as may be required to be paid under existing severance plans to or by applicable law; (x) enter into any employment, consulting contract or severance agreement or arrangement with any present director or former director, officer or other employee of the Company or any of its Subsidiaries, affiliates (including any immediate family member of such person) or establish, adopt any other affiliate of the Company; and (y) enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, written agreement, trustcontract, fund, policy commitment or arrangement for the benefit of any directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing, or authorize in writing any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except (a) Except (i) as set forth on Section 5.01(b) of the Company Disclosure Letter, (ii) as required by applicable Law, (iii) as expressly permitted or required by this Agreement, (iiiv) as indicated on Schedule 5.1with the prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), or (iiiv) as agreed reasonably taken in writing by Parentaccordance with good mining practice to safeguard life or property, after from the date hereof, and prior to hereof until the time the directors earlier of the Purchaser have been elected to, and shall constitute a majority of, Effective Time or the Company Board pursuant to Section 1.3 date this Agreement is validly terminated in accordance with ARTICLE 7 (the "Appointment Date"): (a) the business of “Pre-Closing Period”), the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact conduct the business organization and assets operations of the Company and its Subsidiaries, taken as a whole, in all material respects in the ordinary course of business, consistent with past practice. (b) Except (i) as set forth on Section 5.01(b) of the Company Disclosure Letter, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiariesas required by applicable Law, (iii) preserve as expressly permitted or required by this Agreement, (iv) with the present relationships prior written consent of Parent (which consent shall not be unreasonably withheld, conditioned, or delayed), (v) as reasonably taken in accordance with good mining practice to safeguard life or property or (vi) for the taking of any COVID-19 Response, during the Pre-Closing Period, the Company shall not and its Subsidiaries with customers, suppliers and other persons with which the Company or shall not permit any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer;to: (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iA) declare, set aside or pay any dividend dividends on or make other distribution payable distributions in cash, respect of any of its capital stock or property shares or (B) directly or indirectly redeem, repurchase or otherwise acquire any shares of its capital stock or any Company Options with respect thereto except, in each case: (x) for the declaration and payment of dividends by a direct or indirect wholly owned Subsidiary of the Company solely to its parent or (y) in connection with intercompany purchases of capital stock; stock or share capital among one or more of the Company and its Subsidiaries; (ii) (A) issue, deliver, sell, pledge, dispose of or encumber any additional shares ofencumber, or authorize the issuance, sale, pledge, disposition or encumbrance of (1) any shares of beneficial interests, capital stock or other ownership interest in the Company or any of its Subsidiaries, (2) any securities convertible into or exchangeable foror exercisable for any such shares or ownership interest or (3) any rights, warrants or options, warrants, calls, commitments options to acquire or rights of with respect to any kind to acquire, any such shares of beneficial interest, capital stock of any class of the Company or its Subsidiariesstock, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible convertible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt exchangeable securities; or (vB) redeemtake any action to cause to be exercisable any otherwise unexercisable option under any existing share option plan except, purchase in each case of clause (A) or (B) hereof, (I) for issuances of Company Shares in respect of any exercise of the Company Options outstanding on the date hereof, (II) for the issuances of Company Shares in respect of any exercise of the Company Warrants in accordance with their terms as of the date hereof or (III) for transactions solely between or among the Company and its wholly owned Subsidiaries; (iii) except as required by a Company Plan, ordinary course welfare benefit plan changes at the end of a plan year or as otherwise acquire directly required by applicable Law: (A) increase the compensation or indirectly other benefits payable or provided to any of the Company’s or any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d)Subsidiaries’ officers, neither the Company nor any of its Subsidiaries shall modifydirectors, amend or terminate any of its Contracts or waiveindependent contractors, release or assign any material rights or claimsleased personnel or, except in the ordinary course of business and consistent with past practice (including as a result of promotions), employees; (B) enter into, materially amend or terminate any employment termination, change of control, severance, retention or other Contract with any current or former employee, independent contractor or leased personnel of the Company or any of its Subsidiaries (exclusive of (1) agreements entered into with any newly hired employees or replacements or as a result of promotions, in each case, consistent with past practice, or (2) employment agreements terminable on less than thirty (30) days’ notice without payment or penalty); (C) establish, adopt, enter into, materially amend or terminate any Company Plan for the benefit of any current or former officers, employees, independent contractors, leased personnel or any of their beneficiaries (exclusive of (1) agreements entered into with any newly hired employees or replacements or as a result of promotions, in each case, consistent with past practice, or (2) employment agreements terminable on less than thirty (30) days’ notice without payment or penalty) or (D) enter into or amend any collective bargaining agreement or other agreement with a union or labor organization; (eiv) neither amend, or propose to amend, or permit the adoption of (A) any amendment to any of the Organizational Documents of the Company nor or (B) any of its Subsidiaries shall permit non-ministerial amendment to any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to of the Company and Organizational Documents of its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any effect a recapitalization, reclassification of shares, stock split, reverse stock split or similar transaction, contract or commitment with any affiliate of the Company; or ; (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, restructuring or recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger)“significant subsidiaries,” as defined in Rule 1-02(w) of Regulation S-X; (ivii) make any capital expenditures; (viii) acquire or agree to acquire, by merging or consolidating with, by purchasing an equity interest in or a portion of the material assets of any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any material assets of any other Person; (ix) (A) incur any Indebtedness for borrowed money or guarantee any such Indebtedness of another Person, issue or sell any debt securities or warrants or other rights to acquire any debt securities, guarantee any debt securities of another Person, renew or extend any existing credit or loan arrangements, enter into any “keep well” or other agreement to maintain any financial condition of another Person or enter into any agreement or arrangement having the economic effect of any of the foregoing, except to for (1) intercompany transactions or arrangements among one or more of the extent required under existing employee Company and director benefit plansits Subsidiaries, (2) agreements or arrangements as in effect on or borrowings incurred under the date of this Agreement and disclosed to Parent, increase the compensation Company’s or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company Subsidiaries’ existing credit facilities and (3) short-term Indebtedness incurred in the ordinary course of business consistent with past practice; (B) make any loans or advances to any other Person other than intercompany transactions or arrangements among one or more of the Company and its Subsidiaries or (C) make any capital contributions to, or investments in, any other Person, except for intercompany transactions or arrangements among one or more of the Company and its Subsidiaries; (x) enter into any Contract that would materially restrict, after the Effective Time, Parent and its Subsidiaries (including the Surviving Corporation and its Subsidiaries) with respect to engaging or competing in accordance any line of business or in any geographic area; (xi) except in the ordinary course of business consistent with past practice, sell, transfer, assign, mortgage, encumber or grant otherwise dispose of any retentionassets with a fair market value in excess of fifty thousand dollars ($50,000) in the aggregate; (xii) commence, severance pay, discharge, settle, compromise or termination pay not currently satisfy any pending or threatened litigation, arbitration, proceedings or claims other than any monetary settlement entered in the ordinary course of business consistent with past practice in an amount less than fifty thousand dollars ($50,000) in any single instance or fifty thousand dollars ($50,000) in the aggregate; (xiii) change any of its financial or Tax accounting methods or practices in any respect, except as required by GAAP or Law; (xiv) (A) make, change or revoke any Tax election with respect to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (jB) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess refund of $50,000 or which is material or which relates Taxes with respect to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including(C) enter into any “closing agreement” as described in Section 7121 of the Code (or any corresponding or similar provision of state, without limitation, the hiring local or non-U.S. Law) affecting any Tax Liability or refund of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance Taxes with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of respect to the Company or incurred in any of its Subsidiaries, (D) extend or waive the ordinary course application of business and consistent any statute of limitations regarding the assessment or collection of any Tax with past practice; (n) neither respect to the Company nor or any of its Subsidiaries, (E) settle or compromise any material Tax Liability or refund of material Taxes with respect to the Company or any of its Subsidiaries will or (F) take, or agree prior to commit to takethe Effective Time, any action that would make reasonably be expected to prevent or impede the Merger from qualifying as a “reorganization” within the meaning of Section 368 of the Code; (xv) waive, release or assign any representation rights or warranty claims under, or renew (other than automatic renewals), modify or terminate (other than termination by natural expiration), any Company Material Contract (other than intercompany transactions, agreements or arrangements among one or more of the Company contained herein inaccurate and its Subsidiaries), in any material respect atin a manner which taken as a whole is adverse to the Company and its Subsidiaries or which could prevent or materially delay the consummation of the Merger or the other transactions contemplated hereby past the Outside Date (or any extension thereof); (xvi) cease to maintain the insurance policies set forth on Section 3.16 of the Company Disclosure Letter and, or as prior to the expiration of any time prior tosuch policy, renew such policy on substantially similar terms to the Effective Time (except for representations made as of a specific date)extent available on commercially reasonable terms; or (oxvii) neither the Company nor any of its Subsidiaries will authorize agree or enter into an agreement commit to do take any of the foregoingactions described in clauses (i) through (xvi) of this Section 5.01(b).

Interim Operations of the Company. The Company covenants --------------------------------- and agrees that, except (i) as permitted expressly contemplated by this Agreement or the Option Agreement, (ii) as indicated on Schedule 5.1set forth in Section 5.2 of the Company Disclosure Schedule, (iii) in the ordinary course of business consistent with past practice or (iiiiv) as agreed in writing by Parent, after the date hereof, and prior to the earlier of (x) the termination of this Agreement in accordance with Article VIII hereof and (y) the time the directors designees of the Purchaser Parent have been elected to, and shall constitute a majority of, the Board of Directors of the Company Board pursuant to Section 1.3 hereof (the "Appointment Date"):): ---------------- (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment and each of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its commercially reasonable best efforts to (i) preserve substantially intact the its present business organization intact and assets of the Company and maintain its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries satisfactory relations with customers, suppliers suppliers, employees, contractors, distributors and other persons others having business dealings with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerit; (b) the Company will not, directly or indirectly, (i) except upon exercise of the Options or other rights to purchase shares of Common Stock pursuant to the Stock Plans outstanding on the date hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate Articles of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock Shares reserved for issuance on the date hereof upon pursuant to the exercise of the Options outstanding Optionson the date hereof and except with respect to any sales in accordance with the Stock Purchase Plan; (iii) transfer, lease, license, sell, mortgage, pledge, 39 dispose of, or encumber any of its material assets, whether tangible or intangibleincur or modify any material indebtedness or other liability, other than sales of products in the ordinary and usual course of business and consistent with past practice; or (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly any shares of any class or indirectly any series of its capital stock stock, or any instrument or security which consists of or includes a right to acquire such shares except as permitted by Section 5.2(b) and other than in connection with the exercise of options or rights under the Stock Plans and except with respect to any sales in respect thereofaccordance with the Stock Purchase Plan; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend make any change in the compensation payable or terminate to become payable to any of its Contracts officers, directors, employees, agents or waive, release consultants (other than general increases in wages to employees who are not directors or assign any material rights or claims, except affiliates in the ordinary course of business and consistent with past practice), or to persons providing management services, enter into or amend any employment, severance, consulting, termination or other agreement or employee benefit plan or make any loans to any of its officers, directors, employees, affiliates, agents or consultants or make any change in its existing borrowing or lending arrangements for or on behalf of any of such persons pursuant to an employee benefit plan or otherwise; (e) neither the Company nor any of its Subsidiaries shall permit pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course consistent with past practice; adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant, whether past or present; or amend in any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that respect any such policy may be replaced existing plan, agreement or arrangement in a manner inconsistent with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiariesforegoing; (f) the Company shall not, in any material respect, modify, amend or terminate any of the Company Agreements, and neither the Company nor any of its Subsidiaries shall waive, release or assign any material rights on claims under any of the Company Agreements; (g) neither the Company nor any of its Subsidiaries shall will (i)acquire (by merger, consolidation, acquisition of stock i) incur or assets or otherwise) assume any corporation, partnership or other business organization or division thereof long-term debt or any material assets, short-term indebtedness; (ii) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (iiiii) make any loans, advances or capital contributions to, or investments in, any other person; or (iv) enter into any material commitment or transaction (including, but not limited to, any material borrowing, capital expenditure or purchase, sale or lease of assets or real estate); (h) neither the Company nor any of its Subsidiaries will (i) change any of the accounting methods used by it materially affecting its assets, liabilities or business, except for such changes required by GAAP or (ii) make any material Tax election or change any material Tax election already made, enter into any closing agreement or settle any material Tax Audit; (i) neither the Company nor any of its Subsidiaries will pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than to wholly owned Subsidiaries the payment, discharge or satisfaction of the Company any such claims, liabilities or obligations, in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into of claims, liabilities or amend in any material respect any contract obligations reflected or agreement other than in ordinary course of business consistent with past practicereserved against in, which in any event would either or contemplated by, the consolidated financial statements (aor the notes thereto) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (gj) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) except as otherwise permitted pursuant to Section 5.3, neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit in writing or otherwise to take, any action that would or is reasonably likely to result in any of the conditions to the Merger set forth in Article VII or any of the conditions to the Offer set forth in Annex I not being satisfied, or would make any many representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as Time, or that would materially impair the ability of a specific date)the Company to consummate the Merger in accordance with the terms hereof or materially delay such consummation; orand (ol) subject to the exceptions and qualifications set forth above, neither the Company nor any of its Subsidiaries will authorize or enter into any written agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose, in writing or announce an agreement intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except Except (ia) as permitted expressly required by this Agreement, (iib) as indicated set forth on Schedule 5.1Section 5.1 of the Company Disclosure Letter, (c) as required by applicable Law, or (iiid) as agreed consented to in writing by Parent, Parent after the date hereof, of this Agreement and prior to the time the directors Effective Time, which consent shall not be unreasonably withheld or delayed with respect to clauses (vi) and (vii) of the Purchaser have been elected to, and shall constitute a majority ofthis Section 5.1, the Company Board pursuant to Section 1.3 (the "Appointment Date"):agrees that: (ai) the business of the Company and its Subsidiaries shall be conducted will conduct business only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its their reasonable best efforts to (i) preserve substantially intact the their business organization organizations, assets and assets lines of the Company and its Subsidiariesbusiness, (ii) keep available the services of the their present officers and key officers, employees and consultants of the Company preserve intact their relationships with third parties, including customers and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offersuppliers; (bii) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) not amend its Restated Certificate of Incorporation or By-laws Laws and the Company’s Subsidiaries will not amend their certificate of incorporation, bylaws or similar other comparable charter or organizational documents; or ; (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: will (iA) except for the Company’s regular quarterly cash dividend in respect of Company Common Stock consistent with past practice (including with respect to the timing thereof) and not in excess of $0.29 per share, declare, set aside or pay any dividend or other distribution distribution, whether payable in cash, stock or property other property, with respect to its capital stock; , (iiB) issue, deliversell, transfer, pledge, dispose of or encumber or agree to issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class or other Rights of the Company or any of its Subsidiaries, or other ownership interest Subsidiaries (including stock appreciation rights and phantom treasury stock), other than in respect of shares of Company Common Stock reserved for issuance on the date hereof upon issued pursuant to the exercise of Options outstanding Options; immediately prior to the date of this Agreement, (iiiC) transfersplit, lease, license, sell, mortgage, pledge, dispose combine or reclassify the Shares or any other outstanding capital stock of the Company or any of the Subsidiaries of the Company or issue or authorize the issuance of any other securities in respect of, in lieu of or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; substitution therefor or (vD) redeem, purchase or otherwise acquire acquire, directly or indirectly indirectly, any capital stock or other Rights of the Company or any of its capital stock or rights in respect thereofSubsidiaries; (div) except as disclosed on Schedule 5.1(d)required by applicable Law or as required under the terms of any Company Plan immediately prior to the date of this Agreement, neither the Company nor will not and will not permit its Subsidiaries to (A) increase or agree to increase the compensation payable or to become payable to any current or former officers, directors, employees or consultants of the Company or any of its Subsidiaries shall modify, amend or terminate pay any of its Contracts or waive, release or assign any material rights or claimsamount not required to be paid, except (x) for increases in annual base salaries in the ordinary course of business and consistent with past practiceand competitive markets practices, in an amount not to exceed 5% of such annual base salaries in effect immediately prior to the date hereof in the aggregate, or (y) in connection with the assumption by an officer or employee of the Company who is not a senior executive of the Company of materially new or additional material responsibilities and provided that the amounts so granted, combined with such officer’s or employee’s existing compensation and benefits, shall not exceed the aggregate amount of compensation of a similarly situated officer or employee, (B) accelerate, amend or change the period of exercisability or vesting of options, stock purchase rights, restricted stock or other stock-based awards granted under the Company Stock Plans, or authorize cash payments in exchange for any options, stock purchase rights, restricted stock or other stock-based awards granted under the Company Stock Plans; (C) grant any new rights to severance or termination pay to, or enter into any new rights to employment or severance contracts with, any employees or officers; (D) establish, adopt, enter into or materially amend any collective bargaining agreement, or any other contract or work rule or practice with any labor union, labor organization or works council; (E) establish, adopt, enter into, materially amend or terminate any Company Plan or any plan, contract, policy or program that would be a Company Plan if in effect as of the date hereof (except for any amendments expressly permitted by clauses (A) or (C) of this subsection (iv)); or (F) fund (or agree to fund) any compensation or benefits under any Company Plan, including through a “rabbi” or similar trust; (ev) neither the Company nor any of its Subsidiaries shall permit will (A) incur or assume any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to Indebtedness for borrowed money other than under the existing revolving credit facilities of the Company and its Subsidiaries; (fset forth on Section 5.1(v) neither of the Company nor Disclosure Letter or (B) except in the ordinary course of business consistent with past practice, (x) incur or assume any other form of its Subsidiaries shall Indebtedness, (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwisey) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; Person or (iiz) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)Person; (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (hvi) neither the Company nor any of its Subsidiaries will (i) make, commit to make or authorize any capital expenditure or research and development expenditure, other than capital expenditures and research and development expenditures contemplated by the Company’s existing capital budget, a true and correct copy of which has been furnished to Parent or (ii) announce or implement any restructuring programs or transactions that would qualify as an exit or disposal activity under FASB Accounting Standards Codification Topic 420, including any programs or transactions that would, individually or in the aggregate, qualify as a restructuring as defined under International Account Standard (IAS) No. 37, other than as contemplated by such existing capital budget; (vii) neither the Company nor any of its Subsidiaries will (A) release, assign, compromise, pay, discharge, waive, settle, agree to settle, or satisfy any Action (including any Action relating to this Agreement or the Merger) or other rights, claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the release, assignment, compromise, payment, discharge, waiver, settlement or satisfaction of (x) Actions or other claims, liabilities or obligations reflected or reserved against in the Company Financial Statements (or the notes to the Company Financial Statements), in the case of this clause (x), in each case not materially in excess of the amount reflected or reserved in respect of such right, claim, liability or obligation, provided that any such amount in excess of the applicable amount reflected or reserved shall be counted toward and reduce the limits set forth in clause (y) below, or (y) claims, liabilities or obligations incurred since the date of the Company Financial Statements in the ordinary course of business consistent with past practice that involve amounts not to exceed (in excess of recovered third party insurance proceeds) $5,000,000 individually or $25,000,000 in the aggregate, in either case of clause (x) or clause (y), without the imposition of injunctive or other equitable relief on, or the admission of wrongdoing or a nolo contendere or similar plea by, the Company or any of its Subsidiaries or (B) waive any claims of substantial value; (viii) neither the Company nor any of its Subsidiaries will change any of the accounting methods, principles or practices used by it unless required by a change in GAAP or Law; (ix) neither the Company nor any of its Subsidiaries will (A) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, business combination, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than this Agreement), (B) acquire by merging or consolidating with, or by purchasing an equity interest in or portion of the Merger); assets of, or by any other manner, any business or any corporation, partnership, joint venture, association or other business organization or division thereof, (iC) except to acquire, transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any assets, other than, in the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date case of this Agreement clause (C), acquisitions of raw materials and disclosed to Parent, increase the compensation or fringe benefits inventory and sales of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company inventory in the ordinary course of business in accordance consistent with past practice, (D) take or grant omit to take any retentionaction that would cause any material Intellectual Property Rights, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting including with respect to Taxesany registrations or applications for registration, file any amended Tax Return to lapse, be abandoned or settle canceled, or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against fall into the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise)public domain, other than the payment, discharge actions or satisfaction omissions in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice and not otherwise in violation of liabilities reflected this Section 5.1 or reserved against in the financial statements of the Company (E) enter into a joint venture or incurred in the ordinary course of partnership or similar third-party business and consistent with past practiceenterprise; (nx) neither the Company nor any of its Subsidiaries will takeenter into any Contract which would have been a Material Contract under clauses (iv), (x), (xiii)(A), (xiv) (to the extent any such “change of control” or similar provision would be implicated by the Merger) or (xv) of Section 3.9(a) if entered into prior to the date hereof, or agree to commit to take, amend or terminate any action that would make any representation or warranty of the Company contained herein inaccurate such Material Contract in any material respect atrespect, or as grant any release or relinquishment of any time prior tomaterial rights under, the Effective Time (except for representations made as of a specific date); oror renew, any such Material Contract; (oxi) neither the Company nor any of its Subsidiaries will authorize make, change or revoke any material Tax election; settle or compromise any material Tax liability or refund; enter into any closing agreement within the meaning of Section 7121 of the Code (or any comparable provision of state, local or foreign Law); agree to any adjustment of any material Tax attribute; change any method of Tax accounting or Tax period; file any claim for a material refund of Taxes; execute or consent to any waivers extending the statutory period of limitations with respect to the collection or assessment of material Taxes; file any material amended Tax Return; or request any material Tax ruling; (xii) except to the extent necessary to take any actions that the Company or any third party would otherwise be permitted to take pursuant to Section 5.2 (and in such case only in accordance with the terms of Section 5.2), neither the Company nor any of its Subsidiaries will take any action to exempt or make any Person (other than Parent) or action (other than the transactions contemplated by this Agreement) not subject to the provision of Section 912 of the NYBCL or any other potentially applicable anti-takeover or similar statute or regulation, or the provisions of Article Eleventh of the Company’s Restated Certificate of Incorporation; and (xiii) neither the Company nor any of its Subsidiaries will enter into an agreement agreement, Contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose or announce an intention to do any of the foregoing. Subject to compliance with applicable Law, from the date hereof until the Effective Time, the Company shall confer on a regular and frequent basis with one or more representatives of Parent to report on the general status of ongoing operations; provided, that nothing contained in this Agreement shall give Parent or Merger Sub, directly or indirectly, the right to control or direct the Company’s operations prior to the Effective Time in violation of applicable Law.

Interim Operations of the Company. The Company covenants --------------------------------- and agrees that, except (i) as permitted contemplated by this Agreement, (ii) as indicated on disclosed in Schedule 5.1, or and (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Board of Directors of the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) ), the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable practices and inventory purchases) and in compliance with applicable laws and without limiting the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets generality of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer;foregoing: (ba) the Company will shall not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares Company Common Stock or any other securities of the Company or capital stock or any other securities of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend or cause to be amended its Certificate of Incorporation or By-laws or similar organizational documentsdocuments of any of its Subsidiaries; or (iii) split, combine or reclassify the outstanding Shares Company Common Stock or any outstanding capital stock of any of the Subsidiaries of the Company; (cb) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Company Common Stock reserved for issuance issuances pursuant to the exercise of Options outstanding on the date hereof upon the exercise of outstanding Optionshereof; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of or encumber any right to any trademark, service xxxx or trade name owned by it or over which it has any right whatsoever; (iv) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any other material assets, whether tangible or intangible, assets other than sales of products in the ordinary and usual course of business and consistent with past practice; (ivv) incur or modify any material indebtedness or other material liability, provided that the Company ------------- may borrow money for use in the ordinary and usual course of business, provided -------- further that, neither the Company nor any of its Subsidiaries shall make any ------------ borrowing or incur any indebtedness or other liability or issue that would cause the Company's consolidated net debt (including without limitation the indebtedness currently outstanding under the promissory note issued by the Company to Mafco) to exceed $205 million; (vi) make any debt securitiescapital expenditures in excess of $2 million in the aggregate; or (vvii) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereofstock; (dc) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts Material Agreements or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (ed) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled cancelled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable without notice to the Company and its SubsidiariesParent; (fe) neither the Company nor any of its Subsidiaries shall shall: (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwisei) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company except in the ordinary course of businessbusiness and consistent with past practice; (ii) make any loans, advances or capital contributions to, or investments in, or acquisitions of, any other personperson (other than to Subsidiaries of the Company), other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; or (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (gf) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAPGAAP or applicable law; (hg) neither the Company nor any of its Subsidiaries will shall adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (nh) neither the Company nor any of its Subsidiaries will shall take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or; (oi) except as required under Section 2.4, the Company shall not amend or change the period (or permit any acceleration, amendment or change) of exercisability of Options granted under the 1996 Plan or authorize cash payments in exchange for any Options; (j) except for year-end bonuses and salary increases made in the ordinary course of business consistent with past practice, which in the case of year-end bonuses shall not exceed $2.2 million in the aggregate, neither the Company nor any Subsidiary shall increase the compensation payable or to become payable to its officers or directors; (k) neither the Company nor any of its Subsidiaries will shall grant any severance or termination pay to, or enter into any employment or severance agreement with, any director or officer of the Company or any Subsidiary or establish, adopt, enter into or terminate or amend any Benefit Plan; and (l) neither the Company nor any of its Subsidiaries shall authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except Except (ia) as expressly contemplated or permitted by this AgreementAgreement or the Transactions, (iib) as indicated on Schedule 5.1required by applicable law (including any required compliance by the Company’s directors with their fiduciary duties), (c) as may be set forth in Section 5.1 of the Company Disclosure Schedule, or (iiid) as agreed Parent may consent (which consent shall not be unreasonably withheld or delayed) in writing by Parentwriting, after the date hereof, and prior to the earlier of (x) the termination of this Agreement in accordance with Article 8 and (y) the time that the directors designees of the Purchaser have been elected to, and shall Parent constitute a majority of, of the Company Board directors on the Company’s board of directors pursuant to Section 1.3 hereof (the "“Appointment Date"):”), the Company covenants and agrees that: (a) the business of the Company and its the Company Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payablepractice, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and its Subsidiaries, (ii) keep available the services of the present key officers, employees and consultants of the Company Subsidiaries shall use its reasonable efforts to preserve intact its present business organization and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries maintain good relations with customers, suppliers suppliers, employees, contractors, distributors and other persons others having business dealings with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerit; (b) neither the Company will notnor any Company Subsidiary shall, directly or indirectly, (i) except upon the exercise of the Options, the Warrants, the Stock Option Agreement, or other rights to purchase Common Stock outstanding on the date hereof, issue, sell, transfer or pledge or agree to sell, transfer or pledge any Shares treasury stock of the Company or any capital stock of any of its Subsidiaries Company Subsidiary beneficially owned by it, either directly or indirectly; (ii) amend its Certificate respective certificate or articles of Incorporation incorporation or By-laws bylaws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares Common Stock or any outstanding capital stock of the Company or any of the Subsidiaries of the CompanyCompany Subsidiary; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries Company Subsidiary shall: (i) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (ii) except upon the exercise of the Options, the Warrants, the Stock Option Agreement, or other rights to purchase Common Stock outstanding on the date hereof, issue, deliversell, selltransfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments warrants or rights of any kind to acquire, any shares of capital stock of any class of the Company or its any Company Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any of its material assets, whether tangible or intangibleincur or modify any material indebtedness or other liability, other than sales of products in the ordinary and usual course of business and consistent with past practice; or (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any shares of its capital stock stock, or enter into any instrument which includes a right to acquire such shares except in connection with the exercise of repurchase rights or rights of first refusal in favor of the Company with respect thereofto shares of Common Stock issued upon exercise of Options granted under the Option Plan; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries Company Subsidiary shall modify, amend (i) change the compensation or terminate benefits payable or to become payable to any of its Contracts officers, directors or waive, release employees (other than increases in wages to employees who are not directors or assign any material rights or claims, except affiliates in the ordinary course of business and consistent with past practice), (ii) enter into or amend any employment, severance, consulting, termination or other agreement (other than at-will employment agreements entered into after the date hereof which do not provide for any severance or other payments upon termination of employment) or any employee benefit plan or make any loans to non-officer employees or affiliates or change its existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to an employee benefit plan or otherwise, other than such actions taken in the ordinary course of business consistent with past practice, or (iii) directly or indirectly make, maintain, or arrange for any loans to officers or directors of the Company or any of the Company Subsidiaries; (e) neither the Company nor any Company Subsidiary shall (i) pay or arrange for payment of its Subsidiaries any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or affiliate or pay or make any arrangement for payment to any officers, directors, employees or affiliates of the Company of any amount relating to unused vacation days, except payments and accruals made in the ordinary course of business consistent with past practice, or (ii) adopt or grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any pension, profit-sharing, bonus, extra compensation, incentive, deferred compensation, stock purchase, stock option, stock appreciation right, group insurance, severance pay, retirement or other employee benefit plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any Company director, officer or employee, whether past or present, or amend in any material respect any such existing plan, agreement or arrangement in a manner inconsistent with the foregoing; (f) the Company will not, in any material respect, modify, amend or terminate any of the Company Material Contracts of the Company or any Company Subsidiary except in the ordinary course of business consistent with past practice, and neither the Company nor any Company Subsidiary shall waive, release or assign any material rights or claims under any of their Company Material Contracts; (g) neither the Company nor any Company Subsidiary will permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled cancelled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable without notice to the Company and its SubsidiariesParent; (fh) neither the Company nor any Company Subsidiary will (i) other than pursuant to the Second Amended and Restated Loan and Security Agreement, dated as of its Subsidiaries shall (i)acquire (March 10, 2004, by mergerand among certain of the Company Subsidiaries, consolidationthe lending institutions identified therein, acquisition of stock Fleet Capital Corporation, and General Electric Capital Corporation, incur, become liable for, or assets or otherwise) assume any corporation, partnership or other business organization or division thereof long-term indebtedness or any material assets, short-term indebtedness (which shall not include trade payables); (ii) assume, guarantee, endorse or otherwise become a liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other personPerson, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of businessan immaterial amount; (iiiii) make any loans, advances or capital contributions to, or investments in, any other person, Person other than to wholly owned Subsidiaries of the a Company Subsidiary or which is immaterial in the ordinary course of business and consistent with past practiceamount; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize acquire (by merger, consolidation or acquisition of stock or assets) any single capital expenditure which is in excess of $250,000 corporation, partnership or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into other business organization or division thereof or any transaction, contract or commitment with any affiliate of the Companyequity interest therein; or (viv) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)assets or real estate) other than in the ordinary course of business; (gi) subject to any duty imposed by law, neither the Company nor any Company Subsidiary shall enter into or modify any collective bargaining agreement or any successor collective bargaining agreement to any collective bargaining agreement other than in the ordinary course of business; (j) the Company and each Company Subsidiary shall timely and properly file, or timely and properly file requests for extensions to file, all federal, state, local and foreign Tax Returns which are required to be filed, and pay or make provision for the payment of all Taxes owed by them; (k) neither the Company nor any of its Subsidiaries shall Company Subsidiary will (i) materially change any of the accounting methods used by it unless except for such changes required by GAAPGAAP or (ii) make any Tax election or change any Tax election already made, adopt any Tax accounting method, change any Tax accounting method, enter into any closing agreement or settle any material claim or material assessment relating to Taxes or consent to any material claim or assessment relating to Taxes or any waiver of the statute of limitations for any such claim or assessment; (hl) neither the Company nor any Company Subsidiary will pay, discharge or satisfy any claims, liabilities or obligations (whether absolute, accrued, contingent or otherwise), other than the payment, discharge or satisfaction of its Subsidiaries any such claims, liabilities or obligations, in the ordinary course of business consistent with past practice, or claims, liabilities or obligations reflected or reserved against in, or contemplated by, the consolidated financial statements (or the notes thereto) of the Company; (m) neither the Company nor any Company Subsidiary will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries Company Subsidiary (other than the Merger); (in) except to the extent required under existing employee and director benefit plans, agreements or arrangements as set forth in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees Section 5.1(n) of the Company or its Subsidiaries who are not officers of Disclosure Schedule (“Excepted Expenditures”), neither the Company nor any Company Subsidiary shall make any capital expenditure which is not in all material respects in accordance with past practice and in the ordinary course of business in accordance with past practicebusiness; provided, or grant any retentionhowever, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or that the capital expenditures (other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (jthan Excepted Expenditures) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officersaggregate shall not exceed $100,000; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any Company Subsidiary shall sell, lease, license, mortgage or otherwise encumber or subject to any Lien or otherwise dispose of any of its Subsidiaries properties or assets (including Intellectual Property), except for sales, leases, licenses or encumbrances of its properties or assets in the ordinary course of business consistent with past practice; and (p) neither the Company nor any Company Subsidiary will authorize or enter into an agreement any agreement, contract, commitment or arrangement to do any of the foregoing, or authorize, recommend, propose in writing or announce an intention to do any of the foregoing. Notwithstanding the foregoing, nothing in this Section 5.1 or any other provision of this Agreement shall prohibit the Company (or any Company Subsidiary) from fulfilling its obligations under any Company Material Contract or under any agreement or contract specifically disclosed in Section 5.1 of the Company Disclosure Schedule and previously made available to Parent.

Interim Operations of the Company. The Company covenants and agrees that, --------------------------------- except as set forth on the Disclosure Schedule, prior to the Effective Time (i) unless Purchaser shall otherwise agree in writing and except as permitted otherwise contemplated by this Agreement, (ii) as indicated on Schedule 5.1, or (iii) as agreed in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the Company and its Subsidiaries subsidiaries shall be conducted only in the ordinary and usual course and, to the extent consistent therewith, each of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the its business organization intact and assets of the Company and maintain its Subsidiariesexisting relations with customers, (ii) keep available the services of the present key officerssuppliers, licensees, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offerassociates; (b) the Company will not, directly or indirectly, shall not (i) sell, transfer sell or pledge or agree to sell, transfer sell or pledge any Shares stock owned by it or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectlysubsidiaries; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documentsLaws; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; Shares; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iiv) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to the Shares; or (v) adopt a plan of liquidation; c) neither the Company nor any of its capital stock; subsidiaries shall (iii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiariessubsidiaries other than, or other ownership interest in the case of the Company, Shares issuable pursuant to (including stock appreciation rights and phantom stock), other than shares of Common A) Stock reserved for issuance Options outstanding on the date hereof upon the or (B) exercise of outstanding Optionsthe Warrants; (iiiii) transfer, lease, license, sell, mortgage, pledge, dispose of, of or encumber any material assets, whether tangible or intangible, assets other than sales in the ordinary and usual course of products business; or (iii) acquire directly or indirectly by redemption or otherwise any shares of the capital stock of the Company or Warrants; (i) unless otherwise ordered by any governmental or regulatory authorities of Canada or any province or other governmental subdivision thereof, the United States, the several states, or any other jurisdiction (foreign or domestic) of competent authority, provided that, in the case of any such order, Company shall consult with Parent and Purchaser regarding the appeal of or compliance with such order, neither the Company nor any of its subsidiaries shall establish, adopt, enter into, make any new grants or awards under or amend, any collective bargaining agreement, and, except in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, trust fund, policy or arrangement for the benefit of any directors, officers or employers; employees (jexcept as specifically described in Section 7.6 or Schedule 7.1(d) make hereto) and (ii) neither the Company nor any of its subsidiaries shall (A) grant any increase in the compensation payable or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against become payable by the Company or any Subsidiary for an aggregate amount of its subsidiaries to any of its directors, executive officers or key employees or (B) subject to Section 7.6, enter into or amend any employment agreement with or, except in excess accordance with existing written policy of $50,000 the Company, grant any severance or which is material termination pay to, any officer, director or which relates to the transactions contemplated hereby; (l) make any change in the key management structure employee of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officerssubsidiaries; (me) payneither the Company nor any of its subsidiaries shall settle or compromise any material claims or litigation or, discharge except in the ordinary and usual course of business, modify, amend or satisfy terminate any of its material Contracts or waive, release or assign any material rights or claims; f) except as set forth on Schedule 7.1(f), liabilities neither the Company nor any of its subsidiaries shall incur any indebtedness for money borrowed or issue or sell any debt securities, or assume, guarantee, endorse or otherwise as an accommodation become responsible for the obligations (absoluteof any other individual or entity, accrued, asserted or unasserted, contingent of otherwise)make any loans or advances, other than in the paymentordinary and usual course of business, discharge provided that the aggregate value of such indebtedness, debt securities or satisfaction other obligations, contingent or otherwise, shall not exceed $750,000; g) neither the Company nor any of its subsidiaries shall acquire (by merger, consolidation or acquisition of stock or assets) any corporation, partnership or other business organization or division thereof (other than an entity which is already a wholly-owned subsidiary of the Company) or make any investment either by purchase of stock or securities, contributions to capital (other than to wholly-owned subsidiaries of the Company), material property transfer or purchase of any material property or assets, in any other individual or entity (other than an entity which is already a wholly-owned subsidiary of the Company); h) neither the Company nor any of its subsidiaries shall, except in the ordinary course consistent with past practice, make any tax elections or settle or compromise any income tax liability or, except as required by law or applicable accounting standards, change any accounting policies or procedures; i) neither the Company nor any of business its subsidiaries shall make any payment, direct or indirect, of any material liability of the Company before the same comes due in accordance with its terms; j) neither the terms Company nor any of such obligation or liability and consistent with past practice of liabilities reflected or reserved against its subsidiaries shall, in the financial statements of event any existing insurance coverage shall be terminated or lapse, to the extent available at reasonable cost, fail to procure substantially similar substitute insurance policies with financially sound and reputable insurance companies in at least such amounts and against such risks as are currently covered by such policies; k) except as set forth on Schedule 7.1(k), neither the Company or incurred nor any of its subsidiaries shall incur any capital expenditures other than in the ordinary course of business and consistent with past practice; (npractice and not in an amount in excess of $500,000; l) neither the Company nor any of its Subsidiaries will take, subsidiaries shall take or agree to commit to take, take any action that would make any representation or warranty of the Company contained herein hereunder inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize termination or enter into an agreement to do any expiration of the foregoing.Offer, unless such inaccuracy results from any action or inaction permitted or required by this Agreement or the Tender Agreement; and

Interim Operations of the Company. The Company covenants and agrees that, except (ia) as permitted by From the date of this Agreement to the earlier of the Closing or termination of this Agreement, except as (iiw) required by Law, (x) specifically permitted or required by this Agreement or as indicated set forth on Schedule 5.16.01, (y) required by any contracts, agreements, commitments, leases, sales contracts and other agreements to which the Company or a Company Subsidiary is a party as of the date of this Agreement to the extent copies of which have been provided to Purchaser or (iiiz) as agreed otherwise consented to in writing by ParentPurchaser (not to be unreasonably withheld or delayed) (collectively, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of“Permitted Operations”), the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the business of the and each Company and its Subsidiaries shall be conducted only Subsidiary will conduct their respective businesses in all material respects in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its commercially reasonable best efforts to (i) preserve substantially intact the its present business organization and assets of the Company and its Subsidiariesorganization, (ii) keep available the services of the its present key officers, employees officers and consultants of the Company and its Subsidiariesemployees, (iii) preserve its relationships with clients, suppliers, customers, distributors and others having significant business dealings with it, (iv) renew any Lease up for renewal, (v) maintain all material licenses and material Permits required for the present relationships operation of its business in the ordinary course, (vi) maintain all material assets in good repair and condition other than those disposed of in the ordinary course of business consistent with past practices, (vii) maintain all Insurance Policies, and (viii) maintain its books of account and records in the usual, regular and ordinary manner; and (ix) continue in all material respects the advertising and promotional activities and pricing and purchasing policies of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer;Subsidiaries. (b) Except with respect to the Company will notPermitted Operations, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(cnotwithstanding Section 6.01(a), neither the Company nor any Company Subsidiary shall from the date of its Subsidiaries shall: this Agreement to the earlier of the Closing or termination of this Agreement pursuant to and in accordance with Section 8.02: (i) amend its Organizational Documents; (ii) merge or consolidate with, or acquire all or substantially all of the assets, or business of, any Person or other business organization or division thereof; (iii) redeem, repurchase, split, combine or reclassify its outstanding equity interests or declare, set aside aside, make or pay any dividend or other distribution payable in cashrespect of its equity interests other than (A) dividends paid by the Company’s wholly-owned Subsidiaries to the Company or its wholly-owned Subsidiaries or (B) the cancellation of Company Options as contemplated by Section 7.02(d) or (C) Tax distributions made in accordance with its Organizational Documents; (iv) issue or sell (or agree to issue or sell) any of its equity interests, stock or property with respect any options, warrants, conversion or other rights to purchase any of its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, equity interests or securities convertible into or exchangeable forfor such equity interests (other than upon the exercise or conversion of options, warrants or convertible securities outstanding on the date hereof), or optionsgrant, warrantsor agree to grant, calls, commitments any such options or rights modify or alter the terms of any kind of the above; provided, however, the Company may amend the terms of the Company Options to acquirethe extent necessary to satisfy its obligation pursuant to Section 7.02(d); (v) (A) incur any Indebtedness other than under the Credit Facility as in effect on the date hereof, (B) issue or sell any debt securities, (C) vary the material terms of any contract, agreement, commitment or arrangement with respect to Indebtedness or any debt securities, or (D) other than in the ordinary course of business and except for the Transaction Bonus Agreements, enter into, modify in any material respect or terminate any Lease, any shares Real Property Agreement or any Material Contract; (vi) take any steps to mortgage or pledge to secure any obligation, or subject to any Lien (other than Permitted Liens), any of capital stock its properties other than pursuant to the terms of the Indebtedness set forth in Schedule 1.01(c) as in effect on the date hereof; (vii) grant to any present or former director, officer, consultant or employee any increase in compensation or benefits in any form, or any severance or termination pay, or make any loan to or enter into any employment agreement, collective bargaining agreement or arrangement with any such Person, except in each case as may be required by Law or the terms of any class existing Employee Plan or arrangement or, with respect to any employee not an executive officer or director of the Company or its Subsidiariesa Company Subsidiary, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (v) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course of business and consistent with past practicepractices or the Transaction Bonuses pursuant to the Transaction Bonus Agreements; (eviii) neither the Company nor adopt, enter into, amend, announce to participants any of its Subsidiaries shall permit intention to adopt or terminate, any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership Employee Plan or other business organization employee benefit plan, program or division thereof or arrangement that would be an Employee Plan if it were in effect on the date hereof, except (A) as required by applicable Law, (B) disclosed on in any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations section of any other person, other than guarantees of obligations of wholly-owned Subsidiaries Section 3.15 of the Company in Disclosure Letter, (C) as contemplated pursuant to Section 7.02(d), (D) the ordinary course of business; Transaction Bonus Agreements or (iiE) make any loans, advances or capital contributions to, or investments in, any other person, other than with respect to wholly owned Subsidiaries of the Company’s and the Company Subsidiaries’ health and medical plans, in the ordinary course of business and consistent with past practice; practices provided such action does not materially increase the benefits payable under such Employee Plans; (iiiix) commence any voluntary petition, proceeding or action under any bankruptcy, insolvency or other similar Laws; (x) make or institute any bid material change in its accounting procedures or proposalpractices from those in effect as of December 31, 2006 unless mandated by GAAP; (xi) make, revoke or change any material Tax election (other than elections with respect to the Company or the Operating Company (A) that are with respect to Income Taxes reported on the Partnership Tax Returns of the Company or the Operating Company, (B) have no effect with respect to Tax matters of the Company or any Company Subsidiary after the Closing Date and (C) that do not relate to any Company Subsidiary that is treated as a corporation for purposes of any Income Tax) or settle or compromise any material Tax Liability of the Company or any Company Subsidiary; (xii) other than the sales of goods and inventory purchased for resale in the ordinary course of business consistent with past practice (A) sell, lease, transfer or otherwise dispose of any of its assets having a book or market value in excess of $500,000 individually or $2,000,000 in the aggregate, or (B) enter into, or consent to the entering into of, any agreement granting a preferential right to sell, lease or amend in otherwise dispose of any material respect of such assets; (xiii) (A) incur or commit to incur any contract or agreement capital expenditures other than capital expenditures in the ordinary course of business that do not exceed $1,000,000 individually or $4,000,000 in the aggregate during each three month period following the date hereof and prior to the Closing, or (B) other than the acquisition of goods and inventory for resale in the ordinary course of business consistent with past practice, which in acquire or agree to acquire any event would either (a) involve aggregate consideration under such bid, proposal, contract assets or agreement make any individual lease commitments involving payments in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which 1,000,000 the Company would expect such bid, proposal or renewal to result in a loss thereunder aggregate during each three month period following the date hereof and prior to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)Closing; (gxiv) neither the Company nor compromise or settle any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAPmaterial litigation; (hxv) neither the Company nor compromise or settle any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger)material claim; (ixvi) except enter into, or consent to the extent required under existing employee and director benefit plansentering into of, agreements any agreement with any Governmental Authority relating to the actual or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits threatened condemnation of any of its directors, officers Owned Property or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employersLeased Property; (jxvii) make take or change any Tax election, make or change any method or accounting with respect knowingly omit to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree knowingly permit to commit to takebe taken, any action that would make any representation or warranty cause the representations and warranties of the Company contained herein inaccurate and the Operating Company set forth in any material respect at, the second sentence of Section 3.12(a) or the second sentence of Section 3.12(b) to be untrue as of any time prior to, the Effective Time (except for if such representations or warranties were made as of a specific date)the Closing, other than actions taken pursuant to Sections 6.13 and 6.14(c) hereof; or (oxviii) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement agree to do take any of the foregoingactions set forth in the foregoing subparagraphs (i) through (xvii). Notwithstanding any provision contained in this Agreement, any action taken by the Company and the Company Subsidiaries which is permitted under this Section 6.01 shall not constitute a misrepresentation or breach of any representation, warranty or covenant.

Interim Operations of the Company. The Company covenants and agrees thatDuring the period from the date of this Agreement to the Effective Time, except (i) as required by Law, specifically permitted by this Agreement, (ii) Agreement or as indicated set forth on Schedule 5.1SCHEDULE 6.01, or (iii) as agreed otherwise consented to in writing by Parent, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"):will and will cause each Company Subsidiary to: (a) the business of the Company and its Subsidiaries shall be conducted only use commercially reasonable efforts (consistent with operating in the ordinary and usual course of business in a manner consistent with and past practice (including payment of accounts payable, collection of accounts receivable and inventory purchasespractices) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the its present business organization and assets of the Company and its Subsidiariesorganization, (ii) keep available the services of the its present key officers, employees officers and consultants of the Company and its Subsidiariesemployees, (iii) preserve the present its relationships of the Company and its Subsidiaries with clients, suppliers, customers, suppliers distributors and other persons with which the Company or any of its Subsidiaries has others having significant business relationsdealings with it, including renewing existing leases and licenses in the ordinary course of business, (iv) maintain net cash all assets in good repair and condition other than those disposed of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregateordinary course of business, (v) as maintain all insurance, (vi) maintain its books of account and records in the close usual, regular and ordinary manner and (vii) otherwise operate in the ordinary course of business on the date of the expiration of the Offerbusiness; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) not amend its Certificate of Incorporation or By-laws Laws; (c) not acquire by merging or similar organizational documents; consolidating with, or purchasing all or substantially all of the assets of, or otherwise acquiring, any business of any Person or other business organization or division thereof, in each case for consideration having a value in excess of $5,000,000 or an aggregate value in excess of $10,000,000; (iiid) not split, combine or reclassify the outstanding Shares or any its outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) or declare, set aside aside, make or pay any dividend or other distribution payable in cash, stock or property with respect to of its capital stockstock other than (i) cash dividends or distributions made prior to the Effective Time; or (ii) issue, deliver, dividends paid by the Company's wholly-owned Subsidiaries to the Company or its wholly-owned Subsidiaries; (e) not issue or sell (or agree to issue or sell, pledge, dispose ) any shares of its capital stock of any class or encumber any additional shares ofseries, or any options, warrants, conversion or other rights to purchase any such shares or any securities convertible into or exchangeable forfor such shares (other than upon the exercise or conversion of options, warrants or convertible securities outstanding on the date hereof), or optionsgrant, warrantsor agree to grant, calls, commitments any such options or rights modify or alter the terms of any kind to acquire, any shares of capital stock of any class of the Company or its Subsidiariesabove, or other ownership interest except as contemplated under Section 2.06; (including stock appreciation rights and phantom stock), f) not (i) incur any indebtedness for borrowed money other than shares pursuant to the terms of Common Stock reserved for issuance the Company's existing credit facilities in effect on the date hereof upon or vary the exercise material terms of outstanding Options; any existing debt securities, (ii) issue or sell any debt securities, (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business or pursuant to the Company's 2006 capital expenditure plan which has previously been made available to Parent, acquire or dispose of any assets (other than acquisitions and consistent with past practice; dispositions of goods purchased for resale in the ordinary course of business) having a book or market value individually in excess of $1,000,000, or (iv) incur other than in the ordinary course of business, enter into, modify in any material respect or modify terminate any indebtedness Material Contract; (g) not take any steps to mortgage or other pledge to secure any material liability obligation, or issue to subject to any debt securities; or (v) redeemmaterial Lien, purchase or otherwise acquire directly or indirectly any of its capital stock material properties other than pursuant to the terms of the Company's existing credit facilities as in effect on the date hereof or rights in respect thereofthe ordinary course of business; (dh) except as disclosed on Schedule 5.1(d)not grant to any present or former director or officer, neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claimsor, except in the ordinary course of business business, consultant or other employee any increase in compensation or benefits in any form, or any severance or termination pay, or make any loan to or enter into any employment agreement, collective bargaining agreement or arrangement with any such Person, except in each case as may be required by Law or the terms of any existing Employee Plan or arrangement and consistent with past practiceexcept for the Additional Transaction Bonuses; (ei) neither the Company nor any of its Subsidiaries shall permit not adopt, enter into, amend in any material insurance policy naming respect, announce to participants any intention to adopt or terminate, any Employee Plan or other employee benefit plan, program or arrangement that would be an Employee Plan if it were in effect on the date hereof, except (i) as a beneficiary required by applicable Law, (ii) as disclosed on any disclosure Schedule pursuant to Section 4.15, (iii) as contemplated under Section 2.06, (iv) in connection with the Additional Transaction Bonuses or a loss payable payee to be canceled or terminated except that any such policy may be replaced (v) except, with a policy with coverage and on terms and conditions no less favorable respect to the Company Company's health and its Subsidiariesmedical plans, in the ordinary course of business provided such action does not materially increase the benefits payable under such Employee Plans; (fj) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock not discharge or assets or otherwise) any corporation, partnership or other business organization or division thereof or satisfy any material assets, assume, guarantee, endorse Lien or otherwise become liable pay or responsible satisfy any material obligation or Liability (whether directly, contingently fixed or otherwisecontingent) for the material obligations of any other person, (other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make or commence any loansvoluntary petition, advances proceeding or capital contributions toaction under any bankruptcy, insolvency or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets)similar Laws; (gk) neither the Company nor not make or institute any of material change in its Subsidiaries shall change any of the accounting methods used by it procedures or practices unless required mandated by GAAP; (hl) neither the Company nor not make any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any material Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return election or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officersLiability; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise)not, other than the payment, discharge or satisfaction in the ordinary course of business in accordance business, enter into, or consent to the entering into of, any agreement with any Governmental Entity relating to the terms actual or threatened condemnation of such obligation any Owned Property or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice;Leased Premises; and (n) neither the Company nor any of its Subsidiaries will take, not authorize or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do take any of the foregoingactions set forth in the foregoing subparagraphs (a) through (l).

Interim Operations of the Company. The Company covenants Sellers covenant and agrees agree that, except (i) as permitted contemplated by this Agreement, (ii) as indicated on disclosed in Schedule 5.1, 4.1 of the Disclosure Schedule or (iii) as agreed in writing by Parentwith the prior written consent of Buyer, after the date hereof, hereof and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of, the Company Board pursuant to Section 1.3 (the "Appointment Date"):Closing: (a) the business of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner and, to the extent consistent with past practice (including payment therewith, each of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each preserve in all material respects its business operations intact and use its reasonable best efforts to (i) preserve substantially intact the business organization and assets of the Company and maintain its Subsidiariesexisting relations with customers, (ii) keep available the services of the present key officerssuppliers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present relationships of the Company and its Subsidiaries with customers, suppliers and other persons with which the Company or any of its Subsidiaries has significant business relations, and (iv) maintain net cash of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the Offer; associates; (b) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) not amend its Certificate Articles of Incorporation or By-laws Bylaws or similar organizational documents; or (iiic) neither the Company nor any of its Subsidiaries shall (i) split, combine or reclassify the outstanding Shares Company Common Stock or any outstanding capital stock of any of the Subsidiaries of the Company; ; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (iii) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stockstock (other than dividends from any Subsidiary of the Company to the Company or any other Subsidiary of the Company); (iiiii) issue, deliver, sell, pledge, dispose of issue or encumber sell any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquire, any acquire shares of capital stock of any class of the Company or its Subsidiaries, or other ownership interest (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; or (vvi) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock stock; or rights (vii) dispose of any interest in respect thereof; any Subsidiary; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify(i) adopt any new employee benefit plan (including any stock option, stock benefit or stock purchase plan) or amend any existing employee benefit plan in any material respect, except for changes which are less favorable to participants in such plans or terminate as may be required by applicable law, or (ii) increase any compensation or enter into or amend any employment, severance, termination or similar agreement with any of its Contracts present or waivefuture officers, release directors or assign any material rights or claimsemployees, except for normal increases in the ordinary and usual course of business and the payment of cash bonuses to employees pursuant to and consistent with past practice; existing plans or programs; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it shall, except as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage required or contemplated by this Agreement or in the ordinary and on terms and conditions no less favorable usual course of business (i) acquire, sell, lease or dispose of any assets which in the aggregate are material to the Company and its Subsidiaries; Subsidiaries taken as a whole, or (ii) enter into any commitment or transaction which would be material to the Company and its Subsidiaries taken as a whole; (f) neither the Company nor any of its Subsidiaries shall shall: (i)acquire i) incur or assume any long-term or short-term debt or issue any debt securities except for trade credit and borrowings under existing lines of credit in the ordinary course of business consistent with past practice; (by merger, consolidation, acquisition of stock or assets or otherwiseii) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse (except checks in the ordinary course of business) or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, person (other than guarantees of obligations of wholly-owned Subsidiaries of the Company Company); (iii) make any material loans, advances (except to employees in the ordinary course of business; (iibusiness consistent with past practice) make any loans, advances or capital contributions to, or investments in, any other person, person (other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practiceCompany); (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single pledge or otherwise encumber shares of capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (vi) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any of the accounting methods used by it unless required by GAAP; (h) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees stock of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, Subsidiaries; or grant any retention, severance (v) mortgage or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or pledge any of its Subsidiariesmaterial assets, tangible or intangible, or establishcreate any material mortgage, adopt enter into lien, pledge, charge, security interest or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit encumbrance of any directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting kind with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liabilitysuch asset; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), other than the payment, discharge or satisfaction in the ordinary course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practice; (n) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as of any time prior to, the Effective Time (except for representations made as of a specific date); or (o) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except Except (ia) as permitted expressly contemplated by this Agreement, (iib) as indicated set forth on Schedule 5.1Section 5.1 of the Company Disclosure Letter, (c) as required by Law, or (iiid) as agreed in writing consented to by Parent, Parent after the date hereof, of this Agreement and prior to the time the directors of the Purchaser have been elected toEffective Time, and which consent shall constitute a majority of, not be unreasonably withheld or delayed: (i) the Company Board pursuant and its Subsidiaries will conduct business only in the Ordinary Course of Business and, to Section 1.3 (the "Appointment Date"): (a) the business extent consistent therewith, each of the Company and its Subsidiaries shall be conducted only in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its reasonable best efforts to (i) preserve substantially intact the its business organization intact, and maintain its existing Company Permits, relations with customers, suppliers, employees, creditors and business partners; (ii) the Company and its Subsidiaries will maintain their existing policies of insurance at current levels; (iii) the Company and its Subsidiaries will maintain their assets in normal operating condition and will not sell, lease, pledge or otherwise dispose of encumber any properties or assets material to the Company and its Subsidiaries, taken as a whole (ii) keep available including any accounts, leases, contracts or intellectual property or any assets or the services stock of the present key officers, employees and consultants any of the Company and its Subsidiaries, but excluding the sale or non-exclusive license of products and the sale of inventory in the Ordinary Course of Business); (iiiiv) preserve the present relationships of the Company and its Subsidiaries will not adopt or implement any shareholder rights plan; (v) the Company and its Subsidiaries will not enter into an agreement with customersrespect to any merger, suppliers and other persons with which consolidation, liquidation or business combination, or any acquisition or disposition of all or substantially all of the assets or securities of the Company or any of its Subsidiaries has significant business relations, and Subsidiaries; (ivvi) maintain net cash of the Company and its Subsidiaries will purchase and maintain inventories for the Restaurants in such quantities and quality as necessary to operate the Restaurants in accordance with historical practice; and (vii) the Company and its Subsidiaries will make all payments for rent or other amounts due under the Real Property Lease when such payments become due. (viii) the Company and its Subsidiaries will not amend its Amended Articles of at least $10 million (without giving effect to any transaction-related fees and expenses Incorporation, as amended, or Amended Code of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million in the aggregate) as of the close of business on the date of the expiration of the OfferRegulations; (bix) the Company will not, directly or indirectly, (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of its Subsidiaries beneficially owned by it, either directly or indirectly; (ii) amend its Certificate of Incorporation or By-laws or similar organizational documents; or (iii) split, combine or reclassify the outstanding Shares or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: will, (iA) declare, set aside or pay any dividend or other distribution payable in cash, stock or property with respect to its capital stock; (iiB) issue, deliversell, transfer, pledge, dispose of or encumber or agree to issue, sell, transfer, pledge, dispose of or encumber any additional shares of, or securities convertible into or exchangeable for, or options, warrants, calls, commitments or rights of any kind to acquireacquire (or stock appreciation rights with respect to), any shares of capital stock of any class of the Company or any of its Subsidiaries, or other ownership interest Subsidiaries (including stock appreciation rights and phantom treasury stock), other than shares in respect of Common Stock Shares reserved for issuance on the date hereof upon of this Agreement pursuant to the exercise of Options outstanding Options; on the date of this Agreement, (iiiC) transfersplit, lease, license, sell, mortgage, pledge, dispose of, combine or encumber reclassify the outstanding Common Shares or any material assets, whether tangible or intangible, other than sales outstanding capital stock of products in any of the ordinary and usual course Subsidiaries of business and consistent with past practice; (iv) incur or modify any indebtedness or other material liability or issue any debt securities; the Company or (vD) redeem, purchase or otherwise acquire acquire, directly or indirectly indirectly, any of the Company’s capital stock; (x) except in the Ordinary Course of Business or as required by any Law or under the terms of any Company Plan, the Company will not (A) make any change in the compensation payable or to become payable to any of its capital stock officers, directors, employees, agents, consultants or rights Persons providing management services, (B) enter into or amend any employment, severance, consulting, termination or other agreement or Company Plan or (C) make any loans to any of its officers, directors, employees, Affiliates, agents or consultants or make any change in respect thereofits existing borrowing or lending arrangements for or on behalf of any of such Persons pursuant to an Company Plan or otherwise; (dxi) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except in the ordinary course Ordinary Course of business and consistent Business or as required by any Law or under the terms of any Company Plan, the Company will not, (A) pay or make any accrual or arrangement for payment of any pension, retirement allowance or other employee benefit pursuant to any existing plan, agreement or arrangement to any officer, director, employee or Affiliate, (B) pay or agree to pay or make any accrual or arrangement for payment to any officers, directors, employees or Affiliates of the Company of any amount relating to unused vacation days, (C) adopt or pay, grant, issue, accelerate or accrue salary or other payments or benefits pursuant to any Company Plan, agreement or arrangement, or any employment or consulting agreement with or for the benefit of any director, officer, employee, agent or consultant, whether past practiceor present or (D) amend in any material respect any such existing Company Plan, agreement or arrangement in a manner inconsistent with the foregoing; (exii) neither the Company nor any of its Subsidiaries shall permit will (A) incur or assume any material insurance policy naming it as a beneficiary long-term Indebtedness, or a loss payable payee to be canceled except in the Ordinary Course of Business, incur or terminated except that assume any such policy may be replaced short-term Indebtedness in amounts not consistent with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; past practice, (fB) neither the Company nor any of its Subsidiaries shall (i)acquire (by merger, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other personPerson, other than guarantees of obligations of wholly-owned Subsidiaries of the Company except in the ordinary course Ordinary Course of business; Business and consistent with past practice, (iiC) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company Person except in the ordinary course Ordinary Course of business Business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend in any material respect any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million practice or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or (viD) enter into any material commitment or transaction with respect to any of the foregoing (including, but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assetsassets or real estate), except in the Ordinary Course of Business and consistent with past practice; (gxiii) neither the Company nor any of its Subsidiaries shall will settle, or offer or propose to settle, any material Action involving or against the Company or any of its Subsidiaries, any shareholder litigation or dispute against the Company or any of its officers or directors or any Action that relates to the Transactions; (xiv) neither the Company nor any of its Subsidiaries will pay, discharge, waive or satisfy any rights, claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge, waiver or satisfaction of any such rights, claims, liabilities or obligations, in the Ordinary Course of Business and consistent with past practice, or claims, liabilities or obligations reflected or reserved against in, or contemplated by, the Financial Statements (or the notes to the Financial Statements); (xv) neither the Company nor any of its Subsidiaries will (A) change any of the accounting methods used by it unless required by GAAPGAAP or Law, (B) settle any material tax claim or assessment or (C) consent to any material tax claim or assessment or any waiver of the statute of limitations for any such claim or assessment; (hxvi) neither the Company nor any of its Subsidiaries will (A) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); this Agreement) or (iB) except to the extent required under existing employee and director benefit plansacquire, agreements transfer, lease, license, sell, mortgage, pledge, dispose of or arrangements as in effect on the date of this Agreement and disclosed to Parent, increase the compensation or fringe benefits of encumber any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, 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 directors, officers or employers; (j) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officers; (m) pay, discharge or satisfy any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise)assets, other than the payment, discharge or satisfaction in the ordinary course Ordinary Course of business in accordance with the terms of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business Business and consistent with past practice;; and (nxvii) neither the Company nor any of its Subsidiaries will take, or agree to commit to take, any action that would make any representation or warranty of the Company contained herein inaccurate in any material respect at, or as violation of any time prior to, the Effective Time (except for representations made as of a specific date); orapplicable Law; (oxviii) neither the Company nor any of its Subsidiaries will authorize fail to maintain its books, accounts and records in the usual manner on a basis consistent with that heretofore employed or change any accounting method, policy, practice or application previously employed; (xix) neither the Company nor any of its Subsidiaries will fail to pay, or to make adequate provision for the payment of, all Taxes, interest payments and penalties due and payable to any city, state, the United States, or any other taxing authority, except those being contested in good faith by appropriate proceedings and for which sufficient reserves have been established, or make any elections with respect to Taxes; (xx) neither the Company nor any of its Subsidiaries will acquire, enter into letters of intent, or agree to acquire (i) any business or any corporation, partnership, joint venture, association or other business organization or division thereof or (ii) any assets that are material, individually or in the aggregate, to the Company or any of its Subsidiaries, except purchases of inventory in the Ordinary Course of Business consistent with past practice. (xxi) neither the Company nor any of its Subsidiaries will open or close any Restaurant; (xxii) neither the Company nor any of its Subsidiaries will enter into an agreement agreement, contract, commitment or arrangement to do any of the foregoing, or to authorize, recommend, propose or announce an intention to do any of the foregoing.

Interim Operations of the Company. The Company covenants and agrees that, except (ia) as permitted by From the date of this Agreement to the earlier of the Closing or termination of this Agreement, except as (iiw) required by Law, (x) specifically permitted or required by this Agreement or the TCA Purchase Agreement, (y) required by any contracts, agreements, commitments, leases, sales contracts and other agreements to which the Company or a Company Subsidiary is a party as indicated on Schedule 5.1, of the date of this Agreement to the extent copies of which have been provided to Purchaser or (iiiz) as agreed otherwise consented to in writing by ParentPurchaser (not to be unreasonably withheld or delayed) (collectively, after the date hereof, and prior to the time the directors of the Purchaser have been elected to, and shall constitute a majority of“Permitted Operations”), the Company Board pursuant to Section 1.3 (the "Appointment Date"): (a) the will conduct its business of the Company and its Subsidiaries shall be conducted only in all material respects in the ordinary and usual course of business in a manner consistent with past practice (including payment of accounts payable, collection of accounts receivable and inventory purchases) and in compliance with applicable laws and the Company and its Subsidiaries shall each use its commercially reasonable best efforts to (i) preserve substantially intact the its present business organization and assets of the Company and its Subsidiariesorganization, (ii) keep available the services of the its present key officers, employees and consultants of the Company and its Subsidiaries, (iii) preserve the present its relationships of the Company and its Subsidiaries with clients, suppliers, customers, suppliers distributors and other persons with which the Company or any of its Subsidiaries has others having significant business relationsdealings with it, and (iv) maintain net cash all material licenses and material Permits required for the operation of the Company and its Subsidiaries of at least $10 million (without giving effect to any transaction-related fees and expenses of the Financial Advisor, financial printers and outside counsel not exceeding $1.35 million business in the aggregateordinary course, (vi) as maintain all material assets in good repair and condition other than those disposed of in the close ordinary course of business on consistent with past practices, (vii) maintain all Insurance Policies, and (viii) maintain its books of account and records in the date of the expiration of the Offer;usual, regular and ordinary manner. (b) Except with respect to the Permitted Operations, notwithstanding Section 6.01(a), the Company will not, directly shall not from the date of this Agreement to the earlier of the Closing or indirectly, termination of this Agreement pursuant to and in accordance with Section 8.02: (i) sell, transfer or pledge or agree to sell, transfer or pledge any Shares or capital stock of any of amend its Subsidiaries beneficially owned by it, either directly or indirectly; Organizational Documents; (ii) amend its Certificate merge or consolidate with, or acquire all or substantially all of Incorporation the assets, or By-laws business of, any Person or similar organizational documents; other business organization or division thereof; (iii) redeem, repurchase, split, combine or reclassify the its outstanding Shares equity interests or any outstanding capital stock of any of the Subsidiaries of the Company; (c) except as disclosed on Schedule 5.1(c), neither the Company nor any of its Subsidiaries shall: (i) declare, set aside aside, make or pay any dividend or other distribution payable in cashrespect of its equity interests other than (A) distribution to Sellers of the proceeds received by the Company and Xxxxx XX from the sale of the limited partnership interests of the Operating Company pursuant to the TCA Purchase Agreement or (B) the cancellation of Company Options as contemplated by Section 7.02(d) or (C) Tax distributions made in accordance with its Organizational Documents; (iv) issue or sell (or agree to issue or sell) any of its equity interests, stock or property with respect any options, warrants, conversion or other rights to purchase any of its capital stock; (ii) issue, deliver, sell, pledge, dispose of or encumber any additional shares of, equity interests or securities convertible into or exchangeable forfor such equity interests (other than upon the exercise or conversion of options, warrants or convertible securities outstanding on the date hereof), or optionsgrant, warrantsor agree to grant, calls, commitments any such options or rights modify or alter the terms of any kind to acquireof the above; provided, any shares of capital stock of any class however, the Company may amend the terms of the Company or Options to the extent necessary to satisfy its Subsidiaries, or other ownership interest obligation pursuant to Section 7.02(d); (including stock appreciation rights and phantom stock), other than shares of Common Stock reserved for issuance on the date hereof upon the exercise of outstanding Options; v) (iii) transfer, lease, license, sell, mortgage, pledge, dispose of, or encumber any material assets, whether tangible or intangible, other than sales of products in the ordinary and usual course of business and consistent with past practice; (ivA) incur any Indebtedness (B) issue or modify any indebtedness or other material liability or issue sell any debt securities; , (C) vary the material terms of any contract, agreement, commitment or arrangement with respect to Indebtedness or any debt securities, or (vD) redeem, purchase or otherwise acquire directly or indirectly any of its capital stock or rights in respect thereof; (d) except as disclosed on Schedule 5.1(d), neither the Company nor any of its Subsidiaries shall modify, amend or terminate any of its Contracts or waive, release or assign any material rights or claims, except other than in the ordinary course of business and consistent with past practice; (e) neither the Company nor any of its Subsidiaries shall permit any material insurance policy naming it as a beneficiary or a loss payable payee to be canceled or terminated except that any such policy may be replaced with a policy with coverage and on terms and conditions no less favorable to the Company and its Subsidiaries; (f) neither the Company nor any of its Subsidiaries shall (i)acquire (by mergerenter into, consolidation, acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any material assets, assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the material obligations of any other person, other than guarantees of obligations of wholly-owned Subsidiaries of the Company in the ordinary course of business; (ii) make any loans, advances or capital contributions to, or investments in, any other person, other than to wholly owned Subsidiaries of the Company in the ordinary course of business and consistent with past practice; (iii) make any bid or proposal, or enter into or amend modify in any material respect or terminate any contract or agreement other than in ordinary course of business consistent with past practice, which in any event would either (a) involve aggregate consideration under such bid, proposal, contract or agreement in excess of $2 million or (b) be a bid, proposal or renewal at an amount of which the Company would expect such bid, proposal or renewal to result in a loss thereunder to the Company, (iv) authorize any single capital expenditure which is in excess of $250,000 or capital expenditures which are, in the aggregate, in excess of $1.0 million for the Company and its Subsidiaries taken as a whole, (v) enter into any transaction, contract or commitment with any affiliate of the Company; or Material Contract; (vi) enter into take any material commitment steps to mortgage or transaction with respect pledge to secure any obligation, or subject to any of the foregoing Lien (includingother than Permitted Liens), but not limited to, any borrowing, capital expenditure or purchase, sale or lease of assets); (g) neither the Company nor any of its Subsidiaries shall change any properties other than pursuant to the terms of the accounting methods used by it unless required by GAAP; (hIndebtedness set forth in Schedule 1.01(c) neither the Company nor any of its Subsidiaries will adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of its Subsidiaries (other than the Merger); (i) except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement and disclosed hereof; (vii) grant to Parent, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or its Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any retention, severance or termination pay not currently required to be paid under existing severance plans to or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or consultant any compensation or benefits in any form, or any severance or termination pay, or make any loan to or enter into any employment agreement, collective bargaining agreement or arrangement with any such Person; (viii) hire any Person or adopt or enter into any employee benefit plan, program or arrangement; (ix) commence any voluntary petition, proceeding or action under any bankruptcy, insolvency or other employee similar Laws; (x) make or institute any material change in its accounting procedures or practices from those in effect as of December 31, 2006 unless mandated by GAAP; (xi) make, revoke or change any material Tax election (other than elections with respect to the Company (A) that are with respect to Income Taxes reported on the Partnership Tax Returns of the Company, (B) have no effect with respect to Tax matters of the Company or any of its Subsidiaries, or establish, adopt enter into or amend or terminate Company Subsidiary after the Closing Date and (C) that do not relate to any collective bargaining agreement or Company Plan, including, but not limited to, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement Subsidiary that is treated as a corporation for the benefit purposes of any directors, officers or employers; (jIncome Tax) make or change any Tax election, make or change any method or accounting with respect to Taxes, file any amended Tax Return or settle or compromise any material Tax liability; (k) settle or compromise any pending or threatened suit, action or claim against the Company or any Subsidiary for an aggregate amount in excess of $50,000 or which is material or which relates to the transactions contemplated hereby; (l) make any change in the key management structure Liability of the Company or any of its Subsidiaries, including, without limitation, the hiring of additional officers or the termination of existing officersCompany Subsidiary; (mxii) paysell, discharge lease, transfer or satisfy otherwise dispose of any claims, liabilities or obligations (absolute, accrued, asserted or unasserted, contingent of otherwise), its assets other than as contemplated by the paymentTCA Purchase Agreement, discharge or satisfaction in (B) enter into, or consent to the ordinary course entering into of, any agreement granting a preferential right to sell, lease or otherwise dispose of business in accordance with the terms any of such obligation or liability and consistent with past practice of liabilities reflected or reserved against in the financial statements of the Company or incurred in the ordinary course of business and consistent with past practiceassets; (nxiii) neither the Company nor incur or commit to incur any of its Subsidiaries will capital expenditures, (xiv) compromise or settle any material litigation; (xv) compromise or settle any material claim; (xvi) take or knowingly omit to take, or agree knowingly permit to commit to takebe taken, any action that would make any representation or warranty cause those representations and warranties of the Company contained herein inaccurate and the Operating Company set forth in any material respect at, the second sentence of Section 3.12(a) of the TCA Purchase Agreement or the second sentence of Section 3.12(b) of the TCA Purchase Agreement to be untrue as of any time prior to, the Effective Time (except for if such representations and warranties were made as of a specific date)the Closing, other than actions taken pursuant to Sections 6.13 or 6.14(c) of the TCA Purchase Agreement; or (oxvii) neither the Company nor any of its Subsidiaries will authorize or enter into an agreement agree to do take any of the foregoingactions set forth in the foregoing subparagraphs (i) through (xvi). Notwithstanding any provision contained in this Agreement, any action taken by the Company which is permitted under this Section 6.01 shall not constitute a misrepresentation or breach of any representation, warranty or covenant.